B-224328 Date: January 9, 1987 In the Matter of: Southern Technologies, Inc.
66 Comp. Gen. 208
DIGEST
PROCUREMENT
Specifications
Minimum needs standards
Competitive restrictions
Brand name specifications
1. Protest that proprietary specification for burners and controls
for hot water generators unduly restricts competition is sustained when
agency does not justify requirement that contractor obtain equipment to
be replaced and installed from one particular manufacturer.
Specifications should be stated in a manner that permits consideration
of other equipment that is capable of meeting the government's actual
needs.
PROCUREMENT
Bid Protest
GAO procedures
Preparation costs
PROCUREMENT
Sealed Bidding
Bids
Preparation costs
2. When protester successfully challenges an unduly restrictive
specification, it is entitled to recover the costs of filing and
pursuing the protest.
DECISION
Southern Technologies, Inc., protests the provisions of invitation
for bids IFB) No. N62477-85-B-0245, issued July 23, 1986, by the Naval
Facilities Engineering Command, Washington, D.C. The small business set
aside covers replacement of burners and controls on three existing high
temperature hot water generators at the United States Naval Academy,
Annapolis, Maryland. We sustain the protest. In pre-bid opening protest
to the Navy and our Office, Southern contended that the solicitation
unduly restricted competition in specifying that the replacement burners
and controls must be manufactured by the Coen Company, Inc., and that no
other manufacturer's product will be accepted. The Navy responds that
this project is a retrofit; that the existing generators are
LaMont-type, manufactured by International Boiler Works, and that they
currently have Coen burners and another manufacturer's controls. The
Navy contends that these are incompatible and that it has incurred high
maintenance costs and low efficiency, specifically poor turn down
control problems. It therefore has determined that Coen burners and
controls must be provided to ensure proper and reliable functioning of
the generators. Southern, which did not submit a bid by the September 16
amended opening date, contends that specifying a particular manufacturer
is unnecessary to satisfy the government's legitimate needs, since other
manufacturers can meet the technical and performance requirements of the
IFB. Southern questions the agency's statement that its analysis of
other installations showed that Coen burners and controls are the only
ones that will operate reliably and satisfactorily, as well as the
agency's contention that extensive modifications to the generators would
be necessary if other manufacturers' products were used. The protester
states that it has spoken with the generator manufacturer, who advised
that its equipment will work other manufacturers' burners and controls
if correctly specified and installed. Southern has provided our Office
with lists of seven military installations that it states are
successfully operating using burners and controls of different
manufacturers; of seven manufacturers it believes are capable of
meeting burner requirements; and of which, it states, use the same
manufactures's burners and controls. Where, as here, a protester
challenges a specifications as unduly restrictive of competition, the
procuring agency must establish prima facie support for its position
that the restriction is reasonably related to its needs. Libby Corp.,
et al., B-220392 et al., Mar. 7, 1986, 86-1 CPD 227. This requirement
reflects the agency's statutory obligation to create specifications that
permit full and open competition consistent with the agency's actual
needs. 10 U.S.C. 2305(a)(1) (Supp. III 1985). In our review of
protests concerning specifications, we examine the adequacy of the
agency's position not simply with regard to the reasonableness of the
rationale asserted, but also the analysis given in support of these
reasons, Cleaver Brooks, B-213000, June 29, 1984, 84-2 CPD 1, to assure
that the agency's explanation will withstand logical scrutiny.
Fleetwood Electronics, Inc., B-216947.2, June 11, 1985, 85-1 CPD 664.
The Navy in this instance has restricted the procurement to Coen burners
and controls, requiring its small business construction contractor to
obtain supplies and personnel to supervise its installation forma a
single source. This requirement amounts to a sole source and as such is
subject to close scrutiny. R.R Mongeau Engineers, Inc., B-218356, et
al. July 8, 1985, 85-2 CPD 29. Initially, we point out that the fact
that the Navy may have had unsatisfactory experience with generators
using Coen burners and another manufacturer's controls is not
determinative in applying the legal standards outlined above. The
question presented by the protest is whether the Navy has adequately
justified its refusal to consider products other than Coen's that may be
able to perform equally well. See 10 U.S.C. 2733(c). This has nothing
to do with whether Coen, as the Navy asserts, manufactures the best
product. After examining the record before us, we are of the opinion
that the Navy has not justified exclusion of equipment of manufacturers
other than Coen. The Navy merely states its position in conclusory
form, and has not adequately explained its conclusions. For example,
the Navy claims that it requires Coen burners and controls to ensure
that they are compatible with existing equipment and are of proven
reliability. Southern, however, states that other installations have
combined LaMont-type generators with other than Coen burners and
controls and that performance is not impaired. Southern also states
that the existing generator was not specifically designed to be
compatible with Coen burners or the controls that were installed on it.
The Navy has not refuted these contentions. Nor does the record
substantiate the Navy's statement that the use of other manufacturers'
equipment would involve extensive and expensive modifications to the
generators with no assurance that the generators would work
satisfactorily. Moreover, Southern, as noted, above, states that it
spoke with the generator manufacturers' burners and controls if
correctly specified and installed, and that it should not require
modification. The contracting officer has shown only that Coen burners
and controls operate satisfactorily on generators of the same
approximate age and type as the Naval Academy's at three other academic
institutions. However, he has not shown that other responsible
manufacturers could not supply a product that meets the Navy's needs,
and that no other products will do, as required by 10 U.S.C. 2723(c)(
1). In the absence of such evidence or other information which would
support the Navy's position, we do not believe the Navy has justified
its specification for proprietary equipment. At a minimum, it appears
that it would be less restrictive to require that the burners and
controls be made by the same manufacturer, rather than two different
manufacturers, and that they be compatible with the International Boiler
Works generator. Therefore, by letter of today to the Secretary of the
Navy, we are recommending that the requirement be resolicited, using
functional, performance, or design specifications in accord with 10
U.S.C.. 2305(a)(1)(C). In addition, we find Southern entitled to the
costs of filing and pursuing the protest. The firm has successfully
challenged an unduly restrictive specification, and, as a result of our
recommendation competition for the burners and controls will be
enhanced. The rationale for the award of protest costs her is similar
to that in cases where a protester successfully challenges an improper
sole-source award. In such cases, we consider the incentive of allowing
the protester to recover the costs of tiling and pursuing the protest to
be consistent with the broad purpose of the Competition in contracting
Act of 1984, 10 U.S.C. 2301 (Supp III 1985), which is to increase and
enhance competition. See AT&T Information Systems, Inc., B-223914, Oct.
23, 1986, 66 Comp. Gen. , 86-2 CPD 447; Washington National Arena
Limited Partnership, 65 Comp. Gen. 25 (1985), 85-2 CPD 435. The protest
is sustained.
B-223509 Date: January 9, 1987 In the Matter of: James R. Hladik, Jr. - Relocation Expenses - Title Insurance Premium
66 Comp. Gen. 206
DIGEST
CIVILIAN PERSONNEL
Relocation
Residence transaction expenses
Property titles
Insurance premiums
Reimbursement
A transferred Veterans Administration employee purchased a residence
at his new official station. In obtaining the title insurance necessary
to secure financing, he received a reduced rate on his purchase of
mortgagee's title insurance because it was purchased in conjunction with
an owner's title insurance policy. The cost of the title insurance was
equally divided between seller and buyer. The employee is entitled to
reimbursement of an amount equal to one-half of the charge for the
mortgagee's title insurance if purchased separately.
DECISION
This decision is in response to a request from the Director, Office
of Budget and Finance (Controller) of the Veterans Administration (VA).
We have been asked how much reimbursement an employee may receive where
the cost of the owner's and mortgagee's title insurance policies. for
the reasons set out below, we hold that the employee may be reimbursed
for an amount equal to what his share of the cost of the mortgagee's
title insurance policy would have been had that policy been purchased
alone. BACKGROUND Dr. James R. Hladik, Jr., an employee of the VA, was
transferred from Omaha, Nebraska, to Wichita, Kansas, and reported for
duty in Wichita on August 18, 1985. Incident to the transfer, Dr.
Hladik purchased a residence in the Wichita area. As is the customary
practice in the Wichita area, Dr. Hladik evenly split the $691 total
cost of title insurance with the seller of the residence. This $691
cost included a charge of $656 for an owner's title insurance policy and
$35 for a mortgagee"s (lender's) title insurance policy. Dr. Hladik
originally submitted a travel voucher which included his $345.50 share
of the title insurance costs. The VA reimbursed Dr. Hladik for the $35
cost of the mortgagee's title insurance policy and suspended the
remainder of Dr. Hladik's claim on the basis that the purchase of
owner's title insurance was not a prerequisite to obtaining financing,
and therefore, was not a reimbursable expense. Dr. Hladik requested
that the VA reconsider its decision, and submitted a letter from the
Security Abstract and Title Company which had issued these title
insurance policies. The letter stated that lenders require a mortgage
policy and that, had the mortgagee's insurance policy not been purchased
in conjunction with the owner's policy, the cost of the mortgagee's
policy alone would have been $587. the VA again denied Dr. Hladik's
claim. ANALYSIS Section 5724a (a)(4) of title 5, United States Code
(Supp. III, 1985) provides for the reimbursement of expenses incurred by
a transferred employee in the sale of a residence at the old official
station, and the purchase of a home at the new station. The Federal
Travel Regulations, FPMR 101-7 (Supp. 4, October 23, 1982) incorp. by
ref. 41 C.F.R. 101-7.003 (1984) (FTR), implement the statute, and FTR
para. 2-6.2d(1) provides that:
(1) Reimbursable items. The expenses listed below
are reimbursable in connection with the * * *
purchase of a residence, provided they are
customarily paid * * * by the purchaser of a
residence at the new official station to the
extent they do not exceed amounts customarily paid
in the locality of the residence.
* * * * * * *
(h) Mortgage title insurance policy, paid for by
the employee on a residence purchased by the
employee for the protection of, and required by,
the lender;
(i) Owner's title insurance policy, provided it is
a prerequisite to financing or the transfer of
property; or the cost of the owner's title
insurance policy is inseparable form the cost of
other insurance, which is a prerequisite to
financing or the transfer of property; * * *.
The costs of "(1) searching title, preparing abstract, and legal fees
for a title opinion or (2) where customarily furnished by the seller,
the cost of a title insurance policy * * *" are also included as
reimbursable expenses. FTR para. 2-6.2c. However, the cost of owner's
title insurance purchased by the employee for his own protection is not
reimbursable. FTR para. 2-6d(2)(a). In construing these regulations, we
have recognized that when the owner's title insurance and mortgagee's
title insurance are purchased concurrently, the fee charged for the
title search and related expenses is often reflected in the cost of the
owner's title insurance policy. Chester R. Lane, B-184720, July 1,
1976. While the cost of the owner's title insurance policy is ordinarily
not reimbursable, the cost of title search and related expenses included
in the charge for owner's title insurance has been allowed as a
reimbursable expense, provided that a reasonable allocation could be
made between the cost of the owner's insurance policy the cost of the
mortgagee's insurance had it been purchased separately. Accordingly, we
have generally held in cases similar to Dr. Hladik's that "the employee
is entitled to be reimbursed for the * * * amount allocable to the cost
of the mortgagee's title insurance policy if purchased separately,
regardless of how the cost of the policies nominally might be
apportioned." Ivan V. Faucon, B-197098, April 25, 1980. See also John
G. Evans, B-197098, April 24, 1980; William E. Harris, B-181074, August
27, 1974. As applied to this case, the record shows that the mortgagee's
title insurance policy would have cost $587 if purchased by itself,
rather that the $35 it cost when purchased in conjunction with the
owner's policy. It follows that $587 of the owner's policy premium may
reasonable be considered as allocable to the costs of title search,
mortgagee's title insurance, and other costs properly reimbursable in
connection with mortgagee's title insurance. See Chester R. Lane,
B-184720, July 1, 1976. The remaining $104 is allocable to the owner's
title insurance premium, and is, therefore, not reimbursable. FTR para.
2-62d(2)(a). In conclusion, the $587 cost allocable to the mortgagee's
title insurance policy is a reimbursable expense. this $587 total cost
would have been evenly split between the seller and Dr. Hladik,
therefore, would have incurred an expense of $293.50 allocable to the
cost of the mortgagee's title insurance. As Dr. Hladik has already
received $35, he is entitled to additional reimbursement of $258.50.
Finally, we not that the VA letter suggests that the governing
provisions of the FTR be changed to simply allow reimbursement of the
cost of owner's title insurance since all attorneys recommend that such
coverage be purchased and a few states require by law that full title
insurance be issued in all real estate transactions. This suggestion
should be addressed to the General Services Administration as it is
charged with the promulgation of the regulations.
B-222961.4 Date: January 9, 1987 In the Matter of: Rappahanock Rehabilitation Facility, Inc. --request for Reconsideration
66 Comp. Gen. 202
DIGEST
Procurement
Special Procurement Methods/Categories
In-house performance
Cost evaluation
Government advantage
Allegation substantiation
1. General Accounting Office will consider protest of agency's
determination, based on comparison of in-house and contract costs, not
to purchase particular services from workshop designated by Committee
for Purchase from the Blind and Other Severely Handicapped pursuant to
Wagner-O'Day Act-- even though the act does not compel the government to
purchase services--for purpose of assuring fair treatment of the
offerer, since the agency advised offeror that award decision would be
based on those cost comparison procedures.
Procurement
Special Procurement Methods/Categories
In-house performance
Cost estimates
GAO Review
2. Protest that agency's in-house cost estimate was understated is
denied where record contains no conclusive evidence that agency's
estimate was not based on the full statement of work.
DECISION
Rappahannock Rehabilitation Facility, Inc., requests reconsideration
of our decision Rappahannock Rehabilitation Facility, Inc., B-222961.3,
Sept. 10, 1986, 86-2 C.P.d. 280, in which we dismissed its protest of a
Department of the Navy procurement of custodial sercices for the Marine
Corps Development and Education Command in Quantico, Virginia. We are
persuaded to review the merits of Rappahannock's complaint, but we deny
the protest. Rappahannock's complaint, but we deny the protest.
Rappahannock's protest concerned the Navy's determination whether to
purchase the services pursuant to progisions the Wagner-O'Day Act 41 U.
S.C. 46 et seq. (1982). Under this act, certain supplied and services
are included on a "procurement list" administered by the Committee for
Purchase from the Blind and Other Severly Handicapped. If the
government decides to purchase supplies or services that are on the
list, the act requires that such purchases be made exclusively from
qualified workshops, such Rappahannock. The Navy employed Office of
Management and Budget Circular A-76 cost comparison procedures to aid in
its decision whether to contract at all for the required services; the
agency compared its in-house cost with an offer of $2,584,809 provided
by Rappahannock after the firm was furnished, through the Committee, a
copy of a solicitation that would have been issued for a competitive
procurement. This comparison indicated it would cost $439,538 less for
a 3-year period (base year plus 2 option years included in evaluation)
to retain performance in-house using government employees, and the Navy
decided not to award a contract. Rappahannock appealed the results of
the cost comparison to the Marince Corps Commerical Activities Review
Board, maily asserting that an accurate cost analysis was not possible
from the information contained in the solicitation, and that
Rappahannock therefore had to reply on supplemental informantion
supplied in map form by the Navy Department of Public Works to compute
that area of the buildings to be serviced. Rappahannock complained that
the Navy did not base its calculations on that same information, which
Rappahannock further discovered to be erroneous. The Board denied
Rapppahannock's appeal, asseritn that an independent recalculation had
validated the Navy's calculations and cost estimate, and that
Rappahannockhad acted at its own risk in relying on information other
than that in the solicitation. Rappahannock subsequently filed a
protest with our Office, reasserting the contentiion it raised before
the Marice Corps Commercial Activities Review Board. We dismissed the
protest on the grond that , even where a cost comparison is conducted,
the Wagner-O'Day Act does not compel the government to buy any services
or supplies--it only requires purchase from a desingated firm in lieu of
purchase from another source--so review fo the cost comparison by our
Office would serve no useful purpose. Rappahannock's reconsideration
request is based on its view that, notwithstanding the terms of the
Wagner-O'Day Act, once the Navy opted to use the cost comparison to
determine the lowest cost alternative, it was bound to conduct the
comparison properly and to make award to Rappahannock if the firm's
proposed cost was lower than the Navy's in-house estimate. On
reflection, we are persued to consider Rappahannock's protest on the
merits. While the Wagner-O'Day Act vest agencies with discretion,
generally , whether to contract at all for listed supplies or services,
the Navy did invite Rappahnnock's offer on the understanding that the
decision whether to contract would be based on a cost comparison. The
rule applicable to other cost comparison situations is that although an
agncy is not required to employ cost comparison procedures are held out
to an offeror as the basis for the award decision, they must be applied
properly. Joule Maintenance Corp., B-208684, Sept. 16, 1983, 83-2
C.P.D. 333. It is our view, on reconsideration, that review of the
protest by our Office is appropriate to assure that the cost comparison
was conducted properly, and that Rappahannock was treated fairly. The
solicitation requested firm, fixed unit and extended prices for a base
year and 2 option years for services such as sweeping stairwells and
mopping floors, and the total price for all 3 years was to be evaluated.
Each unit price bid was to be based on the size rule applicable to
other cost comparison situations is that although an agency is not
required to employ cost comparison procedures in deciding whether to
contract for services, Jets, Inc., 59 Comp. Gen. 263 (1980), 80-1 C.P.D.
152, where such procedures are held out to an offeror as the basis for
the award decision, they must be applied properly, Joule Maintenance
Corp., B-208684, Sept. 16, 1983, 83-2 C.P.D. 333. It is our view, on
reconsideration, that review of cost comparison was conducted properly,
and that Rappahannock was treated fairly. The solicitation requested
firm, fixed unit and extended prices for a base year and 2 option years
for services such as sweeping stairwells and mopping floors, and the
total price for all 3 years was to be evaluated. Each unit price bid
was to be based on the size of an area or the number of items to be
cleaned. The IFB also called for unit prices for indefinite-quanity
work cleaning family housing units, calculated per occurrence (the Navy
orivuded estumates if annual occurrences for the purpose of bid
evaluation). In addition, the solicitation gave notice that, since this
contract was to be part of a government cost comparison, the
government's cost estimate would be based on the statement of owrk in
the solicitation. The IFB provided for a site visit by the offeror and
noted that bidders were expected to satisfy themselves as to the general
and local conditions that might affect the cost of contract performance.
The IFB also advised bidders that, in nature of the work and site
conditions under which the work was to be performed withour an
inspection. The solicitation further noted that the specifications,
standards, plans, drawings, descroptions and other pertinent documents
cited were available from the Resident Officer in Charge at the Marine
Dorps Development and Education Command. Rappahannock argues that due to
d iscrepancies between the square footage and historical data upon which
the Navy relied, and the greater square footage derived using maps the
firm obtained from the Navy Department of Public Works upon which
Rappahannock relied, the Navy's cost estimate was not based on the same
work that Rappahannock used to calculate its costs. Rappahannock
concedes that its bid was excessive based on its use of the maps, but
argues that the Navy's estimate failed to include in each of the 3
contract years whe cost of an additional 10.99 full-time equivalents
(FTE's) per year that, in Rappahannock's view, are necessary to perform
the contract requirements for certain of the buildings, and thus was too
low. Rappahannock concludes that its offer would have been low had it
and the Navy bid on the same statment of work. The Navy responds that
the in-house estimate was calculated based on the quanity of work listed
in the solicitation, and that the calculation was based on a moste
efficient organization (MEO) of 36,74 FTE's (per year) to accomplish all
the work, determined with the aid of historical data (April 1983
building measurements) contained in the solicitation. In response to
Rappahannoci's contention in its appeal that the Navy's estimate was not
based on performing all elements of the statement of work in certain
buildings, the Navy recalculated thev area of the challenged buildings
and determined that the total square footage to be serviced actually was
lower than that staten in the IFB-- 370,155 instead of 419,952--although
the man-year requirements to clean this area would be higher each
year--23.9 instead of 21.3--due to changes in the number of spaces and
types of surfaces to be cleaned since the original estimate had been
formulated. (For example, the Navy explains that when tiled areas are
covered with carpet, man-year requirements decrease, and Vice-Versa.)
Although its in-house estimate would be low using either 21.3 or 23.9
man-years, the Navy urges that the lower number is proper for cost
comparison purposes since it is based on the square footage and
historical data in the IFB. The Navy attributes all of the additional
FTE's urged as necessary by Rappahannock to the firm's measurements from
the maps that were not a part of the solicitation. By the Navy's
estimate, Rappahannnock's calculations overstate the actual area by
201,458 square feet. We find Rappahannock's protest unsupported in the
record. Simply put, we find nothing to indicate that the Navy's
estimate was not based on performing all the contract work. first, the
Navy is adamant the Rappahannock's apparent assumption that the agency
in fact based its estimate on the lower, recalculated square footage
instead of the IFB-based area, simply is wrong. Moreover, the details
of Rappahannock's own calculation to show that the Navy would need 10.99
more FTE's per year to service the larger area in no way are discernible
form the record. finally, we have no basis to question the Navy's
conclusion, as noted above, that an updated recalculation based on the
agency's 1986 measurement (reflecting a 12 percent lower square footage
than specified in the IFB) would have increased the in-house labor
requirement only marginally (23.9 instead of 21.3 FTE's), so that we
cannot conclude that Rappahannock was prejudiced in any event. Further,
while there is no conclusive evidence that the Navy's estimate was
understated, we think it is relevant theat Rappahannock concedes that
its bid--based on maps obtained from other than the sources listed in
the IFB-- was mistakenly higher than necessary to perform the contract
work. We share the Navy's view that Rappahannock assumed the risk of
any inaccuracies resulting form the use of these maps, and would not be
entitled to correct these inaccuracies by rebidding. The protest is
denied.
B-224769 Date: January 8,1987 In the Matter of: NDI Engineering Company, Inc.
66 Comp. Gen. 198
DIGEST
PROCUREMENT
Competitive Negotiation
Contract awards
Administrative discretion
Cost/technical tradeoffs
Technical superiority
PROCUREMENT
Competitive Negotiation
Requests for proposals
Evaluation criteria
Cost/technical tradeoffs
Technical superiority
Protester's allegation that its proposal and the awardee's was
technically equal and that protester should have received award based on
its lower proposed costs is without merit where agency evaluators
considered awardee's proposed personnel superior in one area and where
protester was awarded full credit for its lower proposed costs but
awardee remained the higher ranked offeror.
DECISION
NDI Engineering Company (NDI) protests the award of a contract to The
M&T Company (M&T) under request for proposals (RFP) No.
N68335-86-R-0374, issued by the Department of the Navy for engineering
and technical services related to the Shipboard Aviation Program abroad
various ships. NDI alleges that its proposal should have been selected
since it offered the greatest value to the government. We deny the
protest. The RFP was issued on December 17, 1985 with an amended closing
date of January 3, 1986. The award of a cost-plus-fixed-fee type
contract was contemplated and the RFP estimated that a total of 35,500
man-hours would be required over the contract's 30 month performance
period. Offerors were required to submit both technical and cost
proposals, and the RFP's evaluation factors for award were listed as
follows:
1. Personnel Experience 2. Corporate Experience 3. Technical/
Management Approach 4. Offeror's Facility 5. Cost
The RFP indicated that the first three factors were most important and
also stated that although cost was not as important as technical, the
degree of importance would increase with the degree of equality of the
proposals. Overall, technical factors were weighted 70 percent and cost
30 percent. In addition, the RFP advised offerors that costs would be
evaluated for cost realism. The Navy received five proposals by the
RFP's closing date. After the Navy's initial technical evaluation, it
was determined that all five offerors were within the competitive range.
Written discussions were then held and all offerors were advised of the
deficiencies in their proposals. Best and final offers (BAFOs) were
received by May 20, 1986 and the revised technical proposals were
evaluated. M&T was awarded a total of 70 points out of a possible
technical score of 70 and NDI was ranked second with a technical score
of 69.1. Although both proposals were evaluated as being highly
qualified, the Navy evaluators ranked M&T first because the supervisor,
engineer and technician proposed by NDI did not possess specific
experience in all areas of the statement of work (SOW). The agency
evaluators concluded, however, that cost should be used as the
determinative factor among the proposals ranked highly qualified.
Thereafter, the offerors' cost proposals were evaluated. The Navy's
initial cost analysis showed that NDI had included special material
costs in its proposal and had also provided for computer-aided drafting
(CAD). The Navy determined that these two factors should have been
included in the RFP and as a result, the solicitation was revised to
incorporate special material cost estimated at $15,000 and to allow
offers the option of providing a CAD system. Additional discussions were
then held and all offerors were requested to submit revised cost
proposals by July 15. The cost proposals submitted were then evaluated
for cost realism. The Navy found that the overhead rates proposed by
the offerors were not in accordance with the rates approved by the
Defense Contract Audit Agency (DCAA). M&T's rates were found too high
and NDI's proposed rates were found too low. The Navy advised all
offerors of this problem and a letter requesting a third round of BAFOs
was issued on July 31. In response to this request, M&T reduced its
proposed overhead rates and its proposed cost. The Navy evaluated M&
T's cost proposal and found that there was only a $2,000 difference
between M&T's proposed costs and the evaluated realistic costs. NDI also
reduced its price but did not change its proposed overhead rates or
submit additional documentation to support the rate charged.
Consequently, the Navy determined that NDI's realistic cost was higher
than its proposed cost. In making the award determination, however, the
contracting officer utilized each offeror's proposed costs rather than
the Navy's evaluated costs. As a result, the Navy awarded NDI the full
30 points for cost while M&T received 99.42 points and NDI 99.1.
Because M&T received the highest total point score, the Navy awarded a
contract to M&T on September 22 in the amount of $457,153. NDI's
proposed costs were $448,548.10 NDI alleges that it was the highest
ranked offeror after the second round of BAFOs, that there was
sufficient information available at that time to make an award and that
it was therefore improper for the Navy to request a third round of
BAFOs. Also, NDI believes that its proposal is technically equal to M&
T's and that it should have received the award based on its lower cost
and because of socio-economic factors such and NDI's small business
status or its labor surplus. In addition, NDI contends that proposal
showed a better understanding of the work and points to the fact that it
was only after the Navy reviewed its cost proposal that the solicitation
was revised to incorporate material support costs as well as provide
offerors the opportunity to propose a CAD system. Concerning the Navy's
cost realism analysis NDI indicates that the overhead rates which were
criticized as being too low were offered as ceiling rates and that there
was no basis for the Navy to adjust these rates upward. The Navy
contends that the contracting officer acted reasonably in requesting the
third round of BAFOs because all offerors had failed to propose
realistic overhead rates. Also, the Navy argues that the two proposals
were not equal since based on the numerical point scores, M&Twas ranked
higher. In this regard, the Navy points out that M&T had no technical
deficiencies in its proposal while NDI was deficient in personnel
experience for three different labor categories. Although NDI claims
that its technical knowledge is superior, the Navy argues that it
evaluated NDI's proposal based on the information submitted and that NDI
has not shown the evaluation to be unreasonable. In addition, the Navy
contends that its cost realism analysis was proper. The Navy argues
that it properly evaluated NDI's proposal to arrive at a "should cost"
estimate and disagrees the NDI's proposal was more advantageous because
some of its proposed overhead rates were ceiling rates. Since NDI's
proposed overhead for the first 9 months of contract performance was
substantially below that approved by the DCAA, the Navy contends that
its upward adjustment of these rates and of NDI's proposed costs was
proper. In any event, the Navy contends that the ultimate selection did
not hinge on the cost realism analysis since NDI was awarded the full 30
points for costs. The Navy indicates that Award was determined by
combing the numerical technical score with the final numerical cost
score and since M&T received the highest total points, the Navy argues
that its award to M&T was proper. Initially, we point out that an agency
may reopen negotiations after BAFOs where it is clearly in the best
interests of the government to do so. Crown Point Coachworks and R&D
Composite Structures et al., B-208694 et al., Sept. 29, 1983, 83-2 CPD
386. We have upheld agency determinations to request another round of
BAFOs when a valid reason exists for that action. Tymnet, Inc. et al.,
B-209617 et al., Apr. 12, 1983, 83-1 CPD 384. Although NDI contends
that it should have received an award based on its second BAFO, all
offerors, including NDI, had proposed overhead rates which exceeded DCAA
approved rates. We think that the Navy's determination to request an
additional round of BAFOs to allow offerors the opportunity to revise
their proposals or submit additional information to support the offered
rates falls within the permissible grounds of discretion afforded
contracting officers in this area. Consequently, we find no basis to
object to the agency's determination to request a third round of BAFOs
to allow offerors the opportunity to revise their proposals or submit
additional information to support the offered rated falls within the
permissible grounds of discretion afforded contracting officers in this
area. Consequently, we find no basis to object to the agency's
determination to request a third round of BAFOs. Concerning the agency's
technical evaluation, we point out that the determination of the
relative merits of proposals is primarily the responsibility of the
contracting agency, not our office, which must bear the burden of any
difficulties resulting from a defective solicitation.
Petro-Engineering, Inc., B-218255.2, June 12, 1985, 85-1 CPD 677. In
light of this, we repeatedly have held that procuring officials enjoy a
reasonable degree of discretion in the evaluation of proposals, and that
their decision will not be disturbed unless shown to be arbitrary or in
violation of the procurement laws and regulations. Vibra-Tech Engineers,
Inc., B-209541.2, May 23, 1983, 83-1 CPD 550. Furthermore, it is
ultimately the responsibility of the selection official or contracting
officer to determine what significance, if any, should be attached to
the technical evaluators' ratings. National Capital Medical Foundation,
Inc., B-215303.5, June 4, 1985, 85-1 CPD 637. Here, the record shows
that although M&T and NDI were both rated highly qualified, M&T was
ranked superior in the most important technical factor: personnel
experience. While NDI questions whether its deficiency in this area is
significant, M&T's proposed supervisor in one area had specific
experience in the development of the specific deliverables required by
contract line items 0001-0007 whereas NDI's proposed supervisor did not
have such experience. We note that it is not the overall numerical
difference between the proposals which is significant but rather whether
the deficiencies identified are sufficient to support a meaningful
distinction between the proposals, and we believe that the difference
between the proposals in this area supports the contracting officer's
determination not to consider the proposals technically equal. Although
NDI disagrees, we are unable in failing to consider the proposals
technically equal despite this difference. Moreover, to the extent NDI
is arguing that it should have been awarded more points because of its
proposed use of CAD, we note that it is not the function of our Office
to rescore proposals nor will we make independent judgments as to the
numerical scores that should have been assigned. Blurton, Banks &
Assocs., Inc., B-206429, Sept. 20, 1982, 82-2 CPD 238. In this regard,
our review of the record shows that NDI was not downgraded in any way
for its proposed use of CAD and while NDI asserts that its proposal
demonstrated a better understanding of the requirements than M&T's, the
Navy had no reservations regarding either offeror's technical approach
in performing the contract requirements. The fact that NDI believes
that it should have received additional points for its approach does not
establish that the evaluation had no reasonable basis. Diversified Data
Corp., B-204969, Aug. 18,1982, 82-2 CPD 146. Also, since the two
proposals were not found technically equal, we see no basis for the Navy
to consider NDI's small business status or labor surplus location in the
award decision. Finally, concerning the Navy's cost realism analysis, we
not that the cost realism analysis was not utilized by the Navy
considered NDI's realistic costs higher than M&T's, NDI was awarded the
full 30 points allotted for cost. We agree with NDI that where an
offeror proposes a fixed ceiling on overhead, this should be taken into
account and the offeror credited for this aspect of its proposal.
Designers and Planners, Inc., et al., B-221385 et al. May 15, 1986, 86-1
CPD 463; Ecology and Environment, Inc., B-209516, Aug. 23, 1983, 83-2
CPD 229. However, since the Navy gave NDI full credit based on NDI's
lower proposed cost, we see no prejudice to NDI since it had no impact
on the overall selection decision. The record shows that the Navy
followed the RFP's evaluation and in accordance with the cost/ technical
tradeoff set forth in the RFP, M&T was rated higher than NDI. Based on
the record, we are unable to find the Navy's selection of M&T under
these circumstances to be unreasonable. The protest is denied
B-224277, B-224277.2 Date: January 8, 1987 In the Matter of: World-Wide Security Service, Inc.; Philips Electronic Instruments, Inc.
66 Comp. Gen. 195
DIGEST
PROCUREMENT--Noncompetitive Negotiation--Contract awards--Sole
sources--Justification--Procedural defects
A sole-source award based on determination that only one responsible
source would satisfy agency needs is improper where the record indicates
the agency failed to synopsize the contract action in the Commerce
Business Daily as required under the Competition in Contracting Act of
1984, 41 U.S.C. 253(c)(1) and (f)(1)(C) (Supp. III 1985), and thus
interested parties such as protesting firms were not given opportunity
to submit offers.
DECISION
World-Wide Security Systems, Inc. (WSS), and Philips Electronic
Instruments, Inc. (Philips), protest the award of a sole-source contract
to Astrophysics Research Corporation (ARC) issued by the United States
Marshals Service (USMS), Department of Justice, Under request for
proposals (RFP) No. 86-7038 for 100 x-ray security screening systems.
WSS protest USMS' action in conducting a sole-source procurement which
precluded WSS from competing for the procurement, even though, as WSS
contends, for several months prior to the award, it had requested an
opportunity to compete for this procurement. Philips protests that the
manner in which USMS determined to acquire these systems on a
sole-source basis was improper and contrary to competitive bidding
procedures. We sustain the protests. On June 9, 1986, a request for
contract action, accompanied by a recommended justification for other
than full and open competition, dated June 4, 1986, was issued by the
Court Security Division Security Specialist for Scanray Linescan System
4 X-ray screening system manufactured by ARC. The recommendation, which
was referred to the contracting office, lists the features and
characteristics of the ARC Scanray Linescan System 4 as the "technical
reasons" why it was exclusively selected for use by the agency. The
recommendation generally concludes, with respect to the decision to
request a sole-source award to ARC, that "based on(the security
specialist's) interviews with technical security specialists" from
several intelligence and security agencies, he is "persuaded by the body
of technical information and evidence to standardized the Scanray
System-4, x-ray security inspection system, throughout the USMS." On
July 28, 1986, the agency adopted the Security Division's recommendation
and issued an RFP for the supply of digital X-ray screening systems,
Linescan System 4 units. According to the accompanying justification
for the sole-source award required by 41 U. S.C. 253(f) (Supp. III
1985), the USMS, citing 41 U.S.C. 253(c)(1) as its authority, stated its
intention to contract on a sole-source basis with ARC for the
requirement because ARC's system is the only equipment that can meet the
agency's minimum needs "in the area of x-ray screening systems for
detecting weapons and explosives being brought into Federal courthouses
and Federal buildings." The justification further states:
The Linescan System Four X-ray Screening System is
considered by experts in the field to be superior to
all other X-ray screening systems on the market.
Attached is documentation from specialists within the
Justice Department, customs, Secret Service, etc. which
indicates that the Linescan System is (the) best . . .
system for identifying weapons and explosive devices .
. . .
USMS awarded the contract to ARC on August 29. WSS filed a protest with
our Office on September 2; Philips' protest was filed here on September
4. Subsequent to the filing of the subject protests, the agency head
determined that suspension of contract performance would adversely
affect USMS' ability to carry out its mission and, thereupon, authorized
performance of the contract, notwithstanding the protests. Under the
provisions of 41 U.S.C. 253(c)(1), executive agencies are authorized to
use other than competitive procedures when the property or services
needed are available from only one responsible source and no other
products will satisfy the agency's needs. The authority granted by this
provision is circumscribed by the requirements of 41 U. S.C. 253(f),
which includes certain stipulations for the written justification. The
justification must demonstrate a reasonable basis for the conclusion
that there is only one responsible source and describe the market survey
conducted by the agency or state why such a survey conducted by the
agency or state why such a survey was not conducted. 41 U.S.C.
253(f)(3)(B) and (D). Moreover, the contracting agency is, in no
instance, to use other than competitive procedures due to its lack of
advance planning. 41 U.S.C. 253(f)(5). Under 41 U.S.C. 253(1), an
executive agency may not award a contract using procedures other than
competitive procedures unless the justification is approved by the
designated agency approving authority, see 41 U.S.C. 253(f)(1)( B) (Supp
III 1985), and:
. . . notice(of the intended contract action has been
published (in the Commerce Business Daily) . . . and
all bids or proposals received in response to such
notice have been considered by such executive agency.
41 U.S.C. 253(f)(1)(C) (Supp. III 1985).
Although the written justification for the sole-source award was
approved, the record does not indicate that the contract action was
published in the Commerce Business Daily as required under CICA. The
Act provides that unless waived by the agency head, a sole-source award
based on the"only one responsible source" justification cannot be made
without the agency's publication of its contract action in the Commerce
Business Daily. The record fails to show that the synopsis requirement
was waived as permitted under 41 U.S.C. 416(c)(3). This provision
provides that the notice requirement shall not apply where the head of
the executive agency, after consultation with the Administrator for
Federal Procurement Policy and the Administrator of the Small Business
Administration, makes a written determination that it is not appropriate
or reasonable to publish a notice. Also, we note that while the
synopsis requirement is not applicable where the "urgency" exception is
used to justify a noncompetitive award, see 41 U.S.C. 253( f)(1), USMS'
justification for noncompetitive award is based on the "one responsible
source exception" which does require published notice of the contract
action. Since the agency failed to synopsize this contract action, we
sustain the protest on this ground without deciding whether or not the
written sole-source justification itself was adequate. the protests of
USMS' award on a sole-source basis to ARC are sustained. As discussed
above, USMS determined that performance of the contract notwithstanding
the protests was in the best interests of the government (see 4 C.F.R.
21.4(b)91)). Although initial deliveries are scheduled to commence in
late January, CICA requires that where, as here, the agency receives
notice of the protest within 10 days after the contract award but
justifies continuing with contract performance on the basis that the
government's best interests so require, this Office recommend corrective
action without regard to any cost or disruption from terminating
recompeting or reawarding the contract. We therefor recommend that USMS
terminate its contract with ARC and conduct this procurement in
accordance with CICA. See Biegert Aviation, Inc., B-222645, Oct. 10,
1986, 86-2 C.P.D. 419. Also, since the protesters have successfully
challenged an improper sole-source award, they are entitled to recover
the costs of filing and pursuing the protest, including attorneys' fees.
See 4 C.F.R. 21.6(e( (1986); Washington National Arena Limited
Partnership, 65 Comp. Gen. 25 (1985), 85-2 C.P.D. 435.
B-222864 Date: January 8, 1987
66 Comp. Gen. 192
Appropriations/Financial Management
Accountable Officers
Disbursing officers
Relief
Illegal/improper payments
Substitute checks
Appropriations/ Financial Management
Accountable Officers
Disbursing officers
Substitute checks
Issuance
Authority
Army disbursing official, asked to issue new checks to payee where
original checks are held by former business associate of payee, may
issue new checks but will be responsible for loss if payee regains first
checks and cashes old and new checks. This Office may grant him relief
once a loss occurs. If payee voluntarily provides indemnity for such a
loss, disbursing official may accept.
Appropriations/ Financial Management
Accountable Offices
Disbursing officers
Substitute checks
Issuance
Authority
Authority of Secretary of Treasury to authorize issuance of
substitute checks applies to lost, stolen, destroyed or mutilated, not
to circumstances where location of checks is known and they have not
been stolen.
U.S. Army Engineer Division
Ohio River
P.O. Box 27168
Cincinnati, Ohio 45227-0168
Gentlemen: This responds to the April 14, 1986, request of
Lieutenant Colonel R.F. Hawley that we advise a disbursing officer in
the U.S. Army Corps of Engineers, Ohio River Division, as to whether
recertified payments should be made to a contractor. We hold that the
disbursing officer may issue a second check to the contractor, but that
in order to protect himself from liability for a duplicate payment which
may occur, the disbursing officer should accept the offer of a voluntary
indemnification from the payee. The need for the replacement checks
arose when a contractor submitted a request to have the mailing address
on his contract changed in early August 1985. The actual modification
of the address in the contract was not made until September 17, 1985. In
the interim two checks for a total of $50,729.73 were sent to the old
address by the disbursing officer. These checks are now in the
possession of a former business associate of the contractor who refuses
to surrender the checks. The contractor completed two Department of
Army stop payment forms (DA Form 3037), stating that the two checks had
not been received. On the basis of the information submitted by the
contractor, the disbursing officer completed and sent to the Treasury
Department two Standard Forms 1184, "Unavailable Check Cancellation."
The Treasury Department later notified the disbursing officer that the
two checks had not been chased and advised the disbursing officer that
he could recertify the payments and issue new checks. The disbursing
officer has delayed issuing new checks until several issues concerning
his liability for the possible presentation and payment of both the
original and replacement checks are addressed by this Office. The
initial concern of the disbursing official is whether he has the
authority to issue a replacement checks under 31 U.S.C. 3331. Instead of
reissuing the old checks the agency involved now "recertifies" the
payment which results in the issuance of a new check to the payee. We
note that Treasury has consistently viewed checks which are not received
by their payees as within its authority to issue substitute checks under
31 U.S.C. 3331. See, 31 C.F. R. 245.2. Treasury's new administrative
scheme for handling replacement payments also covers checks which are
not received by payees. Treasury Fiscal requirements Manual, Bulletin
No. 83-28 (T.L. No. 415). The second concern of the disbursing official
is whether he will be held liable for an improper payment if both the
original and replacement checks are presented for payment. 54 Comp.
Gen. 112, 114 (1974). An improper payment normally arises where there
is payment of both an original and a substitute check. See, e.g.
B-222134 and B-223139, June 2, 1986. This is because in the routine
substitute or duplicate check situation where we have granted relief, we
are concerned with a payee who has cashed both checks. In those cases
we have said that when the second checks. In those cases we have said
that when the second check is chased, an improper payment occurs. 62
Comp. Gen. 92 (1982). We think this situation changes where an
unauthorized person chases the first check without the payee being
involved in any was in the negotiation of it. In such circumstances,
the second check, when cashed, is not an improper payment. The loss
under such circumstances results from the first check since the claim
that was intended to satisfy remains outstanding. Also, since the first
check was not illegal, improper or incorrect, the disbursing official
would not be liable for the loss and would not need to be relieved.
Instead, the check would have been chased as a result of a forged
endorsement. The risk to the disbursing official is that the original
payee may recover the first check and, as in the routine case noted
above, negotiate both checks. Under such circumstances, the second
check would result in a loss for which the disbursing official's risk in
this case is limited to the situation, that appears unlikely here, where
the payee will cash the first check. The final concern of the disbursing
officer is whether he will be relieved of liability for a possible
duplicate payment. Under 31 U. S.C. 3527(c) this Office may grant
relief to a disbursing official for a loss resulting from an improper
payment when we conclude that the improper payment was not the result of
a lack of good faith and reasonable care. Although the replacement
checks here will be categorized as recertified checks if issued, the
applicable relief statute in case of a loss would remain 31 U,S.C.
3527(c). The provision governing liability and relief of certifying
officials specifically does not apply to Army disbursements such as
this. 31 U.S.C. 3528(d). Accordingly, the standard for relief as
described above is one of good faith and reasonable care, rather that
the different standard under section 3528. See e.g., B-223372, November
12, 1986. Inherently under a relief statute we cannot grant relief for a
loss until it occurs. It does not appear likely that a loss for which
the disbursing official would be liable will occur in this case.
However, the care he has demonstrated to date as well as the steps he
takes hereafter will be reviewed carefully should a loss occur for which
he is liable. We have learned from an attorney representing the payee
that the payee will voluntarily indemnify the Government with a security
arrangement in order to protect the disbursing official from any loss
that might result from the payee recovering the original checks and
negotiating them. If an indemnity arrangement that is satisfactory to
the disbursing official is obtained, we think he may safely issue the
new checks. We would also take such a step into account in the event of
a loss requiring relief from this Office.
B-225378 Date: January 6, 1987 In the Matter of: Friends of the Waterfront, Inc.
66 Comp. Gen. 190
DIGEST
PROCUREMENT
Contractor Qualification
Organizational conflicts of interest
Corporate ownership Agency reasonably determined that firm was
substantially owned or controlled by a government employee, and
therefore ineligible for a contract award, where government employee was
a co-founder of the corporation and signed the firm's bid as president,
and the corporation's address is the employee's residence address.
DECISION
Friends of the Waterfront, Inc. (Waterfront), protests the rejection
of the bid it submitted in response to invitation for bids (IFB) No.
DACW31-86-B-0021, issued by the Army Corps of Engineers. Waterfront
also protests that Lake Weed Cutting Service, the awardee under the IFB,
is nonresponsible and submitted a nonresponsive bid. Since performance
of the contract has been completed, Waterfront requests as relief
reimbursement of its proposal preparation and bid protest costs. We
deny the protest in part and dismiss it in part, and we deny the claim.
The IFB, issued on April 28, 1986, requested bids to harvest hydrilla
and exotic plants growing in the Potomac River. At the May 1 bid
opening, the Army received six bids,with Waterfront being the low
bidder, Allied Biological second low, and Lake Weed third low. The Army
determined that Waterfront's bid was nonresponsive because the firm had
conditioned its price, and that Allied's bid was nonresponsive because
Allied had not bid on all line items. The Corps then conducted a
preaward meeting with Lake Weed, inspected the firm's equipment, and
awarded it the contract. On June 13, Waterfront received notice that its
bid was nonresponsive and that the contract had been awarded to Lake
Weed. During a phone conversation the Corps also informed Waterfront
that pursuant to the Federal Acquisition Regulation (FAR), 48 C.F.R.
3.601 (1985), the firm was ineligible to receive the award due to a
conflict of interest. The Corps made this determination because Mr.
Arnold, a federal government employee, signed the bid as president of
the firm; Mr. Arnold's residence address was given as Waterfront's
corporate address; Mr. Arnold was listed on the firm's Article of
Incorporation as the resident agent; and Mr. and Mrs. Arnold had
founded Waterfront. In a protest to the Corps, Waterfront protested the
nonresponsiveness and conflict of interest determinations, and also
argued that the awardee was a nonresponsible firm and had submitted a
nonresponsive bid. The Corps denied the protest and this protest to our
Office followed. Waterfront asserts that no conflict of interest exists
because Mr. Arnold no longer substantially owns or controls the
corporation. In this regard, Waterfront points out that, following the
contract award to Lake Weed, the corporate ownership of Waterfront was
changed so that Mr. Arnold and another federal-employee stockholder now
only 15.2 percent of the stock. Waterfront further explains that
neither Mr. Arnold nor any other government employee remains a corporate
officer, and that Mr. Arnold was the only government employee on the
Board of Directors at the time of award. The above-cited regulation
prohibits a contract award to a government employee or to a business
concern or other organization owned or substantially owned or controlled
by one or more government employees except where the agency head finds
that a compelling reason, such as the government's needs cannot
otherwise reasonable be met, requires such an award. See FAR, 48 C.F.R.
3.602. No such determination was made here. This regulation implements
a policy that contract awards to federal employees are undesirable
because they invite criticism and give rise to the appearance of
favoritism or fraud. Cooley Container Corp., B-220801, Jan. 31, 1986,
86-1 C.P.D. 114. The policy is intended to avoid even the appearance of
favoritism or preferential treatment by the government towards a firm
competing for a government contract. Ernaco, Inc., B-218106, May 23,
1985, 85-1 C.P.D. 592. The responsibility for determining whether a
firm competing for a contract should be denied an award pursuant to FAR,
48 C.F.R. 3.601, rests primarily with the procuring agency, and we will
not overturn the agency's determination if it has a reasonable basis.
Id. Here, Mr. Arnold was a co-founder of the corporation; Waterfront's
corporate address was the same as Mr. Arnolds's residence address; and
Mr. Arnold was president of the corporate and signed Waterfront's bid.
We find that these facts clearly gave the Corps a reasonable basis to
find that Mr. Arnold substantially owned or controlled the corporation
and that a contract award to Waterfront therefore was prohibited. See
Cooley Container Corp., B-220801, supra. Moreover, Waterfront's
position that certain subsequent changes in the corporation eliminate
any possible conflict and make Waterfront eligible for the award is
irrelevant since it appears from the record that the changes were made
only after the contract was awarded. An agency's determination as to
the presence of an impermissible conflict necessarily must be based on
facts that exist at the time the award is made. Electronica West, Inc.
B-209720, July 26, 1983, 83-2 C.P. D. 127. Since we find that the Corps
properly determined that due to a conflict of interest Waterfront was
ineligible to receive a contract award, we need not consider whether the
firm's bid properly was rejected as nonresponsive. Further, because we
find Waterfront would not be eligible for award in any case, Waterfront
is not an interested party to protest that Lake Weed should not have
received the award. Bid Protest Regulations, 4 C.F.R. 21.0(a) and
21.1(a) (1986); LW Planning Group, B-215539, Nov. 14, 1984, 84-2 C.P.D.
531. Finally, since Waterfront's protest is without merit, Waterfront
is not entitled to reimbursement of the costs it incurred in preparing
its bid and in pursuing this protest. See Designware, Inc., B-221423,
Feb. 20, 1986, 86-1 C.P.D. 181. The protest is denied in part and
dismissed in part. The claim for costs is denied.
B-223118 Date: January 2, 1987 In the Matter of: Orlan Wilson - Back - Improper Retirement
66 Comp. Gen. 185
DIGEST
CIVILIAN PERSONNEL
Retroactive compensation
Retired personnel
Reinstatement
1. Employee whose retirement application was disallowed by Office of
Personal Management after separation from General Services
Administration claims backpay, alleging that disallowance and separation
were due to agency error. In view of the responsibility of an agency to
maintain retirement records and to counsel employees with regard to
their retirement rights, where an employee's retirement was induced by
administrative error and the employee is subsequently restored to the
rolls of the agency, the employee is entitled to backpay for the period
he was off the employment rolls.
CIVILIAN PERSONNEL
Relocation
Actual expenses
Eligibility
Retired personnel
Reinstatement
2. Neither the Back Pay Act, 5 U.S.C. 5596, nor implementing
regulations which prescribe allowable payments when an employee
undergoes an unwarranted personnel action authorize consequential
relocation and moving expenses when an employee is erroneously
separated. Although such expenses may result from an improper personnel
action, they do not represent benefits an employee would have received
and the personnel action not occurred. However, relocation and moving
expenses in connection with a restored employee's transfer may be
allowed where the employee would have received such benefits but for the
personnel action.
DECISION
This decision is in response to a request for an advance decision
from Larry S. Golden, Chief, Accounts Payable Branch, General Services
Administration, Region 6, Kansas City, Missouri. Mr. Golden has
requested our opinion concerning the claim of Mr. Orlan Wilson for
backpay from September 1, 1984, through November 12, 1985. Since Mr.
Wilson's retirement was induced by administrative error and he was
subsequently restored to the rolls of the agency, Mr. wilson is entitled
to backpay for period he was off the employment rolls, and to other
allowances discussed below. BACKGROUND
Prior to September 1984, Mr. Orlan Wilson was employed by the General
Services Administration (GSA) as an Automotive Mechanic Helper, WG-5, in
Vernal, Utah, which is part of the GSA's Region 8, with the Regional
Office located in Denver, Colorado. The GSA advises that in early 1984,
Region 8's motor pools were being reorganized and staff reductions were
occurring. Region 8 Federal Supply Service (FSS), the GSA organization
responsible for motor pools, was attempting to accomplish reductions
with the least possible impact, and employees were being asked
concerning their willingness to retire or to otherwise separate from
government service. In April 1984, Mr. Wilson visited the GSA Personnel
Office in Denver to assess his eligibility for discontinued service
retirement and was apparently advised that was eligible to file
retirement application forms. This understanding was also shared by
Region 8 management which understood that Mr. Wilson was eligible for
retirement and on this basis decided to eliminate his position.
Accordingly, Mr. Wilson was issued a reduction-in-force (RIF) notice on
July 9, 1984. Mr. Wilson then filed his retirement application with GSA
personnel on August 13, 1984, and he was separated by involuntary
retirement on September 1, 1984. Mr. Wilson's RIF notice listed his
service computation date as May 16, 1962. His retirement application
was certified as to his eligibility by the Denver Regional Office,
processed, and sent to the Office of Personnel Management (OPM). The
record shows that incident to his retirement Mr. Wilson moved to
California and purchased a residence. On September 25, 1985, OPM
notified GSA Personnel that Mr. Wilson's retirement has been disallowed
because of inadequate service and his separation was changed from
retirement to involuntary termination. The worksheet prepared by the
Denver Regional Office showing his service date for retirement as May
16, 1962, was in error; the correct date of October 4, 1969, would have
reflected his ineligibility for discontinued service retirement by 5
years. Although the record does not demonstrate precisely what service
was claimed in support of Mr. Wilson's retirement. OPM disallowed his
request for retirement on the grounds that he did not have sufficient
creditable civilian service and that he had not waived his military
retired pay so that could count his military service foe civil service
retirement purposes. Mr. Wilson was reemployed in Denver as a GS-6 on
November 12, 1985. Based on the administrative error in the computation
of his creditable service, Mr. Wilson now asserts that he would not have
separated had he been aware of his retirement ineligibility but rather
would have accepted an offer in Denver, and therefore seeks retroactive
reinstatement to the date of his erroneous retirement, full credit for
retirement and benefit purposes for his time off the employment rolls,
backpay, full leave accrual for the period separated, and relocation
expense reimbursement. The agency points out that Mr. Wilson's actions
seeking reinstatement to government service in 1985 and his move from
California to Denver at his own expense to accept a position support his
claim. GSA further asserts that in the event that Mr. Wilson would have
had to be separated, rather than involuntarily retired, the agency would
have offered him a WG-5 in Denver which was being filled at that time,
and would have repaid relocation expenses. In fact, the agency reports,
this is precisely the action they took in the cases of nine other
employees similarly situated at the same time as Mr. Wilson. OPINION
Backpay is governed by 5 U.S.C. 5596 and the implementing regulations
and instructions of the Office of Personnel Management in 5 C.F.R.
550.801 et seq. These authorities provide that backpay may be awarded
upon a finding that an employee has undergone an unjustified or
unwarranted personnel action that has resulted in the withdrawal or
reduction of any part of the pay of the employee. Benjamin C. Hail,
B-216573, February 11, 1985. an unjustified or unwarranted personnel
action is an act or omission which violates or improperly applies the
requirements of a nondiscretionary provision. A nondiscretionary
provision is any provision of law, Executive Order, regulation,
personnel policy issued by an agency, or collective bargaining agreement
that requires an agency to take a prescribed action under stated
conditions or criteria. Administrative errors are considered to be a
form of a unjustified or unwarranted personnel action. Linnie V.
Blevins, B-204876, June 14, 1982, The agency directly supports Mr.
Wilson's contentions that both he and Region 8 FSS management were
erroneously advised concerning Mr. Wilson's eligibility for discontinued
service retirement. The agency admits that its personnel office
misinterpreted the creditable service requirements for optional
retirement in Mr. Wilson's case and assisted him in submitting a
retirement application based on that misinterpretation. In view of the
responsibility of an agency to maintain retirement records and to
counsel employees with regard to their retirement rights, if an
employee's retirement is induced by administrative error and the
employee is subsequently restored to the rolls of the agency, even if
the retirement is voluntary, the employee is entitled to backpay for the
period he was off the employment rolls. B-175498, June 20, 1972;
B-174199, December 14, 1971; B-166062, July 1969. We conclude that Mr.
Wilson suffered an unwarranted or unjustified personnel action, and
that he is entitled to be retroactively restored to the rolls for the
period of SEptember 1, 1984, to November 12, 1985, with appropriate
backpay. BACKPAY ENTITLEMENT
In computing the pay and allowances of an employee who has undergone
an unjustified or unwarranted personnel action, the agency is
responsible for determining the exact amount of pay the employee would
have earned had the improper personnel action not occurred. Generally,
we have held that the Back Pay Act does not authorize payment of travel,
transportation or moving expenses when they are incidental expenses
incurred by an employee as a consequence of the unwarranted personnel
action. Such expenses are not allowances that the employee would have
received if he had not undergone the improper personnel action. Jack M.
Haning, 63 Comp. Gen. 170 (1984). here, however. as a result of the
improper personnel action Mr. Wilson was denied certain travel and
transportation allowances which he would have received but for the
improper personnel action. Those allowances may be paid (1981). See
also FPM ch. 550, 8-5a (Inst. 262, May 7, 1981), distinguishing
incidental expenses from allowances constituting a form remuneration for
services an employee would have performed had he not been separated. In
the circumstances of Mr. Wilson's case, the agency has made it clear
that but for the improper personnel action, he would have been relocated
at government expense to a WG-5 position in Denver, Colorado. In
computing Mr. Wilson's backpay entitlement, the agency now poses the
following specific questions:
(1) Our Denver transportation office has
prepared a cost comparison indicating
that the employee would have been
authorized movement and storage of his
household goods under the Government
Bill of Lading method. Since the
employee actually moved from California
to Denver, would the employee's submission
of satisfactory evidence of weight
and expense of household goods
moved from California to Colorado be
acceptable as a basis for reimbursement?
As indicated above, the Back Pay Act does not authorize consequential
relocation and moving expenses when an employee is erroneously
separated. See also, Sammy H. Marr, B-178551, January 2, 1976. Rather,
the Back Pay Act authorizes only those payments which the employee would
have been entitled to had the improper personnel action not occurred.
Accordingly, there is no legal basis for allowing moving expenses for
Mr. Wilson's relocation from California to Denver to Colorado. Rather,
Mr. Wilson's relocation entitlement must be determined based on the
revised travel order and the applicable incident to his employment in
Denver, Mr. Wilson is entitled to relocation expense entitlements for
himself and his household goods directly from Vernal, Utah, to Denver,
Colorado. See Ralph C. Harbin, 61 Comp. Gen. 57, supra. The authority
for transportation of household goods at government expense is contained
at 5 U.S.C. 5722-5729; the broadest of those authorities applicable to
transfers is contained at 5 U.S.X 5724(a)(2), which authorizes an
employee to ship 18,000 pounds of household goods and personal effects
where the transfer is deemed to be in the government's interest. Under
5 U.S.C. 5724(c) an employee transferred within the continental United
States may be reimbursed for transportation of household goods on a
commuted-rate basis in lieu of being paid for his actual expenses. As a
result, the employee's submission of satisfactory evidence of weight and
expense of household goods moved from California to Colorado would be
acceptable as forming the basis for reimbursement up to the constructive
cost of moving those household goods from Vernal, Utah, to Denver,
Colorado. Thus, in total, Mr. Wilson is entitled to be reimbursed for
the cost of the transportation of his household goods from California to
Denver, Colorado, not to exceed the cost of shipping the same weight of
household goods from Vernal, Utah, to Denver, Colorado.
(2) The employee has requested reimbursement
for purchase of residence in
California in lieu of purchase in
Colorado. If the employee claim for
real estate expenses are otherwise
allowable, would his claim be acceptable ?
There is no doubt that Mr. Wilson would have been entitled to residence
transaction expenses incurred in the purchase of a residence at Denver,
Colorado, incident to the transfer which the agency asserts would have
taken place but for the improper personnel action associated with Mr.
Wilson's involuntary retirement. It follows that the effect of paying
expenses for the purchase of a Denver residence would serve to restore a
monetary benefit that Mr. Wilson would have received but for the
improper personnel action. However, the California residence
transaction expenses are only a consequence of the erroneous separation
insofar as the California residence would not have been purchased but
for the erroneous separation. The key here is that Mr. Wilson should
obtain neither penalty nor profit from the government's unjustified
action; rather, he should be made whole. As a result, Mr. Wilson should
not be penalized by having to forego reimbursement of residence
transaction expenses he actually incurred in ultimately locating at
Denver as he would have had the unjustified personnel action not taken
place. However, he may not substitute the California residence
transaction expenses he incurred as a consequence of the agency's
actions in lieu a actually incurred costs of locating at Denver. If Mr.
Wilson did not incur any reimbursable costs in locating at the new duty
station in Denver, then there is no reimbursement entitlement for
residence transaction expenses.
(3) The employee has requested
reimbursement of temporary quarters
based on allowable rates. would the
employee's claim for reconstructed
actual expenses noting the absence of receipts be
acceptable?
The Harbin decision, supra, indicates that temporary quarters
subsistence allowance which would have been received but for the
improper personnel action may be paid under the Back Pay Act. In the
context of the question presented here, which requires reconstruction of
expenses without actual receipts or documented itemizations,
reimbursements authorized by the agency are subject to the following
cautionary note. Regulations implementing the temporary quarters
subsistence expense (TQSE) entitlements of 5 U.S.C. 5724a(a)(3) require
receipts for lodging, laundry and cleaning expenses. See Federal Travel
Regulations, FPMR 101-7 para 2-5.4b (Supp. 10 November 14, 1983) (FTR),
incorp. by ref., 41 C.F.R. 101-7.003 (1984). Under this authority an
employee may be reimbursed for the expenses of the occupancy of
temporary quarters in connection with an official transfer to a new duty
station. Reimbursement of TQSE is discretionary with the agency, and in
the absence of an administrative authorization or approval of the use of
temporary quarters, an employee may not be reimbursed for TQSE. In the
circumstances of computation of backpay based on administrative error,
the employee's voucher for TQSE may be certified for payment only after
the expenses were actually incurred and properly approved by the agency.
See, e.g., John A. Orris, 58 Comp. Gen. 652 (1979). This same authority
requires actual expenses to be itemized in a manner prescribed by the
head of the agency that will permit at least a review of the amount
spent daily for lodging, meals, and other items. Although the
regulations do not require a meal-by-meal statement of that cost, they
do require the actual amount spent be shown, and it is the
responsibility of the employing agency, in the first instance, to
determine the subsistence expenses are reasonable. The fact that the
expenses claimed are within the maximum amount specified in FTR para.
2-5.4c does not automatically entitle the employee to reimbursement.
Rather, an evaluation of reasonableness must be made on the basis of the
facts in each case. See, e.g., 52 Comp. Gen. 78 (1972).
(4) Would the employee's obligation to
remain in government service for 1 year
be based on actual reporting date the
Denver office?
Mr. Wilson has now served more than a year in Denver since his
reinstatement and, therefore, whether his service obligation should be
established from the reconstructed date of transfer or the actual
reporting date is an academic issue, because he has completed his
obligation measured from either date.
B-224512.2 Date: December 31, 1986 In the Matter of: Interand Corporation
66 Comp. Gen. 181
DIGEST
PROCUREMENT
Specifications
Brand Name/Equal Specifications
Equivalent Products
Salient Characteristics
Descriptive Literature
A bid offering an "equal" product under a brand name or equal
solicitation must contain sufficient descriptive literature to permit a
determination that the product possesses the salient characteristics
specified in the solicitation, a requirement that is not met by a bid
that merely parrots back the salient characteristics specified.
DECISION
Interand Corporation protests the rejection of its bid as
nonresponsive under invitation for bids (IFB) No. F05604-86-B-0061,
issued by Peterson Air Force Base, Colorado. We deny the protest. The
solicitation was for various items of audio, video, and freeze-frame
teleconferencing equipment to be delivered under a 1-year requirements
contract, with two 1-year options. The equipment is needed by the North
American Air Defense Command (NORAD) to verify data gathered at remote
radar sites. The solicitation required unit prices on various items of
brand name equipment or on "equal" items, and contained the Brand name
or Equal clause prescribed by the Department of Defense Federal
Acquisition Regulation Supplement, 48 C.F.R. 252.210-7000 (1985). The
IFB incorporated by reference the Descriptive Literature clause
prescribed by the Federal Acquisition Regulation (FAR), 48 C.F. R.
52.214-21. The Air Force rejected the protester's low bid as
nonresponsive with respect to contract line item number (CLIN) 6001,
which was for a time base corrector, and CLIN 6005, which was for a RGB
to NTSC (Red/Green/Blue to National Television Systems Committee) color
encoder. With respect to CLIN 6001, the time base corrector, the
solicitation listed as the brand name item a Chroma Electronics, Ltd.
(CEL)/Video Teknix, Inc. (VTI) model No. ITL-1 and specified a number of
salient characteristics of that item that any offered "equal" product
would have to possess. Interand bid on a CEL P147-20/Interand TBC 110
and included with its bid a typewritten sheet which repeated verbatim
the salient characteristics listed in the IFB. At the bottom of the
sheet was the following: "The CEL P147-20/Interand TBC 110 Time Base
Corrector is equivalent to and meets or exceeds all specifications of
the CEL/VTI ITL-1." After bid opening, and at the request of the agency,
Interand provided the agency with additional material describing its TBC
110 and the CEL P147-20. The agency evaluated Interand's bid on CLIN
6001, including the material submitted after bid opening, and determined
that the available material was not sufficient for it to determine that
the offered time base corrector was equivalent to the brand name item
with respect to the listed salient characteristics. Specifically, the
agency noted that the IFB required a time base corrector with an
internal sync generator, a feature that is not standard on the CEL
P147-20. The agency says that in order to incorporate this feature, the
CEL P147-20 would have to be modified to relocate internal components
and provide for internal heat dissipation. The protester's descriptive
literature, however, did not describe any of the required modifications.
Concerning CLIN 6005, the RGB to NTSC color encoder, the IFB required a
VTI model ENC-1 or "equal." The protester bid an Interand model No. 303M
and again submitted a typewritten sheet on which the salient
characteristics of the brand name item were repeated verbatim. As with
CLIN 6001, at the bottom of the sheet was a statement that the Interand
303M meets or exceeds the specifications for VTI ENC-1. Interand
submitted additional material to the agency after bid opening. The
agency says that some of this material appears to have been created
after bid opening, and the protester does not say whether the material
was in existence prior to that time. In any event, it appeared to the
agency based on all of the material submitted that the Interand model
303M consisted of two components, a LENCO 850 and an Extron 102, and
that Interand would have to modify the circuit board of the Extron 102
in order to produce the "true brown" image specified in the IFB. In
addition, the agency noted that the Extron 102 comes with a two-pronged
plug while the solicitation required all components to have
three-pronged, grounded plugs. The protester's literature did not
describe the modifications necessary to meet either the "true brown" or
the three-pronged requirement. The protester contends that the agency's
rejection of its bid as nonresponsive was improper. The sole basis for
this contention is Internad's belief that it submitted sufficient
descriptive literature with its bid. Specifically, the protester notes
that its literature cited each and every salient characteristic of the
listed brand name products for both CLIN 6001 and 6005. Thus, says the
protester, the bid was an unequivocal offer to supply items complying
with the solicitation's requirements and was, therefore, responsive.
Any desire on the agency's part to "evaluate" further the item offered,
argues the protester, would involve issues of responsibility, not
responsiveness. To be responsive to a brand name or equal solicitation,
a bid offering an allegedly equal solicitation, a bid offering an
allegedly equal product must contain sufficient descriptive material to
permit the contracting agency to assess whether the offered alternative
possesses the salient characteristics specified in the solicitation.
Rocky Mountain Trading Company, B-221060, Jan. 24, 1986, 86-1 CPD 88.
The adequacy of the literature in showing compliance is a matter of
responsiveness. Computer Sciences Corp., B-213134, May 14, 1984, 84-1
CPD 518. If the descriptive literature or other information reasonably
available to the agency does not show compliance with all salient
characteristics, the bid must be rejected. HEDCO, Hughes Electronic
Devices Corp., B-221332, Apr. 7, 1986, 86-1 CPD 339. It is not enough
that the bidder believes that its product is an "equal" or that the bid
contains a blanket statement that all salient characteristics will be
met. R.A. Miller Industries, Inc., B-215084, Sept. 24, 1984, 84-2 CPD
332. It is also not enough for a bidder merely to quote back the listed
salient characteristics without taking exception to them. B-168805, May
5, 1970, cited with approval in Systems Technology, Inc., 50 Comp. Gen.
193 at 201 (1970). In this case, we think that the agency's
determination to reject Interand's bid for failure to submit sufficient
descriptive literature with respect to CLINs 6002 and 6005 was
reasonable. For each item, the solicitation prescribed requirements that
the agency determined could be met by Interand's "equal" products only
if Interand's products were modified. Interand has not questioned this
determination. The descriptive literature submitted with the bid,
however, did not describe any modifications. Thus, the bid failed to
comply with the express requirements of the solicitation's Brand Name or
Equal clause that a bidder describe any proposed modifications and
clearly mark its descriptive literature to show the modifications. See
LVW Electronics, B-224512, Dec. 3, 1986, 86-2 CPD , in which we held
that the agency properly rejected the second low bid in the procurement
for failure to describe necessary modifications to "equal" products.
Moreover, Interand's bid merely parroted the salient characteristics
listed in the IFB. Although Interand believes this was sufficient to
satisfy the descriptive literature requirement, we do not agree.
B-168805, supra. In our own view, the mere listing of salient
characteristics does not permit an agency to assess product equivalence,
and does no more show compliance with required characteristics than does
a blanket offer to comply. The protest is denied.
B-224115 Date: December 30, 1986 In the Matter of: Military Base Management, Inc.
66 Comp. Gen. 179
DIGEST
PROCUREMENT
Competitive Negotiation
Use
Criteria
Agency decision to use negotiation procedures, in lieu of sealed
bidding procedures to acquire mess attendant services, is justified
where the contracting officer determines that discussions are necessary
to ensure that offerors fully understand the services and the staffing
required to adequately perform the contract.
DECISION
Military Base Management, Inc. (Military), the incumbent contractor,
protests the negotiated procurement of mess attendant services for
Norfolk Naval Air Station through the issuance of request for proposals
(RFP) No. N00189-86-R-0466 by the Naval Supply Center, Norfolk,
Virginia. Military contends that the services should be procured by
formal advertising (sealed bids), as in prior procurements, and that the
use of negotiation procedures for the acquisition of services that are
neither complex nor unique is contrary to the intent of the Competition
in Contracting Act of 1984 (CICA), 10 U.S.C. 2304 (Supp. III 1985),
and the Federal Acquisition Regulation (FAR), 48 C.F.R. 6.401(a)
(1985), which, Military asserts, requires a showing of compelling need
for discussions. Military further asserts that the scope of work is set
forth in minute detail so that a knowledgeable food service contractor
can readily prepare a fixed-price competitive bid without negotiations.
Military requests that the RFP be canceled and a procurement by sealed
bids be conducted. We find no merit to the protest. The RFP, issued a
small business set-aside, contemplates the award of a firm-fixed-price
contract for a 1-year base period with 3 renewal options. Under the
RFP, the contractor would be required to provide managerial,
administrative and direct labor personnel to accomplish the tasks
specified in the solicitation. The contractor would prepare and serve an
estimated 40,000 meals per month, provide emergency food services, as
required, and perform related janitorial services. The RFP requires
offerors to submit manning charts showing, by space and job categories,
the number of personnel proposed for each half hour of a day. The RFP
advises than in determining the offeror's responsibility, consideration
will be given to whether an offeror's manning charts insure that the
total hours offered, including the manning distribution in space/job
categories prior to, during, the after meal hours and at peak periods,
present an effective and well planned management approach to performance
of the services required. In evaluating offers, the RFP advises that
the government would add the total price for all options to the price
for the basic requirement and that the government may reject an offer as
nonresponsive if it is materially unbalanced as to prices for the basic
requirement and the option quantities. The Navy states that a negotiated
procurement is required because historically mess attendant
solicitations have revealed problems with manning charts that evidenced
differences in personnel staffing for hours and meals required to be
served. The Navy states that the use of sealed bidding procedures would
not provide the opportunity to clarify these differences between
proposed staffing levels and the government's estimates, and that, based
on past contracts, these differences between proposed staffing levels
and the government's estimates, and that, based on past contracts, these
differences often indicate a lack of understanding of the solicitation
requirements and the effort necessary to adequately perform the
services. The use of a negotiated procurement, the Navy states, would
provide for discussions to resolve potential problems, and to ensure
that all offerors fully understand the services required as well as the
staffing necessary to maintain the continuity of services.
Additionally, the Navy states that because of wide disparities in prices
in a prior attempted procurement, it requires discussions to determine
whether prices are fair and reasonable. With the enactment of CICA,
there is no statutory reference for sealed bids. Under CICA, agencies
are required to obtain full and open competition and to use the
competitive procedure or combination of competitive procedures that is
best suited under the circumstances of the procurement. 10 U.S.C.
2304(a)(1) (Supp. III 1985). In determining the competitive procedure
appropriate under the circumstances, the agency shall solicit sealed
bids if: time permits; the contract award will be based on price and
other price-related factors; it is not necessary to conduct discussions
with the responding sources about their bids; and there is a reasonable
expectation of receiving more than one sealed bid. 10 U. S.C.
2304(a)(2)(A). The determination regarding which competitive procedure
is appropriate essentially involves the exercise of a business judgment
by the contracting officer. Essex Electro Eng'rs, Inc., 65 Comp. Gen.
242 (1986), 86-1 CPD 92; see also NUS Corp. et al., B-221863 et al.,
June 20, 1986, 86-2 CPD 574. In light of this change in the law and the
statements proffered by the Navy, we find no basis to object to the use
of negotiation procedures. First, the fact that formal advertising has
been used to procure this type of service in the past is not relevant to
what may properly may be used now since the statutory preference for
formal advertising has been eliminated by CICA. See Military Servs. Inc.
of Ga., B-221384, Apr. 30, 1986 86-1 CPD 423. Moreover, contrary to
Military's assertion, the FAR does not require a showing of compelling
need to justify discussions. See Variable Staffing Sys., B-224105, Dec.
23, 1986, 86-2 CPD . The FAR merely states that sealed bidding shall be
used whenever the CICA conditions set forth in the FAR, 48 C.F.R.
6.401(a), and summarized above, are met. Here, the CICA conditions
requiring sealed bidding have not been met because the contracting
officer determined that it was necessary to hold discussions to ensure
that all offerors fully understood the services and staffing necessary
to perform the contract. In this regard, we have recognized that prior
difficulties with contractor performance may serve as a legitimate basis
for requiring discussions and therefore the use of negotiation
procedures for subsequent procurements. See Variable Staffing Sys.,
supra; Servicemaster, All Cleaning Servs. Inc., B-223355, Aug. 22,
1986, 86-2 CPD 216. We note that, unlike in Variable Staffing Sys.,
supra, the RFP here does not provide for a specific technical evaluation
of proposals. Contract requirements also are spelled out in significant
detail, and while offerors are to submit manning charts, these are
specifically required for the "purpose of assisting the contracting
officer in making an affirmative determination of . . . responsibility .
. . ." It thus appears that, unlike in the prior case, discussions here
will not be used to establish the terms of a vendor's offer or to permit
revisions in offered technical approach. However, it is apparent that
discussions may be used to insure that a vendor understands just what
the agency believes is required by specifications, and may be used to
permit the submission of a revised price if discussions indicate to a
vendor that its original submission did not accurately reflect the
requirements to which the vendor was committing itself. We believe this
is a proper use of discussions and that the possible need for holding
such discussions is a matter within the sound judgment of the
contracting officer. The protest is denied.
B-202121 Date: December 29, 1986 In the Matter of: Propriety of Entering into Certain Housing Agreements with the Federal Republic of Germany
66 Comp. Gen. 176
DIGEST
PROCUREMENT
Special Procurement Methods/Categories
Multi-Year Leases
Quarters
Lease Payments
Statutory Restrictions
The Air Force may enter into agreements with the Federal Republic of
Germany without a proviso specifically limiting yearly payments for
rent, utilities, maintenance and operation per family housing unit to
$16,800, the maximum amount currently provided by law, since estimated
costs are well within the statutory limit, and in light of other
provisions in the lease which provide a safeguard against exceeding the
limit in any event.
DECISION
The Department of the Air Force asks about the propriety of entering
into two agreements with the Federal Republic of Germany (FRG) without
inclusion of a proviso limiting the maximum yearly expenditure per
family unit for rent, utilities, maintenance and operation to $16,800,
the amount prescribed by law. 10 U.S.C. 2828(e)(1). For the reasons
given below, under the circumstances described the Air Force can enter
into these agreements.
BACKGROUND
For over a year the Air Force has been negotiating with the FRG about
the terms and conditions of several build-to-lease housing projects at
Spangdahlem and Zweibrucken Air Bases in Germany. The agreements with
FRG are in the form of Real Property Obligation Documents. The Air
Force states that a supplementary agreement to the NATO Status of Forces
Agreement requires the FRG to enter into the actual leases. The record
suggests that the Air Force and the FRG are in accord on all terms and
conditions of the agreements, except for a provision limiting
expenditures to $16,800, the maximum amount currently authorized by law
for rent, utilities, maintenance and operation, per year per family
housing unit, 10 U.S.C. 2828(e)(1). Apparently, the FRG (1) considers
the need for such a limiting provision to be a United States domestic
restriction not required by any international agreements binding upon
it; (2) maintains that the provision is not included in its agreements
with the United States Army; and (3) regards such provisions as
attempts to transfer financial responsibility to it for costs that are
outside its control. The Air Force states that the two leases involved
will be for fixed terms of 10 years at an annual fixed rent per unit of
$7,257.78 for the Spangdahlem project and $7,509.35 for the one at
Zweibrucken. The utility costs for both locations are estimated to be
$1,570.73 per unit annually. Utilities are handled under separate
contracts and may be increased yearly, consistent with inflation. The
first year per unit maintenance costs are $517.07 for the Spangdahlem
project and $546.23 for the Zweibrucken project. The maintenance costs
are fixed for the first year and are increased yearly thereafter in
accordance with a federally issued price index for maintenance. The
maintenance charges are intended to cover routine day-to-day maintenance
and change of occupancy maintenance such as painting. The Air Force
states that while these costs are subject to inflation, exceeding
statutory limits. Major repairs are the lessor's responsibility and
those costs are absorbed in the rent, which is not subject to
escalation. Although the Air Force has not submitted the agreements, it
states that it has a clause providing for unilateral termination for
convenience by the United States Government. Under this clause the
United States can terminate the agreements in whole or part. The
payments for rent and some maintenance must continue independent of
usage but the FRG will require the lessor to sell or rent the returned
units so as to reduce or eliminate United States liability. The
agreements also include buy-out options which give the United States
Government the right to make lumpsum payments, consistent with a
prearranged price schedule, and assume direct control of the projects.
The Air Force would like to enter into these agreements without
stipulating the $16,800 limitation, suggesting that insistence on its
inclusion could result in loss of the housing units. Among other
things, it maintains that there is little or no chance of exceeding the
$16,800 limit because (1) rent is fixed for 10 years with no escalation;
(2) maintenance and utilities would have to increase by approximately
280 percent before the limit is reached; (3) action can be taken to
reduce, or, if necessary, eliminate maintenance and utility charges;
(4) the buy-out options could be exercised; (5) the $16,800 limitation
could be increased in the future; and (6) the Real Property Obligation
Documents can be terminated.
LEGAL DISCUSSION
The leasing of military family housing in foreign countries is
governed by section 2828 of title 10 of the United States Code.
Paragraph 2828(e)(1) provides that expenditures for rental of family
housing, including costs of utilities, maintenance and operation, may
not exceed $16,800. As the Air Force does not want to include a proviso
limiting payments for rent, utilities, maintenance and operation to the
$16,800 limit, a question is raised about whether the agreements conform
to the Antideficiency Act. The Antideficiency Act, 31 U.S.C. 1341(a),
prohibits United States officers and employees from making expenditures
or incurring obligations in excess of available appropriations, or in
advance of appropriations. As a general rule, an agency may not enter
into a contract that could, in the future, obligate the United States to
pay an indefinite or indeterminate amount, or an amount which could
exceed available funds because of a known statutory ceiling. See 58
Comp. Gen. 46, 47-48 (1978). Under circumstances as set forth above,
however, where bona fide estimates of cost over the contract period are
well below the statutory limitation here involved and where the
agreement to be executed contains a clause allowing the Government to
terminate it for convenience, the agreement may properly be entered into
without inclusion of a specific provision limiting costs per unit to the
statutory ceiling.
B-224305 Date: December 24, 1986 In the Matter of: Morse Boulger, Inc.
66 Comp. Gen. 174
DIGEST
PROCUREMENT
Specifications
Minimum Needs Standards
Competitive Restrictions
Design Specifications
Burden of Proof
Protest that agency improperly used a design specification based on
drawings duplicating competitor's equipment design is sustained where
agency fails to establish prima facie support for the restriction beyond
fact that the specified design will cure defects in the competitor's
currently-installed equipment but the purpose of the procurement is
total replacement of the current equipment.
DECISION
Morse Boulger, Inc. (MBI), protests that the specifications used by
the Navy in invitation for bids (IFB) No. N62470-83-B-8778, unduly
restrict competition. The IFB is for the replacement of the two Detroit
Stoker Company incinerator grates (stokers), which fuel (municipal
refuse) down an inclined slope into and through the furnaces firing two
separate boilers. We sustain the protest. The Navy issued the IFB on
August 8, 1986, with a September 9 bid opening date. On September 4,
MBI protested to the Navy that the equipment portion of the
specifications described a Detroit Stoker item. The Navy had retained
an architect-engineer (A-E) to prepare the project specifications, and
the MBI claimed that the A-E told MBI, during a September 3
conversation, "the design is Detroit Stoker's current design intended to
replace the older model now installed." MBI argued that Detroit Stoker's
current design intended to replace the older model now installed." MBI
argued that Detroit Stoker equipment cost more than other equipment able
to perform the same tasks, and indicated that a number of American
manufacturers would be able to compete if the specifications were
relaxed. The Navy orally denied the protest apparently because of the
A-E's August 28 advice that three stoker manufacturers (Detroit Stoker,
MBI and a German firm) could bid on the requirement as specified. Before
bid opening, MBI filed its protest with our Office contending that the
stoker design and specification were unduly restrictive. The protester
advised that the new stokers represent approximately 60 percent of the
total cost of the project with the balance of the cost going to
demolition and removal of the old stokers and installation of the new
ones. MBI contended that it was unable to bid because the specification
"is for the patented design of another company," and requested either an
amendment of the current specification to allow for competition or a new
procurement using a performance specification instead of a design one.
Three bids were received at the September 9 bid opening. By letter of
September 10, MBI furnished the Navy and our Office with Detroit Stoker
descriptive literature showing drawings identical to the specification's
grate assembly detail drawing (drawing M-10). MBI argued that this was
evidence that the A-E had provided the Navy with specifications
requiring the Detroit Stoker designs in detail. In its report on the
protest, the Navy stated that Detroit Stoker at one time held a patent
on the design used in the specifications, but that the patent had
expired. The Navy further stated that while two unique aspects of the
design (the use of rollers and the direct connection of hydraulic
cylinders) are proprietary to Detroit Stoker, both were needed to reduce
problems (excessive wear and high maintenance, respectively) experienced
with the current Detroit Stoker equipment and reflect the Navy's minimum
needs. The Navy admitted that a manufacturer other than Detroit Stoker
would have to modify its equipment to meet the specification. After
receiving the Navy's report, we conducted a bid protest conference, at
which MBI explained in considerable technical detail how seven design
features required by the specifications were proprietary to Detroit
Stoker and why it could not modify its equipment to meet them; in its
comments on the conference MBI elaborated on the features that had been
discussed. The Navy subsequently filed comments admitting that MBI may
have been placed at a competitive disadvantage by the statement of work.
Nevertheless, the Navy contends that MBI's initial protest should have
provided the technical information later furnished at the conference.
The Navy argues that MBI's initial protest did not provide the kind of
information it could use to test the A-E's analysis that a number of
stoker manufacturers could meet the specification, and contends that the
matters discussed in the bid protest conference therefore are untimely
raised. We agree with the Navy that MBI should have discussed the
specific design features with which it was concerned before the protest
conference so that the Navy could have addressed them in its report.
However, we find MBI's initial protest sufficient to raise the issue of
whether the Navy's use of a Detroit Stoker design in its specification
was unduly restrictive of competition. MBI's September 10 letter
provided the Navy with a clear picture of what it objected to: the
Navy's prescription of a design identical to that in Detroit Stoker's
drawings. When a protester challenges specifications as being unduly
restrictive, the contracting agency must make a prima facie showing that
the agency requires the restriction to meet its actual needs. If it
does so, the burden shifts to the protester to show that the requirement
is clearly unreasonable. Superior Boiler Works, Inc., B-216472, Mar.
25, 1985, 85-1 C.P.D. 342. The agency's initial burden reflects its
statutory obligation to create specifications permitting such full and
open competition as is consistent with actual agency needs, 10 U.S.C.
2305 (Supp. III 1985), while the protester's burden of proof stems from
the fact that the determination of the government's minimum needs and
the best method of accommodating those needs are primarily matters with
in the agency's discretion. Davlin Paint Co., B-218413, July 12, 1985,
85-2 C.P.D. 45. The Navy's IFB makes the protested drawing a part of
the specification and requires that the replacement stoker be the
"manufacturer's latest design that complies with the specification
requirements." Obviously, only Detroit Stoker can meet this requirement
since any other manufacturer would have to modify the design of its
latest equipment to follow the specification drawing. Indeed, the A-E
informed the Navy on September 12 that the "specification was based on a
reciprocating grate system with input from Detroit Stoker." While the
use of a precise design specification does not automatically provide a
basis for finding a solicitation unduly restrictive, such requirements
are inappropriate if an agency can state its minimum needs in terms of a
performance specification which alternative designs could meet. Viereck
Co., B-209215, Mar. 22, 1983, 83-1 C.P.D. 287. The only reason
advanced for specifying the Detroit Stoker design, however, is that it
cures defects in the Navy's current Detroit Stoker equipment. This does
not mean that other designs, like MBI's, would not similarly cure those
defects. Indeed, the A-E's letter of August 28 indicated that the A-E
thought MBI's stokers would be acceptable and that use of the Detroit
Stoker design probably was not meant to exclude MBI's product. The
problem seems to be that the A-E confused the Navy's need to cure the
defects in the current equipment with the Navy's procurement need to
secure competition for new replacement equipment. Consequently, the
record establishes that alternative design approaches to Detroit Stokes
would have been considered and evaluated, so that the Navy has not, in
our view, established prima facie support for its restriction to the
Detroit Stoker design. By separate letter, we are recommending to the
Secretary of the Navy that the Navy cancel the solicitation, revise its
requirements as appropriate, and resolicit. The protest is sustained.
B-224199 Date: December 24, 1986 In the Matter of: Rosser, White, Hobbs, Davidson, McClellan, Kelley, Inc.
66 Comp. Gen. 169
DIGEST
PROCUREMENT
Competitive Negotiation
Offers
Competitive Ranges
Exclusion
Administrative Discretion
1. Under request for proposals which provides for award to lowest
priced technically acceptable offeror, contracting agency properly
excluded protester's technically acceptable offer from competitive range
where protester's proposed price was so substantially higher than other
technically acceptable offer that protester did not have a reasonable
chance of receiving award.
PROCUREMENT
Competitive Negotiation
Technical Evaluation Boards
Bias Allegation
Allegation Substantiation
Evidence Sufficiency
2. Protester fails to show that procurement was improperly
influenced in favor of awardee due to alleged conflict of interest on
part of contracting agency officials where procurement; alleged
conflict of interest is limited to membership in awardee, a professional
organization; and there is no evidence that evaluation was influenced
in any way by favoritism toward awardee.
DECISION
Rosser, White, Hobbs, Davidson, McClellan, Kelley, Inc. (Rosser
White) protests the award of a contract to the American Corrections
Association (ACA) under request for proposals (RFP) No.
N00600-86-R-4465, issued by the Navy for a Brig Program Study. Rosser
White contends that the Navy improperly excluded it from the competitive
range and that award to ACA was improper due to a conflict of interest
on the part of the Navy technical evaluators. We deny the protest. The
RFP, issued on June 13, 1986, called for award of a fixed-price contract
for development of plans to implement management and operational
recommendations made in a prior study by Rosser White of the Navy's
corrections, or brig, system. Section M of the RFP provided that award
would be made to the lowest priced technically acceptable offeror.
Initial proposals were submitted by three offerors, including Rosser
White and ACA, a nonprofit professional organization for those in the
corrections field. The technical proposals were evaluated by the
activity for which the contract was to be performed, the Bureau of Naval
Personnel. By memo dated July 21, the Bureau advised the contracting
activity that all three proposals were unacceptable as submitted, but
reasonably susceptible of being made acceptable through discussions.
The memo included a list of question for each offeror covering areas of
its proposal requiring clarification, which subsequently were sent to
each offeror. Rosser White states that it responded to the questions
concerning its proposal by letter dated August 14. By memo dated August
19, the Bureau revised its initial conclusion and found each of the
three proposals technically acceptable. In a subsequent memo, the Bureau
provided a brief comparison of the offerors' price proposals. ACA's
proposed price was $299,416; Rosser White's $456,572; and the third
offeror's $493,818. ACA's lower price reflected its lower personnel and
administrative costs and the omission of profit from its price proposal.
The Bureau concluded that, while it would be easier for the agency to
work with Rosser White due to its experience with the prior brig study,
ACA also would deliver a quality product. By memo dated August 26, the
contracting officer narrowed the competitive range to one offeror, ACA;
Rosser White and the third offeror were excluded because of the price
difference between their proposals and ACA's proposal. According to the
Navy, the contracting officer's determination was approved by the
contract review board at a meeting on August 28; formal approval was
based on a September 2 memo prepared by the contracting officer. On
August 28, the Navy asked for a best and final offer from ACA, which
later orally advised the Navy that its proposal would remain unchanged.
On September 9, Rosser White received notice from the Navy that it had
been excluded from the competitive range. Award to ACA was made on
September 11. Rosser White then filed its protest on September 23.
Rosser White first contends that it was improper for the Navy to exclude
it from the competitive range based only on the price difference between
its proposal and ACA's proposal. We find this argument to be without
merit. Determining the competitive range is a matter primarily within
the discretion of the procuring agency. While, as Rosser White states,
we will closely scrutinize a determination which results in only one
offeror being included in the competitive range, we will not disturb
such a determination unless it is shown to lack a reasonable basis.
Forecasting International Ltd., B-220622.3, Apr. 1, 1986, 86-1 CPD 306.
More specifically, a technically acceptable proposal may be excluded
from the competitive range where the offeror's proposed price is so
substantially higher than the other technically acceptable offers that
the firm does not have a reasonable chance of receiving the award.
Tracor Marine, Inc., B-222484, Aug. 5, 1986, 86-2 CPD 150. Here, Rosser
White's price was $157,156 higher than ACA's. The principle differences
between the two price proposals were in indirect expenses, where Rosser
White's expenses ($169,305.68) were approximately $89,000 higher than
ACA's ($80,854); and miscellaneous direct costs, where Rosser White's
costs ($54,446.32) were approximately $28,000 higher than ACA's
($26,000). ACA, a nonprofit corporation, also included no profit in its
price, while Rosser White's proposal provided for $37,292 in profit. In
addition, while ACA's and Rosser White's proposed direct labor costs
were close ($148,800 v. $149, 168), ACA proposed almost double the
number of work hours (11,312 v. 6,146), reflecting the significantly
lower wage rates proposed by ACA. Rosser White argues that the Navy
should have included it in the competitive range, in order to give
Rosser White an opportunity to revise its proposal and reduce its price.
We disagree. Since the RFP provided that award would be made to the
lowest priced, technically acceptable offeror, Rosser White would have
had to lower its price to below ACA's to be in line for award. Rosser
White thus would have had to reduce its initial price of $456,572 by
more than $157,000, or almost one-third, to be below ACA's $299,416
price. In view of the significant price reduction required, we agree
with the Navy that Rosser White could not reasonably have expected to
lower its price sufficiently to have a reasonable chance at award;
accordingly, the Navy properly excluded Rosser White from the
competitive range. See Informatics General Corp., B-210709, June 30,
1983, 83-2 CPD 47, aff'd on reconsideration, Nov. 18, 1983, 83-2 CPD
580. Rosser White next argues that three Navy officials who were
involved in the technical evaluation of the ACA proposal are members of
ACA, and, as a result, their participation in the evaluation constituted
a conflict of interest. As support for its assertion, Rosser White
relies principally on Department of Defense (DOD) Directive 5500.7,
para. VII(D), which provides in relevant part that:
. . . all DOD personnel who have affiliations
or financial interests which create conflicts
or appearances of conflicts of interests with
their official duties must disqualify
themselves from any official activities that
are related to those afflictions or interests
or the entities involved.
Rosser White in essence argues that the Navy officials' membership in
ACA, which the Navy does not dispute, is an "affiliation" giving rise to
a conflict of interest which, standing alone, makes award to ACA
improper. In considering conflict of interest allegations in the context
of a bid protest, our role is not to determine whether a violation of
the applicable conflict of interest statutes or regulations occurred;
rather, our review focuses on whether the individuals involved in the
alleged conflict of interest exerted improper influence in the
procurement on behalf of the awardee. See Sterling Medical Associates,
B-213650, Jan. 9, 1984, 84-1 CPD 60. Thus, even assuming that the Navy
officials' ACA membership constitutes a conflict of interest within the
meaning of DOD Directive 5500.7, as Rosser White maintains, the award to
ACA will not be disturbed unless there is a showing that the officials
improperly influenced the procurement in favor of ACA. Rosser White
maintains that it has presented the "hard facts" called for under CACI,
Inc. -Federal v. United States, 719 F.2d 1567 (Fed. Cir. 1983), to
establish an actual conflict of interest which justifies overturning the
award to ACA. We disagree. The court in CACI made clear that
inferences of wrongdoing based on "suspicion or innuendo" are not a
sufficient basis to overturn a contract award. Id. at 1582. In fact,
the court found no basis to disturb the award at issue in CACI since
careful scrutiny of the record showed no evidence of actual bias or
favoritism or any other impropriety in the contract award due to the
participation of the agency evaluators with the alleged conflict of
interest. Similarly here, we find that Rosser White has failed to make
the showing required to disturb the award to ACA. Rosser White does not
discuss in detail what part the three Navy officials with the alleged
conflict of interest played in the procurement. Rosser White states
only that one official was a member of the source selection board and
the other two were in the chain of command in the using activity, the
Bureau of Naval Personnel, with an unspecified role in the procurement.
The Navy report on the protest indicates only that two of the three
officials named by Rosser White participated in some capacity in the
evaluation of the ACA proposal. Further, even assuming that the
officials had an actual role in the evaluation, their affiliation with
ACA is as members only; there is no indication that they serve as
officers or have any other more active involvement. Most important,
there is no evidence that the determination that ACA was technically
acceptable, and thus eligible for award, was in any way influenced by
favoritism toward ACA on the part of the officials Rosser White
identifies. In this regard, Rosser White itself does not contend that
ACA would have been found technically unacceptable but for the
participation in the evaluation by the officials who were ACA members.
In addition, there is no evidence of bias against Rosser White in order
to favor ACA, since Rosser White's proposal, like ACA's, was found
technically acceptable. Finally, the individual who made the
determination that Rosser White be excluded from the competitive range
because of the price differential was not one of the individuals
mentioned by the protester as having a conflict of interest. In sum, it
is not clear what role that three Navy officials played in the
procurement; the affiliation allegedly giving rise to the conflict of
interest is limited to ACA membership; and the record lacks any
indication that the evaluation of the ACA proposal was improperly
influenced. Thus, even assuming that the Navy officials' ACA membership
constituted a conflict of interest, there is no basis in the record for
finding any impropriety in the contract award due to their participation
in the evaluation. Rosser White requests that it be allowed to recover
its proposal preparation costs and the costs of filing and pursuing the
protest. Since we find the protest to be without merit, we deny the
request for costs. Bid Protest Regulations, 4 C.F.R. 21.6(d), (e)
(1986).
B-223809 Date: December 24, 1986 In the Matter of: Jon E. Penhallurick
66 Comp. Gen. 166
DIGEST
CIVILIAN PERSONNEL
Relocation
Household Goods
Vessels
Restrictions
Liability
1. An employee who ships a boat and its trailer as part of a
household goods shipment incident to a transfer of duty station must
bear the expense since boats are expressly excluded by regulations from
the definition of "household goods" that may be shipped at government
transportation officer mistakenly authorized shipment of the boat and
the trailer at government expense.
CIVILIAN PERSONNEL
Relocation
Household Goods
Weight Restrictions
Liability
Computation
2. The constructive weight that the mover used as the basis for his
charges in this case (which was based on the full cubic capacity of his
vehicle), and which was also used as the basis of overweight charges
assessed against the employee, must recalculated because that
constructive weight does not appear to represent sufficiently the actual
weight shipped. The proper formula for computing the employee's
expenses for shipping items that are not household goods as well as for
shipping more than the authorized weight of household goods is explained
in James Knapp, B-216723, August 21, 1985.
DECISION
Mr. Jon E. Penhallurick appeals the determination by our Claims Group
that he is indebted to the Indian Health Service, Department of Health
and Human Services, for $2,005.54 for shipping as household goods a boat
and its trailer, contrary to regulations, and for shipping other
household goods in excess of the weight limit. We conclude that Mr.
Penhallurick is not entitled to the transportation of his boat and its
trailer at government expense, even though a government transportation
officer erroneously authorized their shipment. However, the
constructive weight that the mover used to determine his charges for the
shipment, which was also used as the basis for the overweight charges
assessed against Mr. Penhallurick, must be recalculated by the Indian
Health Service because that constructive weight does not appear to
represent sufficiently the actual weight shipped.
BACKGROUND
Mr. Penhallurick transferred from Kayenta, Arizona, to Tucson,
Arizona, in July 1983. He specifically inquired whether his 14-foot
boat could be moved at government expense, and a government
transportation officer assured him that it could. The boat and trailer
were specifically listed on the government bill of lading, the
government document authorizing movement of the household goods. The
mover did not weigh the shipment to determine the actual weight of Mr.
Penhallurick's household goods. Instead, the mover used a constructive
weight of 21,000 pounds (7 pounds a cubic foot multiplied by 3,000 cubic
feet, the entire capacity of the moving van) as its charge basis to the
Indian Health Service. The movers's justification for using this method
was that no scale was available. Therefore, the provision of its tariff
which states, "If no scale is available the weight shall be determined
by multiplying the cubic feet occupied by seven (7) pounds per cubic
foot," should be applicable. The mover stated that "* * * this shipment
occupied the complete van." As a result, the constructive weight
amounted to nearly twice the weight, 11,000 pounds, authorized to be
shipped at government expense. The Indian Health Service and our Claims
Group accepted this constructive weight as the weight for the shipment.
The charges specifically applicable to the boat and its trailer were
segregated and charged directly to Mr. Penhallurick, with the other
overweight charges determined by a proration formula. Mr. Penhallurick
objects because the movement of this boat was specifically authorized at
government expense and because the mover "* * * could charge for the
whole capacity of the van, even though I had much less weight than my
limit."
AUTHORIZATION OF THE BOAT'S SHIPPING EXPENSES Federal Travel
Regulations, para. 2-1.4h, FPMR 101-7 (Supp. 4, October 1, 1982),
incorp. by ref., 41 C.F.R. 101-7.003 (1985), expressly excludes boats
from being an item of household goods that may be shipped at government
expense. This exclusion for boats was also was also reflected in the
Indian Health Service's Travel Manual. Therefore, while it is
unfortunate that Mr. Penhallurick received erroneous information
concerning the shipment of the boat, which was reflected in the document
authorizing its shipment, this would not afford a basis for the
government to pay for its shipment. The government cannot be bound by
the erroneous advice or actions of its agents which would create a legal
liability unauthorized by the statute or regulation. Jay Johnson,
B-215629, November 27, 1984; Seymour A. Kleiman, B-211287, July 12,
1983. Mr. Penhallurick must pay the moving expenses of his boat and its
trailer, an appurtenance of the boat.
DETERMINATION OF THE SHIPMENT'S WEIGHT Although a mover normally uses
a scale to obtain a weight certificate or ticket to indicate the weight
of his shipment, the mover in this case offered its tariff as authority
for using a constructive weight when "* * * no scale is available * *
*." Although we can appreciate that there may have been no scales
available for a moving van in the small town of Kayenta, Arizona, where
the mover picked up Mr. Penhallurick's shipment, we fail to see why
during the journey from Kayenta to Tucson there were not sufficient
large metropolitan areas in which scales would have been available and
from which an accurate weight of the shipment could have been
determined. This situation is similar to the one encountered in J & V
Audit Company, B-211465, November 18, 1983. In that case there were no
certified scales where the shipment was picked up, and the mover failed
to weigh the shipment on scales at intervening points or at the
destination, using a constructive weight similar to that the movers used
in this case for his charge basis. We found that the use of a
constructive weight was unauthorized in that case because of the
controlling tariff provisions involved, and that the mover's action had
made it impossible to determine with certainty the actual weight of the
shipment. We used a lower weight produced from an uncertified weigh
master's scale for the mover's charge basis rather than the higher
constructive weight in that case to determine the weight of the
shipment. There is no scale weight of any kind available in this case.
However, where it appears that an error has been made in determining the
net weight of household goods shipped under a government bill of lading,
a constructive shipment weight should be obtained based on 7 pounds per
cubic foot of "* * * properly loaded van space * * *" as provided for by
FTR para. 2-8.2b(4). Mr. Penhallurick says that when his boat was loaded
into the van, it filled the van up, and he objected that the mover "* *
*could charge for the whole capacity of the van, even though I had much
less weight than my limit." When scales are unavailable, the mover's
tariff allows him to charge for "* * * cubic feet occupied * * * ." It
appears that for only the 14-foot boat and its trailer, approximately
one-third of the entire cubic apace of the van was occupied and the
mover charged for 7 pounds per cubic foot, or 7,000 pounds. That
constructive weight would be more than double or triple what a normal
14-foot boat and trailer would weigh. We do not believe that the space
"occupied" by the boat and its trailer alone is equivalent to the
"properly loaded van space" that may be subject to constructive weight
in the FTR. Nor, can we be confident in this case that the space
occupied by the rest of the household goods is equivalent to properly
loaded van space. We have been informally advised that an inventory
list of the shipment can be located. Therefore, the constructive weight
of Mr. Penhallurick's shipment should be computed by listing the items
of his household goods from the packing inventory on a cube sheet and
multiplying the cubic feet by 7 pounds, as was done in William A.
Schmidt, Jr., 61 Comp. Gen. 341 (1982). Also, it is appropriate in this
case to determine the actual weight of the boat and its trailer either
by a separate scale weighing or by manufacturer's literature, as was
apparently done with the shipment of an automobile in James Knapp,
B-216723, August 21, 1985. The weight thus determined should be used as
the basis for charging Mr. Penhallurick for the cost of shipping the
boat and trailer. Assuming Mr. Penhallurick's contention that he
shipped "much less weight than my limit" is borne out by the cube sheet,
he would only have to pay the expense of the actual weight of the boat
and trailer computed at the same rate as the rest of the household
goods. Accordingly, the Claims Group's determination that the shipment
of a boat and its trailer may not be made at government expense is
affirmed. However, the constructive weight of the shipment should be
recomputed by the Indian Health Service and based on properly loaded van
space, rather than space occupied, by the method described in William A.
Schmidt, Jr., supra. The shipping expenses for the boat and its trailer
and other overweight charges, if any, should be computed in accordance
with the method referred to above and used in James Knapp, B-216723,
supra.
B-224653 Date: December 18, 1986 In the Matter of: The Honorable Strom Thurmond United States Senate
66 Comp. Gen. 157
DIGEST
APPROPRIATIONS/FINANCIAL MANAGEMENT
Judgment Payments
Permanent/Indefinite Appropriation
Purpose Availability
Real Property
Condemnation
Use of permanent judgment appropriation, provided by 31 U.S.C. 1304(
a), is inappropriate to pay judgment in favor of Congaree Limited
Partnership in United States v. 14,770.65 Acres of Land, 616 F. Supp.
1235 (1985) that resulted from condemnation of land for Congaree Swamp
National Monument because land acquisition appropriations of the
acquiring agency have always, as a matter of law, been available to pay
land acquisition judgments, and judgment appropriation is available only
when payment is "not otherwise provided for."
APPROPRIATIONS/FINANCIAL MANAGEMENT
Judgment Payments
Permanent/Indefinite Appropriation
Purpose Availability
Real Property
Condemnation
Requiring condemnation to be funded through acquiring agency's budget
enables Congress to make informed decision with respect to both agency
spending levels and pace of land acquisition and recognizes a
condemnation is not result of agency wrongdoing but it a normal program
activity.
APPROPRIATIONS/FINANCIAL MANAGEMENT
Judgment Payments
Permanent/Indefinite Appropriation
Purpose Availability
Real Property
Condemnation
Redwood National Park litigation (B-212681(1), Sept. 27, 1983) is not
applicable because Redwood legislation expressly provides for use of
judgment fund for amounts in excess of amount deposited with court.
Klamath Indian Case (B-198352, April 18, 1980) is also distinguishable
because Klamath legislation directed land be acquired by condemnation,
and Congress provided line-item appropriation specifically and solely
for Klamath condemnation. Legislative history showed Congress recognized
appropriation as insufficient.
APPROPRIATIONS/FINANCIAL MANAGEMENT
Judgment Payments
Permanent/Indefinite Appropriation
Purpose Availability
Real Property
Condemnation
Congaree acquisition is funded from Land and Water Conservation Fund
with annual lump-sum appropriations made, allocated among various
projects in committee reports, and these allocations do not create
legally binding restrictions. Therefore, "exhaustion of appropriation"
cited by Park Service here refers to allocation which can be
reprogrammed although process may be inconvenient.
APPROPRIATIONS/FINANCIAL MANAGEMENT
Judgment Payments
Permanent/Indefinite Appropriation
Purpose Availability
Real Property
Condemnation
Filing of declaration of taking by Government, which vests immediate
title in United States and irrevocably commits Government to pay
resulting judgment, does not render appropriation process unnecessary
and would not create another limited exception to traditional treatment
of land acquisition judgments. It is a decision taken by acquiring
agency and does not permit access to judgment appropriation.
Dear Senator Thurmond:
This is in response to your letter of August 29, 1986, concerning the
availability of the permanent judgement appropriation (31 U.S.C. 1304)
to pay the judgement in favor of Congaree Limited Partnership in the
case of United States v. 14770.65 Acres of Land in the County of
Richland, South Carolina, 616 F. Supp. 1235 (1985). We have carefully
reviewed the various documents submitted with your letter as well as
materials submitted by other interested parties. As we will explain
below, it is our opinion that use of the judgement appropriation would
be inappropriate in this case. In brief, the judgement resulted from the
condemnation of land for the Congaree Swamp National Monument as
authorized by Pub. L. No. 94-545 (Oct. 18, 1976), 90 Stat. 2517. The
history of the condemnation is somewhat complicated and is set forth in
detail in the decision of the United States District Court for the
District of South Carolina, reported at 616 F. Supp. 1235 (1985). The
"just compensation" to which Congaree is entitled is the fair market
value of the land in question, determined to be $46 million, plus
interest from the date of taking, which the court found to be February
23, 1978. Approximately $59 million has already been paid over to
Congaree from appropriations available to the National Park Service,
Department of the Interior. The "deficiency," the subject of the
judgement in question here, is $10,758,283.12 with interest from
February 13, 1986. The discussion paper enclosed with your letter
recognizes that "the normal process of land acquisition contemplates
payment of judgments from appropriated land acquisition funds of the
acquiring agency." Several possible grounds have been suggested to
support different treatment of the Congaree judgement. Specifically, it
has been suggested that:
1) Similar judgments have been paid from the permanent
judgement appropriation in the past.
2) The appropriation process should be unnecessary when the
United States has become irrevocably committed to an acquisition through
the use of a declaration of taking.
3) In view of the unusual facts of this case, the
deficiency can be viewed as more in the nature of an inverse
condemnation award. We will address each of these points in turn. To
place our discussion in a more useful context, however, it may be
helpful to first lay a more general foundation.
BACKGROUND
To understand the treatment of the land acquisition judgments, it is
important to recognize that the permanent judgement appropriation was
never intended to extend to all judgments against the United States.
Prior to 1956, the majority of judgments against the United States could
be paid only under specific appropriations. Thus, for example, if
someone obtained a judgement against the United States in a tort action
under the Federal Tort Claims Act or the Suits in Admiralty Act, the
judgment had to be submitted to Congress for an appropriation. It could
not be paid from funds of the respondent agency, regardless of how much
money the agency may have had available to it. This situation was seen
as undesirable and unduly cumbersome and, in 1956, Congress enacted the
permanent judgment appropriation, based upon a General Accounting Office
recommendation. The judgment appropriation originally applied only to
judgments not in excess of $100,000, but this limitation was removed in
1977. Since the judgment appropriation is both permanent and
indefinite, it is not subject to the annual authorization and
appropriation process. It is essentially permanent authorization to
draw money from the general fund to the Treasury. However, it was never
the intent of the judgment appropriation to shift the source of funds of
those types of judgments which could be paid from agency funds. To
preserve the "status quo" with respect to judgments which could be paid
from agency funds, the judgment appropriation was made available only
where payment was "not otherwise provided for." 31 U.S.C. 1304(a)(1).
If this were not the case, agencies would be in a position to avoid
certain valid obligations by using the "back door" of the judgment
appropriation, and to this extent their budget requests would present to
the Congress an artificially low picture of the true cost of their
activities to the taxpayer. Payment is "otherwise provided for" if some
appropriation or fund under the control of the agency involved is
legally available to pay the judgment in question. Thus, the
application of the "otherwise provided for" concept terms on the
question of legal availability of the appropriation rather than
sufficiency of funds. For purposes of the availability of the judgment
appropriation, land acquisition judgments have always been viewed as
"otherwise provided for." The reason is that land acquisition
appropriations have always, as a matter of law, been available to pay
land acquisition judgments. An agency does not need specific authority
to resort to condemnation. By virtue of 40 U.S.C. 257, if an agency
authority to acquire it by condemnation as well. Condemnation
necessarily involves court action. Thus, land acquisition
appropriations are available to pay condemnation judgments, unless
expressly precluded, regardless of whether the term "condemnation"
actually appears in the appropriation. To reinstate, the judgment
appropriation was never intended to apply to land acquisition judgments
because these judgments can be paid from appropriations of the acquiring
agency. The treatment of condemnation judgments is not only a matter of
law, as outlined above, but is also based on policy that we consider to
be fundamentally sound. Eminent domain--the taking of private
property--is one of the most far-reaching of governmental powers and
affects one of the most fundamental rights of the American citizen. As
such, we deem it essential that exercise of the power by a Federal
agency be subject to the strict control of the Congress through the
appropriation process. Requiring condemnations to be funded through the
budget of the acquiring agency enables the Congress to make more
informed decisions with respect to both agency spending levels and the
pace of land acquisitions. In addition, as we have pointed out in the
past, condemnation judgments are materially different from the types of
judgments routinely paid from the judgment appropriation. A
condemnation judgment is not the result of an agency's having done
something which a court finds to be wrong. Rather, condemnation is
nothing more than the exercise by the acquiring agency of a normal
program activity, and as such should be funded like other program
activity, and as such should be funded like other program activities,
that is, through the appropriation process.
PRIOR JUDGMENTS PAID FROM THE JUDGMENT APPROPRIATION
It is suggested that the Congaree judgment can be paid from the
judgment appropriation on the basis of precedent established in the
Redwood National Park litigation (B-212681(1), September 27, 1983) and
in the condemnation of certain Klamath Indian lands (B-198352, April 18,
1980). We think both situations are readily distinguishable. It is true
that our 1983 Redwood opinion concluded that the judgment appropriation
was available for final condemnation judgments over and above amounts
provided in land acquisition appropriations. The difference, however,
is that the Redwood legislation expressly provides for use of the
judgment appropriation for amounts in excess of the amount deposited
with the court (16 U.S.C. 79g(b)). If anything, the Redwood case
supports our position in this case by demonstrating that Congress, when
it has deemed access to the judgment appropriation desirable, has made
express provision to that effect in the acquisition legislation. The
Klamath case is another condemnation judgment which we certified for
payment from the judgment appropriation, but it was also significantly
different from this case. The Klamath legislation did not merely
authorize acquisition of the land; it directed that the land be
acquired by condemnation. More importantly, Congress provided a
line-item appropriation specifically and solely for the Klamath
condemnation. As we stated in our opinion in that case, "The funds
could not have been exhausted by anything but the condemnation of the
Klamath forest lands." These facts, coupled with legislative history
indicating a recognition that the amount appropriated would not be
sufficient to cover the final judgment, caused us to conclude that use
of the judgment appropriation would not offend the established structure
of funding land acquisitions. Unlike the Klamath situation, the Congaree
acquisition is funded from the Land and Water Conservation Fund. Annual
lump-sum appropriations are made to this Fund, allocated among various
projects in committee reports. It is a fundamental proposition, long
recognized by the Congress, that these allocations do not create legally
binding restrictions. See, for example, 55 Comp. Gen. 307 (1975); 55
Comp. Gen 812 (1976). Thus, the "exhaustion of appropriations" cited by
the Park Service refers to these allocations, not to legally available
appropriations. We understand that reprogramming may involve a measure
of inconvenience. Its importance here lies in the fact that a
reprogramming, if made, will provide the required funds without a
necessary increase in outlays, whereas in Klamath there was no way to
avoid an increase in outlays.
EFFECT OF DECLARATION OF TAKING
Setting aside for the moment the question of the so-called "inverse
condemnation," land condemnation can proceed in one of two ways. The
Government can, under 40 U.S.C. 258a, file a declaration of taking, in
which event title vests immediately in the United States and the United
States becomes irrevocably committed to pay the resulting judgment.
Alternatively, the Government can proceed without filing a declaration
of taking (sometimes called a "complaint only condemnation), in which
event the resulting judgment is merely a determination of just
compensation. It does not obligate the United States and is essentially
an offer which the Government can accept (by tendering payment) or
reject (by abandoning the proceeding). We cannot agree that the use of a
declaration of taking should be viewed as another exception and should
somehow render the appropriation process unnecessary. Our discussion
thus far has proceeded on the premise that we are talking about
judgments of the type which obligate the United States--declaration of
taking cases (as in the Klamath case) or judgments in legislative taking
situations (as in the Klamath case) or judgments in legislative taking
situations (as in the Redwood case). We have never been concerned with
"complaint only' judgments as no one has yet suggested that these could
be paid from the judgment appropriation. The point is that using the
judgment as no one has yet suggested that these could be paid from the
judgment appropriation. The point is that using the judgment
appropriation in declaration of taking cases would not merely create
another limited exception to the traditional treatment of land
acquisitions. It would drastically alter the way those judgments are
paid, with budgetary consequences we think are highly undesirable. A
declaration of taking is not forced on the Government by the landowner
or the court. It is a decision made by the acquiring agency (with
committee consent in the case of the Park Service). To permit access to
the general fund of the Treasury through the judgment appropriation in
declaration of taking cases would render congressional ceilings on land
acquisition meaningless, and would largely remove land acquisition from
accountability to the Congress. Knowing that it had unlimited access to
funds, an acquiring agency would have no incentive to obtain realistic
appraisals, to present realistic budget requests to the Congress, or, in
situations affording discretion, to restrict its use of the eminent
domain power to the levels prescribed by Congress through the
authorization and appropriation process. While congressional control
through the appropriation process is, in our view, always a matter of
primary importance, it is all the more vital in times when budgetary
constraints require that all Federal spending be subject to close
scrutiny.
INVERSE CONDEMNATION THEORY
This issue was not mentioned in your letter, but has been raised by
other parties interested in the case. We address it briefly here for
the sake of completeness. While the declaration of taking was filed on
February 22, 1980, the Park Service had actually taken possession of the
land, with court approval, two years earlier on February 23, 1978. The
thrust of the district court's decision at 616 F. Supp. 1235 was that,
for purposes of determining just compensation, the date of taking was
February 23, 1978, and interest on the fair market value should run from
that date. It has been suggested to us that the "condemnation" should be
viewed as encompassing only that portion of the proceedings starting
with the declaration of taking, and that the "damages" for the preceding
two years of possession can be regarded as more in the nature of an
inverse condemnation. (Inverse condemnation judgments are generally
paid from the judgment appropriation, except where actions of an agency
have, either intentionally or unintentionally, "forced" the landowner to
sue and the result would be clear augmentation of the agency's land
acquisition appropriations. For an example of such a case, see Althaus
v. United States, 7 Cl. Ct. 688 (1985).) As to the possible application
of an inverse condemnation theory to the Congaree case, it should
suffice to note that the district court expressly rejected this
approach. The court noted that "both litigants were concerned that the
Court might incorrectly engage in an 'inverse condemnation' analysis to
decide the subject case," and emphasized that "this court is expressly
not basing its decision on an inverse taking theory." 616 F. Supp. at
1259, n. 42. In conclusion, although there have been exceptions based on
the particular statutes involved, it remains our position that the
permanent judgment appropriation should not be used to fund land
acquisitions. The Congaree case, while somewhat more complicated
factually, is in essence a typical land condemnation, and differs
significantly from the few prior cases in which we have approved payment
from the judgment appropriation. It is our opinion therefore, for the
reasons set forth, that use of the judgment appropriation in this case
would be inappropriate.
B-224300 Date: December 18, 1986 In the Matter of: DWS, Inc.
66 Comp. Gen. 155
DIGEST
PROCUREMENT
Sealed Bidding
Bonds
Justification
GAO Review
Air Force regulation that prohibits the use of performance and
payment bonds in nonconstruction contracts unless there is a documented
history of prior default by contractors in the particular type of work
to be performed does not preclude a requirement for such bonds where (1)
the contracting officer's determination to require them is based, in
part, on the fact that a contract for similar services at another
installation was terminated for default and (2) some of the work to be
performed involves construction.
DECISION
DWS, Inc. protests the terms of invitation for bids (IFB) No.
F64605-86-B-0116, issued by Hickam Air Force Base, Hawaii, for housing
maintenance services. DWS contends that the requirement for performance
and payment bonds violates applicable Air Force regulations and unduly
restricts completion. We deny the protest. The Air Force issued the
solicitation on June 25, 1986, as a small business set-aside with an
October 2 bid opening date. The agency contemplated the award of a
contract for a base period of 1 year with four 1-year options. The
contract is to cover routine and emergency services and change of
occupancy maintenance, which entails restoration of walls, appliances,
floors and windows, painting, preventive maintenance, and cleaning for
2,455 units of military family housing at Hickam Air Force Base. The
protest is the incumbent contractor. At issue in this case is whether
the IFB's requirement that the successful contractor furnish a 100
percent performance bond and a 40 percent payment bond violates the
applicable Air Force regulation governing the use of such bonds for
other than construction contracts. This regulation, promulgated on
January 6, 1986, provides in pertinent part:
Performance and payment bonds shall
not be required in other than
construction contracts unless there
is a documented history of prior
default by contractors in the
particular type of work to be
required. Additionally,
documentation of the inherent or
recurring nature of such default,
and the reasons therefor, must be
prepared before a determination to
use such bonds can be made.
Air Force Federal Acquisition Regulation Supplement (AFFARSUP) 28.103-1
(Jan. 6, 1986). DWS construes this regulation as constituting a clear
prohibition against such bond requirements in nonconstruction contracts
except where there is an actual history of prior default by contractors
performing similar work. DWS states that there has not been such a
showing in the instant case, and it maintains that the solicitation must
be amended accordingly. The Air Force responds that this regulation
should not be construed so narrowly. The Air Force argues that the
regulation is not an absolute prohibition, but merely provides guidance
to contracting officers. Focusing upon the exception set forth in the
regulation, the Air Force continues that contracting officers may
consider "additional matters" when exercising their inherent discretion
to determine whether to require payment and performance bonds in a given
case. The Air Force refers to what it describes as performance
problems, resulting deficiency notices and payment deductions under both
DWS's and a predecessor contract, and states that another Air Force
installation has actually defaulted a contractor performing similar
maintenance services. (We recognize that DWS disputes the Air Force's
position as to its performance.) The Air Force thus maintains that the
contracting officer appropriately required performance and payment bonds
for this acquisition. Our Office is required to give great deference to
an agency's reasonable interpretation of its regulations. Big Valley
Lumber Co., B-221181 et. al., Apr. 2, 1986, 86-1 CPD 313. We will not
question an agency interpretation unless it is shown to be unreasonable.
Computer Data Systems, Inc., B-203301, Nov. 6, 1981, 61 Comp. Gen. 79,
81-2 CPD 393. We have construed the Federal Acquisition Regulation
(FAR) provision, 48 C.F.R. 28.103-1 (1985), corresponding to this Air
Force regulation as authorizing contracting officers to include bonding
requirements in nonconstruction contracts, as long as the requirements
are reasonable and imposed in good faith. See Rampart Services, Inc.,
B-221054.2, Feb. 14, 1986, 86-1 CPD 164. The Air Force regulation
somewhat limits the discretion afforded contracting officers under the
FAR, since it requires a showing of a prior default by a contractor
performing the particular type of nonconstruction work called for in the
subject solicitation. In our opinion, only after such a showing is made
can the contracting officer look at additional matters, and then only
for the limited purpose of determining whether the default is of an
inherent or recurring nature. See S.F.A Corp., B-212855, Jan. 9, 1984,
63 Comp. Gen. 154, 84-1 CPD 57 (stating that in determining the
interpretation of regulation, we focus upon the plain meaning). Here, we
conclude that the justification set forth by the contracting officer to
require performance and payment bonds satisfied this regulatory scheme.
The contracting officer first showed that a contract for family housing
maintenance services at Wright Patterson Air Force Base had been
terminated for default. Then, by referring to what the agency considers
unsatisfactory performance under the current and predecessor contracts
at Hickam Air Force Base, the contracting officer showed that the
default may be of an inherent or recurring nature. In addition, as the
agency points out (and the protester does not dispute), this contract
will involve construction-related activities that are covered by the
minimum wage requirements of the Davis Bacon Act, 40 U.S.C. 276( a)
(1982). The tasks in this category include major painting of more than
200 square feet and major floor refinishing of more than 300 square feet
a unit. Assuming that these tasks are severable and meet the Act's
$2,000 threshold, they are properly classified as construction. See
Dynalectron Corp., B-220588, Feb. 11, 1986, 86-1 CPD 68. Thus, the Air
Force regulation at issue here, which by its terms applies only to
nonconstruction contracts, is not applicable to the entire contract to
be awarded under the protested solicitation. Finally, the Air Force
argues that completion was not unduly restricted in that two prior
solicitations with similar requirements drew responses from nine and
five small business bidders, respectively. In view of these
circumstances, we will not disturb the determination of the contracting
officer to require performance and payment bonds for this procurement.
The protest is denied.
B-221765 Date: December 16, 1986 In the Matter of: Commander William W. Heilig, Jr., USN
66 Comp. Gen. 152
DIGEST
MILITARY PERSONNEL
Relocation
Relocation Travel
Travel Time
Delays
Personal Convenience
Service members traveling under permanent change-of-station orders
are eligible under the Joint Travel Regulations for additional travel
time and monetary allowances for delays en route taken at ports to await
delivery of their automobiles, only if they demonstrate that the delays
were caused by circumstances beyond their control. Hence, a Navy
officer may not be allowed an additional 10 days travel time for a delay
taken to accept delivery of his automobile at Norfolk, Virginia, while
he was en route from Bermuda to Texas, where it appeared he could have
avoided the delay by arranging for the timely shipment of the automobile
prior to his departure from Bermuda.
DECISION
The issue in this matter is whether a Navy officer may be allowed an
additional 10 days per diem claimed for a 10-day delay en route taken at
Norfolk, Virginia, during a permanent change-of-station move from
Bermuda to Texas, for the purpose of awaiting the arrival of the ship
carrying his automobile from Bermuda. In light of the facts presented,
and the applicable provisions of statute and regulation, we conclude
that the claim may not be allowed.
BACKGROUND
In March 1985 Commander William W. Heilig, Jr. USN, received orders
reassigning him from Bermuda to Corpus Christi, Texas, on a permanent
change-of-station transfer effective in August 1985. The orders
authorized the taking of up to 30 days leave en route. In compliance
with these orders, Commander Heilig traveled by aircraft from Bermuda to
Norfolk, Virginia, on August 10, 1985. He remained in Norfolk for 15
days, until August 25. He then traveled to Texas by automobile and
reported to his new permanent duty station at Corpus Christi 7 days
later on September 1. The concerned Navy disbursing officials indicate
that Commander Heilig was allowed 5 days time for automobile travel at
the prescribed rate of 300 miles per day for his trip from Norfolk to
Corpus Christi, and that he was paid 5 days per diem predicated on this
allowable travel time. On September 17, 1985, Commander Heilig submitted
a request to his new commanding officer in Texas for 10 days additional
travel time. As the basis for his request, he referred to subparagraph
M1050-2b, of the Joint Travel Regulations, and he provided this
explanation:
Upon completion of an overseas tour of duty
my POV was shipped to Norfolk, Va. Due to
transporting ship's schedule/Navy Supply
procedures (unloadings, processing, etc), I
had to wait nine days after arrival in CONUS
for the release of my POV. An additional day
was
required in order to have the catalytic converter reinstalled. This
request was approved, and as a result Commander Heilig was credited with
an additional 10 days of official travel time, and only 7 days of the
period between August 10 and September 1, 1985, were charged to leave
upon the adjustment of his leave account. Commander Heilig has now
submitted a supplemental travel voucher claiming additional per diem for
the 10 days additional travel time. The concerned disbursing officials
express doubt, however, concerning the propriety of allowing the claim,
and they question whether Commander Heilig's request for additional
travel time was properly approved.
ANALYSIS AND CONCLUSION
Subsection 404(a) of title 37, United States Code, provides that
under regulations prescribed by the Secretaries concerned, a member of a
uniformed service is entitled to travel and transportation allowances
for travel performed or to be performed under orders upon a change of
permanent station. Implementing regulations are contained in Volume 1 of
the Joint Travel Regulations. Subparagraph M1050-2a of those
regulations provides that upon a permanent change-of-station transfer,
generally, 1 day of travel time will be allowed for each 300 miles of
the official distance of the ordered travel when travel is performed by
privately owned conveyance. Subparagraph M1050-2b, which was referred
to by Commander Heilig in his application for additional travel time,
provides:
b. Additional Travel Time. Additional
travel time may be authorized or
approved when travel is delayed beyond
that authorized in subpar. a for reasons
clearly beyond the control of the
member, such as: acts of God,
restrictions by Government authorities,
difficulties in obtaining fuel for
privately owned conveyances, or other
reasons satisfactory to the member's new
commanding officer. The amount of
additional travel time so authorized
may be the actual period of delay or
such shorter periods as may be
determined appropriately by the member's
new commanding officer. The member will
provide his new commanding officer with
a full explanation of the circumstances
which necessitated the delay and such
explanation together with the approval
or disapproval of the commanding
officer, will be appended to his travel
voucher.
We have not previously had the occasion to consider the application of
these provisions of statute and regulation in situations involving
service members delayed en route at ports to await ships carrying their
private automobiles. We have, however, in applying similar provisions
of statute and regulation contained in 5 U.S.C. 5701 et seq. and the
Federal Travel Regulations, which govern the travel entitlements of
federal civil service employees, allowed claims for additional travel
benefits in such situations only where there was a clear indication that
the delay was caused by circumstances beyond the employee's control. We
have allowed additional travel time under this standard in cases where
the timely shipment of an employee's automobile from an overseas duty
station was precluded due to government-caused delays in the delivery of
the employee's travel orders, and where delay resulted from a closing of
the customs office at the port of the automobile's arrival. Conversely,
we have denied such claims in the absence of a clear showing that the
delay was caused by circumstances beyond the employee's control. In the
present case, the regulations upon which Commander Heilig based his
application for additional travel time, quoted above, establish the same
requirement that permits commanding officers to approve requests for
additional travel time only if it is shown that the delay was "for
reasons clearly beyond the control of the member." We do not find that
the explanation furnished by Commander Heilig demonstrates, in the
attendant circumstances, that his 15-day delay en route in Norfolk was
caused by circumstances beyond his control. That is, it appears that he
received his orders over 4 months in advance of the time of his
permanent change-of-station transfer, and he was thus apparently given
ample opportunity to arrange for the timely shipment of his automobile.
Moreover, it has not otherwise been demonstrated that the delay en route
was actually caused by circumstances beyond his control. Instead, every
indication in the record before us is that his entire 15-day stay in
Norfolk between August 10 and August 25, 1985, was primarily a matter of
personal accommodation permitted under the provision in his orders
authorizing him to take leave en route. It follows that Commander
Heilig's application for 10 days additional travel time should not have
been approved, and that he is not entitled to 10 days additional per
diem or a 10-day adjustment in his leave account. Accordingly, we deny
Commander Heilig's claim. The voucher, which may not be processed for
payment, will be retained here.
B-224933 Date: December 12, 1986 In the Matter of: Robertson & Penn, Inc.
66 Comp. Gen. 148
DIGEST
PROCUREMENT
Special Procurement Methods/Categories
Service Contracts
Rate Changes
Administrative Policies
GAO Review
1. When Army policy is to provide low cost laundry and dry cleaning
to service members, the General Accounting Office (GAO) has no legal
basis to question directive which specifically states that installation
commanders, rather than bidders, will establish prices for such
services. GAO generally does not review executive branch policies in
its bid protest function.
PROCUREMENT
Special Procurement Methods/Categories
Service Contracts
GOCO Plants
Use
2. When protester chooses to subcontract a portion of dry cleaning
work that it could perform at a government-owned facility with
government-furnished equipment, its resulting higher prices do not
establish that the government is improperly using appropriated funds to
subsidize or defray the cost of the dry cleaning.
PROCUREMENT
Sealed Bidding
Competitive Advantage
Incumbent Contractors
3. Unless the government has contributed to the competitive
advantage of an incumbent contractor, an agency is not required to take
action to equalize the competition. Nevertheless, when an agency has
provided information as to the incumbent's current workload in the
context of a bid protest, the General Accounting Office suggests that
the agency make this information available to all bidders in a
solicitation amendment.
PROCUREMENT
Contract Management
Contract Administration
GAO Review
4. Protest alleging that the agency improperly failed to review
prices for laundry and dry cleaning services during the course of an
existing contract concerns contract administration, and it is therefore
outside the General Accounting Office's bid protest jurisdiction.
DECISION
Robertson & Penn, Inc. protests the terms of a solicitation for
operation of a government-owned laundry and dry cleaning facility at
Fort Dix, New Jersey. The firm primarily alleges that the prices
specified in the invitation for bids (IFB), No. DABT35-86-B-0099, for
dry cleaning of personal items for individual service members are too
low to cover the contractor's operating costs. Therefore, Robertson &
Penn argues, the Army is improperly using appropriated funds to
subsidize the dry cleaning. We deny the protest. The IFB, issued July
23, 1986, as a small business set-aside, contemplated a 1-year contract
with up to 4 option years. Bidders were to submit lump sum prices for an
estimated amount of military organizational laundry and dry cleaning
each month. The estimates, however, did not include individual piece
rate work, which the solicitation defined as "laundry or dry cleaning
work that is processed for authorized individual patrons on a cash and
carry basis." For this work, Technical Exhibit 10 of the IFB set forth
specific prices that individuals utilizing these services were to pay
directly to the contractor. Before the October 9, 1986, amended bid
opening date, the incumbent contractor, Crown Laundry and Dry Cleaning,
Inc., filed an agency-level protest in which it alleged that the
individual piece rate prices for dry cleaning were less than the costs
which it had incurred in performing the current contract. Crown Laundry
requested the Army to increase these prices to reflect its actual and
administrative costs for subcontracting the dry cleaning, since Fort Dix
does not have dry cleaning equipment. In response to Crown Laundry's
protest, the record indicates, the Army reviewed the individual piece
rate prices in Technical Exhibit 10, which were already approximately 10
percent more than those in the current contract, and determined that a
total increase of 58 percent would be appropriate. This figure was
based on a comparison of prices for similar services at five other
military installations and at a local commercial cleaner. On August 22,
1986, the Army amended the IFB to reflect the 58 percent increase in
individual piece rate prices. One day before the scheduled bid opening
(which has been postponed indefinitely), Robertson & Penn protested to
our Office, arguing that the amended prices are still not sufficient to
cover dry cleaning costs. In support of this argument, the firm
submitted prices from two potential subcontractors making the following
comparison: Item Fort Dix Trenton, N.J. Medford, N.J.
Blouse $1.20 $1.30 $1.25 Cap .30 .50 1.25 Cape 2.40 2.60 1.25 Coat, Rain
2.20 5.60 4.50 Dress, Evening 3.95 5.00 4.00 Jacket 1.35 3.00 3.75
Overcoat, 1.95 3.60 2.50
w/liner Uniform,
Dress 1.95 2.60 2.50 Dress,
Pleated 1.35 3.60 3.50 Like Crown Laundry, Robertson & Penn alleges
that the disparity between actual costs and the "artificially low"
individual piece rate prices set by Fort Dix results in a violation of
Army Regulation (AR) 210-130 (Aug. 15, 1986), specifically Chapter 4-9,
which states that prices will be based on overall operating costs, all
of which must be recovered, and which prohibits the use of appropriated
funds to subsidize or otherwise defray such costs. Robertson & Penn
alleges that in this case, bidders must increase their proposed prices
for monthly service to the Army in order to recoup losses that may be
incurred in providing dry cleaning services to individuals. In this
regard, the firm alleges that the incumbent has an unfair competitive
advantage because only it knows the actual volume--and therefore the
full impact--of the individual piece rate work. Chapter 4-9 also states
that individual piece rate prices will be reviewed at least twice a year
and adjusted as required to ensure that services are not being provided
at a loss. Robertson & Penn maintains that the Army failed to conduct
semi-annual reviews during the course of Crown Laundry's contract, but
did so only in response to the firm's agency-level protest. The Army
responds that Chapter 4-9 specifically authorizes installation
commanders to set individual piece rate prices; that as a matter of
policy, it provides laundry and dry cleaning services to individual
service members at low cost; and that the prices in Technical Exhibit
10 are current as of August 1986. The Army further states that these
prices were set with due regard for the prohibition against the use of
appropriated funds. The government provides in-plant resources,
including maintenance and utilities, at no cost to the contractor, and
according to the Army, all work associated with dry except the actual
washing, extracting, and tumbling can be done at the Fort Dix facility.
Finally, the Army states, the current dry cleaning workload is
approximately 7,400 items a month, or less than 2 percent of the
contract. In its comments on the agency report, Robertson & Penn argues
that permitting a commander to set prices is appropriate only when dry
cleaning is done in-house, and that the Army should otherwise have no
role in setting individual piece rate prices. The firm seeks our
recommendation that bidders, rather than the Army, should set such
prices at whatever level they feel is necessary to cover the cost of dry
cleaning services. Robertson & Penn strongly disagrees with the Army as
to the amount of subcontracting necessary. The firm states that the
pressing capabilities at the Fort Dix facility may be exhausted by other
contract work, and it maintains that "whoever does the dry cleaning
should do the total process." We find, first, that Robertson & Penn is
mistaken as to the scope and applicability of AR 210-130. The policies
and procedures set forth therein apply both to laundry and dry cleaning
facilities that are government owned and operated and to those that are
government owned and contractor operated. Since provision of low cost
laundry and dry cleaning to service members and other authorized patrons
in accord with AR 210-130 is a matter of Army policy, we have no legal
basis to question the setting of prices by installation commanders,
rather than by bidders. Our Office does not generally consider
executive branch policies in its bid protest function. See True Machine
Co., B-215885, Jan. 4, 1985, 85-1 CPD 18. Second, Robertson & Penn does
not attempt to break down the figures provided by its proposed
subcontractors or to show that the difference between their prices and
those in Technical Exhibit 10 is in fact related to the dry cleaning
processes that cannot be performed at Fort Dix. If, unlike the
incumbent contractor, who apparently does some work on site, Robertson &
Penn chooses to subcontract pre-spotting or pressing and finishing, for
example, the resulting higher prices for dry cleaning do not establish
that the Army is improperly using appropriated funds to subsidize the
cost of the services. The protester's allegation about lack of pressing
capacity at Fort Dix is unsupported. Third, Robertson & Penn has not
shown that the government contributed to any competitive advantage of
the incumbent contractor, so as to require it to equalize the
competition. See Universal Alarm Services, B-214022, Mar. 5, 1984, 84-1
CPD 267. We note, however, that the Army has provided, in its report to
our Office, information as to the current individual piece rate
workload, and we suggest that it make this information available to all
bidders by means of a solicitation amendment. Finally, we will not
consider Robertson & Penn's protest regarding the Army's alleged failure
to review individual piece rate prices during the course of Crown
Laundry's contract. This a matter of contract administration, and it
therefore is outside our bid protest jurisdiction. See 31 U.S.C. 3552
(Supp. III 1985); 4 C.F.R. 21.2( f)(1) (1986). The protest is denied.
B-224159 Date: December 12, 1986 In the Matter of: Audio Intelligence Devices
66 Comp. Gen. 145
DIGEST
PROCUREMENT
Noncompetitive Negotiation
Contract Awards
Sole Sources
Propriety
1. Sole-source award is improper where, due to contracting agency's
failure to adequately consider whether protester's products also will
meet its minimum needs, agency fails to show a reasonable basis for its
conclusion that only the proposed awardee can provide the required
products.
PROCUREMENT
Noncompetitive Negotiation
Contract Awards
Sole Sources
Justification
Procedural Defects
2. Contracting agency failed to comply with the procedural
requirements for a sole-source award under the Competition in
Contracting Act of 1984 where written justification for the solesource
award lacks an adequate demonstration of the rationale for agency's
conclusion that only the proposed awardee can provide the required
products.
DECISION
Audio Intelligence Devices (AID) protests the award of a sole-source
contract to Tactical RF, Inc. under request for proposals (RFP) No.
CS-I-86-032, issued by the U.S. Customs Service, Department of the
Treasury, for body transmitter/receiver systems. AID contends that the
contracting agency improperly determined that the awardee was the only
responsible source capable of meeting the agency's needs. We sustain
the protest. On August 4, 1986, the Customs Service published in the
Commerce Business Daily (CBD) a notice of its intention to procure four
body transmitter/receiver systems on a sole-source basis from Tactical
RF, Inc. On August 6, the agency completed its written justification
for the sole-source award pursuant to 41 U.S.C. 253(f) (Supp. III 1985),
as added by the Competition in Contracting Act of 1984 (CICA). Customs
concluded that a sole-source award to Tactical RF was justified under 41
U.S.C. 253(c)(1), which authorizes use of other than competitive
procedures when the items needed are available from only one responsible
source and no other products will satisfy the agency's needs. According
to the justification, the transmitters are for use by undercover Customs
agents and informers and must be easily concealable; in addition, the
transmitters and receivers must operate in certain confidential
frequencies used by the agency. The justification concludes that no
firm except Tactical RF offers both a transmitter and a receiver that
operate in the required frequencies. In this regard, the justification
specifically notes that AID manufactures a transmitter, but not a
receiver, meeting the frequency requirements. In addition, the
justification states that "no other manufacturer markets transmitters or
receivers which have superior technical specifications or small size of
the Tactical Rf units which will operate on the confidential
frequencies." In response to the August 4 CBD notice, AID advised
Customs by letter dated August 5 that it could provide products meeting
the agency's needs. In the product catalog AID submitted for Customs'
review, AID specifically offers to modify its existing products or
manufacture new products if necessary to meet a customer's special
needs. After examining the descriptive literature furnished by AID,
Customs conceded that, contrary to the statement in the justification,
both AID and other firms manufacture receivers which operate in the
required frequencies. Customs nevertheless concluded that AID's
products fail to meet its minimum needs because they do not include
certain physical and technical features available from Tactical RF.
Specifically, Customs states that the AID receiver that operates in the
required frequency range is a two-channel battery-powered model; in
comparison, the Tactical Rf receiver is a four-channel model operating
from multiple power sources, with other superior technical features such
as greater sensitivity and selectivity. With regard to the transmitter,
Customs states that the AID model which meets the frequency requirements
is not as small or as concealable as the Tactical RF model, which is
technically superior as well. Customs also states that while AID
manufactures a transmitter similar to the Tactical RF model, the AID
product does not operate in the required frequency range. Customs
advised AID that its products did not meet the agency's minimum needs by
letter dated September 11. Award then was made to Tactical RF on
September 15. We find that Customs has failed to demonstrate a
reasonable basis for its conclusion that Tactical RF is the only
responsible source for the required products. Specifically, in
evaluating AID's products, Customs did not take into account AID's offer
to modify its standard products to operate in the required frequencies;
instead, Customs' technical evaluation was limited to those AID products
which operate in the required frequencies as a standard feature. Since
Customs did not consider whether other AID products, if adapted to
operate in the required frequencies as AID offers, would meet Customs'
minimum needs, Customs could not reasonably conclude that only Tactical
RF could provide the required products. We also find that Customs'
written justification for the sole-source award was defective. Under
CICA, a contracting agency's justification for a sole-source award in
part must include a description of the agency's needs and a
demonstration, based on the proposed contractor's qualifications or the
nature of the procurement, of the contracting agency's reasons for the
sole-source award decision. 41 U.S.C. 253 (f)(3)(A), (B). In this
case, Customs concedes that its justification is flawed to the extent
that the principal rationale relied on for the award--the unavailability
from any other source of receivers and transmitters operating in the
required frequency ranges--is erroneous. In addition to the erroneous
reference to frequency ranges, the justification contains only a brief
statement that "no other manufacturer markets transmitters or receivers
which have superior technical specifications or small size of the
Tactical RF units which will operate on the confidential frequencies."
The justification does not discuss the unique features of the Tactical
RF product in any detail, however, and does not indicate whether or why
they are necessary to meet Customs' minimum needs. Further, the fact
that no other product has "superior technical specifications," as the
justification states, does not support Customs' position that no other
product offers technical feature equivalent to the Tactical RF product.
We find that the sole-source award to Tactical RF was improper since
Customs has failed to show a reasonable basis for its conclusion that
AID's products do not meet its minimum needs. Specifically, there is no
indication that Customs' needs would not be met by AID's products
modified to operate in the required frequency ranges. Accordingly,
since the sole-source award was not justified, we recommend that Customs
terminate the contract awarded to Tactical RF and conduct a competitive
procurement for the items needed. In addition, since AID has
successfully challenged an improper sole-source award, we find that AID
is entitled to recover the costs of filing and pursuing the protest. See
Bid Protest Regulations 4 C.F.R. 21.6 (e) (1986); Washington National
Arena Limited Partnership, 65 Comp. Gen. 25 (1985), 85-2 CPD 435. The
protest is sustained.
B-223932 Date: December 10, 1986 In the Matter of: Federal Computer Corporation
66 Comp. Gen. 139
DIGEST
PROCUREMENT
Sealed Bidding
Two-Step Sealed Bidding
Offers
Rejection
Propriety
1. Contracting agency acts improperly where, under step one of a
two-step sealed bid acquisition, it rejects a technical proposal as
unacceptable for failure to meet requirements that were either unstated
in the solicitation or, at best, ambiguously stated.
PROCUREMENT
Bid Protest
GAO Procedures
Protest Timeliness
Unapparent Solicitation Improprieties
2. Offeror's failure to request clarification or to protest
regarding ambiguous specifications before the closing date for receipt
of initial proposals does not preclude relief where the ambiguity was
not apparent on the face of the solicitation.
PROCUREMENT
Sealed Bidding
Bids
Preparation Costs
3. Recovery of neither proposal preparation costs nor the costs of
filing and pursuing a protest is appropriate where the remedy afforded
the protester is the opportunity to submit a revised technical proposal
and to be reevaluated on the basis of unambiguous specifications.
DECISION
Federal Computer Corporation protests the rejection of its technical
proposal as unacceptable under step one of a two-step sealed bid
acquisition conducted by the Department of the Navy, Automatic Data
Processing Selection Office, under solicitation No. N66032-85-B-0013.
The solicitation covered keyboard video display terminals (KVDTs),
controllers, printers, associated components, software, training, and
maintenance for eight shipyards. Federal Computer contends that the
Navy improperly rejected its proposal for failure to meet requirements
not set forth in the solicitation. Specifically, the protester contends
that the solicitation did not require, and therefore it did not offer to
provide, an information system in which certain operations (protection
against unauthorized entry of data and two different tab functions) are
performed independently within the terminal, rather than with the
assistance of a controller. The Navy, which disputes this interpretation
of the solicitation, on September 26, 1986, awarded a contract to
Federal Technology Corporation, the low step-two bidder, whose evaluated
life cycle cost was $17,988,607. We sustain the protest.
BACKGROUND
As provided in the Federal Acquisition Regulation (FAR), 48 C.F.R.
14.501-14.503 (1985), two-step sealed bidding combines the benefits of
sealed bids with the flexibility of negotiation. In step one, the agency
request technical proposals, evaluates them, and conducts discussions if
necessary. In step two, which is conducted in accord with sealed bid
procedures, the competition is limited to only those firms that
submitted acceptable proposals under step one. See Midcoast Aviation,
Inc., B-223103, June 23, 1986, 86-1 CPD 577. The solicitation
contemplated an indefinite quantity contract, specifying minimum
quantities for the base year and maximum quantities for 4 succeeding
years. As issued on August 15, 1985, it provided, under paragraph
6.1.1., General Operating Characteristics, that the "video terminals
shall operate with or provide as a minimum" certain enumerated
capabilities. These included "total compatibility with the Honeywell
Information Systems implementation of the IBM 3270 bisynchronous
communications protocol . . . ." and a "protected field" command
pursuant to which no data could be entered. In addition, under
paragraph 6.1.2., Keyboard Characteristics, the solicitation required
that the Keyboard provide a cursor control key for moving to the next
tab position and a back tab key to returning to prior fields on the
screen. On October 15, 1985, the Navy responded to offerors' inquiries
concerning the solicitation by issuing a supplement to the solicitation.
Shortly thereafter, on October 28, 1985, the Navy issued an amendment
with a cover letter which cautioned offerors that, because of recent
internal Navy decisions, the amendment might be contrary to or change
the information in the supplement. Among the changes were the transfer
of certain specifications for the controller, specifically those
concerning data transmission speed and duplex and bisynchronous mode
operation, from section 6.1, describing the required terminals, to
section 6.3, describing the required controller. The amendment also
changed paragraph 6.1.1., General Operating Characteristics, to provide
that the "video terminals, all of which will operate from controllers
proposed in paragraph 6.3, shall operate with or provide as a minimum"
certain specified capabilities, adding the underlined language. The Navy
advises us that several offerors submitted multiple proposals in
response to the solicitation. After an initial evaluation, the agency
requested clarifications from 5 offerors, including Federal Computer,
concerning 11 proposals that it had found susceptible of being made
acceptable. In the initial request for clarifications directed to
Federal Computer, the Navy noted that was not able to verify that its
proposal satisfied the requirement for a protected field "in a mode
compatible with the required Honeywell Information Systems
implementation of the IBM 3270 bisynchronous communications
environment," and it asked the firm to provide technical references that
explained how this requirement was met. The agency likewise asked for
clarifying information concerning the required next tab and back tab
capabilities. In a subsequent request for clarifications, the agency,
again referring to the compatibility requirement and to the controller
specifications, requested that Federal Computer:
provide clarifications and supporting technical
references describing how the proposed KVDT provides
the IBM 3270 functionality. Also explain the
distinction as to how the required KVDT features are
performed in the KVDT vice the controllers.
Federal Computer responded that the proposed equipment satisfied the
requirement for protected field, next tab, and back tab capabilities in
a manner compatible with the Honeywell implementation of the IBM 3270
bisynchronous communications protocol. Federal Computer indicated that
the protected field function "can be simulated in the controller, using
an internal, transparent buffer," and that the "controller translates
and maps the data and attributes as necessary to provide the proper full
screen image." As for the next tab and back tab capabilities, it stated
that the "actual internal (controller) treatment and handling of these
attributes is the same as described for protected fields." The agency,
however, rejected these proposed solutions and found Federal Computer's
proposal to be technically unacceptable. The contracting officer
advised the firm that, as stated in the solicitation:
the display terminal shall contain a local
intelligence that permits it to perform the field
protection function without communicating with any
other device. In both cases protected field and next
tab/back tab, your proposed solution requires that the
terminal be mapped to the IBM 3270 function by the
emulation process in conjunction with the proposed
controllers, not at the display terminal . . . . The
proposed solution does not meet the Navy's requirement
and is unacceptable.
The Navy then solicited sealed bids from the three offerors that had
submitted technically acceptable proposals under step one of the
procurement and, as noted above, on September 26, 1986, made award to
Federal Technology Corporation.
FEDERAL COMPUTER'S PROTEST
Upon learning of the rejection of its proposal, Federal Computer
first filed a protest with the agency, then with our Office. Federal
Computer denies the contracting officer's assertion that the
solicitation required the terminal to contain a "local intelligence"
permitting it to perform the protected field, next tab, and back tab
functions without communicating with any other device. Federal Computer
maintains that, to the contrary, the solicitation, as amended,
implicitly contradicts this by providing that the "video terminals, all
of which will operate from controllers proposed in paragraph 6.3, shall
operate with or provide as a minimum" certain enumerated functions.
Even if the solicitation is construed as requiring such "intelligent"
terminals, Federal Computer maintains, it was at least as reasonable for
it to interpret the solicitation as not requiring the terminals to
provide the protected field, next tab, and back tab functions without
the assistance of the controllers. Federal Computer concludes that its
technical proposal was improperly rejected, either on the basis of
unstated requirements or as a result of ambiguous specifications. The
Navy responds that the language in the amendment cited by the protester
was only intended to inform offerors that all the terminals would be
connected to the host computer through the controllers and that this
equipment must be compatible. The agency maintains that Federal
Computer's interpretation of the amendment is inconsistent with the
basic requirement in the "Scope of Contract" section of the solicitation
for the terminals to provide:
complete compatibility with the addressing sequence,
command code structure, and line discipline employed
by the IBM 3270 Information Display System . . . .
The Navy maintains that the IBM 3270 type terminal is:
an intelligent terminal which performs its functions
based on attribute control codes received form a host
application program and does not require intervention
or communication with any other device or component.
Federal Computer disagrees; it maintains that the IBM 3270 Information
Display System includes a number of different terminals, at least some
of which operate in conjunction with the system's controller to provide
the protected field, next tab, and back tab functions.
GAO ANALYSIS
It is a fundamental principle that an agency may evaluate offers only
on the basis of the factors and requirements specified in the
solicitation. 10 U.S.C. 2305 (b)(1) (Supp. III 1985); see Cardkey
Systems, B-220660, Feb. 11, 1986, 86-1 CPD 154. Moreover, solicitations
must be sufficiently definite to permit competition on a common basis.
Consequently, specifications must not be ambiguous. An ambiguity exists
if the specifications are subject to more than one reasonable
interpretation. Nasuf Construction Corp.--Reconsideration, B-219733.2,
Mar. 18, 1986, 86-1 CPD 263. Rejection of a proposal for failure to
satisfy only one interpretation of an ambiguous specification is
improper. Rocky Mountain Training Co., B-220925, Mar. 3, 1986, 86-1 CPD
214. Here, our technical consultants confirm that the IBM 3270
Information Display System consists of a family of terminals and
controllers, providing a standard set of functions in a variety of ways;
according to our consultants, some of the terminals require controller
assistance to perform the functions in question. Since there is no
dispute that Federal Computer proposed using controllers for the
protected field, next tab, and back tab functions, the question before
us is whether Federal Computer's proposed solution is contrary to the
mandatory, unambiguous requirements of the solicitation. The Navy argues
that in the supplement (question No. 19), it clearly stated that it is
unacceptable for the controller, rather than the terminal, to supply the
required "synchronous line protocol and terminal poll address," even
though this would allow offerors to propose less expensive terminals.
Also in the supplement (question No. 18), the Navy indicated that some
terminals would be used in a "stand alone" mode, not connected through a
controller, and that certain "specified functions" must be available for
these terminals. If Federal Computer found the specifications ambiguous,
the Navy further maintains, Federal Computer was required either to make
a written request for clarification or to file a protest based upon an
alleged solicitation impropriety by the closing date for receipt of
proposals. In any event, the agency argues that its requests for
clarifications put the firm on notice of the Navy's interpretation of
the specifications. We find Federal Computer's interpretation of the
solicitation reasonable. Nothing in the initial solicitation clearly
required that the three functions in question--protected field, next
tab, and back tab--be provided by the display terminals without the
assistance of the controllers. Nor were the functions specified in
questions 18 and 19 of the supplement those at issue here. Moreover,
the cover letter to the subsequently-issued amendment cautioned offerors
that the amendment might differ from the supplement, and the amendment
itself provided that all terminals would operate from controllers. We
find the argument that the agency's requests for clarifications also put
the firm on notice of the Navy's interpretation of the specifications
irrelevant, since the Navy did not afford offerors an opportunity to
revise their proposals at that time. We therefore do not believe that
any ambiguity was reasonably apparent before the closing date for
receipt of proposals, and Federal Computer's failure to request
clarification or to protest by that date does not provide a basis for
denying relief. Cf. Wheeler Brothers, Inc., et al.--Request for
Reconsideration, B-214081.3, Apr. 4, 1985, 85-1 CPD 388. Finally, 46
working days after this protest was filed and 14 working days after the
submission of Federal Computer's comments on the agency report, the Navy
filed a submission with our Office in which it claimed that the
solicitation required offerors to propose terminals that operate in an
"identical manner" to the leased systems being replaced. The
solicitation, however, merely required compatibility with certain
elements of the IBM 3270 information Display system. The Navy has
failed to cite, and we are unaware of, a particular provision in the
solicitation requiring the terminals to operate in an "identical manner"
to the leased systems being replaced. Since we consider the agency's
argument to be without merit, we need not address the timeliness of the
submission. Cf. Price Waterhouse , 65 Comp. Gen. 206 (1986), 86-1 CPD
54; 4 C.F.R. 21.3 (g) (1986). We conclude that the Navy acted
improperly in rejecting Federal Computer's proposal for failure to meet
requirements that were either unstated in the solicitation or, at best,
ambiguously stated.
REMEDIES
By letter of today, we are recommending that the Navy reopen
negotiations with the offerors that responded to the initial
solicitation, clearly and unambiguously inform them as to what is
required to meet the agency's minimum needs, and afford them the
opportunity to submit revised technical proposals. Those whose
proposals are acceptable should be invited to submit sealed bids. If
appropriate, the Navy should terminate the awarded contract and award a
new one. If Federal Technology remains entitled to the contract, but
the price it submits is less than its current contract price, the
contract should be modified accordingly. See Consolidated Bell, Inc.,
B-220425, Mar. 11, 1986, 86-1 CPD 238; see also Cardkey Systems, supra;
but cf. Rocky Mountain Trading Co., supra. As for Federal Computer's
costs, the Competition in Contracting Act of 1984, 31 U.S.C. 3554 (Supp.
III 1985) and our Bid Protest Regulations, 4 C.F.R. 21.6 (d), provide
authority for our Office to declare protesters entitled to proposal
preparation costs and the costs of filing and pursuing a protest. We
will, however, only allow the recovery of proposal preparation costs
where the contracting agency unreasonably excluded the protester from
the competition and no other remedy enumerated in sections 21.6(a) (2-5)
of our regulations is appropriate. 4 C.F.R. 21.6(e). One of the
enumerated remedies is a recommendation that the contract be recompeted,
which in effect we are making in this case. Accordingly, the recovery
of proposal preparation costs is not appropriate here. Federal
Properties of R.I., Inc. , B-218192.2, May 7, 1985, 85-1 CPD 508; see
also Greenleaf Distribution Services, Inc. , B-221335, Apr. 30, 1986,
86-1 CPD 422; cf. Koehring Co., Speedstar Division , 65 Comp. Gen. 268
(1986), 86-1 CPD 135. Our regulations permit recovery of the costs of
filing and pursuing a protest where the protester had been unreasonably
excluded from the procurement, unless we recommend that the contract be
awarded to the protester and the protester actually receives the award.
4 C.F.R. 21.6 (e). Where, however, as a result of our recommendation,
the protester, whose proposal was improperly rejected, is given the
opportunity to compete for award, the unreasonable exclusion is thereby
corrected. Thus, the recovery of the costs of filing and pursuing the
protest would be inappropriate. The Hamilton Tool Co. , B-218260.4,
Aug. 6, 1985, 85-2 CPD 132. The protest is sustained.
B-223915 Date: December 10, 1986 In the Matter of: American BallScrew
66 Comp. Gen. 133
DIGEST
PROCUREMENT
Bid Protest
GAO Procedures
Protest Timeliness
Apparent Solicitation Improprieties
Protest that request for quotations for a preapproved ballscrew
unduly restricts competition must be filed before the closing date for
receipt of quotations.
PROCUREMENT
Competitive Negotiation
Contract Awards
Pre-Qualification
Determination Time Periods
A potential offeror may not be denied the opportunity to submit an
offer (or quotation) and have it considered for a contract solely
because the offeror has not met a prequalification requirement if the
offeror can demonstrate that the offeror or its product can meet the
standards established for qualification before the date specified for
award.
PROCUREMENT
Specification
Minimum Needs Standards
Competitive Restrictions
Pre-Qualification
Design Specifications
In procurements with prequalification requirements, contracting
agencies have a statutorily-imposed duty to specify in writing and make
available upon request all requirements that a potential offeror or its
product must satisfy to become qualified, such requirements to be
limited to those least restrictive to meet the agencies' needs. By
advising an offeror that no specifications, plans of drawings were
available for required ballscrews, when the agency had a specification
control drawing, the agency effectively precluded the offeror from any
opportunity to qualify, in violation of its duty to facilitate
qualification and competition.
PROCUREMENT
Competitive Negotiation
Offers
Preparation Costs
Recovery of the protester's quotation preparation costs and its costs
of filing and pursuing the protest, including attorney's fees, is
allowed where the contracting agency's actions effectively excluded the
protester from the procurement, and there was a substantial likelihood
that the protester would have received award.
DECISION
American BallScrew protests the rejection of its quotation under
request for quotations (RFQ) No. FD2050-86-15911. The RFQ was issued by
Kelly Air Force Base, Texas, for 42 critical spare-part ballscrews that
are a component of the assemblies used to install and remove the engines
from F-111 aircraft. Because a failure of a ballscrew could cause an
engine to fall, resulting in injuries to personnel as well as damage to
the engine, the user activity assigned a procurement method code to the
items that restricted competition to previously approved sources.
American BallScrew, which is not an approved source, protests that the
prequalification requirement was unduly restrictive of competition and
the Air Force failed to provide American Ballscrew with a reasonable
opportunity to attain approval prior to award. We sustain the protest.
Background American BallScrew learned of the procurement through a
synopsis published in the Commerce Business Daily (CBD), February 13,
1986, that listed an approximate closing date of April 3, 1986. The
synopsis identified the ballscrew assembly by its national stock number
assigned by the General Services Administration, and the part numbers of
the previously-approved sources, Beaver Precision Products, Inc. and
General Dynamics Corporation. There was a brief description of the
ballscrew, but no precise specifications. The synopsis stated that the
agency would consider quotations from any responsible source, but
explained that the source must submit: 1) evidence of satisfactorily
having produced the required parts for the government or its prime
contractor; or 2) such complete engineering data, qualification test
reports, etc. as may be required to determine the acceptability of the
source's product. The synopsis further stated that the specifications,
plans or drawings related to the procurement were not available and
could not be furnished by the government. On the date the RFQ was
issued, March 6, American BallScrew asked a representative of the
contracting activity to loan the firm a ballscrew for the purpose of
design replication. The protester received no immediate response to the
request, but did have an opportunity to inspect visually a ballscrew at
Kelly Air Force Base before submitting a quotation on March 14. On
April 24, the representative told the protester that there were not
enough ballscrews in stock for loaning. The Air Force took no action
regarding the quotation until May 20, apparently because the initial
buyer had been reassigned and not replaced until that date. The new
buyer advised American BallScrew that it must submit drawings for
evaluation. Since neither of the approved sources had submitted a
quotation by June 9, The Air Force again sent each of them an RFQ. Both
firms responded by submitting quotations between June 24 and 26. At
that time, the Air Force decided to consider only the quotations from
the approved sources because the agency's ballscrew stock had been
depleted and the ballscrews were critically needed for mission support.
On July 18, the Air Force issued a purchase order to Beaver Precision
Products based on its quoted price of $542 per ballscrew. General
Dynamics and the protester quoted unit prices of $590.86 and $295.00,
respectively. One week before the award, American BallScrew obtained a
copy of the specification control drawing and advised the Air Force it
would submit the required drawings. The drawings were submitted on July
24, and the agency evaluated them with regard to qualifying American
BallScrew's product for future procurements. The Air Force engineers
have determined that the protester will have to submit a prototype
ballscrew for performance testing.
Prequalification Requirement Issue
To the extent the protester complains that the Air Force's
prequalification requirement was unduly restrictive, the protest is
untimely. Our Bid Protest Regulations require that a protest of
solicitation improprieties apparent prior to the closing date for the
receipt of proposals (or quotations) be filed prior to the time for
closing. 4 C.F.R. 21.2(a)(1) (1986); see Ralph Constr., Inc.,
B-222162, June 25, 1986, 86-1 CPD 592. The closing date was April 3,
1986, of which American BallScrew had notice based on the CBD synopsis.
The protest, however, was filed almost 4 months later on August 1, and
therefore we will not consider this issue.
Reasonable Opportunity to Qualify
Although the protester's challenge to the procurement methodology is
untimely, its protest that the Air Force did not afford it a reasonable
opportunity to prequalify its product is timely and will be considered
on the merits. Initially, we note that the Air Force suggests that
American BallScrew was not eligible for award since it was not
designated as a preapproved source by the user activity. Section 1216(
a) of the Department of Defense Authorization Act, 1985 (Act), 10 U.S.
C. 2319(c)(3) (Supp. III 1985), provides, however, that a potential
offeror may not be denied the opportunity to submit an offer (or
quotation) and have it considered for a contract solely because the
potential offeror has not met a prequalification requirement if the
offeror can demonstrate to the satisfaction of the contracting officer
that its product meets the standards established for qualification or
can meet such standards before the date specified for award. Thus, an
offeror may not be excluded from consideration merely because it is not
an approved source. In this regard, the Air Force's synopsis of the
procurement properly did state that any responsible sources could
compete, subject to the requirement for a preaward determination that
the source's product was acceptable. The Act further provides that the
contracting agency must specify in writing and make available to a
potential offeror upon request all requirements which a prospective
offeror or its product must satisfy in order to become qualified, such
requirements to be limited to those no more restrictive than necessary
to meet the agency's needs. 10 U.S.C. 2319(b)(2). The agency also must
ensure that a potential offeror is provided, upon request, a prompt
opportunity to demonstrate its ability to meet the prequalification
standards. 10 U.S.C. 2319(b)(4). These provisions effectively create a
duty on the part of a contracting agency to take certain action towards
qualifying new sources. The protester argues that the Air Force withheld
an available specification control drawing of an approved ballscrew and
refused to loan American Ballscrew the item, thus depriving American
Ballscrew of information that would have enabled it to submit the
necessary drawings for evaluation. The Air Force responds that the
protester did not request the specification control drawing, which
indisputably existed, and that there were insufficient ballscrews in
stock for loaning. The Air Force argues that the protester was at fault
for failing to contact the buyer to obtain the prequalification
requirements immediately after the CBD synopsis was issued, and for
delaying submission of its drawings for evaluation. Regarding the Air
Force's failure to loan the protester a ballscrew, we point out that an
agency may impose restrictions upon loaning spare-part items because of
inventory needs, 10 U.S.C. 2320( d), and we have no reason to question
the Air Force's statement that its inventory was depleted to such an
extent that no ballscrew was available for loaning. It is our view,
however, that the Air Force failed to meet its statutorily-imposed duty
to devise specific prequalification requirements that were least
restrictive of competition, and to advise a potential offeror of those
requirements upon request. The record shows that soon after the CBD
notice was published, an American BallScrew representative visited the
contracting agency to determine what the agency's needs were. Further,
the protester requested a copy of the RFQ and subsequently requested the
agency to loan it a ballscrew. Although the record does not indicate
whether the protester specifically requested the buyer to make available
all of the qualifications its product must meet to be approved, it
should have been clear that the offeror was seeking all information that
would enable it to qualify and to compete. At that time the Air Force
possessed a drawing that detailed the required dimensions and
characteristics of the ballscrew. Since the RFQ contained no precise
specifications, the drawing would have provided much of the information
necessary for prequalification. (The Air Force determined that
performance testing also would be required for approval, although not
until after the protester had submitted its quotation.) It is
disingenuous of the Air Force to argue that American BallScrew never
requested the available drawing since American BallScrew had no reason
to doubt the truthfulness of the statement in the CBD synopsis that
specifications, plans or drawings related to the procurement were not
available and could not be furnished by the government. The fact is
that the Air Force disclosure of the drawing would have made the
standards for prequalification less vague and restrictive. If American
BallScrew had been given the drawing promptly, we expect that it could
have attained product approval in the period of approximately 5 months
between when it expressed interest in the procurement and the award was
made. In this regard, we note that although American BallScrew did not
produce the required item, the protester contends that it manufactured a
commercially available ballscrew that easily could have been modified to
meet the agency's needs. In addition, 3 weeks after receipt of the
drawing the protester submitted drawings that convinced agency engineers
that the protester could be an acceptable source if it submitted a
prototype ballscrew that passed testing. It is clear that the agency's
in withholding the drawing and a precise statement of the
prequalification requirements precluded American BallScrew from having
the opportunity to develop the item and have it tested with reasonable
promptness as required by 10 U. S.C. 2319(b)(4). We therefore sustain
the protest. Although the protester requests that we recommend
termination of Beaver Precision Product's contract for convenience, such
action is not feasible since the ballscrews already have been delivered.
By separate letter to the Secretary of the Air Force, we are
recommending that the agency take appropriate action to allow American
BallScrew to qualify its product for further procurements, and to
prevent a recurrence of this problem in such procurements. The protester
also has requested reimbursement of its quotation preparation costs as
well as the costs of filing and pursuing the protest, including
attorney's fees. We will allow a protester to recover its quotation
preparation costs where the protester, having a substantial chance for
award, was unreasonably excluded from the procurement and none of the
remedies listed in our regulations, at 4 C.F.R. 21.6(a)(2)-5, is
appropriate. Edgewater Machine & Fabricators, Inc., B-219828.3, Apr. 14,
1986, 65 Comp. Gen. 488, 86-1 CPD 359. In this case, as indicated
above, the Air Force's actions effectively excluded American BallScrew
from the competition, and under the circumstances we cannot say that
American BallScrew, had it not been so excluded, would not have had a
substantial chance for award. We therefore find the protester entitled
to reimbursement of its quotation preparation costs. Regarding the costs
of filing and pursuing a protest, we will allow the recovery of such
costs, including attorney's fees, where the agency's actions effectively
excluded the protester from the procurement, except where our Office
recommends that the contract be awarded to the protester and the
protester receives the award. 4 C.F.R. 21.6(d) and (e); Kavouras,
Inc., B220058.2 et al., Feb. 11, 1986, 86-1 CPD 148, aff'd, FAA-Request
for Reconsideration, B-220058.4, Apr. 23, 1986, 86-1 CPD 394. Since the
Air Force's actions had the effect of precluding the protester from an
opportunity to compete, we also allow the recovery of American
BallScrew's protest costs, including attorney's fees. American
BallScrew should submit its claim for costs directly to the Air Force.
See 4 C.F.R. 21.6(f).
Conclusion
We sustain the protest and allow the protester's request for
reimbursement of its quotation preparation costs and its cost of filing
and pursuing the protest, including reasonable attorney's fees.
B-224656 Date: December 9, 1986 In the Matter of: TVI Corporation
66 Comp. Gen. 127
DIGEST
PROCUREMENT
Bid Protest
GAO Procedures
Protest Timeliness
Apparent Solicitation Improprieties
Contention that specification in invitation for bids (IFB) overstated
contracting agency's minimum needs is timely where filed within 10 days
after contracting officer advised the protester that a technical feature
which the protester maintains was required by the specification would
not be needed.
PROCUREMENT
Specifications
Minimum Needs Standards
Competitive Restrictions
Design Specifications
Justification
Contention that specification in IFB overstated contracting agency's
minimum needs by requiring that wiring harness for thermal targets have
special power-saving circuitry is without merit where there is no
reasonable basis to conclude that the specification imposed that
requirement.
PROCUREMENT
Sealed Bidding
Invitations for Bids
Evaluation Criteria
Unit Prices
IFB for thermal targets and wiring harnesses which provided that
award would be based on the "price of basic targets" did not require the
contracting agency to exclude bids for the harnesses in calculating the
lowest bid where the bidding schedule included line items for equal
quantities of the targets and harnesses and the reference to "basic
targets" in the award clause reasonably encompassed the harnesses, which
are necessary to operate the target systems.
PROCUREMENT
Sealed Bidding
Contract Awards
Multiple/Aggregate Awards
Although IFB required consideration of multiple awards for components
of an integrated thermal target system, contracting agency's decision
that aggregate award was necessary to meet its minimum needs was proper
where multiple awards would require equipment modification to make
components compatible.
PROCUREMENT
Bid Protest
Moot Allegation
GAO Review
Contention that contracting agency improperly increased protester's
bid by the cost of installing its products is academic where did would
not be low even without the addition of any installation costs.
PROCUREMENT
Contract Types
Basic Ordering Agreements
Purchase Orders
Optional Use
There is no basis to require contracting agency to terminate an
existing contract in order to place an order for the items being
procured under a basic ordering agreement which did not take effect
until after the existing contract was awarded.
DECISION
TVI Corporation protests the award of a contract to Blane
Enterprises, Inc. under invitation for bids (IFB) No. DAHA 10-86-B-0009
issued by the United States Property and Fiscal Officer, Idaho, for
thermal targets for use by the Idaho Army National Guard. We deny the
protest. The IFB, issued on July 11, 1986, called for bids on 985
thermal targets and wiring harnesses along with related equipment
(target repair kits and "J-bolt" hardware sets) for use in tank gunnery
training. Bids were to be submitted by line item for each of four
different types of targets and harnesses, the repair kits, and the
hardware sets. Two firms, TVI and Blane Enterprises, submitted bids.
Blane's total bid for all 10 line items was lower than TVI's total bid.
The bids for targets, harnesses, and related equipment were as follows:
TVI Blane
Targets (all types) $258,904.50 $346,665 Harnesses (all types)$
178,672.15 $ 64,085 Repair kits $ 120.00 $ 300 Hardware $ 9,850.00 $
5,910
$447,546.65 $416,960
Shipping $ 8,000.00
$455,546.65 $416,960
On September 3, the National Guard made an aggregate award for all 10
line items to Blane. TVI then filed its protest on September 12. On
October 24, the agency authorized performance of the contract
notwithstanding the protest based on its finding under the Competition
in Contracting Act of 1984, 31 U.S.C. 3553(d)(2)(A)(ii) (Supp. III
1985), that urgent and compelling circumstances would not permit waiting
for a decision on the protest. TVI challenges the award to Blane on
several grounds, arguing that (1) Blane's wire harnesses do not comply
with a requirement in the IFB for compatibility with the specified
target elevating mechanism; (2) the IFB required that award be based on
the bids for the targets only, without considering the bids for the
harnesses and related equipment; and (3) the agency should have made
multiple awards to both bidders instead of an aggregate award to Blane.
TVI also argues that the contract with Blane should be terminated in
favor of placing orders for the targets under a basic ordering agreement
which took effect after the Blane contract was awarded. As discussed in
detail below, we find TVI's arguments to be without merit. Wire harness
interoperability The original IFB contained a list of 16 specifications
for the thermal targets; paragraph 11 required that they
be designed so that power to heat the targets
can be provided by Army standard 220VAC, 110VAC,
24VDC, and 12VDC for interoperability with all
type classified Army target elevating mechanisms.
TVI states that after it received the IFB, it advised the contracting
officer that no device was available which could operate on all four
voltages as required in paragraph 11 of the IFB. The Army subsequently
issued amendment No. 1 to the IFB which modified the specification as
follows:
The following items of the specifications are
clarified: . . . (2) Para 11 dealing with power
requirements: 24/12V DC is required for targets
proposed.
TVI argues that the term used in paragraph 11--"all type classified Army
target elevating mechanisms"--refers to a device which provides power
for the target and lifting mechanism exclusively from a battery. TVI
maintains that in order to prevent depletion of the battery which would
result from a continual power supply to the mechanism, the wire harness
of the target requires special circuitry to conserve the battery power
by shutting off the current flow to the target while it is not exposed
to fire. TVI states that its bid for wire harnesses was based on
providing harnesses with this power-saving feature. On September 5,
after the award had been made to Blane, the contracting officer advised
TVI that the target elevating mechanism would be powered by a generator
rather than exclusively by a battery, as TVI had assumed. According to
TVI, since a generator provides a constant power supply not subject to
depletion like a battery, a simpler, less expensive wire harness without
the power-saving feature would have been adequate to meet the National
Guard's needs. To the extent the specification requires the more
elaborate wire harness, TVI argues, the specification overstates the
National Guard's minimum needs. TVI states that had it known that the
National Guard planned to use a generator, TVI would have based its bid
on the simpler wire harness, and, as a result, would have lowered its
bid for the harnesses by approximately two-thirds, making its total bid
significantly lower than Blaine's total bid. TVI also asserts that the
awardee's bid was nonresponsive because its wire harnesses lack the
power-saving feature. We find TVI's arguments to be without merit. As a
preliminary matter, the National Guard maintains that TVI's argument is
untimely because the issue was not raised before bid opening. We
disagree. Our Bid Protest Regulations require that protests based on
alleged improprieties apparent on the face of the IFB be filed before
bid opening. 4 C.F.R. 21.2(a)(1) (1986). In this case, however, the
alleged impropriety--a specification which overstates the National
Guard's minimum needs--was not apparent until TVI was advised by the
contracting officer after bid opening that the National Guard would not
be using the power source which TVI maintains is required by the
specification. Since the protest was filed within 10 days after TVI was
advised of the National Guard's plans, the protest is timely. See 4 C.
F.R. 21.2(a)(2); E.C. Campbell, Inc., B-205533, July 8, 1982, 82-2 CPD
34. Even assuming, as TVI contends, that the target elevating mechanism
referred to in the specification operates exclusively by battery, TVI
has not shown that the specification required bidders to provide wire
harnesses with the circuitry TVI states is necessary to conserve battery
power. First, the specification does not state explicitly that the wire
harnesses are to include the power-saving circuitry TVI describes, nor
does the IFB contain any requirement regarding the amount of time the
battery must operate before recharging or replacement. Further, TVI
offers no evidence to show how long the battery power would last without
the power-saving harness circuitry; TVI states only that the battery
would be "quickly depleted." TVI thus has not shown that the power
depletion would be so rapid that the power-saving circuitry is a
prerequisite for any reasonable operation of the target system. Since
the specification cannot reasonably be interpreted to require the more
elaborate harnesses, we see no basis for concluding that it overstated
the National Guard's minimum needs as TVI contends. Finally, TVI
maintains that the Blane bid should be considered nonresponsive to the
IFB since the agency has not "verified" that the harnesses will operate
with the target elevating mechanism. There is nothing on the face of
Blane's bid that would indicate that it intended to offer harnesses that
did not conform to the IFB specification. Therefore, Blane's bid is
nonresponsive. Bender Shipbuilding & Repair Co., Inc., B-219629.2, Oct.
25, 1985, 85-2 CPD 462. TVI's complaint is that the agency has not
"verified" that Blane can supply harnesses that will work. That is a
matter of Blane's responsibility which the agency has affirmatively
determined by making award to the firm. Digital Equipment Corp.,
B-219435, Oct. 24, 1985, 85-2 CPD 456. We do not review such
determinations except in circumstances not present here. 4 C.F.R.
21.3(f)(5). Moreover, TVI has not shown any reasonable basis for this
contention, since the only allegedly incompatible feature of the Blane
harness according to TVI is the lack of power-saving circuitry, which we
find was not required by the specifications in the IFB. Calculating the
lowest bid TVI argues that the lowest bid should have been calculated
solely on the basis of the bids for targets, excluding the bids for the
wire harnesses and related equipment. We disagree. Section M.6 of the
IFB provided as follows with regard to the evaluation of bids:
CONTRACT AWARD. The government
will award a contract resulting
from this solicitation to the
responsible offer whose offer,
conforming to the solicitation will
be most advantageous to the
government, cost or price and other
factors considered. Award factors
will include but not be limited
to the following:
a. Price of the basic targets.
b. Cost of government-furnished
labor and materials to emplace,
maintain and replace target system.
TVI argues that by referring solely to the "price of basic targets," the
National Guard effectively excluded bids for the other items from the
calculation of the lowest price. According to TVI, it was reasonable to
conclude that the Army would procure only the targets, since, unlike the
harnesses, the targets cannot be reused. The bidding schedule calls for
bids on equal quantities of targets and wire harnesses; accordingly, it
was more reasonable for bidders to assume that the targets and harnesses
would be used together rather than, as TVI maintains, that the National
Guard intended only to replace used targets. Most significantly, the
line items in the bidding schedule for items other than targets would be
superfluous under TVI's interpretation. Further, the reference to "basic
targets" in section M. 6 of the IFB, while not as clear as it should
have been, reasonably encompasses the wire harnesses, equipment which is
required to operate the target system. Thus, in our view, the only
reasonable interpretation of the IFB, considering both the bidding
schedule and section M.6, is that bids on all the items would be
considered.
Multiple awards
TVI argues that the National Guard should have made multiple awards
to both bidders instead of an aggregate award to Blane. Specifically,
TVI contends that the National Guard should have awarded a contract for
the targets to TVI based on its lower bid for the targets ($258,904.50
v. $346,665 bid by Blane), and awarded a contract solely for harnesses
to Blane, whose bid for those items was lower ($64,085 v. $178,672.15
bid by TVI). As a preliminary matter, we agree with TVI that the
National Guard was required to consider making multiple awards. Our
Office has required award on the basis of the most favorable overall
cost to the government. Consequently, where multiple awards are not
prohibited by the solicitation and would result in the lowest overall
cost to the government, separate awards to different bidders who are low
on individual items, rather than an aggregate award, are proper. See
Talbott Development Corp., B-220641, Feb. 11, 1986, 86-1 CPD 152. Here,
while the National Guard states that multiple awards were not intended,
the IFB did not clearly indicate that an aggregate award was intended.
In fact, the agency failed to insert a check in the space provided to
show whether or not the multiple awards clause, FAR, 48 C. F.R.
52.214-22, set out in section M.1 of the IFB, was applicable. Even where
a solicitation fails to specifically provide for award solely on an
aggregate basis, however, an aggregate award is proper where, as here,
it is evident from the solicitation that the contracting agency's
minimum needs require it and there is no prejudice to other bidders.
See Blinderman Const. Co., B-216298, Dec. 24, 1984, 84-2 CPD 688, aff'd
on reconsideration, B-218028, Feb. 20, 1985, 85-1 CPD 214. There
clearly was no prejudice to TVI, the only other bidder, since its bid
covered all the items in the IFB, and it thus was not misled into
bidding on only some of the items. Id. Further, there was no
requirement in the IFB specifications that the harness offered be
compatible with other than the bidder's targets. There also is nothing
in the record showing that different manufacturers' targets and
harnesses are normally interchangeable. On the contrary, the National
Guard states that the targets and the Blane harnesses are not compatible
unless modified through the use of adapters or some other means, thus
decreasing the efficiency of range operations and adding set-up and
repair time. Although TVI states without elaboration that it disagrees
with the National Guard's conclusion regarding the impact on the
efficiency of range operations, TVI concedes that some modification
would be required to use the TVI targets with the Blane harnesses.
Accordingly, we find that it was reasonable for the National Guard to
make an aggregate award for components intended to operate as part of
the same system, where it is undisputed that the components would
require modification to operate as part of the same system, where it is
undisputed that the components would require modification to operate
properly together. Since the decision to make an aggregate award was
justified based on the need for a modification of the targets or
harnesses, which TVI concedes, we need not consider TVI's other
contention that the National Guard used a different model than TVI bid
under the IFB in determining the compatibility of the TVI target and the
Blane harness.
Installation Costs
TVI also challenges the addition of $93,348.05 to its aggregate bid
as the cost of installing the TVI targets, again arguing that the cost
was calculated improperly based on a different type of target than the
one bid by TVI under the IFB. We need not consider this argument in
detail, however, since, even assuming that there would be no
installation costs, TVI under the IFB. We need not consider this
argument in detail, however, since, even assuming that there would be no
installation costs, TVI's total bid still was higher than Blane's total
bid. Basic ordering agreement Finally, TVI argues that the National
Guard should order the targets under a basic ordering agreement (BOA)
for thermal targets which took effect after the award to Blane was made.
We find this argument to be without merit. A contracting agency is not
required to place an order under a BOA. See FAR, 48 C.F.R. 16.703(c).
Further, although TVI maintains that award under the BOA would be
preferable in terms of price and the products available, TVI has not
shown, and we see no reason, why the National Guard would be required to
terminate the existing contract with Blane in order to place an order
under the subsequent BOA. TVI has requested that it be allowed to
recover its bid preparation costs and the costs of pursuing the protest.
Since we find the protest to be without merit, we deny the request for
costs. 4 C.F.R. 21.6(d), (e).
B-224774 Date: December 8, 1986 In the Matter of: George S. Winfield
66 Comp. Gen. 124
DIGEST
MILITARY PERSONNEL
Pay
Overpayments
Interest
Waiver
Discharged Navy member's request for waiver of a claim against him
for excess leave he took while he was in service is denied since under
the circumstances he either knew or should have known at the time that
he was taking leave he had not earned, and therefore he was at fault in
taking the excess leave. Such "fault" precludes favorable consideration
of his request to be relieved of his repayment obligations under the
provisions of the waiver statute, 10 U.S.C. 2774. Interest charges
incorrectly assessed on the debt must, however, be deleted under
Department of Defense Instruction 7045.18, which provides that interest
shall not accrue on the amount due while a request for waiver is
pending.
DECISION
This is in response to an appeal to our Claims Group's action of May
8, 1986, denying in part a request for waiver submitted by a discharged
Navy member, George S. Winfield, of the debt he incurred while was in
service as the result of overpayments of military pay and allowances he
received. In addition to his request for full waiver of the remaining
balance of his debt, amounting to $355.36, Mr. Winfield asks that, in
the event we affirm the Claims Group's determination, he be relieved of
the interest payments of $214.40 charged by the Navy in July 1986 on the
amount due. Based on our review of the record, we agree with the Claims
Group's determination denying Mr. Winfield request for a complete
waiver. With regard to the interest charges, Mr. Winfield was correct
in his belief that no interest should have been assessed on the claim
during the period his request for waiver was pending.
BACKGROUND
Mr. Winfield was discharged from the Navy on November 26, 1982. On
November 13, 1981, he had received a payment in the amount of $369 from
the Navy that it did not charge to his account. The amount subsequently
was charged against his account, but only after Mr. Winfield received
the payment again as part of his final payment upon discharge. In
addition, Mr. Winfield took 19 days leave in excess of the amount he had
earned. According to the record, his Leave and Earnings Statement (LES)
showed an erroneous leave balance that was much higher than leave
actually earned. Mr. Winfield was permitted to take a large amount of
excess leave near the end of his active duty career, producing an
additional overpayment of pay and allowances amounting to $355.36. In
his initial request for waiver, Mr. Winfield stated that he was not
aware of receiving any overpayments in pay or that he had taken excess
leave. With reference to the pay, he did not know how much his final
payment upon discharge should have been and was not aware that the Navy
had failed to credit a payment to his account. Also, he indicated that
he relied on his LES leave balance since the figures matched those on
file in his personnel and disbursing offices. Under 10 U.S.C. 2774 the
Claims Group relieved Mr. Winfield of his indebtedness for the final
payment that was not properly credited to his account. We agree with
the Claims Group's determination since there is no evidence of fault,
fraud, misrepresentation, or lack of good faith by Mr. Winfield
concerning that overpayment. Nothing in the record suggests that Mr.
Winfield was or should have been aware that the 1981 payment was not
credited to him, and since he did not know how large his final payment
from the Navy would be, waiver in this instance seems appropriate. The
Claims Group denied Mr Winfield's request for waiver of the claim for a
refund of the $355.36 overpayment he received as the result of the 19
days excess leave that he took. It should not have relied on the
figures in his LES since he suspected they were incorrect. His failure
to inquire about the accuracy of the figures to officials in his
personnel or disbursing offices constituted fault under 10 U.S.C. 2774,
thereby precluding waiver.
ANALYSIS
Section 2774 of title 10, United States Code, provides in pertinent
part that a claim against a member or former member of the uniformed
services arising out of erroneous payments of pay or allowances, may be
waived in whole or in part if collection "would be against equity and
group conscience and not in the best interest of the United States."
Under subsection 2774(b) the Comptroller General may not, however,
exercise his authority to waive a claim:
(1) if, in his opinion, there exists, in connection
with the claim, an indication of fraud,
misrepresentation, fault, or lack of good faith on the
part of the member or any other person having an
interest in obtaining a waiver of the claim. * * *
The term "fault", as used in this subsection, has been interpreted by
this Office to mean more than an overt act or omission by a service
member. "Fault" exists if, in light of the facts, it is determined that
a member should have known that an error existed and should have taken
action to have it corrected. Petty Officer Robert R. McGhee, Jr., USN
(Retired), B-196226, August 30, 1984. The applicable standard is
whether a reasonable person should have been aware he was receiving
payments in excess of his proper entitlement. Thomas M. Welsch,
B-196461, February 13, 1980. See also Price v. United States, 621 F.2d
418 (Ct. Cl. 1980). In this case, Mr. Winfield's LES showed an incorrect
annual leave balance during his last year on active duty. He states
that he suspected the figure was higher than it should have been. His
suspicion should have prompted him to question the erroneous figures
maintained by his disbursing and personnel offices. Instead of drawing
attention to the error, once he discovered that his LES figures were the
same as those in the disbursing and personnel offices, he accepted them
as correct and took excess leave. Nothing in the record suggests that
Mr. Winfield should have believed he was entitled to the amount of leave
printed on his LES. Had he pursued the matter, it is likely that the
error would have been discovered and Mr. Winfield's records corrected.
We have previously held that "where a member fails to remain reasonably
within his leave balance, he should realize that he will be required to
repay any amounts received while in an excess leave status, and as a
result of accepting the payments he must be considered at least
partially at fault in the matter." Gregory S. Heenan, B-200297, July
24, 1981. Under the circumstances of this case, we believe that Mr.
Winfield was at fault in taking excess leave and, therefore, we may not
grant him full waiver of the claim. Mr. Winfield requests that we deduct
the interest charged to the claim. He bases this request on information
he received from the Department of the Navy that interest would not
accrue during the time his request for waiver was pending. After
consulting Department of the Navy officials, we learned that Mr.
Winfield erroneously was charged interest on the claim. Department of
Defense regulations provide that while a request for waiver is pending,
interest on the amount due shall not accrue. DOD Instruction 7045.18
Enclosure 3, para. H (March 13, 1985). The Navy Accounting and Finance
Office attributes the $214.40 interest charge to a systems error.
Accordingly, we affirm the Claims Group's action denying Mr. Winfield's
request for a total waiver. He remains obligated to refund the
overpayment amounting to $355.36 which he received through his use of 19
days' excess leave. The $214.40 interest charge on this debt is,
however, deleted.
B-224017 Date: December 8, 1986 In the Matter of: Devres, Inc.
66 Comp. Gen. 121
DIGEST
PROCUREMENT
Competitive Negotiation
Requests for Proposals
Evaluation Criteria
Subcriteria
Disclosure
1. Where an offeror's experience in a particular agency program is
the single most important evaluation subfactor and is worth more than
five of the six general evaluation factors, contracting agency should
have disclosed the subfactor in the request for proposals (RFP), even
though the subfactor was reasonably related to the general experience
evaluation factor listed in the RFP.
PROCUREMENT
Competitive Negotiation
Offers
Preparation Costs
2. Protester is entitled to recover proposal preparation costs and
costs of filing and pursuing the protest where contracting agency
improperly induced protester to incur the cost of competing by failing
to disclose a significant evaluation factor.
DECISION
Devres, Inc. protests the exclusion of its proposal from the
competitive range under request for proposals (RFP) No. WNTC-2-86 issued
by the Soil Conservation Service (SCS), Department of Agriculture, for a
social and economic study of the Copper River Basin in southern Alaska.
Devres contends that SCS improperly downgraded its proposal based on an
evaluation criterion not disclosed in the RFP. We sustain the protest.
The economic and social analysis called for by the RFP is one part of
the contracting agency's Copper River Basin planning program, a program
carried out in cooperation with the State of Alaska in order to assist
the State's planning efforts in the region. Section M-2 of the RFP
listed six evaluation factors to be considered in making award; the
first and most important factor is "experience in multidisciplinary
natural resource planning involving cooperative interagency teams."
According to SCS, the panel established to review the proposals devised
a rating plan which assigned specific weight to each of the six major
evaluation factors and divided each into subfactors. The panel assigned
42 percent of the total score to the first evaluation factor,
experience; the remaining five factors were given weights ranging from
21 percent to 6 percent of the total score. The rating plan listed the
following subfactors, worth a total of 100 points, as comprising the
experience factor:
USDA River Basin experience --60 pts.
Federal interagency teams --20 pts.
Interagency nonfederal --10 pts.
Alaska cooperative interagency exp. --10 pts.
Proposals from 10 offerors were received by the due date of July 9,
1986. On August 11, the review panel decided that the two offerors with
the highest scores (89 and 92 points) should be included in the
competitive range. Under the evaluation factor for experience, both
offerors had received the full 60 points assigned to the most important
subfactor, USDA River Basin experience. Devres was notified that its
proposal had not been included in the competitive range on August 14.
The evaluation documents show that Devres received a total of 62 points;
under the experience factor, Devres received only 40 of 100 total
points because it lacked any USDA River Basin experience. SCS does not
dispute that the score Devres received under the experience evaluation
factor was critical to the decision to exclude its proposal from the
competitive range. Devres argues that experience with the USDA River
Basin project was a significant evaluation subfactor not reasonably
related to the general experience factor listed in the RFP, Devres
contends, it was improper for SCS to apply it in evaluating proposals.
SCS disagrees, arguing that specific experience with its River Basin
program. We find that while SCS reasonably could decide that an
offeror's experience with the River Basin program was of significant
value, SCS should have disclosed that subfactor and its importance in
the RFP. As a general rule, a contracting agency need not specifically
identify the subfactors comprising the evaluation criteria if the
subfactors are reasonably related to the stated criteria. Washington
Occupational Health Associates, Inc., B-222466, June 19, 1986, 86-1 CPD
567. Thus, for example, where an RFP listed general experience and
personnel qualifications as an evaluation criterion, the contracting
agency reasonably could consider an offeror's experience in the specific
services called for under the RFP; the RFP did not have to list
specific experience as a separate evaluation factor since it was
reasonably related to the general experience evaluation factor.
Technical Services Corp., 64 Comp. Gen. 245 (1985), 85-1 CPD 152.
Similarly here, an offeror's experience with the River Basin program is
reasonably related to the evaluation factor in the RFP which calls for
"experience in multidisciplinary natural resource planning involving
cooperative interagency teams," a generic description of the River Basin
program. Further, Devres has shown no basis on which to challenge the
agency's position that experience in the program would facilitate an
offeror's performance. In our view, however, SCS should have disclosed
its plan to evaluate the offerors' specific program experience because
of its significance in the overall evaluation. Experience in the River
Basin program was by far the most important subfactor under the general
experience factor. Specifically, the program experience subfactor was
worth 60 of 100 points under the experience factor, which itself was
worth 42 percent of the total score; as a result, the program
experience subfactor was worth approximately 25 percent of the total
score. None of the other subfactors approached the importance of the
River Basin subfactor; in fact, of the other five general evaluation
factors listed in the RFP, the next closest in weight to the River Basin
experience subfactor ("knowledge and experience in conducting natural
resource economic evaluations") was worth only 21 percent of the total
score. Accordingly, experience in the River Basin program was not only
the single most important subfactor, but was worth more by itself than
five of the six general evaluation factors. Contracting agencies are
required by statute to include in solicitations all significant
evaluation factors and their relative importance. 41 U.S.C. 253a(b)(1)
(Supp. III 1985). Further, the Federal Acquisition Regulation (FAR), 48
C.F.R. 15.605(e) (1985), requires that solicitations disclose "any
significant subfactors" to be considered in the award decision. Here,
the River Basin subfactor clearly constituted a significant subfactor
within the meaning of the FAR in light of its relative weight in the
evaluation scheme. In addition, by putting a significant premium of
River Basin program experience, SCS in effect narrowed the field of
competitors to those with such experience. In fact, Devres states that
it would not have submitted a proposal had it known that program
experience was so important. Accordingly, we find that SCS was required
under the FAR to disclose in the RFP that experience in the USDA River
Basin program would be the most significant factor in the evaluation. As
relief, Devres has requested that SCS be required to evaluate the
proposals without considering any offeror's experience in the River
Basin program. This is not a appropriate remedy; however; Devres has
not shown that it was unreasonable for SCS to regard program experience
as valuable, and SCS is not required to evaluate proposals without
taking into account a subfactor it reasonably regards as important to
the award decision. Resolicitation also is inappropriate since the
program experience subfactor in effect narrows the field of competition
and there thus is little reason to anticipate an increase in the number
of competitors if the subfactor is disclosed and a new competition is
held. Instead, we find that Devres is entitled to recover its proposal
preparation costs and the costs of filing and pursuing the protest since
SCS improperly induced Devres to incur the cost of competing by failing
to disclose the program experience subfactor. See Bid Protest
Regulations, 4 C.F.R. 21.6(d), (e) (1986); Tandem Computers, Inc.,
B-221333, Apr. 14, 1986, 65 Comp Gen. 490, 86-1 CPD 362. Devres should
submit its claims for such costs directly to the agency. 4 C.F.R.
21.6(f). The protest is sustained.
B-225031 Date: December 5, 1986 In the Matter of: Colbar, Inc.
66 Comp. Gen. 120
DIGEST
PROCUREMENT
Competitive Negotiation
Use
Criteria
Allegation that agency should not have conducted a competitive
procurement for its interim requirements but rather should have extended
protester's current contract pending the resolution of its protest will
not be reviewed since agency's actions are consistent with statutory
requirements to obtain full and open competition.
DECISION
Colbar, Inc. protests the Department of the Army's actions under
invitation for bids (IFB) No. DABT23-86-B-0083 for custodial services at
Fort Knox, Kentucky. Colbar, the incumbent contractor, initially
alleged that certain portions of the IFB were ambiguous. The Army
resolved these issues to Colbar's satisfaction by issuing amendment Nos.
0002 and 0003, and Colbar's sole remaining complaint concerns the Army's
determination to compete its interim requirements rather than extend
Colbar's current pending the resolution of this protest. Colbar was
provided an opportunity to compete for the Army's interim requirements.
The purpose of our bid protest function is to insure that, consistent
with statute, full and open competition is obtained. Kollmorgen Corp.,
B-221709.5, June 24, 1986, 86-1 CPD 580. This requirement applies to
contract extensions and renewals. See Resources Consultants, Inc.,
B-221860, Mar. 27, 1986, 86-1 CPD 296; Work System Design, Inc.,
B-213451, Aug. 27, 1984, 84-2 CPD 226. Colbar's assertion that it
should have received an extension of its present contract is, in effect,
an allegation that it was entitled to a sole-source award and our Office
generally does not review protests that a particular firm is entitled to
a sole-source award. Kollmorgen Corp., supra. Moreover, we point out
that Colbar's contract was awarded under section 8(a) of the Small
Business Act, 15 U.S.C. 637(a) (1982), and we have held that an agency's
determination not to extend a contract negotiated under the provisions
of section 8(a) is within the agency's discretion and generally not
subject to legal review. See Aetna Ambulance Serv., Inc., et al.,
B-190187, Mar. 31, 1978, 78-1 CPD 258. Accordingly, the protest is
dismissed.
B-224699 Date: December 5, 1986 In the Matter of: Union Natural Gas Company
66 Comp. Gen. 116
DIGEST
PROCUREMENT
Noncompetitive Negotiation
Use
Justification
Utility services
1. Agency determination to acquire non-interruptible natural gas
from local utility and limit competition for gas to interuptible
supplies is reasonable where it is based on a market survey showing
limited potential competition, and a balancing of risk of acquiring
non-inerruptoble gas from utility and non-utility suppliers against
agency's concern for potential dislocation of personnel, damage and
disruption which might accompany interruption of gas supply.
PROCUREMENT
Specifications
Minimum needs standards
Competitive restrictions
GAO review
2. General Accounting Office will not question an agency's
determination of its minimum needs absent a clear showing that the
determination is unreasonable. Protester which merely seels tp redraw
request for quotations to reflect its own needs rather than those of
agencies conducting joint acquisition has not demonstrated that
agencies' determination is unreasonable.
DECISION
Union Natural Gas Company protests request for proposals (RFP) No.
F05611-86-R-0080, issued by the United States Air Force Academy. We
deny the protest. The Academy issued this RFP in conjunction with the
United States Army at Fort Carson, Colorado, to acquire interruptible
natural gas supplies for Fort Carson and the Academy. Interruptible
supplies are those for which alternate energy sources, such as oil, are
available for the facility's use, or for which the temporary loss of
supply would not result in damage or serious dislocation of personnel.
The RFP contemplates a 5-year price redeterminable contract, with the
proviso that if at any time the price of the natural gas being supplied,
including transportation charges, is not at least 5 percent less than
that offered by the local utility, the Academy and Fort Carson may
acquire their gas from the utility. The contractor is expected to
transport the gas to the Academy and Fort Carson through existing
utility pipelines. The Academy and Fort Carson will continue to acquire
firm supplies, i.e., non-interruptible gas (for housing, for example),
from the lacal utility under a General Services Administration (GSA)
area-wide contract. Prior to initiating this procurement, the Academy
conducted a market survey, by issuing a request for quotations, to
assess the practicability fo competition for all of its gas needs. Of
the 11 respondents other than the local utility,10 either suggested that
the procurement be limited to interruptible gas only, did not offer to
supply firm gas, or qualified their supply of firm gas for various
reasons, such as the availability of transportation. Union, the
remaining respondent, stated that had sufficient gas to satisfy up to
100 percent of the requirements and included a proposed letter
agreement. The proposed letter agreement, however, was equivocal
regarding whether or not Union might build a pipeline and required the
negotiation of provisions that would excuse performance in certain
circumstances. Against these responses, the Academy weighed the lical
utility's extensive pipeline system and multiple alternate sources for
gas and the fact that during periods of high demand, pipeline companies
first curtail the capacity available to users transporting their own
gas--which means that during periods of extreme cold weather, for
instance, gas acquired by the Academy and Fort Carson from souces othe
than the local public utility might not be delivered. On the basis of
this market survey, the Academy determined to continue acquiring its
supply of firm gas from the local utility and limit the competition to
interruptible gas. Union states, in apparent reference to its response
to the Academy's market survey, that it previously advised the
contracting officer of its willingness to provide all of the natural gas
requirements for these installations, including non-interruptible gas.
Union contends that the contracting officer therefore was aware that
there was competition available for non-interruptible gas and asserts
that the RFP is improper because it does not include requirements for
fim supplies for the Academy and Fort Carson. Union also contends that
the RFP unfairly favors the incumbent utility by requiring transport of
the gas through utility pipelines, and asserts that the contemplated
term of the contract is tooo short to allow amortization of the capital
costs of constructing a new pipeline. Union asserts that competition
for all of the requirements for these two installations could result in
substantial annual savings. In short, United contests the Academy's
determination not to compete for non-interruptible supplies of gas.
United asks that the RFP be postponed and reissued to provide for a
fixed 5-year term for all of the gas needs of these two installations,
and for sufficient time for the construction of new pipeline facilities.
The acquisition of utility services by agencies of the Department of
Defense (DOD) is covered generally by the provisions of subpart 8.3 of
the Federal Acquisition Regulation (FAR), 48 C.F.R> 8.3(1985), except
for specific provisions for which DOD has substituted its own
regulation. FAR, 48 C.F.R. 8.302(c). Under subpart 8.3 of the DOD FAR
Suplement No. 5, Revised October 1, 1974. 5 Government Contracts
Reporter (CCH) para. 37,465 (Feb. 19, 1975). Where GSA has area-wide
contracts for utility services, federal agencies are required to acquire
utility services under those conracts unless the agency determines that
(1) more advantageous services are available from another supplier, or
(2) it is in the government's interest to negotiate special rates or
special services under a spearate contract which departs from the
plubished rate schedules of the current utility service supplier. FAR,
48 C.F.R. 8.304-2(c). In addressing the first issue, the regulations
provide that:
. . . where . . . another prospective supplier
requests an opportunity to furnish the service of the
Department shall determine whether more than
onsupplier
can provide the service. Where competition
is found to exist, competitive solicitation of
proposals shall be inititated at whatever time is
considered to be most advantageous to the Government.
5 Government Contracts Reporter (CCH) para. 37,469.
This regulation vests in the DOD organization concerned the discretion
to determine whether competion exists for any particular utility
service. We apply a standard of reasonableness in assessing the
propriety of a sole-source award, which is closely analogous to the
situation persented her as it applies to the government's firm gas
needs. We will not question and award under these circumstances unless
it is shown that the contracting agency's justification for the award is
unreasonable. See Arthur Young & Co., B-221879, June 9, 1986, 86-1
C.P.D. 536. In our judgement, Union has not established that the
Academy's determination to limit the competition to interruptible gas
was unreasonable. As noted above, the vast majority of the potential
suppliers of gas were unwilling to commit to supply firm gas, and even
Union, when its proposed letter agreement was considere, was a provision
excusing nonperformance in its contract. The Academy had to balance the
risk apparent in these offers against the greater certainity of
continuous availability associated with acquiring firm supplies of
natural gas from the lical utility. Given the Academy's concern for the
potential substantial disruption and expense that might accompany the
personnel dislocations and damage to buildings that could result from
the interruption of firm gas, we cannot conclude that the Academy's
decision to continue procuring firm supplies from the public utility was
unreasonable. We have specifically held that such considerations
properly may be taken into account by a procuring agency in structuring
a competition. Owl Resources Co., B-221296, Mar. 21, 1986, 86-1 C.P>D.
282. Union, while arguing that it should be afforded the opportunity to
provide firm gas, substantially increasing the risk of disruption of
service. In these circumstances, we find no basis for questioning the
Academy's determination that there was no practical competition for firm
gas and the accompanying decision to limit the competitionto
interruptible gas. With regard to the balance of Union's objections, the
determination of the government's minimum needs and the method of
accommodating those needs is primarily the responsibility of the
contracting agency; we will not question an agency's determination of
its minimum needs absent a clear showing theat is unreasonable. Ram
Enterprises, Inc., B-221924, June 24, 1986, 86-1 C.P.d. 581. The
Academy and Fort Carson structured the RFP to provide flexibility to
take advantage of changing prices for natural gas over the life of the
contract, rpovide savings beginning with the current heating season, and
proadent the base of competition by not requiring new pipeline
construction. Union, however, would have the government compromise these
requirements in favor of redrawing the RFP to promote its own interests,
rather than those of the Academy and Fort Carson, by requiring a delay
in implementation and a 5-year firm contract. Union's advocay of its own
interestes does not establish that the agencies' requirements are
unreasonable. The protest is denied.
MATTER OF: Wiley H. Stephens
FILE: B-222901
66 Comp. Gen. 114
DATE: December 5, 1986
A headquarters memorandum directing the promotion of all employees
occupying Air Reserve Technician foreman positions constituted a
nondiscretionary agency policy. Although the agency failed to include
the employee's instrument mechanic foreman position on a list of
positions to which the policy applied, the employee is entitled to a
promotion with backpay retroactive to the date when other foreman were
promoted. Omission of the existing and occupied foreman position from
the list was an administrative error which resulted in the failure to
carry out a nondiscretionary agency policy requiring the promotion.
We have been asked to determine whether a retroactive promotion with
backpay may be granted to Mr. Wiley H. Stevens, an Air Force Reserve
Technician employed as an Instrument Mechanic foreman in aircraft
maintenance at Dobbins Air Force Base. /1/ We hold that Mr. Stephens is
entitled to a promotion with backpay retroactive to October 28, 1984,
the date on which he should have been promoted under an agency
determination increasing by one grade all Air Reserve Technician foreman
positions in aircraft maintenance.
Mr. Stephens' position was designated WS-3359-7, Instrument Mechanic
Foreman, wage grade level 7, on July 28, 1982. By memorandum of
September 1, 1984, Headquarters, Air Force Reserve, Robins Air Force
Base, Georgia, announced rewritten and upgraded position descriptions
reflecting the duties of all Air Reserve Technician foreman positions in
aircraft maintenance and directed that the incumbents of those positions
be promoted to the upgraded positions in conjunction with the first
scheduled wage adjustment on or after July 28, 1984. The memorandum
stated:
"The new ART (Air Force Reserve Technician) foreman position
descriptions applicable to the addressed unit(s) replace all ART
foreman positions currently established."
The memorandum attached a list purporting to cancel "all the ART
foreman positions currently established at the serviced unit(s)." It
also attached a list of the "new ART foreman positions being established
at the serviced unit(s)," as well as the new position descriptions.
Except for Mr. Stephens, all foremen at grade level WS-7 were
promoted to grade level WS-8 on October 28, 1984, in accordance with the
September 1, 1984 memorandum and attachments. Mr. Stephens' position
did not appear on either of the lists attached to the memorandum.
Although Mr. Stephens occupied a WS-7 foreman position that should have
been included, it was omitted from the list which was compiled on the
basis of a unit manpower document which erroneously reflected Mr.
Stephens' position as nonsupervisory. While the delay in resolving that
discrepancy appears to be based on some question concerning the proper
classification of Mr. Stephens' position, the record indicates that he
continued to occupy the WS-7 supervisory position throughout the period
here in question. He was never removed from the WS-7 position and it
was never reclassified as a nonsupervisory position. Mr. Stephens was
ultimately promoted to grade level WS-8 on February 16, 1986, in
response to a letter of December 9, 1985, from the Classification
Specialist, Dobbins Air Base, stating:
"(T)he position currently classified as WS-07 subordinate
foreman position should be classified at the WS-08 level in line
with current AFRES policy on grading procedure for wage supervisor
positions."
Mr. Stephens has filed a grievance concerning the delay in effecting
his promotion. Although the Civilian Personnel Officer, Dobbins Air
Force Base, has confirmed the circumstances that delayed Mr. Stephens'
promotion and has concluded that the failure to promote him on October
28, 1984, was an unwarranted personnel action, the grievance examiner
has expressed doubt concerning the agency's authority to grant a
retroactive promotion with backpay.
As a general rule, a personnel action may not be made retroactive so
as to increase an employee's right to compensation. Janice Levy,
B-190408, December 21, 1977. We have recognized an exception to this
rule in the case where an administrative or clerical error results in a
failure to carry out a nondiscretionary agency regulation or policy.
Where this exception applies, retroactive promotion with backpay is
available as a remedy under the Back Pay Act, 5 U.S.C. Section 5596.
See B-211784, May 1, 1984.
We believe this exception applies in the present case. By its
memorandum of September 1, 1984, Headquarters established a
nondiscretionary policy requiring the promotion of all Air Reserve
Technician foreman. This conclusion follows from language in the
memorandum stating that the new ART foreman positon descriptions
applicable to the addressed units replace "all ART foreman positions
currently established." Mr. Stephens occupied the position of Instrument
Mechanic foreman as of September 1, 1984, and that position remained
established throughout the period for which he seeks retroactive
promotion. Its omission from the list of upgraded foreman positions
attached to the memorandum of September 1, 1984, appears to have been
the result of an administrative error committed at Headquarters level in
listing Mr. Stephens' position as a nonsupervisory position on a unit
manpower document. That listing appears to have been the result of a
misapprehension on the part of Headquarter officials that Mr. Stephens
did not exercise supervision over the electrical shop and therefore did
not supervise the requisite number of employees to qualify as a foreman.
Since Mr. Stephens occupied a foreman position that should have been
identified in the attachments to the September 1, 1984 memorandum and
since he should have been promoted along with the other foreman, we find
that he is entitle to a promotion with backpay retroactive to October
28, 1984, the date other Air Reserve Technician foremen were promoted.
Retroactive promotion should place him in the appropriate step of grade
level WS-8, and he should be given creditable service for time within
grade retroactive to October 28, 1984. Under the Back Pay Act, Mr.
Stephens is to receive an amount equal to the pay, allowances, or
differentials which he would have normally received during the period of
the unjustified or unwarranted personnel action. 5 U.S.C. Section
5596(b)(A); 5 C.F.R. Section 550.805(a).
Comptroller General of the United States
(1) The Accounting and Finance Officer, Air Force Reserve, Dobbins
Air Force Base, submitted the request for an advance decision.
B-225485 Date: December 3, 1986 In the Matter of: TAB, Incorporated
66 Comp. Gen. 113
DIGEST
PROCUREMENT
Bid Protest
Forum Election
Finality
Protester that has filed with the General Services Administration
Board of Contract Appeals (GSBCA) may not elect to file the same protest
with the General Accounting Office solely to preserve the timeliness of
the latter protest in the event that the GSBCA determined that it lacks
jurisdiction. The Competition in Contracting Act envisions mutually
exclusive forums.
DECISION
TAB, Incorporated protests the award of a contract for management of
a computer facility in Washington, D.C. under Solicitation No.
S0278005, issued by the Bureau of Mines, Department of the Interior.
The protester, which has filed a protest on the same matter with the
General Services Administration Board of Contract appeals (GSBCA),
states that it does not intend to elect our Office as a forum, but that
it believes timely filing here is necessary to preserve its rights if
the GSBCA determines that it lacks jurisdiction. We dismiss the protest.
The Bureau of Mines awarded the contract in question on November 3, 1986
to Evaluation Technologies, Inc. following the contracting officer's
denial of an agency-level protest in which TAB alleged that its cost
proposal had not been properly evaluated. Although TAB does not specify
the date and time of its protest to GSBCA, it does indicate that it
occurred before the filing here on November 13. TAB argues that our
decision in System Automation Corp., B-224166, Oct. 29, 1986, 86-2 CPD
493, compels it to file here. In that case, we dismissed as untimely a
protest that initially had been filed with and sustained by the GSBCA,
but was the filed with us when, on appeal, GSBCA was held to be without
jurisdiction in the matter. That holding, however, does not provide any
basis for our allowing a protester to file with both the GSBCA and our
Office and have consideration of the latter protest temporarily
suspended while the GSBCA decides whether to exercise jurisdiction. The
Competition in Contracting Act of 1984 (CICA), 31 U.S.C. 3552 (Supp. III
1985), clearly provides that an interested party who has filed a protest
with the GSBCA under section 111(h) of the Federal Property and
Administrative Services Act of 1949 (the Brooks Act), 40 U.S.C. 759(h)
(Supp. III 1985), may not protest to our Office with respect to that
procurement. As we stated in System Automation, CICA contemplates the
protester's making a final election between this Office and the GSBCA
when both forums are available. See also Resource Consultants, Inc., 65
Comp. Gen. 72 (1985), 85-2 CPD 580 (the clear intent of the Brooks Act
is to provide for an election of mutually exclusive forums); Analytics
Communication System, B-222402, Apr. 10, 1986, 86-1 CPD 356 (it would be
inappropriate for the General Accounting Office to consider a matter
actively being litigated before the GSBCA); 4 C.F.R. 21.1(a), 21.3(f)
(1986). Therefore, it is simply not permissible under CICA for a party
to file a protest with both forums. We note that TBA's concern about
GSBCA jurisdiction may be unwarranted. The Congress, in the continuing
appropriations resolution for fiscal year 1987, amended the Brooks Act
to provide that GSBCA's jurisdiction encompasses any procurement that is
"subject to" the Act, rather than being limited to those "conducted
under authority of" the Act, and that the GSBCA has "the authority to
determine whether any procurement is subject to" the Brooks Act. Pub.
L. No. 99-591 (Oct. 30, 1986) (to be codified at 40 U.S.C. 759(f)). The
effect of this legislation is to overrule the decision of the U.S. Court
of Appeals for the Federal Circuit in Electronic Data Systems Federal
Corp. v. General Services Administration Board of Contract Appeals, 792
F.2d 1569 (Fed. Cir. 1986), holding that under the prior statutory
provisions, the GSBCA lacked jurisdiction over protests concerning
automatic data processing procurements that should have been, but were
not conducted under the Brooks Act. In any event, since TAB may not
maintain a protest before both the GSBCA and this Office, the protest is
dismissed.
B-223917 Date: December 3, 1986 In the Matter of: Fairchild Communication & Electronics Company
66 Comp. Gen. 109
DIGEST
PROCUREMENT
Contractor Qualification
Responsibility
Contracting Officer Findings
Negative Determination
GAO Review
Protest challenging nonresponsibility determination is sustained
where contracting officer relied solely on a negative preaward survey
report showing delinquent deliveries in arriving at the determination,
but the record casts substantial doubt on the validity of the survey
data.
DECISION
Fairchild Communications & Electronics Company (Fairchild) protests
the rejection of its low bid under invitation for bids (IFB) No.
DAAB07-86-B-DO50, issued by the Department of the Army for modem test
sets. The Army rejected the bid after receiving a Defense Contract
Administration Services Management Area (DCASMA), Baltimore, preaward
survey recommending against award because of Fairchild's late deliveries
of earlier contracts. Fairchild contends that the Army's negative
determination of responsibility was improper because it was based on a
preaward survey that employed erroneous data. We sustain the protest.
The solicitation is the second step of a two-step, sealed bid
procurement for a base quantity of 130 modem test sets with an option
for the same quantity. The Army uses the test sets with an option for
the same quantity. The Army uses the test sets to review the power
consumption requirements of equipment transmitting to Defense Satellite
Communications System satellites. The Army found four of the five
step-one technical proposals acceptable, and at the May 28, 1986,
step-two bid opening, Fairchild was the low evaluated bidder on both the
base and option quantities at $3,845,900; Qualcomm, Inc. was second low
at $6,493,593. On June 17, DCASMA conducted an on-site preaward survey
at Fairchild's plant. The preaward survey found Fairchild satisfactory
in four areas (technical capability, plant facilities and production
equipment, materials-purchased parts-subcontracting, and personnel), but
unsatisfactory in two areas (organization and management data, and
delivery performance record). The two unsatisfactory ratings resulted
from late deliveries that DCASMA attributed to inadequate planning and
vendor/subcontractor control. This was based on DCASMA records showing
that 19 out of 52 (37 percent) contracts closed in the past year, and 27
of 135 (20 percent) contracts currently open were delinquent due to
contractor-caused delays. DCASMA recommended against award on the
ground that Fairchild was incapable of assuring satisfactory performance
of the proposed contract because DCASMA was unaware of any action taken
by Fairchild to correct the problems. The Army adopted DCASMA's
recommendation in concluding that Fairchild was nonresponsible, and
reports that Fairchild would have received the award but for the
preaward survey. On July 24, the Army awarded Qualcomm the base
quantity at its bid price of $4,380,358. Fairchild bid $2,929,070 for
the base quantity. Fairchild contends that the nonresponsibility
determination was improper because no government official, DCASMA or
Army, investigated the facts behind the reported numbers. Regarding the
delinquency of the closed contracts, Fairchild argues it was unexcusably
late on no more than 7 out of 52 contracts (13 percent), and not the 37
percent reported by DCASMA. Fairchild has offered this explanation of
the actual status of the 19 delinquent closed contracts: one contract
was held by a separate division of Fairchild Industries under separate
management; one contract in fact was not late; one $5,228 contract was
terminated for convenience at no cost to the government; two contracts
were late because of the need to replace potentially defective Texas
Instruments computer chips; one contract was late on a few items (2.4
percent of contract price) but the majority of the items were delivered
early at government request; and seven contracts under $10,000 were
late solely on account of Fairchild. Fairchild furnishes similar
explanations in concluding that the data showing 27 delinquent open
contracts is inaccurate, and that the Army's nonresponsibility
determination thus was unreasonable. The Army takes the position that it
properly found Fairchild nonresponsible because it relied on DCASMA's
preaward survey which stated the percentages of late closed and late
open contracts and the general reasons for them (inadequate planning and
vendor control), and which recommended against award since DCASMA could
find no evidence of corrective action. The Army maintains it was not
required to conduct an independent evaluation to substantiate this
information. The Army further notes that, under our prior decisions,
the contracting officer's determination properly could be based on the
facts at hand immediately prior to the award, and was not required to
take into account status changes and information arising after the date
of award. In this regard, as noted above, the Army did not know at the
time of award that Fairchild contested the accuracy of DCASMA's
information. Finally, the Army legal counsel argues that even if
Fairchild is correct and it was at fault on only seven contract
delinquencies, this still would be sufficient to sustain the Army's
determination since the determination is only objectionable if it lacks
any reasonable basis. The Army is correct that we have held that a
contracting officer generally may reply on the results of a preaward
survey in determining a prospective awardee's responsibility, System
Development Corp., B-212624, Dec. 5, 1983, 83-2 C.P.D. 644, and that the
propriety of such a determination will not be affected by information
that surfaces after award. Martin Electronics, Inc., B-221298, Mar. 13,
1986, 86-1 C.P.D. 252. We also have held, however, that a
nonresponsibility determination will not be deemed reasonable if not
based on accurate information and conclusions for the preaward survey
team. Dyneteria, Inc., B-211525, Dec. 7, 1983, 83-2 C.P.D. 654. Thus,
our Office will consider the accuracy of the preaward survey information
relied upon in judging whether a negative determination of
responsibility was reasonable. Decker and Co., et al., B-220807, et
al., Jan. 28, 1986, 86-1 C.P.D. 100. We find that Fairchild has raised
substantial doubt as to the accuracy of some of the information on which
the Army relied in making its determination here. More specifically, we
think the percentages of delinquent contracts cited in the preaward
survey without explanations of the circumstances of the contracts
carried by DCASMA as delinquent may have presented the contracting
officer with an unrealistic picture of Fairchild's past and current
performance. For example, in response to Fairchild's contention that one
contract cited as delinquent was held by a Fairchild division separate
from the Fairchild Communications and Electronics Company competing
here, the Army states that at the time of award and performance of the
contract, the two divisions were one and the same. Fairchild refutes
the Army's position in its comment on the administrative report,
however, asserting that these divisions in fact were split in 1982,
prior to that contract award. As for the contract Fairchild maintains
was performed on time, the Army states that, notwithstanding Fairchild's
assertion, DCASMA's records indicate "an apparent minor delay."
Fairchild responds, however, that DCASMA's records simply are incorrect
since delivery was due April 24, 1985 (400 days after the date of the
contract, which was signed March 19, 1984), and was made on April 23,
1985. Our calculations of the delivery date support Fairchild's
position. As a third example, in response to Fairchilds argument that
two of the contracts were delinquent due solely to government fault--one
where the Army delayed its inspection of the items, the second where the
Army delayed issuing a need modification--the Army states that Fairchild
really was at fault for failing to request modifications extending the
delivery dates once it realized the Army's delay would place the
contract in delinquent status. Fairchild maintains that it had no duty
to obtain a superfluous contract modification acknowledging a delivery
schedule extension the Army already had accepted, and that, in any case,
its failure to do so does not reflect negatively on its ability to
perform on time. We agree with Fairchild's position that, whether or not
deemed delinquent as a technical matter, these contracts have
questionable value in predicting future timely performance and that, had
the contracting officer been aware of the circumstances of these and
other Fairchild contracts carried by DCASMA as delinquent, he very well
might have viewed the delinquency percentages in the preaward survey
differently. Had the contracting officer known, for instance, that
DCASMA had included in the delinquency percentages contracts for which
Fairchild merely had neglected to seek pro forma extensions, he
presumably would have assigned these percentages less weight in deciding
whether to adopt he DCASMA recommendation against award. It is
significant in this regard that, as already noted, the contracting
officer's nonresponsibility determination was based solely on the
delinquency percentages and DCASMA's negative recommendation. In
reaching this conclusion, we recognize that the contracting officer
already has reviewed some information underlying the survey in preparing
his report on this protest. It appears from the contracting officer's
report regarding certain of the delinquencies --including those detailed
above--however, that he still was not furnished accurate information on
the delinquencies. Further, while the Army may have reviewed some
information, it apparently has not been furnished information on the
circumstances of the 27 open contracts carried by DCASMA as delinquent;
in its protest, Fairchild explains each in concluding that none of these
contracts are delinquent. We finally note that, although Army legal
counsel argues that the seven closed contract delinquencies conceded by
Fairchild could, by themselves, be a proper basis for finding Fairchild
nonresponsible, the contracting officer has not stated that he would
have found Fairchild nonresponsible were that the case, and there is
nothing in the record that would lead us to assume he would do so. In
view of the above, by separate letter of today we are recommending to
the Secretary of the Army that the Army award a contract to Fairchild if
otherwise appropriate. In this respect, Fairchild has requested both
its costs of filing and pursuing this protest, including attorneys'
fees, and bid and proposal preparation costs. In light of our
recommendation, however, reimbursement of those costs is not
appropriate. 4 C.F.R. 21.6 We note that Fairchild submitted its
protest with attachments containing commercial, financial and personnel
information that Fairchild regards and proprietary, but inadvertently
failed to mark in accordance with our Bid Protest Regulations, 4 C.F.R.
21.3(b) (1986). Qualcomm has requested copies of that information from
both the Army and our Office. Fairchild has objected to the
information's disclosure, and the Army has refused to disclose the
requested information to Qualcomm on the ground that such disclosure
would be inappropriate. We agree with the Army, and therefore also
refuse to disclose it. The protest is sustained.
B-224274 Date: December 2, 1986 In the Matter of: Quantic Industries, Inc.
66 Comp. Gen. 106
DIGEST
PROCUREMENT
Competitive Negotiation
Contract awards
Initial-offer awards
Propriety
Protest against agency award to other than the lowest cost offeror on
the basis of initial proposals is denied where the protester's allegedly
lower cost all or none alternate proposal did non constitute a valid
offer but was only an informational quantity recommendation, requested
under solicitation for agency use in determining economical future
purchase quantities.
DECISION
Quantic Industries, Inc. (Quantic), protests the award of a contract
to Action Manufacturing Co. (Action), under request for proposals (RFP)
No. DAAA09-86-R-1143 issued by the Army. The protester asserts that the
Army failed to consider Quantic's lowest priced alternate all or none
proposal, and instead awarded the entire quantity to Action at a higher
price on the basis of initial proposals. We deny the protest. The RFP,
for two types of electro-mechanical safe and arming assemblies, we
restricted to current mobilization base producers. The RFP schedule
called for separate contract line item number (CLIN) price entries for
the two types of devices, respectively designated BLU-91/B and BLU-92/B.
Entries were requested for different CLINs for each of the devices, the
CLINs representing 100 percent, 65 percent and 35 percent of the total
quantities of 441,668 BLU-91/B's and 175,879 BLU-92/B's which were to be
awarded. The schedule called for CLIN pricing on the basis of F.O.B.
origin and F.O.B. destination, with and without first article testing
for each of the items. The RFP provided for award on the basis of the
lowest overall cost to the government for the combination of CLINs
deemed to be in the government's best interest. Quantic and Action both
entered prices on the schedule for the various CLINs requested. The
Army determined that it was in the governments's interest to award on
the basis of 100 percent of each of the two items. Action's unit price,
F.O.B. origin, with first article testing, for CLIN 001 (100 percent of
the BLU91/?B's was $18.35, and its unit price for CLIN 007 (100 percent
of the BLR-92/B's) was $15.35. Action's total price of CLINs 001 and
007 was $10,804,350.45, F.O.B. origin, with first article testing.
Quantic's prices, as entered on the schedule, were higher for both
CLINs. Two other offerors were also higher priced than 001 and 007, on
the basis that Action's initial proposal provided the lowest evaluated
cost. Section L-1.13 of the RFP provided that award could be made on
the basis of initial offers received without discussions. Section L-9 of
the RFP entitled "Economic Purchase QuantitySupplies," contained a apace
for "offeror recommendations," under which Quantic entered the following
information:
(a) Offerors are invited to state an opinion on
whether the quantity(ies) of supplies on which bids,
proposals or quotes are requested in this solicitation
is (are) economically advantageous to the Government.
(b) Each offeror who believes that acquisitions in
different quantities would be more advantageous is
invited to recommend an economic purchase quantity.
If different quantities are recommended, a total and a
unit price must be quoted for applicable items. An
economic purchase quantity is that quantity at which a
significant price break occurs and beyond which no
substantial decrease would different quantity points,
this information is desired as well.
Offeror Recommendations
Price
quotaItem
Quantity tion
Total Combine 001AB & BLU-91/B 441,668 $18.13 0007AB BLU-92/B 175,879
$15.75 $10,777,535
(c) The information requested in this provision
is being solicited to avoid acquisitions in
disadvantageous quantities and to assist the
Government in developing a data base for future
acquisitions of these items. However, the
Government reserves the right to amend or cancel the
solicitation and resolicit with respect to any
individual item in the event quotations received and
the Government's requirements indicate that
different quantities should be acquired.
Quantic contends that this information constitutes and alternate all or
none offer at a lower price than Action's. Quantic points out that the
RFP did not prohibit all or none offers and that, absent such a
prohibition, its alternate all or none offer should be considered by the
procuring agency. RKFM Products corp., B-186424, Sept. 15, 1976, 76-2
C.P.D. 247. Quantic asserts that since it submitted a technically
acceptable offer, only Quantic is entitled to award on the basis of its
low initial offer since, under the Competition in Contracting Act of
1984, the agency may only award without conducting discussions where
acceptable on the basis of initial proposals would result in the lowest
overall cost to the government. 10 U.S.C. 2305(b)(4)(A)(ii) (Supp. II
1985); Sperry Corp., B-220521, Jan. 13, 1986, 86-1 C.P.D. 28.
Quantic's argument is based entirely on its premise that the above
quoted information constitutes an alternate all or none offer which
warrants evaluation or consideration by the Army. The Army asserts that
this entry merely constitutes information solicited by the Army. We
agree that the entry was informational in nature and did not constitute
an alternate all or none offered by Quantic. The Specific language of
the section makes it clear that the purpose of the information provided
is primarily for the development of a data base for future acquisitions.
The information is not for use in the contest of the instant RFP since
in order to use he information to alter the quantities being solicited
the agency reserves that right to amend or cancel the RFP. The fact
that the section contemplates amendment or cancellation to utilize the
information provided contradicts Quantic's position that the section is
intended for alternate offers under the present RFP. This purpose is
made more explicit in Federal Acquisition Regulation (FAR) subpart 72.,
(FAC No. 84-11, Aug. 30, 1985), entitled "planning for the Purchase of
Supplies in Economic Quantities." FAR, 7.220 states that "the subpart
prescribes policies and procedures and gathering information form
offerors to assist the government in planning the most advantageous
quantities in which supplies should be purchased." Accordingly, FAR,
7.204(b) states:
In recognition of the act that economic purchase
quantity data furnished by offerors are only one of
the many data inputs required for determining the most
economical order quantities, contracting officers
should generally take no action to revise quantities to
be acquired in connection with the instant procurement.
. . .
In our view, by this language, the FAR makes it clear that section L-9
is intended to gather information for structuring future procurements,
and only incidentally to facilitate the possible alteration of the
instant procurement. While Quantic argued that use of an RFP for this
purpose is contrary to FAR 15.402(d), proscribing the use of an RFP for
a solicitation for information or planning purposes, Quantic
misconstrues the intent of this provision which merely indicates that
RFP's should be used with the intention and expectation of receiving
offers, not merely for planning purposes. It does not prevent the
incidental use of a section to solicit recommendations or information
for future procurement use as well--as permitted by FAR, 7.202(b).
Here, in fact the RFP was intended to solicit offers and an award has,
in fact, been made. Thus, the RFP was not issued for informational or
planning purposes, and is not inconsistent with FAR, 15.402(d) in this
respect. Thus, contrary to Quantic's contention that Section L-9 was
designed to elicit alternate proposals, it is clear that the information
properly was requested primarily for planning purposes for future
procurements, and was not intended for solicitation provided notice that
award might be made on the basis of initial proposals, the Army properly
made award of the CLINs 001 and 007 to Action since such an award was
correctly determined. Consolidated Bell, Inc., B-220425, Mar. 11, 1986,
86-1 C.P.D. 238. The protest is denied.
B-223624.4 Date: December 1, 1986 In the Matter of: Wallace Benders Corp.--Reconsideration
66 Comp. Gen. 101
DIGEST
PROCUREMENT
Specifications
Minimum needs standards
Competitive restrictions
GAO review
Agency should have amended solicitation specification to allow for
the offer of alternative equipment that the agency had determined would
meet its minimum needs. Protest that the specifications were unduly
restrictive is denied, however, where the protester clearly understood
from the agency's best and final offer request that its alternative
equipment would be acceptable it the agency's sized limitations could be
met, and the protester responded with a corrected best and final offer
that the agency reasonably believed was for the alternative equipment,
but rejected because it was not low. Although the protester asserts
that its offered price was actually for the equipment, but rejected
because it was not low. Although the protester asserts that its offered
price was actually for the equipment originally specified, its
assumption that the agency would understand this, and request another
round of best and final offers to give it an opportunity to submit a
price for the alternative equipment, was unreasonable.
DECISION
Wallace Benders Corp. requests reconsideration of our decision to
dismiss as untimely its protest against the Department of the Navy's
contract award under request for proposals (RAP) No. N00600-85-TR-2496
for a rotary pipe bending machine. We have determined that the protest
should be considered timely. We deny the protest on the merits.
BACKGROUND
Wallace's original protest, which we received on July 14, 1986,
alleged that the Navy had arbitrarily rejected Wallace's alternative
proposal under the RAP. Enclosed with the protest was a letter of July
8, 1986, from Wallace to the Navy contracting officer, which complained
of the agency's rejection of Wallace's alternative proposal. the July 8
letter referred to a letter of May 12, 1986, from the Navy to Wallace,
in which the Navy had "ruled out the improved design." We concluded that
Wallace's basis of protest arose when it received the May 12 letter and
issued a notice dismissing the protest as untimely because it was not
filed until nearly 2 months later, after the contract had been awarded
to another firm on July 28, 1986. Wallace Benders
Corp.--Reconsideration, B-223624.2, july 28, 1986, 86-2 CPD 124. Wallace
filed this second request for reconsideration on August 7, 1986.
Wallace stated that by letter dated July 28, 1986, the agency informed
Wallace that the technical questions concerning Wallace's alternative
design had been resolved. Wallace questioned how we could conclude that
the Navy letter of May 12 was notice that its alternative design was
unacceptable. when the Navy had just found it to be acceptable. We
telephoned the Navy for clarification and learned that the May 12 letter
in fact was not intended to be a final rejection notice. We therefore
requested that the agency submit a written report on the protest. See 4
C.F.R. 21.3 (1986). the agency's report reveals a series of events
marked by confusion and misunderstanding. The actual facts and
circumstances, as we understand them, are as follows. The RAP was issued
on June 7, 1985 and specified that the solicited rotary pipe bending
machine be a "swing arm" type and a "clamp die" model. (According to
Wallace, it did this at the contracting officer's suggestion.) After a
technical evaluation had been performed, the contracting officer sent
Wallace a letter dated December 24, 1985, stating that the firm's
proposal had been found technically unacceptable but capable of being
made in the areas indicated in an enclosure. The letter also gave
Wallace the opportunity to submit a revised proposal. With respect to
the offer for the clamp die model, the enclosure stated that the
specifications required a swing arm model, the enclosure stated that a
technical evaluation could not be performed because Wallace had not
submitted the required "brochures, photographs, illustrations, drawings,
or narrative" showing that the offered equipment could meet the
government's specifications. Wallace did not submit a revised offer.
Prior to the due date for revised proposals, however, Wallace did send a
letter reiterating why it believed that clamp die model should be
considered acceptable. For, example, WAllace pointed out that the
applicable military specification allows for both clamp die and swing
arm type machines. The letter was reviewed by the technical evaluators
in lieu of a revised proposal. The contracting officer then sent the
letter o May 12, 1986 to Wallace. This letter again stated that
Wallace's proposal had been found technically unacceptable but capable
of being made acceptable if clarified and revised in the areas indicated
in an enclosure. It also requested that Wallace submit a best and final
offer. The enclosure to the May 12 letter stated:
Wallace Benders Corp. is unacceptable as submitted.
The offeror has not provided sufficient technical
information to permit a complete technical evaluation.
This Office acknowledges and appreciates Wallace
Benders Corp. 's clarification * * * pertaining to an
"integral clamp on bend die" type machine. There is no
dispute that this type machine can accomplish pipe
bending operations describes in the subject
solicitation. However, due to floor space
limitations, the requirement for a "swing arm" type
machine shall remain as written in accordance with
MIL-B-80083B, paragraph 3.4.4.2.
The agency states that its intent was to notify Wallace that the clamp
die model was acceptable in a functional sense, but nonconforming as to
size, and that if this remaining deficiency could be satisfactorily
clarified or revised, the machine would be acceptable. Wallace responded
to the best and final offer request. In its response, Wallace stated:
"We are pleased to learn in your letter dated 12 May 1986 that the
contracting officer acknowledges that the integral clamp on bend die
type machine can accomplish the pipe bending operations described in the
subject solicitation." Wallace went on to say that its original clamp
die proposal contained a typographical error which indicated that the
clamp die model was significantly larger than it actually is. Wallace
stated that since the typographical error appeared to have caused
confusion even though other parts of the proposal could be made
acceptable by the corrected proposal page enclosed with its best and
final offer price was $324,00. On July 7, 1986, Wallace received notice
that the contract had been awarded to 600 Machinery Inc., at a price of
$317,000. Wallace responded to this notice with the letter to the
contracting officer of July 8, referenced above, in which it complained
of the rejection of its alternative offer of a clamp die machine. The
contracting officer sent a reply to Wallace on July 28 (the same day we
affirmed our dismissal of Wallace's July 14 protest to our Office). In
this letter, the contracting officer stated:
Contrary to your assertion in your protest that the
equipment you offered was determined unacceptable by
the Navy, we acknowledge that your equipment was
capable of performing according to the Government's
specifications in our 12 May 86 letter and advised the
only technical problem that remained was a size
limitation.
limitation to our satisfaction, however, your Best and
Final offer of $324,000 was not the lowest technically
acceptable offer and for that reason your firm did not
receive the contract award.
Wallace now asserts that the contracting officer erroneously assumed its
best and final offer was for the clamp die type machine. In fact,
Wallace states, its offered price was for the swing arm model. In this
connection, Wallace notes that the agency's best and final offer request
(the May 12 letter) specifically stated that the requirement for a swing
arm type machine would remain as written. Wallace states that as a
result, it did not believe it was being asked to submit an offer for a
clamp die type machine, but to the contrary, believed it had been
instructed that only a swing arm type machine would be acceptable.
Wallace also notes that while it did continue its argument in favor of
the clamp die model in its best and final offer, it expected that the
contracting officer would acknowledge the acceptability of the clamp die
type machine (based on the corrected dimensions) and then allow Wallace
to submit a clamp die offer. In addition, Wallace argues that because
its offer was for $324,000, the contracting officer should have
recognized that the offer was for a swing arm machine or at least
requested clarification from Wallace, since its original swing arm offer
was $328,000 while its clamp die offer was $301800. The Navy asserts
that it reasonably assumed that Wallace's best and final offer was for a
clamp die type machine since the entire offer consisted of information
concerning the actual size of the clamp die model, which was clearly
intended to rectify the only deficiency the best and final offer
requested identified in Wallace's clamp die proposal. The agency also
notes that Wallace never supplied the documentation required by the RAP
to demonstrate that its swing arm model could meet the specifications (a
deficiency which had been pointed out to Wallace in the agency's
December 24 request for a revised offer). Nor did Wallace in any way
indicate that its offer was for a swing arm machine. The agency asserts
that it therefore reasonably interpreted the offer as one for a clamp
die machine. The agency also argues that the difference between the
original clamp die offer of $301,800 and the best and final offer of
$324,00 was not enough to raise any question in the contracting
officer's mind, particularly in the context of Wallace's best and final
offer. Moreover, the agency points out that the offeror has the
responsibility to submit an adequately written proposal, and that if it
does not do so, it cannot be expected to be considered for award. See
Basic Technology, Inc. B-214489, July 13, 1984, 84-2 CPD 45.
TIMELINESS
As a preliminary matter, the Navy argues that the protest remains
untimely and again should be dismissed. The Navy contends that any
basis for protest arose no later than the time Wallace received the May
12 letter requesting a best and final offer since Wallace should have
known than that once its size nonconformity was corrected, its clamp die
proposal would be accepted. Assuming that Wallace should have known
this, we are at a loss as to why Wallace would at that point have any
basis to protest the rejection of its proposal. if the May 12 letter
was not a final rejection of Wallace's clamp die proposal, then it
follows that the letter provided no basis for Wallace to protest the
rejection of the proposal. We therefor find no merit to the agency's
argument.
ANALYSIS
Although never specifically stated, Wallace's real basis of protest
is that the RAP requirement for a swing arm type machine was unduly
restrictive of competition. The agency essentially admits that the
requirement was unduly restrictive since it now acknowledges that the
clamp die type machine met its needs. The proper course of action for
an agency to take, when it becomes apparent that specifications are
restrictive, is to amend the specifications to remove the unnecessary
restriction on competition. See ITC Distribution & Control Division,
B-216462, Mar. 25, 1985, 85-1 CPD 493. The Navy did not do this here,
despite the fact that by its own admission, it had determined that the
clamp die model was functionally acceptable before it issued the request
for best and final offers. Nevertheless, we are denying the protest
because we think that the agency reasonably interpreted Wallace's best
and final offer as one for the clamp die model. As the Navy points out,
the only discussion in the offer pertained to the clamp die model.
Moreover, not only was there no mention of the swing arm model, but
Wallace also never submitted the documentation necessary to demonstrate
the acceptability of its swing arm offer. Although Wallace's final
price was closer to the price originally offered for the swing arm
offer. Although Wallace's final price was closer to the price
originally offered for the swing arm model than that for the clamp die
model, we agree with the agency that this difference alone was not
sufficient to put the contracting officer on notice that the offer was,
or even might be, for the swing arm model. In this connection, we note
that while the agency's May 12 best and final offer request did state
that the specifications would remain as written it was clear that the
agency considered the clamp die model unacceptable only because of its
failure to meet the size limitation. Wallace's best and final offer
clearly reflects that it understood this and realized that it could make
its proposal acceptable by correcting the typographical error regarding
the clamp die model's actual dimensions. Under these circumstances, we
think it was unreasonable for Wallace to assume that the agency would
understand, in the context of Wallace's corrected best and final offer,
that the price stated was for the swing arm model, and would request
another round of best and final offers in order to give Wallace a
further opportunity to submit a price for the clamp die model. We
therefore conclude that the agency reasonably believed that Wallace
offered the clamp die model, but was not the low offeror. We recognize,
however, that the agency is not totally without fault here because it
did not amend the specifications. By not doing so, if did not receive
the benefit of competition from other potential offerors who might have
been interested in offering the clamp die model, which Wallace describes
as less expensive and as the state of the art. Therefore, by letter of
today, we are calling this matter to the attention of the navy and
recommending that action be taken to prevent a recurrence of this
situation.
B-222742 Date: November 28, 1986 In the Matter of: William J. Fitzgerald - Relocation Services - Real Estate Title Requirements
66 Comp. Gen. 95
DIGEST
Civilian Personnel
Relocation
Residence transaction expenses
Reimbursement
Eligibility
Property titles
Agency questions whether a transferred employee wishing to use a
relocation contractor's house sale services at no personal expense meets
the applicable title requirements in paragraph 2-6.1c of the Federal
Travel Regulations. These requirements are that an employee must have
held title to his residence either alone or jointly with a member of his
immediate family before receiving notice of his transfer. Here, the
employee has met neither requirement because: (1) his separated wife's
oral agreement to sell her interest in their residence to him was
unenforceable under state laws and thus did not vest him with sole
title; and (2) his separated wife was not part of his household and,
therefore, did not qualify as a member of his immediate family.
DECISION
Mr. George R. Turner, Jr., Regional Federal Highway Administrator,
Region 3, of the Federal Highway Administration (FHA), Department of
Transportation (DOT), has requested our decision concerning Mr. William
J. Fitzgerald, an FHA employee who was transferred from Tallahassee,
Florida, to Baltimore, Maryland. Specifically, the FHA has asked us to
determine whether Mr. Fitzgerald's ownership interest in his house in
Tallahassee meets the title requirements specified in paragraph 2-6.1c
of the Federal Travel Regulations, FPMR 101-7 (Supp. 4, August 23,
1983), incorp. by ref., 41 C.F.R. 101-7.003 (1985) (FTR), so as to
qualify him for house sale services under DOT's relocation service
contract without personal expense to him. As explained below, the
applicable title requirements in FTR para. 2-6.1c are that an employee
must have held title to his residence alone or jointly with a member of
his immediate family before receiving notification of his transfer. We
hold that Mr. Fitzgerald has not met these requirements because: (1)
his separated wife's oral agreement to sell her interest in the
Tallahassee house to him, although made before Mr. Fitzgerald received
notification of his transfer, was unenforceable under Florida law and,
therefore, did not vest him with sole title to the property; and (2)
his separated wife was not part of his household, and therefore she did
not qualify as a member of his immediate family.
BACKGROUND
On March 9, 1984, Mr. Fitzgerald was offered and accepted a transfer
from Tallahassee to Baltimore. Six days earlier, on March 3, Mr.
Fitzgerald's wife had vacated their jointly-owned house in Tallahassee
in order to move into a separate residence she was in the process of
purchasing.1/ According to Mr. Fitzgerald, his wife had orally agreed on
February 1, 1984, to sell her interest in the house to him. Mr.
Fitzgerald states that his wife had "implemented" this agreement by
immediately applying for and soon obtaining financing for her new
residence on the strength of the payment owed to her. Mr. Fitzgerald
paid his wife $20,000 for her interest in the Tallahassee house on March
15, 1984, the date she settled on the purchase of her new residence. On
May 4, 1984, Mrs. Fitzgerald executed a quit-claim deed conveying her
interest in the Tallahassee house to Mr. Fitzgerald. Mr. Fitzgerald
reported to his new duty station in Baltimore on June 25, 1984. On
November 20, 1984, the Fitzgeralds were divorced. Mr. Fitzgerald now
wishes to sell the Tallahassee house by using house sale services
available under the DOT's contract with ChemExec Relocation Systems,
Inc., a relocation service company,2/ but the FHA questions whether Mr.
Fitzgerald would be eligible to use those services without any charge to
him. The DOT's contract with ChemExec provides that the company will,
for a fee charged to the agency, purchase a transferred employee's
residence and assume responsibility for all costs associated with
reselling it. Pursuant to DOT's written policy, as well as the
government-wide relocation service guidelines contained in FTR para.
2-12.5d (Supp. 11, August 27, 1984), the agency may pay the relocation
company's full fee for providing an employee with house sale services
only if the extent of the employee's interest in the residence is such
that, had he sold it himself, he would have been entitled to full
reimbursement for his expenses under the FTR. The FTR's requirements
with respect to the direct reimbursement of real estate expenses are
contained in Chapter 2, Part 6, para. 2-6.1 of which provides in
relevant part as follows:
Conditions and requirements under which allowances are payable.
To the extent allowable under this provision, the Government shall
reimburse an employee for expenses required to be paid by him/ her
in connection with the sale of one residence at his/her old
official station, * * * Provided, That:
* * * * *
c. Title Requirements. The title to the residence or dwelling at
the old or new official station, * * * is in the name of the
employee alone, or more members of his/her immediate family, or
solely in the name of one or more members of his/her immediate
family. For an employee to be eligible for reimbursement of the
costs of selling a dwelling * * * the employee's interest in the
property must have been acquired prior to the date the employee
was first definitely informed by competent authority of his/her
transfer to the new official station.
In the even an employe wishing to use house sale services under the
DOT's contract does not satisfy the title requirements stated above, DOT
policy provides that the agency may pay only a prorata share of the
relocation company's house sale fee and the employee will be responsible
for paying the balance. Mr. Fitzgerald contends that he meets the title
requirements specified in FTR para. 2-6.1c, above, thus qualifying for
house sale services at no personal expense. Specifically, he maintains
that he acquired sole title to the Tallahassee house before March 9,
1984, the date he received notification of his transfer, because his
wife had orally agreed on February 1 to sell her interest in the
property to him. Mr. Fitzgerald argues that this agreement was
effective to pass title to him, notwithstanding the lack of written
documentation, because his wife had "implemented" the agreement when she
relied on its terms to obtain financing for her new residence.
Alternatively, Mr. Fitzgerald suggests that, since he was still legally
married to Mrs. Fitzgerald when he received notification of his
transfer, she was a member of his immediate family within the meaning of
FTR para. 2-6.1c. Thus, according to Mr. Fitzgerald, even the
Fitzgeralds' joint ownership of the Tallahassee house would have
satisfied the requirements of FTR para. 2-6.1c.
DISCUSSION
As indicated above, the applicable regulations in FTR para. 2-6.1c
allow an employee full reimbursement for house sale expenses only if
certain specific requirements are met. One requirement is that title to
the house must be in the employee's name alone, in the joint names of
the employee and a member of his immediate family, or solely in the name
of a member of his immediate family. A second requirement, which
qualifies the first, is that the employee must have acquired his
interest in the property prior to the date he was definitely informed of
his transfer. Based on the second requirement in FTR para. 2-6.1c, we
have stated that an employee's maximum interest in real estate is fixed
on the date he receives his transfer notice.3/ This interest may be
diminished by subsequent events,4/ but may not be expanded.5/
Accordingly, in order to determine whether Mr. Fitzgerald held sole
title to the Tallahassee house for purposes of the requirements in FTR
para. 2-6.1c, we must examine the status of his title on March 9, 1984,
the date he received definite notice of his transfer to Baltimore. This
requires us to determine whether Mrs. Fitzgerald's oral agreement on
February 1, 1984, to sell the Tallahassee house to Mr. Fitzgerald
effected a transfer of title to him. Under a Florida law commonly known
as the "statute of frauds," an agreement to sell real estate must be in
writing or else it is unenforceable and does not pass title to the
purchaser.6/ Courts interpreting this Florida law have recognized a
limited exception to the requirement for written documentation based on
the equitable doctrine of "part performance," which basically holds that
an oral contract for the sale of land is enforceable if a party has
performed actions which clearly evidence the existence of a such
contract.7/ However, we are not aware of any Florida court case applying
the part performance doctrine to enforce an oral contract for the sale
of land where the only "performance" has been the seller's reliance on
the claimed agreement in an unrelated real estate transaction.
1/ Although the Fitzgeralds did not enter into a separation agreement at
the time, they in fact became permanently separated beginning on March
3. 2/ The DOT entered into this contract under the authority of 5 U.S.C.
5724c (Supp. III 1985), which authorizes agencies to contract with
private firms for the provision of relocation services to transferred
employees. 3/ Thomas A. Fournier, B-217825, August 2, 1985. 4/ See Alan
Wood, 64 Comp. Gen. 299 (1985), and Fournier, cited in note 3, holding
that events which occur between the date an employee receives
notification of his transfer and the date he settles on the sale of his
residence may serve to reduce his interest in the residence for
reimbursement purposes. 5/ See generally Joel O. Brende, B-217484,
February 11, 1986, 65 Comp. Gen. 282. 6/ FLA. STAT. ANN. 725.01 (West
1969). 7/ See Miller v. Murray, 68 So. 2d 594, 596 (Fla. 1953), stating
that an oral contract may be enforced if a purchaser has paid at least
part of the purchase price, taken possession of the property, and made
valuable improvements. See also A. CORBIN, CORBIN ON CONTRACTS 420-443
(1950). This latter authority recognizes that certain actions of the
seller, such as the making of expensive alternations to suit the
purchaser, may constitute part performance. A. CORBIN, above, at 424.
Accordingly, Mrs. Fitzgerald's oral agreement to sell her interest in
the Tallahassee house to Mr. Fitzgerald was ineffective because it did
not meet the statutory requirement for written documentation. Since the
agreement was ineffective, Mr. Fitzgerald did not acquire sole title to
the Tallahassee house before he received notification of his transfer on
March 9, 1984, as required by FTR para. 2-6.1c. Nor, contrary to Mr.
Fitzgerald's suggestion, did he hold title to the residence with a
member of his "immediate family" for purposes of FTR para. 2-6.1c. The
term "immediate family", as used in FTR para. 2-6.1c, is defined in FTR
para. 2-1.4d as including an employee's spouse, children, and certain
dependent relatives who are members of the employee's "household" at the
time he reports to his new duty station. We have specifically held that
a separated spouse is not a member of an employee's household, and,
therefore, that such a spouse does not fall within the FTR's definition
of an employee's immediate family.8/ In sum, Mr. Fitzgerald did not meet
the title requirements specified in FTR para. 2-6.1c because he neither
acquired sole title to the Tallahassee house before receiving
notification of his transfer nor held the title jointly with a member of
his immediate family. Under these circumstances, DOT's relocation
service policy and FTR para. 2-12.5d, discussed previously, would
preclude the agency from paying the relocation company's full fee for
house sale services provided to Mr. Fitzgerald. Since Mr. Fitzgerald
held a one-half interest in the Tallahassee house for purposes of the
FTR, it appears that, under DOT policy, he would be responsible for
paying one-half of the company's fee. 8/ See Wood, cited in note, and
William A. Cromer, B-205869, June 8, 1982.
B-223874 Date: November 10, 1986 In the Matter of: Koch Corporation
66 Comp. Gen. 92
DIGEST
Procurement
Sealed bidding
Invitations for bids
Defects
Descriptive literature
Descriptive literature clause in an invitation for bids which merely
states in general terms what categories of descriptive literature might
be required is defective due to lack of specificity and because the
contract file does not contain a technical justification as to why
product acceptability cannot be determined without the submission of
descriptive literature, as required by Federal Acquisition Regulation
(FAR), 48 C.F.R. 14.202-5(c) (1985). Therefore, it is improper for the
procuring agency to reject a bid as nonresponsive for failure to include
descriptive literature.
DECISION
Koch Corporation protests the rejection of its bid as nonresponsive
under invitation for bids (IFB) No. 556-66-86 issued by the Veterans
Administration Medical Center, North Chicago, Illinois (VA) for the
replacement of existing windows in two buildings. We sustain the
protest. The VA issued the IFB on May 5, 1986. Nine bids were received
and opened on June 16. Koch's low bid of $1,046,747 was rejected on
that same day because Koch failed to submit descriptive literature with
its bid. Only four bidders out of nine submitted descriptive
literature. On June 25, Koch filed a timely protest with the contracting
officer against the rejection of Koch's bid arguing that although the
IFB contained the standard descriptive literature clause set forth in
Federal Acquisition Regulation (FAR), 48 C.F.R. 52.214-21 (1985), the
IFB failed to specify which portions of the plans or specifications that
the descriptive literature should address. Koch contended, therefore,
that the IFB did not in fact require descriptive literature. The VA
denied Koch's protest by letter dated July 29, 1986, in which the VA
justified the inclusion of the descriptive literature clause in the IFB
on the basis that the VA's General Counsel "recommended that the
descriptive literature clause be included in all VA solicitations for
replacement windows" because he considered descriptive literature to be
essential in assisting the VA to determine whether the replacement
windows offered by bidders will conform to the specifications. The
letter stated that Koch's bid was rejected because in the absence of
descriptive literature, the bid did not "conform to the essential
requirements of the solicitation." Award was made to Miami Wall Systems,
Inc. (Miami), the second low bidder, on July 31. On August 13, Koch
filed a protest with our Office against the contracting officer's denial
of its agency level protest. In its protest to us, Koch reiterates the
contentions made in its agency-level protest, namely, that the IFB did
not put bidders on notice that descriptive literature must be submitted
with the bids, or indicate just what descriptive literature was
required. We agree. The IFB contained the following descriptive
literature clause:
52.214-21 Descriptive Literature (APR 1984)
(a) 'Descriptive Literature' means
information (e.g., cuts, illustrations,
drawings, and brochures) that is
submitted as part of a bid. Descriptive
literature is required to establish, for
the purpose of evaluation and award,
details of the product offered that are
specified elsewhere in the solicitation
and pertain to significant elements such
as (1) design; (2) materials; (3) components;
(4) performance characteristics;
and (5) methods of manufacture, assembly,
construction, or operation. The term
includes only information required to
determine the technical acceptability of
the offered product. It does not include
other information such as that used in
determining the responsibility of a
prospective Contractor or for operating
or maintaining equipment.
(b) Descriptive literature, required
elsewhere in this solicitation, must be
(1) identified to show the item(s) of the
offer to which it applies and (2)
received by the time specified in this
solicitation for receipt of bids.
Failure to submit descriptive literature
on time will require rejection of the
bid, except that late descriptive literature
sent by mail may be considered under
the Late Submissions, Modifications, and
Withdrawals of Bids provision of this
solicitation.
(c) The failure of description literature
to show that the product offered conforms
to the requirements of this solicitation
will require rejection of the bid."
(Italic supplied.) Although paragraph (b) of the clause refers to
descriptive literature "required elsewhere in this solicitation," the VA
admits that the solicitation contains no additional references to a
requirement for descriptive literature. When descriptive literature is
required by an IFB to be submitted with bids, the adequacy of the
literature in showing compliance with the delineated specifications is a
matter of responsiveness, and where the literature does not show
compliance the bid must be rejected. Harnischfeger Corp., B-220036,
Dec. 19, 1985, 85-2 C.P.D. 689. However, where the need for descriptive
literature can be justified, the IFB must clearly establish the nature
and extent of the descriptive material asked for, the purpose to be
served by such data, and whether all details of such data will be
considered an integral part of the awarded contract. FAR, 48 C.F.R.
14.202-5(d)(1); Wholesale Office Furniture, Inc., B-215081, Dec. 4,
1984, 84-2 C.P.D. 618; Air Plastics, Inc., 53 Comp. Gen. 622 (1974),
74-1 C.P.D. 100. Therefore, the IFB must definitely set forth the
components or specifications for which descriptive literature is
required, and literature is not required to show compliance with
specifications beyond those set forth. Viereck Co., Corp., B-213134,
May 14, 1984, 84-1 C.P.D. 518. Moreover, our Office has consistently
held that a descriptive literature clause is defective where it merely
recites categories of general subjects which might require description
since it does not establish a common basis for the evaluation of bids.
See Air Plastics, Inc., 53 Comp. Gen. 622, supra; 46 Comp. Gen. 1
(1966); 42 Comp. Gen. 598 (1963). Here, the descriptive literature
clause merely states in general terms that descriptive literature--"
required elsewhere in the solicitation"--would be required. The VA
admits, however, that the IFB fails to specify elsewhere the nature and
extent of that descriptive literature required. Because the IFB
incorporates more than 15 other publications and specifications, each
with many requirements, and the IFB itself contains hundreds of
requirements, from reading the IFB's descriptive literature clause, a
bidder would not reasonably be aware of what literature, if any, was
required, and for what purpose. Air Plastics Inc., 53 Comp. Gen. 622,
supra; 46 Comp. Gen. 1, supra. Therefore, the rejection of Koch's low
bid for failure to include descriptive literature and the award to the
second low bidder was improper. The protest is sustained. As stated
above, the VA's report to our Office does not contain the contract
file's justification for the VA's inclusion of the descriptive
literature clause in the IFB as required by FAR, 48 C.F.R. 14.202-5(c).
The only justification presented is contained in the July 29 letter from
the contracting officer to Koch stating that descriptive literature is
required because VA's General Counsel considered it essential to a
determination that the replacement windows offered will meet the
specifications. In these circumstances, it is unclear whether there
exists an adequate justification for descriptive literature under this
IFB. We therefore recommend that the VA determine whether descriptive
literature is necessary to evaluate the responsiveness of the bids. If
the VA determines that descriptive literature is not required for bid
evaluation purposes (but is instead merely informational) and it is
otherwise appropriate, we recommend that the VA make award to the low
responsive, responsible bidder without regard to the bidder's failure to
submit descriptive literature, i.e., to Koch if Koch is otherwise bound
to perform in accordance with the IFB and Koch is determined to be a
responsible bidder. See Patterson Pump Co., B-216133, B-216778, Mar.
22, 1985, 85-1 C.P.D. 333. If award to Koch is appropriate, the
contract awarded to Miami must be terminated for the convenience of the
government. However, if the VA determines that descriptive literature is
necessary to evaluate the responsiveness of the bids, we recommend that
the VA justify for the contract file its requirement for descriptive
literature in accordance with FAR, 48 C.F. R. 14.202-5(c). The VA
should then resolicit, incorporating a detailed descriptive literature
clause into the new IFB, clearly establishing the nature and extent of
the descriptive material asked for, the purpose to be served by the
data, and whether the details of such data will be considered an
integral part of the awarded contract. FAR, 48 C.F.R. 14.202-5(d)(1);
Wholesale Office Furniture, Inc., B-216081, supra; Air Plastics, Inc.,
53 Comp. Gen. 622, supra. If the low, responsive and responsible bidder
on resolicitation is other than Miami, then that firm's contract should
be terminated for the convenience of the government.
B-223613 Date: November 10, 1986 In the Matter of: Freund Precision, Inc.
66 Comp. Gen. 90
DIGEST
Procurement
Competitive negotiation
Contract awards
Government delays
Justification
When 16 months elapse between submission of an offer for an alternate
product and award, agency's failure to consider whether it could
evaluate the alternate product by such means as first article testing is
not reasonable or consistent with the Competition in Contracting Act
requirement for advance planning.
DECISION
Freund Precision, Inc. protests the award of a contract to the Grimes
Division of Midland Ross Corporation under request for proposals (RFP)
No. DLA400-85-R-4679, issued by the Defense General Supply Center
(DGSC), Richmond, Virginia, a field activity of the Defense Logistics
Agency (DLA). Freund questions the contracting activity's failure to
complete evaluation of its offer for an alternate product within the
16-month period between the submission of its initial offer and the
award. We sustain the protest. The solicitation, issued on February 8,
1985, sought offers for a base quantity of 300, plus an unspecified
option quantity, of a light base assembly, identified in the RFP as
Grimes part number 11-04-83-1. It is a component of an emergency exit
light used on several Air Force and Navy aircraft. Offerors were
permitted to submit quotes for alternate products as defined in a
standard solicitation clause entitled "Product Offered." This clause
requires offerors of alternate products to submit all drawings,
specifications, or other data necessary to enable the government to
determine whether they are either identical to or physically,
mechanically, electronically, and functionally interchangeable with the
product specified. The clause warns offerors that the failure to furnish
all necessary information may preclude their consideration, and it
additionally states that an alternate product will be considered
technically unacceptable if acceptability cannot be determined before
award. The solicitation further provided that award would be made to
the lowest-priced, technically acceptable offeror. Freund and Grimes
were the only firms to submit offers. Freund, offering an alternate
product (Freund Precision part number 50280) that it stated had the
identical form, fit, and function of the specified part, submitted the
low unit price, $88.10. Its total contract price was $26,430 FOB
destination. Grimes' unit price was $90.05 for a total contract price
of $27,015 FOB origin. Freund included drawings of its product with its
offer but did not furnish the agency with any other technical data.
Technical personnel at DGSC reviewed the drawings and concluded that the
information furnished was insufficient to evaluate Freund's product.
They notified Freund of this finding and advised the firm to submit
additional technical data for both its product and the specified Grimes
part by May 30, 1985. In responding to this request, Freund availed
itself of the activity's reverse engineering program, which entailed the
purchase of the designated part from the agency and use of this sample
to develop drawings through reverse engineering. The protester submitted
these additional materials to the agency on May 31, 1985. Again, the
technical personnel at DGSC reviewed Freund's materials but determined
that without drawings of the Grimes part, they could not evaluate the
technical acceptability of the protester's product. DGSC also furnished
Freund's materials to engineers of its Value Engineering Program Office,
which in turn forwarded them for review to the Navy and Air Force
offices responsible for evaluating alternate products. DGSC also tried
unsuccessfully to obtain the required drawings and technical data from
Grimes. The Navy and Air Force both stated that they could not evaluate
Freund's product without additional test and performance data to verify
adequate performance of the end item, i.e., the emergency light with the
Freund part installed. In June 1986, DGSC concluded that it could not
them evaluate Freund's product and that it would be unable to do so in
the near future. Moreover, by this time DGSC's stock of the part had
been depleted, as it had not purchased any of the emergency light base
assemblies since the inception of this procurement in January 1985. The
contracting officer therefore determined that award could not be delayed
any longer. He asked Grimes, the only offeror found technically
acceptable, to submit a best and final offer. On June 18, 1986, DGSC
awarded that firm a contract for the base quantity of 300 at a unit
price of $99. By letter dated July 1, DGSC notified the protester of
this action and further advised it that first article tests were being
developed and that an adequate competitive procurement package should be
available by September 1987. Freund essentially charges that DGSC's
failure to evaluate its product in the 16-month period that elapsed from
the submission of its initial offer to the date of award was
unreasonable. The part being procured, Freund states, is of a simple
design that is easily analyzed by reverse engineering, as the efforts of
its own staff demonstrate. Freund continues that the drawings it
prepared during this process, at its own expense, are sufficient to
enable the agency to evaluate its product. DGSC's insistence on
obtaining all technical data for the designated Grimes part in order to
evaluate its product, Freund thus maintains, perpetuates the sole-source
procurement of the product. The record here indicates that had DGSC and
the user activities planned ahead, they might have been able to evaluate
Freund's alternate product without resort to comparisons of
specifications and drawings for the Grimes part. As suggested by DGSC
in referring to future acquisitions, first article testing can be
utilized to evaluate alternate offers for this spare part. Compare B.H.
Aircraft Co., Inc., B-222565 et al., Aug. 7, 1986, 86-2 CPD 143
(agency's insistence on engine qualification testing, rather than first
article, is not unreasonable when duct assemblies offered by protester
are critical to safe and effective operation of C-130 aircraft). While
we recognize that first article approval takes time, it does not appear
that DGSC even considered employing this technique for the subject
procurement. Had it done so the beginning of the 16-month period that
elapsed between submission of initial proposals and contract award, it
should have been able to conduct a competitive procurement. In this
regard, we note that by May 1985, when the agency asked the protester to
submit additional data concerning both its own and the Grimes part, the
Competition in Contracting Act of 1984, 10 U.S.C. 2305 (Supp. III 1985)
was in effect. This section requires advance procurement planning and
development of specifications so as to permit agencies to obtain full
and open competition. In view of the agency's depleted stock and the
fact that first article tests had not been developed at the time of the
award in June 1986, we cannot say that the award itself was improper.
However, because lack of advance planning unreasonably denied the
protester with the opportunity to compete for this award, we find that
Freund is entitled to its costs of filing and pursuing this protest,
including reasonable attorney's fees. See 4 C.F.R. 21.6(d), (e) (1986);
Malco Plastics, B-219886, Dec. 23, 1985, 85-2 CPD 701. Freund should
submit its claims for such costs directly to the agency. 4 C.F.R.
21.6(f). Furthermore, we are recommending that the agency, in
exercising the option for an additional unspecified quantity of the
emergency light base assemblies, procure only the minimum amount needed
until it can develop a competitive procurement package which includes an
adequate method for qualifying alternate products. The protest is
sustained.
B-224435, Date: November 7, 1986 In the Matter of: PLURIBUS PRODUCTS, INC.
66 Comp. Gen. 86
DIGEST
Procurement
Sealed bidding
All-or-none-bids
Responsive
1. Agency's failure to discover "all or none" bid qualification at
bid opening but before award does not affect responsiveness of bid or
consideration of qualification in evaluation of bids, where invitation
for bids permitted bidding on an "all or none" basis and qualification
was typed on the bid at the end of the pricing schedule.
PROCUREMENT
Sealed bidding
All-or-none bids
Evaluation
Propriety
2. In the absence of evidence affirmatively establishing that "all
or none" qualification was added to a bid after opening, the General
Accounting Office will not question consideration of the bid as
qualified, even though an appearance of impropriety was created when the
agency failed to discover the qualification until 2 months after bid
opening.
DECISION
Pluribus Products, Inc. protests the award of a contract for field
desks to Texas Trunk Co. under invitation for bids (IFB) No.
DLA400-86-B-3469, issued by the Defense Logistics Agency (DLA). The
protester contends that because of the concealed nature of the "all or
none" qualification of Texas Trunk's bid, the bid should be rejected as
nonresponsive or, in the alternative, the qualification should not be
considered. We deny the protest. The solicitation, issued March 13,
1986, requested prices for desks delivered FOB destination and/or FOB
origin to five different locations. Bidders were requested to submit
prices for four alternate quantities for each location. The
solicitation advised that the quantity awarded for each location would
depend on the requirements at the time of award, price differentials,
and the availability of funds. The solicitation provided that "the
government may accept any item or group of items of a bid, unless the
bidder qualifies the bid by specific limitation." At bid opening on
April 15, an original and a revised bid were received from Texas Trunk.
The agency determined that Texas Trunk was apparently low for line items
1, 2, and 5 and Pluribus was apparently low for line items 3 and 4.
Preaward surveys were performed for both bidders. In a preaward review
of Texas Trunk's bid on June 24, the agency first noticed that on the
pricing schedule, following the last line item, in a space between the
preprinted portions of the bidding form, Texas Trunk had restricted its
bid to "all or abstract to reflect this restriction, and determined that
Texas Trunk's "all or none" bid represented the lowest cost to the
government. Following an award to Texas Trunk for all of the line
items, Pluribus protested to this Office on July 18. Pluribus argues
that Texas Trunk's bid should have been rejected or the bid
qualification ignored due to the alleged inconspicuous placement of the
"all or none" restriction in the bid. The protester maintains that the
placement of the typed words of the qualification in a small blank space
between preprinted portions of the solicitation form, so that the
left-hand margins coincide (pricing was to be inserted on the right side
of the bid page) makes the qualification almost impossible to detect.
The protester argues that by the alleged inconspicuous placement, the
awardee attempted to retain the option to point out the bid restriction
or to remain silent. Pluribus believes that an investigation as to
whether the qualification was actually on the bid at the time of opening
is warranted. Pluribus points out that Texas Trunk did not notify the
agency of the presence of the "all or none" restriction at bid opening
or during the preaward survey, and that affidavits submitted by Texas
Trunk regarding how it prepares its bids are inconsistent with the
notations on the bids submitted in this case. The protester also
complains that the original pages of Texas Trunk's revised bid are
missing from agency files, so that they cannot be examined to determine
whether the restriction was typed on a Texas Trunk typewriter. In
response to the protest, Texas Trunk contends it had no notice that it
was being considered for award of less than all the line items, either
at bid opening or during the preaward survey, and therefore had no
reason to inform the agency of its "all or none" bid qualification. The
firm also has submitted two reports of a forensic document examiner who
examine xerox copies of the revised bid pages and the original pages of
the initially submitted bid. The examiner concluded that the "all or
none" restriction on both of the documents is typed in "the same
proportional spacing type-style" which is found on the IBM Executive
Typewriter, Serial No. 214623, which is owned by Texas Trunk, Inc. She
found, however, that the typewriter used by Texas Trunk is in relatively
good repair and produces insufficient typing defects or unusual
characteristics necessary to definitely conclude that the bids were
produced on the typewriter. As discussed above, DLA is unable to locate
the original pages of the revised bid. However, we have received from
the agency the original of the cover letter submitted to the agency with
Texas Trunk's revised bid and the original pages that it has a
long-established policy of "all or none" bidding, and submitted copies
of excerpts from past "all or none" bids. In our view, DLA acted
properly when it discovered the restriction in Texas Trunk's bid. In
the absence of a provision in the solicitation to the contrary, on "all
or none" bid is responsive and must be accepted if it offers the lowest
aggregate price. Walsky Construction Co., B-216737, Jan. 29, 1985, 85-1
CPD 117; Federal Acquisition Regulation (FAR), 48 C.F.R. 14.404-5
(1985). Since the IFB contained no prohibition against bidding on an
"all or none" basis, bidders were permitted to qualify their bids on
that basis, bidders were permitted to qualify their bids on that basis
without rendering them nonresponsive. Moreover, where a bid is
submitted on an "all or none" basis, the bidder does not have the option
to decide after bid opening whether it will accept an award on less than
the total number of items bid. Canova Moving & Storage Co., B-207168,
Jan. 18, 1983, 83-1 CPD 59. The agency's failure to discover the
qualification until after bid opening did not affect the legal rights of
the parties and did not render the aggregate award to Texas Trunk
improper. See Paragon Van Lines, Inc., B-222018.2, June 25, 1986, 86-1
CPD 591. The protester cites Central Mechanical Construction, Inc.,
B-220594, Dec. 31, 1985, 85-2 CPD 730, as a situation similar to this
case. In Central Mechanical we held that a modification increasing a
bid price, written on the envelope that contained the bid, should not be
considered. The contracting officer did not see the writing until the
bidder's agent drew his attention to it after the bid was opened and
read aloud. We stated that the modification was so inconspicuous in
size and location on the envelope corner that it afforded the bidder an
option it could exercise depending on its relative standing among other
bidders. In this case, however, while the qualification could
reasonably have been overlooked at bid opening because of its location
between preprinted portions of the bid form, the language was on the bid
document itself and in a logical location at the end of the priding
schedule. Under these circumstances, we do not believe that the
placement of the modification provided Texas Trunk with a possible
advantage over other bidders. Regarding the protester's request for an
investigation, we generally do not conduct investigations pursuant to
our bid protest authority to establish the validity of a protester's
suspicions. Fugro Inter, Inc.--Reconsideration, B-219393.2, Dec. 13,
1985, 85-2 CPD 654. In this connection, the protester cites George C.
Martin, Inc., 55 Comp. Gen. 100 (1975), 75-2 CPD 175, a case concerning
a similar allegation of bid tampering, in which we investigated whether
an "all or none" qualification was on the bid at opening. In Martin,
there was a serious question of whether a distinctive handprinted "all
or none" notation could have been reasonably overlooked by the
contracting officials. Because of the serious question raised about the
integrity of the procurement process in the circumstances of that case,
we had the bid documents and handwriting specimens inspected. Here, we
believe that the restriction could have been overlooked at bid opening.
The "all or none" qualification was typed in a small space between
preprinted portions of the solicitation form and was aligned with the
left margin of the form. On the original of the initially submitted
bid, the qualification is typed in light blue ink, but is not
distinctive or immediately noticeable when reading the bid amounts.
While agency personnel did not initially notice the qualification, the
record contains no affirmative evidence that it was not on the bid as
submitted. Moreover, as discussed above, a forensic document examiner
has already reviewed available material and concluded that Texas Trunk's
typewriter has insufficient individual characteristics to definitely
identify any typing as being from the typewriter. She found nothing,
however, to indicate that the "all or none" qualification was not
produced on Texas Trunk's typewriter. Consequently, we do not believe
that additional investigation would be warranted in this case. The FAR,
48 C.F.R. 14.402-1, requires that bids should be read aloud to all
persons present when practical, and 48 C.F.R. 14.403, requires that the
agency certify that the abstract of bids is accurate. To the extent the
procuring agency failed to read aloud and properly record Texas Trunk's
bid qualification, its error did not affect the validity of the bid. In
the absence of affirmative evidence indicating that the qualification of
Texas Trunk's bid was affixed after bid opening, we conclude that the
firm's bid was properly qualified and as such the lowest responsive
total bid available to the government. We deny the protest.
B-224006 Date: November 7, 1986 In the Matter of: EASTERN TECHNOLOGIES, LTD.
66 Comp. Gen. 85
DIGEST
Procurement
Contract Disputes
Shipment Schedules
Prior Contracts
Adverse Effects
GAO Review
GAO will not consider objections regarding solicitation requirements
which protester was obligated to meet by virtue of a prior contract for
virtually identical products since protester is required to resolve all
claims arising under that contract pursuant to the disputes clause of
the contract. GAO consideration of objections would permit protester to
circumvent claim resolving process of protester's prior contract since a
favorable decision by GAO could be used as a basis to challenge the
prior contract.
DECISION
Eastern Technologies, Ltd. (Eastern), protests as unduly restrictive
the proposed delivery schedule in invitation for bids (IFB) No.
DAAE07-86-B-J439 issued by the Department of the Army, Tank-Automotive
Command, for 28, 5000 gallon air-transportable aircraft refueling
trucks, with an option for 42 additional vehicles. We dismiss the
protest.
The solicitation provided for delivery of the first article test
report 190 days from the date of contract award and 4 sequential
delivery dates for the 28 vehicles after approval of the report. A
prebid conference was held and all potential bidders, including Eastern,
were invited. Eastern did not attend the conference. According to the
Army, at the prebid conference, the terms of the IFB, including the
delivery requirements, were discussed at length. The Army states that
it was the consensus of the participants that a 250-day schedule for
delivery of the first article test report was considered reasonable.
The Army issued amendment 3 to the IFB, extending the delivery schedule
for the report from 190 days to 250 days. Eastern filed its protest
against the IFB's delivery schedule with our Office on August 19, 1986.
At that time, Eastern was in the process of performing under another
Army contract, No. DAAE07-86-C-J016, for 42 refueling trucks identical
to those under the subject solicitation. However, Eastern was having
difficulty in the timely performance of its contractual obligations
under the prior contract and by letters (submitted for the protest
record by Eastern) dated May 19, 1986, and June 24, 1986, Eastern
requested a time extension for delivery of its first article test report
at no change in contract price. By letters dated May 29, 1986, and July
11, 1986 (submitted for the protest record by Eastern), the Army denied
Eastern's request for a no-cost extension of the delivery date for the
first article test reports because Eastern had "not documented any
excusable delays" as defined by the Federal Acquisition Regulation
(FAR). In addition, by letter dated August 15, 1986, the Army requested
Eastern to "show cause" why Eastern should not be terminated for
default, for among other reasons, Eastern's failure to deliver the two
first article test reports, due August 13, 1986. By letter of August 21,
1986 (also made part of the protest file by Eastern), Eastern contended
that the Army acted improperly by requiring the delivery of the first
article test report in the timeframe stated in the contract. Eastern
states that it intended to meet the contractual delivery schedule of the
vehicles themselves but would not agree to a reduction in contract value
due to its late delivery of the two first article reports. Finally, in
its comments on the agency report and the bid protest conference held on
the matter, Eastern states that on October 6, 1986, Eastern received
notice that its contract No. DAAE07-86-C-J016 had been terminated for
default on October 1 on the ground that Eastern failed to deliver the
two first article test reports within the contract specified 210-day
timeframe. So far as its performance under the defaulted contract is
concerned, Eastern is free to challenge the delivery requirements (and
the default) with the Army under the disputes and default clauses of its
contract. However, although the Army has provided our Office with a
report rebutting Eastern's contentions concerning the reasonableness of
the delivery schedule, we do not think we should provide Eastern with
what is essentially another forum to decide issues related to potential
claims under its now-defaulted contract with the Army. See 4 C.F.R.
21.3(f)( 1) (1986); Graham Associates, Inc., B-207495, Apr. 22, 1983,
83-1 C.P. D. 433. Therefore, the protest is dismissed.
B-224497 Date: October 31, 1986 In the Matter of: Seaward International, Inc.
66 Comp. Gen. 77
Procurement
Contractor Qualification
Responsibility
Contracting Officer Findings
Affirmative Determination
GAO Review
General Accounting Office will not take exception to a contracting
officer's affirmative responsibility determination where there has been
no showing that definitive responsibility criteria may not have been
met, and there is no showing of fraud or bad faith on the part of
contracting officials, or of conduct which is so arbitrary and
capricious as to be tantamount to bad faith.
Procurement
Contractor Qualification
Responsibility
Contracting Officer Findings
Bad Faith
Allegation Substantiation
Protest that contracting officer's affirmative responsibility
determination was made in bad faith is denied where the record does not
support the protester's assertion that such determination was made in
complete disregard of the contractor's alleged prior history of poor
performance. The record shows that the agency thoroughly investigated
the protester's allegations concerning the contractor's responsibility
and found them to be without merit, and the protester's disagreement
with the outcome of this investigation does not suffice to show bad
faith.
Procurement
Bid Protests
Allegation Investigation
GAO Review
General Accounting Office will not invoke its independent audit
authority and conduct an investigation into protest allegations where
the record shows that they already have been thoroughly investigated by
the contracting agency.
Seaward International, Inc. protests the Department of the Navy's
contract award to Intertrade Industries, Ltd. under invitation for bids
(IFB) No. N00189-86-B-0009, for marine fenders. Seaward asserts that
the contracting officers's affirmative determination of Intertrade's
responsibility was made in bad faith. We deny the protest.Marine
fenders consist of an energy-absorbing foam core covered by a coating or
"shell" of polyurethane elastomer, encased in a chain and wire netting.
They are used between two ships or between a ship and a dock to protect
ships from damage while being docked or while moored.
Standard of Review
The determination of whether a firm can and will meet its legal
obligations if its bid is accepted ( i.e., that the firm is
"responsible") necessarily is a subjective business judgment for the
procuring officials, who must bear the consequences of contract
performance deficiencies, and thus is not readily susceptible to our
review. J.F. Barton Contracting Co., B-210663, Feb. 22, 1983, 83-1 CPD
177. We therefore will not take exception to an affirmative
responsibility determination unless, as pertains here, the protester
makes a showing of fraud or bad faith on the part of procuring
officials. Information Systems & Networks Corp., B-218642, July 3,
1985, 85-2 CPD 25. To make this showing, the protester has a heavy
burden of proof; it must demonstrate by virtually irrefutable proof
that the procuring officials had a specific and malicious intent to
injure the protester. Id. We also will review protests of affirmative
responsibility determinations where there is a showing that the
solicitation contained definitive responsibility criteria that may not
have been met. See Nations, Inc., B-220935.2, Feb. 26, 1986, 86-1 CPD
203. This exception does not apply here, however.
Seaward contends that our imposition of this burden of proof is
inconsistent with the standard applied by the Court of Claims, now the
United States Claims Court. Citing Keco Industries, Inc. v. United
States, 492 F.2d 1200, 1204 (Ct. Cl. 1974), Seaward argues that
arbitrary and capricious conduct by procurement officials long has been
equated with bad faith and is grounds for relief. Seaward asserts that
we should adopt this standard.
In fact, the burden of proof we have required in order to establish
bad faith on the part of contracting officials is based on the standard
applied by the Court of Claims in Kalvar Corp. v. United States, 543
F.2d 1298 (Ct. Cl. 1976). See e.g., Bradford National Corp., B-194789,
Mar. 10, 1980, 80-1 CPD 183. In Kalvar, the court stated that any
analysis of a question of governmental bad faith must begin with the
presumption that public officials act conscientiously in the conduct of
their duties and that it requires "well- nigh irrefragable proof" to
induce the court to abandon this presumption of good faith dealing. The
court also stated that in cases where the court has considered
allegations of bad faith, the necessary "irrefragable proof" has been
equated with evidence of some specific intent to injure the plaintiff,
such as actions which are motivated alone by malice. Kalvar Corp. v.
United States, supra> at 1301-1302. The Claims Court has applied the
Kalvar standard as recently as 1984 to allegations of bad faith on the
part of contracting officials. See Harris Systems International, Inc.
v. United States, 5 Cl. Ct. 253, 262 (1984). Further, we note that while
the court in Keco did state that courts often equate wholly unreasonable
action with conduct motivated by subjective bad faith, the statement
appears in dicta. See Keco Industries, Inc. v. United States, supra at
1204. Unlike Kalvar and Harris, Keco did not involve a specific
allegation of bad faith on the part of procuring officials. Therefore,
we do not agree with Seaward that our standard of proof is inconsistent
with that applied by the Claims Court.
Nevertheless, we agree with Seaward that circumstances may arise
where the conduct of procuring officials is so arbitrary and capricious
that it is tantamount to bad faith. After thoroughly reviewing the
record in this case, however, we conclude that such circumstances do not
exist here.
Positions of Protester and Agency
Seaward's allegations regarding Intertrade's responsibility are based
on Intertrade's record of prior performance of Navy marine fender
contracts. Seaward asserts that this record demonstrates that
Intertrade lacks the capability to perform the work under the protested
IFB and lacks the integrity to be a government contractor. Seaward
essentially argues that the contracting officer's affirmative
responsibility determination was made in such disregard of this evidence
as to constitute bad faith. Seaward specifically cites Intertrade's
performance under Navy contract No. N00189-85-C-0558, the most recent
Navy marine fender procurement prior to the protested one. Seaward
asserts that Intertrade wilfully misrepresented to the Navy the type of
polyurethane elastomer it would use to produce the shells for the
fenders. Seaward alleges that for purposes of the contract's first
article test requirement, Intertrade provided polyurethane elastomer
test samples consisting of elastomer manufactured by the American
Cyanamid Company that had been cast in a mold. Seaward contends that
the shells on the fenders actually supplied by Intertrade, however, were
produced by using a spray process to apply the elastomer. This is
significant, according to Seaward, because the American Cyanamid
elastomer cannot be applied by spraying and has different, superior
performance characteristics than elastomer which can be so applied.
Therefore, Seaward concludes that in order to pass the first article
test, Intertrade wilfully misrepresented the performance characteristics
of the elastomer shells it would supply to the Navy.
In addition, Seaward contends that the foam core of the fenders
supplied by Intertrade under contract No. N00189-85-C-0558 did not
comply with certain of the contract specifications. Seaward alleges that
based on its knowledge of foam costs, and considering Intertrade's bid
price for the fenders, it is highly unlikely that Intertrade actually
used foam that met the specifications. Seaward asserts that since it
brought this, as well as Intertrade's alleged misrepresentation of the
material used in the fender shells, to the contracting officer's
attention prior to award of the protested contract, the contracting
officer could not in good faith have found Intertrade responsible.
Seaward also cites a series of marine fender contracts going back to
1978 under which the Navy allegedly has experienced poor performance of
fenders manufactured by Intertrade. To substantiate its position,
Seaward has submitted a series of internal Navy deficiency reports
(obtained through a freedom of Information Act request) on the
performance of Intertrade marine fenders. The protester argues that
these reports show that Intertrade has consistently provided fenders
that do not meet contract specifications, and that the contracting
officer also could not make a good faith affirmative responsibility
determination in light of this information.
The Navy states that it has thoroughly investigated Seaward's
allegations and has concluded that they are without merit. With respect
to Seaward's allegations concerning Intertrade's performance under
contract No. N00189-85-C-0558, the Navy states that its investigation
revealed that Intertrade in fact used the same process and polyurethane
elastomer to produce the first article test samples as it later used for
the fender shells actually supplied under the contract. The Navy also
asserts that the process Intertrade uses is not a "spray" process, but
has withheld any further details of the process from Seaward as it is
deemed to be proprietary to Intertrade. (The agency has, however,
released to our Office the full results of its investigations including
further details about Intertrade's process.) The Navy also states that
as a result of its investigation, it has concluded that the foam
supplied by Intertrade complies with the contract specifications.
With respect to Seaward's assertions that Intertrade has a history of
supplying substandard marine fenders to the Navy, the agency first
points out that the fenders for which the deficiency reports were issued
are 2 by 3 foot fenders that are manufactured under specifications very
different than those applicable to the 6 by 12 foot fenders to be
supplied under the protested solicitation (and which were supplied under
contract No. N00189-85-C-0558). Further, the Navy states that the cover
letter accompanying the deficiency reports, when they were released to
Seaward, specifically qualifies the reports because some were never
validated and others were not identified to a particular contractor.
The Navy also asserts that the fact that the reported fenders failed
does not necessarily show that they did not meet contract
specifications. The Navy states that the fenders in question were built
to a variety of designs and specifications, portions of which were
themselves weak and thus may be responsible for the fender failures. In
addition, the Navy asserts that the fenders are frequently abused and
subjected to overloads which they were not designed to sustain. Also,
the Navy reports that the end users who submit the deficiency reports
often are not actually aware of the type of fender used or its
manufacturer so that the reports issued by the users are often subject
to misstatements of facts or faulty conclusions. The Navy asserts that
under these circumstances, it cannot reasonably conclude that Intertrade
has a history of supplying defective fenders to the Navy.
Seaward responds to the Navy's position on contract No.
N00189-85-C-0558 by arguing that if Intertrade is using a bast (rather
than a spray) process to produce the fender shells, it must have altered
the ratio of the components used to produce the polyurethane elastomer
for the shell and that this would also alter the physical properties of
the shell itself, which then would not meet the contract specifications.
The protester alleges that under these circumstances, Intertrade could
not in good faith have represented in its first article certification
that its product complied with the specifications, and that the Navy is
equally blame-worthy because it obviously failed to conduct adequate
inspection and testing of Intertrade's first article. In addition,
Seaward notes that while the Navy has asserted that its investigation
resulted in a conclusion that Intertrade's fenders met the contract's
foam specifications, the Navy has recently relaxed the foam
specifications by amending the current (protested) contract.
Seaward also disputes the Navy's position regarding Intertrade's
alleged history of supplying substandard fenders. The protester asserts
that it is obvious the agency has not conducted an adequate
investigation of these matter since it admits that its own deficiency
reports have not been validated. Seaward also argues that even though
the specifications for the 2 by 3 foot fenders different than those for
the 6 by 12 foot fenders being procured under the protested contract,
the production processes and basic materials used in their construction
are the same.
The protester questions the Navy's position that at least some of the
fender failures are due to inadequate specifications and asserts that
Navy employees whom Seaward has contacted believe that Intertrade's
fenders are defective and do not conform to the specifications. Seaward
also contends that even if the small fender specifications were weak,
Seaward's own fenders supplied under the same specifications have
performed satisfactorily, as evidenced by the fact that only one
deficiency report has been issued against it.
Analysis
At the outset, we reiterate that the scope of our review of protests
against affirmative responsibility determinations, such as this, is
limited to insuring that such determinations are made in good faith.
This scope of review does not include determining whether a contractor's
prior performance under any particular contract in fact was adequate or
in compliance with contract specifications. Nor does it include an
examination of the adequacy of the agency's contract management
responsibilities. These are matters of contract administration that
simply are not encompassed by our bid protest function. See Fugro
Inter, Inc.-- Reconsideration, B-219323.2, Dec. 13, 1985, 85-2 CPD 654;
Xtek, Inc., B-213166, Mar. 5, 1984, 84-1 CPD 264. Furthermore, the
basis for our review of affirmative responsibility determinations does
not include possible fraud or bad faith on the contractor's part.
Rather, our concern is with the possibility of such conduct on the part
of contracting officials in making responsibility determinations.
Accordingly, the issue before us in this case whether the contracting
officer's affirmative responsibility determination was made in such
disregard of Intertrade's record of prior performance as to constitute
bad faith. We find that it was not.
In so far as Seaward's allegations concerning Intertrade's
performance under contract No. N001889-85-C-0558 are concerned, these
allegations primarily relate either to alleged fraud or bad faith on
Intertrade's part (the alleged misrepresentation of the composition and
properties of the fender shell) or to contract administration (the
Navy's alleged failure to properly test and inspect the fenders and
enforce the shell and foam specifications). None of these allegations
suffices to show bad faith on the contracting officer's part in making
the affirmative determination of Intertrade's responsibility here.
While the allegations might support such a conclusion had it been shown
that Intertrade in fact wilfully misrepresented that its fenders met the
contract specifications, and that the contracting officer was aware of
this fact, no such showing has been made. The agency had investigated
Seaward's allegations concerning Intertrade and found them without
merit. Our review of the investigative reports generally substantiates
the agency's position. For example, as the Navy has indicated, the
investigators concluded that the process Intertrade uses to make the
fender shells is not a spray process, and that there was no
misrepresentation of the composition or physical properties of the
elastomer or fender shells. While there is, as the Navy acknowledges,
evidence of some deficiencies in Intertrade's performance, there is
nothing that provides any basis for questioning the contracting
officer's good faith in finding Intertrade responsible.In fact, the Navy
has conducted two investigations as a result of Seaward's allegations.
The first was performed before Seaward filed its protest here, in
response to a series of letters Seaward sent to various government
offices and officials. The second was performed after Seaward filed its
protest. We are constrained in our discussion of the investigative
reports as the Navy has determined that they are not releasable outside
the government. See Raytheon Support Services Co., B-219389.2, Oct. 31,
1985, 85-2 CPD 495.
We note in this connection that recent unsatisfactory performance
does not require a determination that a contractor is nonresponsible.
See GAVCO Corp.-- Request Reconsideration, B-207846.2, Sept. 20, 1982,
82-2 CPD 242. Rather, it is simply one of several factors the
contracting officer should take into account in considering a
prospective contractor's responsibility. See Turbine Engine Services--
Request for Reconstruction, 64 Comp. Gen. 639 (1985), 85-1 CPD 721.
Here, the contracting officer determined that the performance
deficiencies under contract No. N00189-85-C-0558 did not warrant a
determination of nonresponsibility, and we find no evidence that this
judgment resulted from bad faith.
We turn then to Seaward's assertion that Intertrade has a history of
supplying substandard Marine fenders to the Navy and that in light of
this, the affirmative determination of Intertrade's responsibility was
made in bad faith. As stated previously, the Navy argues that the
deficiency reports relied on by Seaward to substantiate this allegation
relate to small 2 by 3 foot fenders built to different specifications
than those that are the subject of the protesting procurement. In
addition, the agency notes that some of the reports have not been
validated; that is, that there is no showing that the poor performance
of the fenders is attributable to contractor fault. In this connection,
the agency has indicated that there were weaknesses in some of the
specifications under which the small fenders were built. The agency also
states that the remaining deficiency reports do not support Seaward's
position as the fenders have not been identified to a specific
contractor. Under these circumstances, we find no basis to question the
good faith of the contracting officer in finding Intertrade responsible.
The agency has offered a reasonable explanation for the conclusion that
the deficiency reports cited by Seaward do not require, or even support,
a nonresponsibility determination here. Although Seaward clearly
disagrees with the agency's position concerning the impact of those
reports on Intertrade's responsibility, this disagreement does not
suffice to show bad faith. See Information Systems & Network Corp.,
B-218642, supra.
Furthermore, we are not persuaded by Seaward's assertion that the
performance of Intertrade's smaller 2 by 3 foot fenders cannot be
discounted by the agency on the basis of specification differences,
since the basic manufacturing processes and materials nevertheless are
the same for the small and large fenders. Nor are we persuaded by
Seaward's assertion that some Navy employees have told Seaward they
believe Intertrade's small fenders do not conform to contract
specifications. Seaward has not shown that the differences in the
contract specifications for the small and large fenders have no affect
on product performance, nor has it shown why the alleged belief of
certain Navy employees should be adequate to overcome the presumption
that the contracting officer acted in good faith. Similarly, Seaward's
contention that its own small fenders have been the subject of only one
deficiency report is not sufficient to overcome this presumption. Even
if Seaward's fenders in fact have a superior performance record, it does
not necessarily follow that Intertrade's fenders do not meet contract
specifications.
Accordingly, we find that none of these contentions is sufficient to
prove that the contracting officer's affirmative responsibility
determination was made in bad faith.
Oil Containment Boom Litigation
Seaward also relies on a case now pending before the Armed Services
Board of Contract Appeals (ASBCA) involving a dispute between Intertrade
and the Navy over the type of polyurethane elastomer required for use in
producing an oil containment boom under Navy contract No.
N62472-79-C-1651. Seaward essentially contends that this litigation
demonstrates that, as here, Intertrade misrepresented the type of
polyurethane elastomer it would use in performing the contract. Seaward
contends that this further supports its assertions that Intertrade is
nonresponsible.An oil containment boom is a "floating fence" used to
contain or divert oil spills.
Based on our review of the supporting documentation supplied by
Seaward, we again find nothing to substantiate a finding that the
contracting officer's affirmative responsibility determination was made
in bad faith here. Beyond this, it clearly is inappropriate for us to
consider further what the documentation may or may not show, as these
matters are the subject of the litigation before the ASBCA. See
Analytics Communications System, B-222402, Apr. 10, 1986, 86-1 CPD 356.
Request For Investigation
Seaward also has alleged that the Navy did not adequately investigate
Seaward's allegations, and has requested that we invoke our independent
audit powers and conduct our own investigation of this matter. Based on
our review of the record, we believe the Navy in fact has conducted a
thorough and fair review of Seaward's allegations. We therefore do not
find that any further investigation of these allegations by our Office
is necessary or warranted.
Conclusion
We find no merit to Seaward's assertion that the contracting
officer's affirmative responsibility determination was made in such
disregard of Intertrade's record of prior performance as to constitute
bad faith. Therefore, the protest is denied.
B-223824 Date: October 29, 1986 In the Matter of: Kings Point Industries
66 Comp. Gen. 74
Procurement
Contractor Qualification
Responsibility/responsiveness Distinctions
Supply Contracts
Work Sites
Solicitation provision requiring bidders to specify the name and
location of the facility where the supplies offered are to be produced
relates to responsibility, since this information is not necessary to
determine what a bidder that has not otherwise taken exception to the
specifications will provide. An agency should not reject a bid as
nonresponsive for failure to include such information, which may be
furnished any time before award.
Kings Point Industries protests the rejection of its bid as
nonresponsive to invitation for bids (IFB) No. DLA500-86-B-1447, issued
by the Defense Industrial Supply Center, Philadelphia, Pennsylvania, a
field activity of the Defense Logistics Agency (DLA). The IFB was for
1,714 survivors' slings and was a 100 percent small business set-aside.
The protester contends that it submitted the low, responsive bid and
that DLA should not have rejected it for failure to complete clause
A-15, which required bidders to list the name and location of the
facility where the supplies offered were to be produced.
We sustain the protest. At bid opening on June 5, 1986, DLA received
four bids. Kings Point, with a unit price of $59.17, was low, while
Texas Mil-Tronics Corporation, with a unit price of $59.89, was
second-low.
The contracting officer, upon review of Kings Point's bid, determined
that the bidder had left blank paragraph 1 of Clause A-15, "Place of
Performance-Inspection and Shipping Point," which required bidders to
set forth the following: "The name and location of the MANUFACTURING
FACILITY where the supplies offered are to be produced. Dealers are
cautioned to cite manufacturing plants only. If more than one plant is
specified, information must be submitted as to the amount and extent of
the work to be done at each plant listed. With respect to each plant
shown, the information furnished must be sufficient to identify the name
and address of the owner and operator, if other than offeror." (Emphasis
original.) Kings Point completed paragraph 2 of clause A-15 by checking
a box indicating that the supplies would not be furnished from stock.
In addition, the firm used a rubber stamp with its name and street
address in Fayetteville, North Carolina, to complete paragraph 3,
indicating its preferred site for inspections, and paragraph 4,
identifing the plant as its shipping point. Since the solicitation
instructed bidders to complete paragraph 3 only if they preferred
inspection at a site "other than" that shown in paragraph 1, the
contracting officer concluded that Kings Point's manufacturing facility
was an unnamed facility other than its inspection facility. Therefore,
he rejected the bid for failure to comply with solicitation clause D-21,
"Manufacturing or Production Information/Sealed Bid Acquisitions." This
clause provided in pertinent part: "If bids are submitted which fail to
provide the actual manufacturing/production source(s) for the items(s)
offered, or, if such information is provided but restricted from
disclosure . . . such bids will be rejected as nonresponsive."
In its protest, Kings Point acknowledges that it failed to complete
paragraph 1 of Clause A-15, but contends that the other information in
its bid indicates its agreement to manufacture the supplies at its
Fayetteville plant. The rubber stamp with the protester's address
appears not only elsewhere in clause A-15, but also on the face of the
bid and on the firm's acknowledgement of an amendment that extended bid
opening by 1 month. In addition, the protester argues, it has performed
five prior contracts at the same location, and DLA's agreement to waive
first article testing for the protested procurement depends upon this
remaining unchanged.
Kings Point further states that clause D-21, which DLA used to
disqualify it, is based on an agency regulation, DLAR 52.217-9004
(1985), that applies only to identification sources for spare parts.
Kings Point argues that the clause should not have been included in this
IFB, since the survivors' sling is not a spare part but an integral item
of rescue equipment. The protester also contends that the place of
performance is a matter of bidder responsibility, rather than bid
responsiveness.
DLA responds that information regarding the place of performance is
necessary for it to determine precisely what the bidder intends to
supply, and that public disclosure of the manufacturing source will
prevent bid shopping and enhance competition. DLA also contends that to
permit Kings Point to furnish the name and location of its manufacturing
facility after bid opening would prejudice other bidders who, pursuant
to the IFB, identified their facilities in their bids. We disagree. The
test for responsiveness is whether a bid as submitted represents an
unequivocal offer to provide the requested supplies or services at a
firm, fixed price. Epcon Industrial System, Inc., B-216725, Dec. 27,
1984, 85-1 CPD 2. Unless something on the face of the bid, or
specifically a part thereof, either limits, reduces, or modifies the
obligation of the prospective contractor to perform in accord with the
terms of the invitation, the bid is responsive. Pierpoint, Inc.,
B-219855, Oct. 10, 1985, 85-2 CPD 401; 48 Comp. Gen. 685 (1969).
In the present case, Kings Point unqualifiedly offered to meet all
the requirements of the invitation, and there was nothing on the face of
the bid limiting, reducing, or modifying its obligation to perform in
accord with the terms of the invitation. Consequently, the completion
of paragraph 1 of clause A-15 was not necessary for DLA to determine
precisely what the firm intended to supply.
We have considered similar clauses that required bidders to identify
the place of manufacturer, and we generally have concluded that they are
not related to bid responsiveness. See, e.g., Steel Style, Inc.--
Reconsideration, B-219629.3, Sept. 24, 1985, 85-2 CPD 330; Ace Metal
Fabricators, Inc., B-210265, Mar. 14, 1983, 83-1 CPD 249. While there
is an exception in those rare cases where the government has a material
need to have performance take place at a certain location, see Keco
Industries, Inc., B-199934, Sept. 22, 1980, 80-2 CPD 219, such
information usually relates to the bidder's responsibility, and it can
be furnished any time before award. Id. Since the IFB here did not
require performance at a specific location, failure to identity the
manufacturing facility provides no basis to find Kings Point's bid
nonresponsive. This is true even though clause D-21 specifically stated
that a bidder's failure to provide the actual manufacturing/production
sources would result in refection of the bid. An agency may not convert
a matter of responsibility into one of responsiveness simply by the
terms of a solicitation. See Paul N. Howard Co., B-199145, Nov. 28,
1980, 80-2 CPD 399, aff'd on reconsideration, 60 Comp. Gen. 606 (1981),
81-2 CPD 42.
We conclude that DLA improperly determined that Kings Point's bid was
nonresponsive. Therefore, by letter of today to the Director, DLA, we
are recommending award of the contract Kings Point as the low responsive
bidder if otherwise proper. The protest is sustained.
B-225003 Date: October 24, 1986 In the Matter of: Ralph Urban
66 Comp. Gen. 67
Procurement
Bid Protests
Sales
Government Property
GAO Review
Procurement
Government Property Sales
GAO Review
Under the Competition in Contracting Act of 1984, a protest filed
with the General Accounting Office (GAO) must pertain to a procurement
of property or services by a federal agency. Protests concerning sales
will be reviewed by GAO only where the federal agency involved has
agreed to such review.
Ralph Urban protests the sale by the Farmers Home Administration,
Department of Agriculture, of standing hay from the Van Huesen Farm,
Yates County, New York. Mr. Urban contends that the bidding procedures
utilized to award this contract favored a particular bidder and were
otherwise defective.
Under the Competition in Contracting Act of 1984 (CICA), 31 U.S.C.
3551 (Supp. III 1985), our Office is authorized to review protests
concerning proposed contracts for the "procurement of property or
services" by a federal agency. Here, the protest concerns a sale of
standing hay by the Department of Agriculture, and, as such, it does not
involve a procurement of property or services within the meaning of
CICA. As our Bid Protest Regulations indicate, we will review protests
concerning sales by a federal agency only if the agency involved agrees
in writing to have its protests decided by our Office; the agency
involved here has not done so. As a result, there is no basis for review
of the protest by our Office. See Equity Federal Savings Bank, 64 Comp.
Gen. 697 (1985), 85-2 CPD 81. The protest is dismissed.
B-224501 Date: October 24, 1986 In the Matter of: Security America Services, Inc.
66 Comp. Gen. 63
Procurement
Sealed Bidding
Bonds
Justification
GAO Review
General Accounting Office will not question a requirement for
performance and payment bonds on a non-construction contract unless the
decision to include the requirement is shown to be unreasonable or made
in bad faith.
Procurement
Sealed Bidding
Invitations for Bids
Interpretation
Terms
Bonds
Intent of provision in invitation for guard services that sureties
furnishing bonds for initial year are "bound . . . to include the option
periods, if exercised" (option prices were evaluated) is unclear, since
sureties are not parties to the contract and thus cannot actually be
bound by it. Statement is not legally objectionable in the context of
the procurement, however, since initial and option year bond
requirements of the solicitation are separate and distinct, so that
invitation does not contemplate contractor paying a first-year premium
for option year for bonds, and government thus improperly reimbursing
the firm in the initial-year price to protect only a contingent
interest.
Security America Services, Inc. (SAS), protests that the requirement
for performance and payment bonds in invitation for bids (IFB) No. IFB/
DLS-4-87, issued by the Immigration and Naturalization Service (INS) of
the Department of Justice, is improper. We deny the protest.
The solicitation is for unarmed quard services at INS's Port Isabel
Service Processing Center in Texas for a 1-year period, with options for
2 more years. Bids were opened on July 29, 1986, the day after SAS
filed its protest; SAS did not bid, presumably because of its objection
to the IFB's terms regarding bonding. Award is to be based on the low
evaluated bid, including the option year prices.
The IFB requires, for the initial contract year, that the successful
contractor furnish, before issuance of a notice to proceed, a 100
percent performance bond and a 50 percent payment bond if the contract
price is not more than $1 million; 40 percent if the price is between
$1 and $5 million. The IFB has a separate bonding provision for the
option years, which provides that if the government exercises an option
the contractor will have to furnish performance and payment bonds in the
specified percentages of the option year price. SAS objects to any
requirement for performance and payment bonds. The firm points out that
the Federal Acquisition Regulation (FAR), 48 C.F.R. 28.103-1 (1985),
provides that such bonds generally are not required for non-construction
contracts. SAS further argues that while the regulation nevertheless
does permit an agency to require bonds in non-construction situations
"when necessary to protect the Government's interest," FAR, 48 C.F.R.
28.103-2(a), our Office has endorsed such requirements only where
government-furnished property was extensively involved in contract
performance. The protester asserts that the services involved here are
of a non-critical nature that do not require the use of government
property, and bonds therefore are not appropriate.
INS responds that the primary function of the guard services, which
are provided 24 hours per day, is the security and control of the
entire, secured compound; the guards are charged with protecting
government property and preventing the escape of incarcerated illegal
aliens. The compound is made up of numerous buildings containing much
government equipment to which the contractor will have unlimited access,
and the contractor is responsible for damage to government property
caused by his negligence. The agency asserts that guard services at its
detention center thus indeed are critical and cannot be suspended for
even a short time. The agency advises that in fiscal year 1985 the
contractors at Port Isabel and another processing center defaulted due
to financial problems, and that INS's mission would have been harmed
severely if the contracts had not included bonds.
We find no legal merit to the protest. In our decision in D.J.
Findley, Inc., B-221096, Feb.3, 1986, 86-1 C.P.D. 121, which also
involved security guard services, we specifically rejected the
proposition that our endorsement of bonding in non-construction
situations depends on extensive use of government property in contract
performance. We pointed out that, as stated above, the regulations
authorize bonds anytime it is necessary to protect the government's
interest; a contract where government property is to be used in
performance is only one example of a situation in which a bond
requirement is needed to secure to the government the fulfillment of the
contractor's obligations. FAR, 48 C.F.R. 28.103-2(a)(1). We therefore
stated that we would question a requirement for bonding on other than a
construction contract only where the objecting firm establishes that the
decision to include it was not reasonable or made in good faith. See
also Galaxy Custodial Services, Inc., et al., 64 Comp. Gen. 593 (1985),
85-1 C.P.D. 658.
SAS does not argue that INS's decision to require bonds was made in
bad faith. Moreover, we find nothing unreasonable in the agency's
decision that bonds are needed to insure uninterrupted guard service in
what, despite the protester's view to the contrary, we are persuaded by
the agency's explanation is a critical performance situation.
Accordingly, we deny this aspect of the protest.
SAS also protest a particular provision of the bond requirement as it
applies to the option years. The language in issue is: "Corporate
sureties executing bonds for the initial period are bound to the
contract to include the options periods, if exercised."
SAS contends that in order for a contractor to insure that the same
surety used for the initial year is bound for the option years, the
contractor must pay the surety a premium for all bonds in the first
year. SAS argues that the requirement thus is improper in that its
effect is to reflect in the contract's first-year price a government
expense for an obligation that would not be incurred until the option
years, and only if funds then are available and the options are
exercised. INS responds that the solicitation clearly only requires
bonds for the option years if and when those options are exercised.
Thus, the contractor simply will be required to furnish performance and
payment bonds at the time the options are exercised at bid prices that
reflect the premiums for those bonds; in INS's view, there is nothing
wrong with such a requirement. The purpose of the sentence to which SAS
objects is not entirely clear. We do not see how the government, simply
because it has a contract with the principal, can bind a particular
surety to furnish option-period bonds, since the agency would have no
practical recourse against the surety if the surety subsequently refused
to furnish the bonds, there being no privity of contract between the
parties. The only way the government could bind the surety, in our
view, is by express agreement with the surety itself.
We would be inclined to agree with SAS that the provision in issue is
improper if we also were to conclude that its actual effect was to
require the contractor to present to the government at the contract's
outset a 3-year surety commitment that reasonably necessitated a
first-year payment of premiums for option-year bonds. In this respect,
we have held that, as a general matter, the government does not desire
to pay a contractor, in a price that includes a premium for a bond that
covers an option period, for the protection of only a contingent
interest. See Pacific Coast Utilities Service, Inc., B-209003.2, Jan.
20, 1983, 83-1 C.P.D. 73; see also Consolidated Technologies, Inc.,
B-215723, Dec. 7, 1984, 84-2 C.P.D. 639.
The only way to reach that conclusion, however, is to ignore the
context in which the provision appears. As stated above, the IFB
establishes discrete bonding provisions for the initial and each option
year: option-year bonds are required to be submitted, in the specified
amounts of the option year bid prices, only if and when the options are
exercised. Thus, the invitation when read as a whole neither
contemplates nor necessitates a first-year government expense for
option-year bonds. Instead, it clearly is expected that the bond
premium for an option year is reflected in that option-year price and
thus is payable by the contractor and reimbursable by the government
upon exercise, not before.
To the extent SAS believes it would need to pay its surety at the
contract's outset for an option-year commitment even in the context of
this procurement, we view that as a matter of the firm's business
judgment, and not as a factor that necessarily establishes a
solicitation impropriety. Further, as to the effect of the provision on
the ultimate decision whether to exercise the option, which is a
unilateral right contract administration, which is outside the scope of
our bid protest function. See Interstate Equipment Sales, B-222213,
Mar. 19, 1986, 86-1 C.P.D. 274. We therefore will not object to the
solicitation on the basis argued by SAS. The protest is denied.
B-223914 Date: October 23, 1986 In the Matter of: AT&T Information Services, Inc.,
66 Comp. Gen. 58
Procurement
Bid Protest
GAO Procedures
Protest Timeliness
10-day Rule
Effective Dates
Protest challenging contracting agency's justification for
sole-source award based on urgent circumstances is timely when filed
within 10 days after protester receives the justification, despite the
fact that the protester had learned earlier of agency's selection of
awardee, since the protester did not know the grounds of its protest
until the justification was received.
Procurement
Noncompetitive Negotiation
Use
Justification
Urgent Needs
Agency procuring telecommunications services adequately demonstrated
the urgency required by statute (41 U.S.C. 253 (c)(2)) to use the
noncompetitive procedures where, due to age of existing
telecommunications equipment, the user agency was experiencing periodic
losses of telecommunications services which could have a serious adverse
impact on the agency's operations.
Procurement
Noncompetitive Negotiation
Contract Awards
Sole Sources
Propriety
Although agency's need to replace existing telecommunications
equipment was of sufficient urgency to justify limiting the number of
sources considered, it was improper for the agency to make a sole-source
award without considering any other offers, since the agency failed to
show that the time constraints imposed by the urgency of the agency's
needs prevented the agency from using abbreviated competitive procedures
to consider proposals from other sources.
Procurement
Bid Protests
GAO Procedures
Preparation Costs
When protest of an improper sole source is sustained, protester is
entitled to recover costs of filing and pursuing the protest, even where
recommended relief is a new procurement under which the protester will
have the opportunity to compete.
AT&T Information Systems, Inc. (AT&T) protests the award of a
contract by the General Services Administration (GSA) to the Chesapeake
and Potomac Telephone Company (C&P) for telecommunications services at
the Veterans Administration (VA) Central Office, Washington, D.C. AT&T
challenges GSA's determination that urgent and compelling circumstances
justified award to C&P without soliciting offers for other sources. We
sustain the protest.
Since the breakup of the Bell system in January 1984,
telecommunications services at the VA Central Office have been furnished
under an agreement between AT&T and GSA providing for continued lease
from AT&T of the equipment already in place at VA, a Western Electric
Company 701 private branch exchange switch. The service agreement
extends through December 31, 1986.GSA has overall responsibility for
obtaining telecommunications services for federal agencies. See 40
U.S.C. 295 (1982). Agencies are required to secure GSA approval for
any changes to their telecommunications resources. Federal Information
Resources Management Regulation, 41 C.F.R. 201-39.001 (1985).
Beginning in March 1982, VA sought GSA's approval to replace the 701
switch, which is approximately 50 years old. GSA ultimately granted
approval for a competitive procurement of replacement equipment in April
1984. VA issued an RFP in August 1984, but, due to an apparent
ambiguity in the specifications, the RFP was canceled in August 1985.
VA subsequently decided to accept an offer from AT&T to replace the 701
switch with a new system, the AT&T System 85. When asked for approval
of VA's plan, GSA suggested that VA consider obtaining services from C&
P as an alternative to the AT&T System 85, and requested that VA conduct
a cost comparison of the two systems.According to GSA, many other
agencies already receive telecommunications services under the C& P
Centrex system. The services are ordered by GSA on behalf of the
agencies based on C&P's published tariffs.
In April 1986, VA advised GSA that it had decided to use the C&P
system and began discussions with C&P regarding the equipment
changeover. On July 15, the GSA contracting officer issued a
justification for the C&P order which discussed VA's prior attempts to
procure replacement equipment, the performance problems VA was
experiencing, and VA's cost comparison of the AT&T and C&P Systems. GSA
then placed an order with C&P for the services on July 22.
The protest was filed on July 31. GSA decided to allow C&P to
proceed with performance notwithstanding the protest, based on its
finding under the Competition Contracting Act of 1984 (CICA), 31 U.S.C.
3553 (d)(2)(A)(ii) (Supp. III 1985), that urgent and compelling
circumstances would not permit waiting for a decision on the protest.
According to GSA, the award to C&P is an interim arrangement which will
be used until a contract is awarded for telecommunications services on a
consolidated basis for all federal agencies in the Washington, D.C.
area. Specifically, GSA states that it plans to issue an RFP for the
consolidated system, called the Washington Interagency
Telecommunications System (WITS), in October 1986, with award planned
for late 1987. Thus, the current agreement with C&P for services at the
VA Central Office is expected to last for approximately 3 years, until
performance starts under the WITS contract.
As a preliminary matter, GSA contends that the protest is untimely.
GSA argues that AT&T was put on notice of the basis of its protest by a
letter from VA dated May 28, 1986, advising AT&T that VA had decided to
convert to the C&P Centrex system, instead of replacing the existing
switch with the AT&T System 85. Since the protest was not filed until
July 31, GSA argues, the protest in untimely under our Bid Protest
Regulations, 4 C.F.R. 21.2(a)(2)(1986). AT&T states that its in-house
counsel called GSA's counsel in late May 1986 to advise her that AT&T
had learned that VA had selected the C&P system. GSA counsel agreed to
check on the VA decision, and a few days later advised AT&T's counsel
that no orders with C&P had yet been placed or were imminent, and that
she would look into the status of the VA procurement. No further
information regarding the progress of VA's plans passed between the
parties until July 23, when GSA provided AT&T with a copy of GSA's July
15 justification for making award to Centrex. The protest then was
filed with our Office on July 31.
We find that the protest is timely. Our Bid Protest Regulations, 4
C.F.R. 21.2(a)(2), require that protest such as this one be filed within
10 days after the protester knew or should have known the basis of its
protest. Here, while the May 28 letter from VA which GSA refers to
notified AT&T that VA had selected C&P, AT&T was not advised of the
grounds for that decision, on which its protest is based, until July 23,
when it received GSA's July 15 justification for the award to C&P. In
fact, at the time the VA letter was written GSA had yet to execute its
July 15 justification. Further, based on conversations between counsel
for AT&T and GSA, AT&T reasonably could conclude that the status of the
decision to award to C&P was unclear since GSA, the agency with overall
responsibility for telecommunications services, apparently had not yet
approved VA's decision. Under these circumstances, AT&T acted
reasonably in waiting until it received the GSA justification before
filing its protest challenging the justification. See EDO Corp.,
B-224386, Sept. 18, 1986, 86-2 CPD .
The July 15 justification prepared by the contracting officer at GSA
is based on GSA's finding that award to C&P could be made with less than
full and open competition as authorized by 41 U.S.C. 253(c)(2), as
amended by CICA, due to VA's urgent need to replace the existing
equipment. The justification states that replacement was deemed urgent
because, due to the age of the current switch, difficulty in acquiring
spare parts, and inadequate maintenance, VA was experiencing equipment
failures resulting in loss of telephone service and delays in processing
and receiving calls. The justification also states that expansion of VA
programs is hampered because the 701 switch has reached capacity. In
addition, the justification concludes that the C&P Centrex system will
cost less than the AT&T System 85.
AT&T contends that (1) GSA has failed to show the "unusual and
compelling urgency required by 41 U.S.C. 253(c)(2) to use noncompetitive
procedures; (2) GSA acted improperly by failing to solicit other
sources, including AT&T, and instead making a sole-source award to C&P;
(3) the GSA justification is defective because it was not properly
certified by the contracting officer, does not indicate that a market
survey was done, and relies on an inaccurate cost comparison of the AT&T
and C&P systems; and (4) contrary to GSA's finding, the C&P Centrex
system does not provide the same services as the AT&T System 85.
With regard to AT&T's first contention, 41 U.S.C. 253(c)(2)
authorizes an executive agency to use noncompetitive procedures when:
"the executive agency's need for the property or services is of such an
unusual or compelling urgency that the Government would be seriously
injured unless the executive agency is permitted to limit the number of
sources from which it solicits bids or proposals." Here, GSA argues that
the potential adverse impact on VA's operations due to performance
problems with the 701 switch satisfies the statutory requirements for
using noncompetitive procedures. Specifically, GSA states that the lack
of reliable services from the 701 switch threatens the two primary
functions of VA's Central Office, management of VA hospitals and
providing health care to the Department of Defense in emergencies. AT&
T does not dispute that the 701 switch has malfunctioned; on one
occasion cited by GSA, for example, a switch malfunction left the VA
Central Office without telephone service for 2 hours during the workday.
Rather, AT&T argues that GSA has failed to show that the problems with
the 701 switch actually have seriously injured VA's operations. We do
not agree with AT&T's contention that VA was required to wait for actual
injury to occur before its need for a replacement switch could be
considered sufficiently critical to invoke 41 U.S.C. 253 (c)(2). In our
view, it is reasonable to conclude that telecommunications services are
critical to VA in carrying out its statutory mission, and, to the extent
the existing switch fails to provide reliable services, VA's need to
replace the switch is urgent. AT&T also argues that VA's delay in
replacing the 701 switch demonstrates that the need for replacement
equipment is not urgent. While VA began efforts to replace the switch
at least as early as 1982, the record shows that the services at VA in
more recent years have been deteriorating due to the condition of the
switch. For example, GSA and AT&T recently entered into a separate
contract for an AT&T technician dedicated to maintenance of the VA
switch, since VA believed that AT&T was not adequately maintaining the
switch as evidenced by the high number of "trouble reports" at VA. Thus,
in our view, AT&T has not demonstrated that it was unreasonable for GSA
and VA to conclude that the need to replace the switch became more
urgent due to the passage of time and the resulting deterioration in the
services at VA.
Finally, AT&T contends that, in accordance with 41 U.S.C. 253(f)(5)(
A), GSA and VA were precluded from using noncompetitive procedures to
make award to C&P because any urgency in replacing the 701 switch was
due to the agencies' lack of advance planning. As discussed above, the
delay in selecting replacement equipment until mid 1986 was due
principally to the cancellation of the RFP in 1984 and other delays
resulting from the required coordination efforts between GSA and VA.
Since 1982, however, both agencies clearly have addressed the need to
replace the 701 switch, and we see no evidence of insufficient diligence
on their part which would amount to a lack of advance planning within
the meaning of 41 U.S.C. 253(f)(5)(A).
Although we find that VA's need was of sufficient urgency to justify
limiting the number of sources considered, we do not agree with GSA that
the circumstances warranted a sole-source award to C&P without
soliciting offers from other sources. As discussed above, the GSA
justification for making award to C&P relied on 41 U.S.C. 253(c)(2),
which authorizes a contracting agency to "limit the number of sources"
solicited. This provision thus does not authorize a sole-source award
in every case in which it is invoked; rather, as provided in 41 U.S.C.
253(e), an agency relying on section 253(c)(2) is required to request
offers from as many potential sources as is practicable under the
circumstances. As a result, a sole-source award is proper under section
253(c)(2) only where, due to urgent circumstances, the agency reasonably
believes that only one firm can promptly and properly perform the work
required. Gentex Corp., B-221340, Feb. 25, 1986, 86-1 CPD 195. In this
case, we find that GSA has failed to show that only C&P can provide the
services within the time required to meet VA's urgent need.
GSA concedes that AT&T's System 85 would satisfy VA's
telecommunications needs; GSA contends only that, due to the imminent
expiration of its current service agreement with AT&T in December 1986,
there was not enough time to conduct a formal procurement. GSA has made
no showing, however, that the time constraints prevented GSA or VA from
using other procedures short of a full competition to consider offers
from other sources, as, for example, by inviting a price proposal from
AT&T for services equivalent to those under the C&P Centrex system,
whose prices are accessible from its public tariffs.
GSA maintains that VA's cost comparison of the AT&T System 85 and the
C&P Centrex system served in effect as an abbreviated competition, since
AT&T knew that VA was considering C&P and tailored its prices for the
System 85 to be competitive with the C&P system. In our view, the fact
that AT&T knew of VA's interest in C&P did not satisfy the agencies'
obligation to ensure that the sources solicited were competing on an
equal basis, to the extent permitted by the time constraints imposed by
the urgency of the VA's needs. Although it was aware that C&P was being
considered, AT&T states that GSA never asked AT&T for a price proposal
covering VA's needs for the next 3 to 4 years, until performance
commences under the new WITS consolidated services contract. AT&T
states that had it known it was competing against a C&P proposal for the
duration of VA's interim needs, AT&T would have offered lower prices
than it did for its System 85.
AT&T's assertion that it would have offered lower prices is
particularly significant in light of the revised cost comparison
submitted by GSA in connection with the protest, which shows a
significantly smaller price difference between the AT&T System 85 and
the C&P Centrex system than under the original comparison. In addition,
AT&T challenges the revised cost comparison, arguing that the
calculation of the C&P price omitted additional costs which the cost
comparison itself recognizes will be incurred in changing over to the
C&P system. Thus, a proper cost comparison of equivalent offers from
AT&T and C&P may indicate that AT&T's price is lower than C&P's.The
original comparison relied on in the GSA justification showed that the
C&P system would cost $907,024 less than the AT&T system. After
correction of certain improper calculations, the revised comparison
shows that the C&P price is lower by only $225,645.These costs, which
are not quantified in the cost comparison, are for a second entrance
cable and for construction of mainframe and operator console rooms.
Since we find that GSA improperly made a sole-source award to C&P
without soliciting other offers, we need not consider the remaining
issues raised by AT&T regarding whether the justification complied with
the procedural requirements of CICA and whether the C&P Centrex system
provides services equivalent to the AT&T System 85.
As discussed above, GSA decided to allow C&P to continue with
performance notwithstanding the protest. GSA states that the changeover
to C&P occurred on September 26 and that the contract permits GSA to
terminate C&P services on 30-days notice. Accordingly, we recommend
that AT&T be given an opportunity to submit a price proposal for
services for the interim period equivalent to those provided under the
C&P Centrex system. Based on a cost comparison of the systems, GSA and
VA should determine whether to continue with the C&P system or terminate
C&P's services and award a contract to AT&T. We also find that AT&T is
entitled to recover the costs of filing the protest, including
attorney's fees. Our regulations permit recovery of the costs of filing
and pursuing a protest where the protester is unreasonably excluded from
the procurement, unless we recommend that the contract be awarded to the
protester and the protester actually receives the award. 4 C.F.R.
21.6(e). We have interpreted this to allow recovery of the costs of
protesting an improper sole source award, even when we also recommend
that a new procurement be conducted under which the protester will have
the opportunity to compete. Washington National Arena Limited
Partnership, 65 Comp. Gen. 25 (1985), 85-2 CPD 435. Accordingly, we
grant AT&T's claim for costs. The protest is sustained.
B-223913 Date: October 23, 1986 In the Matter of: Atlantic Marine Services, Inc.
66 Comp. Gen. 54
Procurement
Special Procurement Methods/Categories
In-House Performance
Cost Estimates
Computation Errors
Non-Prejudicial Allegation
There is no basis to question an agency's decision to retain services
in-house rather than to contract for them as the result of an Office of
Management and Budget Circular No. A-76 cost comparison where the
protester makes no credible showing that the cost comparison's outcome
likely would have been different had the agency calculated the
government's estimated costs for the insurance of vessels in the manner
advanced by the protester.
Atlantic Marine Services, Inc. (Atlantic) protests a determination
made by the United States Army Corps of Engineers (Corps) pursuant to
Office of Management and Budget (OMB) Circular No. A-76 that it would be
more economical to retain certain operation and maintenance services
in-house rather than to contract the requirement. Atlantic complains
that the agency's cost comparison was based upon inaccurate calculations
and was unfairly conducted in favor of retaining the work in-house. We
dismiss the protest in part and deny it in part.
Background
In order to determine whether it would be more economical to contract
out the services or continue to have them performed by in-house
personnel, the Corps issued invitation for bids (IFB) No.
DACW61-86-B-0020, soliciting bids for a base year plus four 1-year
options. Bids were to be evaluated on the basis of the total aggregate
price for the full 5-year period adjusted in accordance with Circular
A-76 procedures, and then compared to the government's estimate of the
cost of in-house performance. The scope of work included the support of
dredging in the Delaware River and entailed the contractor's use of
government-owned vessels. Accordingly, the IFB provided, among other
insurance requirements, that the contractor was to procure and maintain
marine casualty ("hull") insurance for each vessel to be furnished by
the government. Two bids were received in response to the IFB.
Atlantic was the apparent low bidder at $7,885,475 for the entire
contract period. The bid was then adjusted in accordance with A-76
procedures to reflect a final contract price of $8,281,602. However,
the government's estimate of the cost of performance by government
personnel was significantly less at $6,316,267, a difference of nearly
$2 million. Accordingly, the Corps determined to retain the services
in-house.As prescribed by the A-76 cost comparison procedures,
Atlantic's total aggregate bid price was adjusted to reflect the
estimated cost of contract administration and conversion (a total
increase of $490,753), and the payment of federal income tax (a
deduction of $94,626), resulting in a net increase of $396,127 to the
bid price.
Atlantic then filed an administrative appeal of the Corps'
determination. The firm's principal complaint was that the government's
estimate was significantly understated with regard to the calculation of
marine casualty insurance costs, and, therefore, was not a fair basis
for comparison with the cost of contracting. In this regard, Atlantic
noted that the IFB required the contractor to obtain full replacement
cost insurance (which Atlantic asserted would cost in excess of $1
million), whereas the government's estimate established an insurance
cost of less that $5,000 for the entire 5-year contract period.
Atlantic urged that the government's calculation was improperly made on
the basis of both greatly undervalued equipment and application of the
inappropriate insurance cost factor multiplier. However, the Corps'
appeals board found no material error in the cost comparison procedures.
Atlantic's protest to this Office follows the agency's dismissal of the
appeal.
Analysis
Our Office will review protests concerning agency decisions to
continue performing services in-house instead of contracting for them,
solely to ascertain whether the agency adhered to the established
procedures for the comparison of in-house/contracting costs. Dwain
Fletcher Co., B-219580, Sept. 27, 1985, 85-2 CPD 348. We do so because
we believe if would be detrimental to the procurement system if, after
the agency induced the submission of offers, there were a faulty or
misleading cost comparison which materially affected the agency's
decision that in-house performance would be more economical than
performance by contract. Dynateria, Inc., B-221089, Mar. 31, 1986, 86-1
CPD 302.
Accordingly, a protester challenging a cost comparison must
demonstrate not only a failure to follow established procedures, but
also that this failure had a material effect upon the outcome of the
cost comparison--that is, a clear showing that the result likely would
have been different had the improper calculation or other procedural
error not been made. See American Operations Corp., B-217237, Aug. 27,
1985, 85-2 CPD 231. The protester may meet its burden by presenting
sufficient evidence to raise a reasonable doubt as to whether the result
of the cost comparison would be different under the correct procedures
if the agency does not dispel that doubt. Serv-Air, Inc. AVCO, 60
Comp. Gen. 44 (1980), 80-2 CPD 317.
Although Atlantic's administrative appeal and subsequent protest to
this Office challenged certain elements of the cost comparison besides
the calculation of marine insurance costs, such as the government's
proposed staffing and estimation of overhead costs, it is clear from the
record that Atlantic has never asserted that any miscalculations or
errors with respect to those elements had a material effect upon the
cost comparison's outcome. Indeed, since Atlantic did not respond to
the agency's position on those issues of protest are deemed to be
abandoned and will not be considered. See American Bank Note Co.,
B-222589, Sept. 18, 1986, 86-2 CPD ; The Big Picture Co., Inc.,
B-220859.2, Mar. 4, 1986, 86-1 CPD 218. To the extent Atlantic complains
that the IFB's requirement for the contractor to obtain replacement cost
insurance was unnecessary and represented an undue restriction on its
ability to compete with the government, the protests is untimely. Our
Bid Protest Regulations provide that protests based upon alleged
improprieties in a solicitation which are apparent prior to bid opening
or the closing date for receipt of initial proposals must be filed
(received) prior to bid opening or the closing date for initial
proposals in order to be considered. 4 C.F.R. 21.2 (a)(1) (1986).
Here, bid opening occurred on May 29, 1986, but Atlantic did not file
its protest with this Office until July 31. The marine casualty
insurance requirement was clear from the face of the IFB, and, contrary
to Atlantic's assertion, we do not regard the insurance requirement per
se as an issue directly related to the Corps' proper conduct of the cost
comparison under A-76 procedures. In any event, we see no legal basis
for Atlantic's protest against the requirement. The Federal Acquisition
Regulation (FAR), 48 C.F.R. 28.306(a) (1985), expressly provides, with
respect to fixed-price contracts such as contemplated by the subject
IFB, that although the government ordinarily is not concerned with the
contractor's insurance coverage under a fixed-price contract,
contracting agencies nevertheless may require insurance in special
circumstances such as where: (1) the contractor is principally engaged
in government work; (2) government property is involved; or (3) the
work is to be performed on a government installation. As the Corps
states, all of those circumstances were reasonably present here with
respect to contractor performance of the work. Moreover, the FAR also
provides that when contract performance involves the use of vessels, the
contracting officer shall require, as determined by the agency, vessel
collision liability and protection and indemnity liability insurance. 48
C.F.R. 28.307-2(e).
In view of the discretion afforded to contracting agencies by the FAR
with respect to insurance requirements, we see no indication that the
marine casualty insurance requirement here was either unnecessary or
imposed an unreasonable burden upon potential contractors. Therefore,
we believe the only question for consideration under our Circular A-76
review function is whether the Corps properly calculated the
government's marine insurance costs for cost comparison purposes. The
Supplement to OMB Circular No. A-76 (August 1983) recognizes at part IV,
chapter 2, section F.6, that the operation of any government activity
involves potential costs from casualty losses and liability claims,
nothing that the government is primarily self-insured and must pay for
all losses incurred. For the purpose of computing the government's
estimated insurance costs, section F.6.a. provides that casualty losses
shall be determined by multiplying a factor of .0005 times the net book
value (estimated acquisition cost and any betterments less accumulated
depreciation) of government equipment and the average value of material
and supplies, whereas casualty losses for facilities and minor items
will be determined by multiplying.005 times the estimated replacement
cost.
Therefore, we find no merit in Atlantic's assertion that the Corps
improperly used the .0005 multiplier in computing its casualty insurance
costs, since that factor is specifically mandated by the A-76 cost
comparison procedures. Rather, we believe Atlantic's fundamental
argumental argument is that it was inequitable for cost comparison
purposes for the government to compute its marine insurance costs on the
basis of the net book value of the equipment, as provided by section
F.6.a. of the A-76 Supplement, while at the same time requiring the
contractor to provide insurance on the basis of the replacement cost of
the vessels.
However, Atlantic's argument notwithstanding, it is clear that any
computation of the government's insurance costs on the basis of the
replacement value of the vessels, rather than on their remaining book
value--even though the latter is the basis prescribed by the A-76
procedures--would have had no effect upon the cost comparison's outcome.
In this regard, as provided in the RFP, the total replacement value of
the vessels to be insured under any contract was $11,106,383. If this
figure is multiplied by the .0005 casualty insurance factor, the
estimated insurance cost to the government, when extended over the
anticipate 5-year contract term, would be less than $28,000. Given the
nearly $2 million difference between the estimated costs of in-house and
contractor performance, this different basis for the computation of the
government's marine insurance costs would have had a wholly de minimis
impact upon the result of the A-76 cost comparison. See Samsel Services
Co., B-213828, Sept. 5, 1984, 84-2 CPD 257. Accordingly, we conclude
that Atlantic's protest against the propriety of the agency's decision
to retain the services in-house has failed to meet the required burden
of proof. Id. The protest is dismissed in part and denied in part.
B-223329 Date: October 17, 1986 In the Matter of: Department of Agriculture--Request for Advance Decision
66 Comp. Gen. 51
Procurement
Contract Management
Contract Modification
Fixed-Price Contracts
Retroactive Adjustments
Consideration
Procurement
Socio-Economic Policies
Labor Standards
Overtime
Federal Procurement Regulations/Laws
Retroactive Applications
Fixed-priced construction contracts executed before January 1, 1986
may not be modified without consideration to delete the requirement for
payment of premium rates for overtime worked in excess of 8 hours a day
in order to conform to Pub. L. No. 99-145, which eliminated the
requirement from contracts executed after January 1, 1986. Neither the
statute nor its legislative history reflects congressional intent to
have the statute applied retroactively.
Procurement
Contract Management
Contract Modification
Fixed-Price Contracts
Retroactive Adjustments
Consideration
The desire to conform old contracts to a new statute which amended
overtime pay laws does not constitute sufficient consideration to delete
provisions for the payment of premium pay for overtime worked in excess
of 8 hours a day from the contracts which were awarded before the
effective date of the statute. Modification of contract to delete daily
overtime provisions requires that adequate consideration should be
negotiated between agency and individual contractors.
The Soil Conservation Service (SCS), Department of Agriculture, has
requested an advance decision from our Office approving its proposal to
modify certain fixed-price construction contracts executed before
January 1, 1986. SCS desires to remove provisions requiring premium
payments for hours worked by contractors' employees in excess of 8 hours
a day without requiring consideration from the contractors. This
request arises because Section 1241 of the Department of Defense
Authorization Act, 1986, Pub. L. No. 99-145, 99th Cong., 1st Sess.
(1985) (hereinafter referred to as the Act), amended the Contract Work
Hours and Safety Standards Act (CWHSSA), 40 U.S.C. 328 (a) (1982), and
the Walsh-Healey Public Contracts Act (PCA), 41 U.S.C. 35(c) (1982), by
deleting the requirement for payment of not less than 1-1/2 times the
basic rate of pay for hours worked in excess of 8 per day. The
amendment, which was enacted on November 8, 1985 and became effective on
January 1, 1986, did not change the requirement for premium pay for
hours worked in excess of 40 hours a week. Thus, this amendment permits
contractors to establish flexible work schedules for their employees
assigned to government contracts executed after January 1, 1986.
SCS states that many of its contractors are insisting that their
pre-January 1, 1986 contracts be amended to remove the provisions for
premium payments for daily overtime and that no consideration be
required from them. The contractors argue that these contract
provisions have been rendered void by the act. SCS points out that one
of its contractors has already submitted a claim under the disputes
clause of its contract demanding that SCS delete or not enforce the
daily overtime pay requirement. SCS expects similar claims in the
future that could result in costly and time-consuming negotiations in
arriving at equitable adjustments because of the wide diversity in the
sizes of the contracts and the degrees of completion. SCS contends that
the matter is further complicated, because the Department of Labor (DOL)
has stated its position (DOL Memorandum No. 143, Dec. 23, 1985) that,
although certain contractors may continue to be obligated to pay daily
overtime compensation pursuant to state or local laws, collective
bargaining agreements, or employment contracts, DOL will take no action
to enforce the daily overtime payment provisions in the pre-January 1,
1986 contracts, since that is a "question of contract law between the
parties independent of the Department of Labor's authority under CWHSSA
and PCA." The first issue is whether the statutory amendments should be
construed as having retroactivity as well as prospective application;
that is, does the Act apply to contracts executed prior to January 1,
1986. The courts generally "indulge in the presumption that the
legislature intended statutes, or amendments thereof, enacted by it, to
operate prospectively only" unless the contrary intention of the
legislature is clearly apparent. 73 Am. Jur. 2d, Statutes, 350 (1974);
Slade v. United States of Mexico , 617 F. Supp. 351 (D.D.C. 1985). We
find nothing in the wording of the Act or in its legislative history
reflecting a specific congressional intent to have the Act applied to
contracts executed before its expressed effective date on January 1,
1986. Thus, we have no basis upon which to conclude that Congress
intended that the daily overtime provisions in contracts executed void
and unenforceable.
The next issue is whether SCS may delete the requirement for premium
payments for daily overtime from contracts executed before January 1,
1986 without consideration from the contractors. In this record, we
point out what our Office has a long-standing position that in the
absence of a statute so providing, no officer or agent of the government
has the authority to waive contractual rights which have accrued to the
United States or to modify existing contracts to the detriment of the
government without adequate legal consideration or a compensatory
benefit to the United States. See Economic Development
Administration-Comprise Authority , 62 Comp. Gen. 489 (1983);
Department of Agriculture--Request for Advance Decision , B-207165, May
3, 1982, 82-1 CPD 416; 39 Comp. Gen. 726 (1960); 20 Comp. Gen. 726
(1960); 20 Comp. Gen. 448 (1941). There is no provision in the statute
which authorizes SCS to waive the contractual rights which have accrued
to the government in the pre-January 1, 1986, contracts or to modify
them without receiving adequate consideration. At the time these
contracts were executed, the existing laws and the contract provisions
agreed to by the contractors and the SCS required payment of overtime
premiums for work performed in excess of 8 hours a day. Since the
statutory amendments appear to be prospective in nature, SCS may not
relinquish the government's contractual rights, for which the government
is presumably paying since compliance with the overtime requirement
makes performance more expensive, and the contractors are obligated to
pay daily overtime rates of pay where appropriate unless the government
receives adequate consideration for such contractual modifications. In
other words, deletion of the daily overtime provisions would generally
result in a decrease in the contractor's costs of performing the
contract, and, since contracts in question are fixed-price contracts,
the government should receive the benefit of any reduction in costs.
This, in fact, is what is required by current regulations. The
Federal Acquisition Regulation (FAR), as amended by Federal Acquisition
Circular (FAC) 84-14, Mar. 31, 1986, 51 Fed. Reg. 12,292 (1986), which
revised FAR parts 22, 52 and 53, provides for use of a revised clause,
52.222-4, Contract Work Hours and Safety Standards Act--Overtime
Compensation, which eliminates the requirement to pay premium payments
for daily overtime. The circular specifically provides: "For existing
contracts, overtime for hours worked in excess of 8 hours per day may
still be required by existing collective bargaining agreements and State
or local laws, in addition to the old CWHSSA clause. Contracting
officers should not modify existing contracts to substitute the revised
clause unless the modification: (a) will result in a reduction of
contract cost or price or other consideration, and (5) is agreed to by
the contractor."
This is consistent with our holding above as well as with the
previously referenced DOL Memorandum No. 143. With regard to SCS's
statement that is faced with outdated contracts without enforcement
processes in place and current contracts with more favorable terms we
refer to our decision in a similar case, 46 Comp. Gen. 874 (1967), where
the old contracts also differed from the new contracts. There, the
agency sought authorization to modify certain storage contracts awarded
in 1965 to compensate for the increased labor costs the contractors
felt, as a practical matter, they had to pay as a result of the
enactment of the Service Contract Act of 1965. This act, however, did
not apply to contracts executed before its effective date of January 20,
1966. The storage contracts were fixed-price contracts and contained
options for 5 additional 1-year periods at the prices specified for the
initial contract. The agency no longer required the contractors to bind
themselves to fixed-price contracts for such long periods, and it argued
that the contractors' adherence to the new policy reflected by the act
constituted valuable consideration from the contractors. We rejected
this argument and stated that any furtherance of the policy set out in
the act resulting from payment of higher wages than would otherwise be
required would not constitute sufficient consideration to support the
modifications. We believe that the difference between the overtime
provisions in the pre and post-January 1, 1986 contracts conform to the
overtime amendments are not sufficient justification for modifying the
old contracts without adequate consideration.
We recognize, as SCS points out, that the effect of a deletion of the
daily premium payment provision could vary greatly among the
contractors. For example, a contractor whose employees regularly work
more than 8 hours in a day would have its labor costs reduced by
deletion of the daily overtime provisions significantly more than a
contractor whose employees never work more than 8 hours in a day. Under
these circumstances, the kind and amount of the consideration required
to modify the contract will vary greatly and should be negotiated
between SCS and the individual contractors. Accordingly, SCS should not
modify pre-January 1, 1986, contracts by deleting daily overtime pay
provisions without receiving adequate consideration in return.
B-224408 Date: October 16, 1986 In the Matter of: ABC Paving Company
66 Comp. Gen. 47
Procurement
Sealed Bidding
Invitations for Bids
Wage Rates
Amendments
Acknowledgement
Failure to acknowledge IFB amendment increasing wage rates cannot be
cured after bid opening by bidder whose employees are not covered by
collective bargaining agreement binding firm to pay wages not less than
those prescribed by Secretary of Labor. Decision in United States
Department of the Interior--Request for Advance Decision, et al., 64
Comp. Gen. 189 (1985), 85-1 C.P.D. 34, which holds otherwise, is
overruled.
ABC Paving Company, the second lowest bidder, protests the Army's award
of a contract to Souter Asphalt Paving, the lowest bidder, under
invitation for bids (IFB) No. DACA27-86-B-0044 issued by the United
States Army Engineer District (Army), Louisville, Kentucky, for repair
of an armored vehicle test track. ABC contends that Souter's bid is
nonresponsive because Souter failed to acknowledge a Davis-Bacon Act
wage rate amendment that increased the cost of performance. ABC further
contends that the defect in Souter's bid cannot be waived or cured as a
minor informality under Federal Acquisition Regulation (FAR), 48 C.F.R.
14.405 (d)(2) (1985), which permits consideration of a bid rendered
nonresponsive by failure to acknowledge an amendment if the amendment
has merely a negligible effect on price, quantity, quality, or delivery
of the work. We sustain the protest.
The IFB requires test track repairs including: (1) partial
resurfacing of the track; (2) removal and reconstruction of an existing
concrete and steel undulating course, (3) rehabilitation of the track
shoulders, and (4) drainage improvements. The IFB was amended once to
include a revised Davis-Bacon Act wage rate determination increasing the
wages payable to some classes of construction workers while decreasing
the wages payable to others. The revised wage rate determination covers
16 classes of construction workers and applies to all airport, bridge,
highway and sewer construction in the state of Michigan.
Souter submitted the low bid of $418,722, while ABC was second low,
bidding $428,800. The Army noted Souter's failure to acknowledge the
wage rate amendment at bid opening and immediately began evaluating the
changes in the revised wage rate determination to ascertain their
materiality for purpose of FAR, 48 C.F.R. 14.405 (d)(2). Since the
amendment affected only wages and not construction specifications, the
evaluation focused on the effect of the amendment on price. The
evaluation assumed that the contractor would mark-up direct labor cost
20 percent for overhead, 10 percent for profit and 1.44 percent for
bonds. It further assumed that the contractor's direct labor costs
were: truck drivers - 30 percent; and laborers and other trades - 40
percent. These assumptions were then applied to the three labor classes
(cement masons, truck drivers, and iron workers) affected by the
revision. On this basis, the Army calculated the net effect of the
revision as a cost increase of less than $1,000, or approximately 0.2
percent of Souter's low bid. The Army concluded that the amendment had
only a negligible effect on price and that the government could consider
Souter's bid. The Army advised Souter of the effects of the amendment,
and Souter acknowledged the amendment agreeing to abide by its terms at
no change in bid price. The Army then awarded Souter the contract. In
doing so, the Army relied on our decision in United States Department of
the Interior--Request for Advance Decision, et al., 64 Comp. Gen. 189
(1985), 85-1 C.P.D. 34, which allows a bidder to cure, after bid
opening, a defect occasioned by the failure to acknowledge an amendment
incorporating a revised wage rate provided the conditions exist for
invoking the rules for correcting the defect as a minor informality
under FAR, 48 C.F.R. 14.405 (d)(2). ABC argues that the Army's
evaluation of the cost impact of the wage rate revision is in error
principally because the Army omitted two classes of necessary workers
(open cut construction laborers, and underground construction power
equipment operators) from its calculations. In this respect, the record
shows that in calculating the amendment's impact the Army assumed that
the instant work requires only seven of the 16 classes of workers
covered by the revised wage rate determination. ABC, however, believes
that nine classes apply.
The principle purpose of the Davis-Bacon Act, 40 U.S.C. 276(a)
(1982), is to protect a contractor's employees from substandard earnings
by fixings a floor under wages on government project. Until our
decision in Brutoco Engineering & Construction, Inc., 62 Comp. Gen. 111
(1983), 83-1 C.P.D. 9, our Office's traditional position had been that
in view of that purpose a bid that failed to acknowledge an amendment
revising wage rates had to be rejected as nonresponsive without such
acknowledgement the bidder could not legally be required by the
government to pay the revised wages. We held that the bidder could not
be given the option, after bid opening, to accept the obligation the
wage rate amendment would impose or to refuse it and avoid the contract.
See, e.g., Morris Plains Contracting Inc., B-209352, Oct. 21, 1982,
82-2 C.P.D. 360. In Brutoco, however, we recognized that as a practical
matter the rights of the employees may well be protected--although not
by any government action--through the contractual relationship of the
employees' union and the employer/ bidder. We noted that if the
employees in fact are covered by a contract that legally binds the
employer/bidder to pay wages not less than the Secretary of Labor's wage
rate determination, the employees are protected from the evils the
Davis-Bacon Act was designed to foreclose; in that case, we did not see
how the bidder really could refuse to acknowledge the wage rate
amendment after bid opening by claiming it did not intend to pay the
wages set forth in it. In the Department of the Interior decision on
which the Army relied on the present case, we modified Brutoco to extend
the bidder's ability to cure the failure to acknowledge a wage rate
amendment. We stated that even without a union agreement the interests
of the affected employees would not suffer if the defect were cured
after opening but before award, since the wage rates thus would be
incorporated into the contract. We held that so long as the conditions
existed for involving the minor-informality rules in FAR, 48 C.F.R.
14.405 (d)(2)-- basically, the amendment's effect on price clearly had
to be de minimis--the failure to acknowledge a wage rate amendment did
not render the bidder ineligible for award, and could be cured. In the
period since that decision, which we issued on January 11, 1985, we have
analyzed the issue in terms of the impact of the wage rate increase on
the low bidder's bid and the difference between the low and second low
bids. See, e.g., Mike Vanebo, 64 Comp. Gen. 780 (1985), 85-2 C.P.D. 184;
Reliable Service Technology, B-217152, Feb. 25, 1985, 85-1 C.P.D. 234.
The same matter involved in the Department of the Interior decision
was the subject of litigation in the Claims Court. In its January 15,
1985, decision in Grade-Way Construction v. United States, 7 Cl.Ct.
263 (1985), the court conceded that the possible impact in price of the
amendment's revised wage rate clearly was de minimis. The court
disagreed, however, that the failure to acknowledge the amendment could
be cured after bid opening: "Failure to acknowledge the amendment
containing the modified schedules and rates can be treated as a minor
formality only if the government can waive the provision. While the
bidder here would take advantage of an opportunity to cure its defect
and acknowledge the amendment, this option alone cannot render the bid
responsive, for to permit such action would place a bidder in the
position of having an election to take or avoid the contract after bid
opening . . . The opportunity of a bidder to cure must be taken into
consideration only when there is a corresponding right of the government
to waive the provision if such curative action is not taken. Here, the
payment of specified rates is mandated by the "Davis-Bacon Act" and the
government is powerless to waive such requirements. Thus, if "the
bidder" were to prevail here, a rule would be established whereby the
sole control over whether the bid was rendered responsive or not would
rest with the bidder--an unacceptable procedure impugning the integrity
of the entire competitive bidding system." The court held that since the
government had no option to waive the wage rate increases the bid had to
be rejected as nonresponsive regardless of how negligible its impact
might be. On reflection, we think the Claims Court's view is the better
one.
In the Department of the Interior decision, we noted the small amount
of the amendment's impact--$1,500, or .013 percent--on the bid price of
$11.4 million, and its .495 percent impact on the difference between the
two bids, $302,923. However, we do not think that factor should be used
to establish a precedent that would permit a post-bid opening cure of a
defect that could not be waived. Although the impact of a wage rate
revision might be minimal relative to the bid price, it may well be
significant to the employees the Davis-Bacon Act is designed to protect.
Moreover, the fact that the amendment's purpose could be accomplished
by a post-bid opening acknowledgement is not relevant, since the bidder
simply cannot be awarded the contract without such acknowledgement--the
wage rate protection for the employees is mandated by statute-- and the
bidder thus could decide to render itself ineligible for award by
choosing not to cure the defect. (In contrast, in Brutoco we pointed
out that, as a practical matter, the bidder was not really in a position
to disavow the revised rates in view of the union agreement involved.)
As the Claims Court points out, and as established in our decisions on
bid responsiveness, giving the bidder such control over the bid's
acceptability compromises the integrity of the competitive procurement
system; where a bidder is in that situation, the bid is nonresponsive.
See, e.g., Johnson Moving & Storage Co., B-221826, Mar. 19, 1986, 86-1
C.P.D. 273. For the above reasons, we adopt the Claims Court's view as
expressed in Grade-Way Construction v. United States, and we hereby
overrule our decision on this issue in the Department of the Interior
case. Accordingly, and since the protest record does not establish that
Souter had the necessary union contract, we agree with ABC that Souter
should not have been permitted to cure its failure to acknowledge the
wage rate revision, and that the bid therefore should have been rejected
as nonresponsive. In this respect, however, we recognize that the Army
in relying on our Department of the Interior decision, may not have
ascertained whether Souter in fact was subject to a collective
bargaining agreement that bound it to pay wage rates equal to or greater
than the rates set out in the unacknowledged wage amendment. If such an
agreement applied, permitting Souter to cure its failure to acknowledge
the wage rate revision would have been proper.
The protest is sustained. The Army has postponed the issuance of a
notice to proceed pending resolution of the protest. By separate
letter, we are recommending to the Secretary of the Army that, in the
absence of the required agreement, Souter's contract be terminated for
the convenience of the government and that an award be to ABC, if
otherwise appropriate.
B-224593 Date: October 15, 1986 In the Matter of: Transferred Employees--Real Estate Expenses--Title Requirements
66 Comp. Gen. 44
Civilian Personnel
Relocation
Residence Transaction Expenses
Reimbursement
Eligibility
Property Titles
A transferred Government employee attempted to purchase a house in
connection with her permanent change-of-station move. Because the
employee had recently been discharged in bankruptcy, however, title to
the property was placed solely in the name of a friend in order to
satisfy the requirements of a mortgage lender. The employee may not be
reimbursed real estate expenses since title to the property purchased
was not in her name solely, in her name and the name of an immediate
family member jointly, or solely in the name of an immediate family
member, as required by the applicable statute and regulations. The fact
that the employee later married the friend in whose name title was
vested, and the fact that the employee made financial contributions
towards the purchase, are irrelevant for purposes of determining whether
the employee has met the title requirements.
This is in response to a request for an advance decision submitted by
Josephine Montoya, Authorized Certifying Officer, Department of the
Interior, Bureau of Indian Affairs, as to the propriety of paying a
voucher for costs incurred in the purchase of a house in connection with
a permanent change of station. We conclude that the voucher may not be
approved for payment.
Background
This matter concerns an employee of the Department of the Interior
who was transferred from Seattle, Washington, to Washington, D.C., and
who reported to her new duty station on August 7, 1983. In connection
with this permanent change-of-station transfer, the employee was
authorized travel and transportation expenses, including the costs
associated with the sale of her Seattle home and the purchase of a new
home at her new duty station. The agency reimbursed the employee for
the costs of selling her old home but denied her reimbursement for the
costs associated with the purchase of a new home on the grounds that she
failed to meet the title requirements specified in paragraph 2-6.1c of
the Federal Travel Regulations (FTR). Paragraph 2-6.1c of the FTR
specifies that in order for an employee to be reimbursed for the costs
incurred in connection with the sale or purchase of a home at the old or
new duty station: "the title to the residence * * * at the old or new
official station * * * is in the name of the employee alone, or in the
joint names of the employee and one or more members of his/her immediate
family." The authority for reimbursing an employee for the costs
associated with real estate transactions in connection with a permanent
change of station is 5 U.S.C. 5724a(a)(4) and Part 6 of Chapter 2 of the
Federal Travel Regulations incorp. by ref., 41 C.F.R. 101-7.003.
Because the employee had been through bankruptcy proceedings shortly
before she attempted to purchase a new home in Annapolis, Maryland, she
was informed by a mortgage company that her name could not appear on the
mortgage nor could title to the property be vested in her.
Consequently, the mortgage was assumed by the deed to the property was
drawn in the name of a personal acquaintance of the employee. The
employee indicates that at the time of the transaction, she and her
acquaintance had been living together for some time and that, some time
after the closing on the house, they were married.
Additionally, the employee indicates that on February 1, 1985, she
and her acquaintance entered into a "premarital agreement." This was 7
days before closing on the house on February 8, 1985. This "premarital
agreement" purports to render them "tenants in common" with respect to
the residence purchased.
Issues
The employee raises several arguments which she feels demonstrate
that the agency acted erroneously in denying her reimbursement for the
costs incurred in purchasing this new residence. First, she suggests
that, since her name appeared on the land-sale contract for the purchase
of the new home, she was liable upon the contract. She considers this
evidence of her proprietary interest in the property and her liability
to pay for the property. Second, she suggests that by virtue of her
financial contribution to the purchase price, she has an interest in the
property in the property. Third, she suggests that the "premarital
agreement" made her and her acquaintance "tenants in common" under the
law of the State of Maryland and as such they are "equal owners" of the
property, notwithstanding the fact that the deed to the property recites
only the acquaintance's name as grantee. Finally, she contends that she
and her acquaintance "lived as husband and wife since September of 1983"
and that despite the lack of a formal marriage at the time of closing he
was a "member of her immediate family" as that term is defined in the
regulations.
Analysis and Conclusion
With respect to the employee's first argument, it is a fundamental
rule of property law that, upon proper execution and delivery of a deed,
the contract for sale merges into and does not survive the deed. Under
this principle, liability under the contract is discharged. This
principle is the law in the State of Maryland. Erlewine v. Happ, 39 Md.
App. 106, 383 A.2d 82 (1978); Millison v. Fruchtman, 214 Md. 515, 136
A.2d 240 (1957). Hence, in the transaction in question a deed was both
properly executed land-sale contract did not vest title to the property
in the employee, nor could she be held liable upon the contract
following the conveyance of title to her acquaintance by deed.
As to the employee's second argument, although she has made a
financial contribution to the purchase price of the house, this
contribution did not vest her with title to the property. The record
shows that the deed recites only the name of her acquaintance as
grantee. Therefore, title to the property is vested solely in him.
Moreover, we have previously held that, for purposes of FTR para.
2-6.1c, the fact of financial contribution is of no consequence where
title to the property is not vested in the required party or parties.
Patrick G. Collins, B-220829, February 28, 1986. As to the employee's
third argument, the execution of the "premarital agreement" did not act
to vest title to the property in her. The original deed conveyed the
property to her acquaintance as the sole grantee, and the "premarital
agreement" otherwise failed to convey legal title in the property to the
employee. Under the statutory law of the State of Maryland "* * * no
estate of inheritance or freehold * * * or deed may pass or take effect
unless the deed granting it is executed and recorded." MD. CODE ANN.
3-101. We are informed by the employee that the "premarital agreement"
executed between her and her acquaintance has not been recorded as is
required by Maryland law. This being the case, the employee is vested
with no legal title to the property by virtue of the "premarital
agreement" and her acquaintance is the record holder of title. See e.g.
Kingsley v. Makay, 253 Md. 24, 251 A.2d 585 (1969), Bourke v. Krick, 304
F.2d 501 (4th Cir. 1962). Finally as to the employee's argument that she
and her acquaintance had been living as husband and wife since 1983,
thus qualifying him as a member of her immediate family as defined in
FTR para. 2-1.4d, we cannot agree. Neither the State of Washington nor
the State of Maryland recognizes as common-law marriage contracted and
consummated within the state. In Re Gallagher's Estate, 213 P.2d 621
(Wash. 1950); Maryland Commission on Human Relations v. Greenbelt
Homes, Inc., 300 Md. 75, 475 A.2d 1192, 1197 (1984). Therefore, they
did not have a legally recognized husband and wife relationship until
some time following the settlement upon the house. In sum, the
acquaintance cannot be said to have been the spouse of the employee
either at the time she reported for duty at her new duty station or at
the time of settlement upon the house and he does not otherwise qualify
as a member of her immediate family under FTR para. 2-1.4(d). Moreover,
the fact of their subsequent marriage is of no consequence. See Patrick
G. Collins, B-220289, supra.Paragraph 2-1.4d of the FTR defines
immediate family member to include one's spouse, dependent children who
are unmarried and under the age of 21, dependent parents and depended
brothers or sisters who are a member of the employee's household at the
time he or she reports to the new duty station.
In the final analysis, title to the property was vested exclusively
in someone who was not a member to the employee's immediate family at
the time she reported to her new duty station. We have consistently
held that where title to real estate is not vested in the required party
or parties, expenses associated with the sale or purchase of real estate
in connection with a permanent change-of-station transfer cannot be
reimbursed. See, e.g., Patrick G. Collins, B-220289, supra; Carl A.
Gidlund, 60 Comp. Gen. 141 (1980); B-197781, September 8, 1982; Adele
K. Kauth, B-197929, March 25, 1981; Reverend Richard A. Houlahan,
B-192583, March 14, 1979. Accordingly, the voucher presented for
decision may not be approved for payment.
B-224064 Date: October 10, 1986 In the Matter of: Federal Contracting Corporation
66 Comp. Gen. 42
Procurement
Bid Protests
GAO Procedures
Agency Notification
Evidence Sufficiency
Protest is dismissed where protester failed to furnish copy of
protest filed with the General Accounting Office to contracting officer
or other designated individual or location, as required by applicable
Bid Protest Regulations. While protester claims to have mailed copy to
designated agency office, protester is unable to present evidence that
it was received and, thus, that the notice requirement was satisfied.
Federal Contracting Corporation (FCC) protests the cancellation of
request for proposals (RFP) No. DTCG29-86-R-03515, issued by the United
States Coast Guard, Eighth District, New Orleans, Louisiana, for the
maintenance of aids to navigation Buoys, at the United States Coast
Guard Base, Mobile, Alabama. FCC contends that the agency's decision to
cancel the solicitation circumvented the procurement process and
resulted in a "breach" of competitive procurement procedures. The
protest is dismissed because of the protester's failure to furnish a
copy of its protest to the contracting officer within 1 day after the
protest was filed with our Office, as required under our Bid Protest
Regulations, 4 C.F.R. 21.1 (d) (1986).
Our Office was first informed of the contracting officer's nonreceipt
of a copy of the protest when, after 25 working days following our
receipt of the protest and notification thereof to the Department of
Transportation, we did not receive the agency report on the due date.
Although the letter of protest indicated that copies were provided to
the commander, Eighth Coast Guard District, New Orleans, Louisiana-- the
same address as that of the contracting officer--and to the Commandant,
United States Coast Guard, Washington, D.C., upon our inquiry concerning
the administrative report, both of these offices state that neither a
copy nor a notice of the protest had ever been received, and that, in
fact, the Coast Guard had no knowledge of a protest having been filed in
connection with the subject procurement. The protester states that
copies of the protest were mailed as indicated in its protest letter,
but the protest is unable to provide any evidence that the copies were
received and, in particular, that a copy was received by the contracting
officer in New Orleans. Although FCC filed its protest in our Office by
certified mail, the protester states: "Since we were filing this
protest with the GAO and not the Contracting Agency we saw no need in
sending the agency copy by certified mail. There was not such a
requirement stated in the GAO guidelines and, consequently, it was not
done in that manner." The protester correctly states that our Bid
Protest Regulations do not require that it provide the contracting
officer (or agency) with a copy of its protest by certified mail.
Rather, our Bid Protest Regulations state: "The protester shall furnish
a copy of the protest . . . to the individual or location designated by
the contracting agency in the solicitation for receipt of protests ....
The designated individual or location, or if applicable, the contracting
officer must receive a copy of the protest no later that 1 "working" day
after the protest is filed with the General Accounting Office." 4 C.F.R.
21.1 (d).
Thus, our Regulations require receipt by the appropriate office or
individual, regardless of the manner by which receipt is effected.
Our Regulations impose this strict time requirement because a delay
in the contracting officer's receipt of a copy of the protest (1)
impedes the agency's ability to meet the 25-day deadline imposed by the
Competition in Contracting Act of 1984, 31 U.S.C. 3553 (Supp. III 1985)
for filing its administrative report with our Office, and (2) frustrates
our efforts to consider expeditiously all objections to agency
procurement actions Westinghouse Electric Corp., Westinghouse Furniture
Systems Division--Reconsideration, B-222428.2, June 3, 1986, 86-1 C.P.D.
516. That the protester mailed a copy of its protest to the contracting
officer (or to the individual or location designated in the solicitation
does not ensure the protester's compliance with the statutory
requirement for timely receipt by the agency. See Carlyle Van Lines,
Inc.--Reconsideration, B-221331.2, Jan. 24, 1986, 86-1 C.P. D. 89.
Whether FCC mailed the copy of the protest is of no relevance, since its
action did not satisfy the notice requirement of 4 C.F.R. 21.1(d).
Westinghouse Electric Corp., B-222428.2, supra, 86-1 C.P.D. 516 at 2.
The protest is dismissed.
B-223810 Date: October 8, 1986 In the Matter of: Master Sergeant Anthony Goularte, USA (Retired) (Deceased)
66 Comp. Gen. 40
Military Personnel
Pay
Claims
Savings Deposit
Statutes of Limitation
Applicability
Because the 6-year statute of limitations (31 U.S.C. 3702 (b)) does
not apply to claims for deposits under the soldiers' savings deposit
program, a claim received in the General Accounting Office 32 years
after it accrued is not barred by the statute. The claim for such
deposits made by the service member's widow may not be paid, however,
because the only service records still in existence relating to it
support the inference that the member was paid such deposits at the time
of his retirement in 1951, and the claimant has not presented evidence
to overcome that inference.
This is in response to an appeal of our Claims Group's action of October
21, 1983, disallowing a claim against the United States filed by Lucile
F. Goularte. Mrs. Goularte claims entitlement to funds deposited by her
late husband, Master Sergeant Anthony Goularte, USA (Retired) into a
Soldiers' Deposit Savings Account in 1945. Our Claims Group determined
the claim is barred under the Barring Act, 31 U.S.C. 3702 (b), because
more than 6 years elapsed between the date the claim accrued and the
date it was received in our office. The Claims Group erred in stating
that this claim is barred since the Barring Act does not apply to claims
for funds deposited in Soldiers' Deposit accounts. Based on our review
of the case on its merits, however, we are unable to permit payment
because the claimant has failed to meet her burden of proving that the
funds to which she is claiming entitlement were not paid to her husband
when due, over 30 years ago.
Background
The savings program under which Sergeant Goularte deposited his funds
in 1945 (which is no longer in effect) was provided for under statutes
and implementing regulations authorizing such deposits with interest
accruing during the member's term of service. Such deposits were not
placed to the credit of the United States, but were deposited in the
Treasury in a separate trust fund for the benefit of the depositor, with
the intention that such funds be paid over to the member upon separation
from active duty. See 10 U.S.C. 906-908(1940); 31 U.S.C. 725s (1940);
31 Comp. Gen. 562 (1952); and 31 Comp. Gen. 178 (1951).
Anthony Goularte served in the United States Army from 1920 until his
retirement as a Master Sergeant in 1951. October 30, 1945, he deposited
$1,200 into a Soldiers' Deposit Savings Account as evidenced by a War
Department, Finance Department Form 10, which his widow and daughter
discovered after he died in 1981. The Centralized Pay Operations Branch
of the U.S. Army Finance and Accounting Center searched its records for
a unpaid balance due Anthony Goularte. It failed to discover any record
of an unpaid account in his name and in a letter dated December 3, 1982,
the Finance Center informed Mrs. Goularte that the money was due and
payable to her husband at the time of his release from active duty.
Presumably, in the orderly conduct of public business, the account was
timely paid, as indicated by a ledger with active or unpaid Soldiers'
Deposit accounts dated November 1951 which does not reflect an unpaid
account for Anthony Goularte. There is no record of actual payment
since Mr. Goularte's personal military pay records from that period have
been routinely destroyed.
The Claims Group determined that Mrs. Goularte's claim was barred
from consideration due to the provisions of 31 U.S.C. 3702 (b). This
code section contains the codification of the Barring Act of October 9,
1940, as amended, which provides that all claims against the United
States to be settled by the Comptroller General are barred unless
received by him within 6 years from their accrual dates. The Claims
Group determined that the date of accrual for this claim was June 30,
1951, when Sergeant Goularte retired, making it untimely under the Act
since we received it on January 31, 1983.
Analysis
We have held that the Barring Act does not apply to funds deposited
in Soldiers' Deposit Savings Accounts which are not held by the
Government on its own account but merely as trustees for others.
B-139963, July 6, 1959, and 42 Comp. Gen. 622, 623 (1963). As such, the
Claims Group's determination that Mrs. Goularte's claim was barred was
incorrect, and the claim should have been decided on its merits.
The burden of proving the existence of a valid claim against the
United States is on the person asserting the claim. 4 C.F.R. 31.7
(1986). Notwithstanding that burden, since such proof often can be
found in Government records, upon presentation of a claim, attempts are
made to secure these records in order to insure to the maximum extent
possible that such entitlement as a claimant may have is protected.
Edward J. Reed, B-216359, March 5, 1985. Where records necessary to
establish or refute a claim are unavailable, and the claimant, in turn,
has failed to provide proof of entitlement, we have no alternative but
to disallow the claim. Sherwood T. Rodriguez, B-214533, July 23, 1984.
Under the regulations and prior decisions, Mrs. Goularte has the
burden of proving Sergeant Goularte did not receive the payment due him
from the Soldiers' Deposit account, thus entitling her to payment at
this time. She has presented as her sole evidence of entitlement a
certificate documenting Sergeant Goularte's deposit on October 30, 1945,
into the savings account. We cannot determine on the basis of this
document alone that Sergeant Goularte did not receive his money when he
retired from military service as contemplated by the applicable statutes
and regulation in effect at the time. And, as indicated above, the Army
ledger showing unpaid Soldiers' Deposit accounts dated November 1951 did
not show an outstanding account for Sergeant Goularte, further
supporting the inference that he had received payment in the normal
course of events upon his retirement in June 1951. Accordingly, Mrs.
Goularte has not met her burden of proving the validity of her claim.
Therefore, her claim must be denied.
B-224424 Date: October 7, 1986 In the Matter of: SRI International
66 Comp. Gen. 35
Procurement
Contractor Qualification
Organizational Conflicts of Interest
Allegation Substantiation
Evidence Sufficiency
Allegation that conflict of interest exists because awardee proposed
to utilize 3 members of 10-member advisory panel that made
recommendations to the contracting agency as to how to best proceed
under the current solicitation is denied where all deliberations of the
panel were made available and where there is no evidence that panel
members had access to any information which provided the awardee with an
unfair advantage in the procurement.
Procurement
Competitive Negotiation
Technical Transfusion/Leveling
Allegation Substantiation
Evidence Sufficiency
Allegation that agency engaged in technical leveling and transfusion
by issuing an amendment which required the protester's approach in one
technical area and improperly discussed protester's proposed solution
with an offeror in another area is denied where record shows that all
offerors included in their proposal the same technical approach proposed
by the protester and where there is no evidence that discussions were
held in order to raise other proposals to protester's level.
SRI International (SRI) protests the award of a contract to Abt
Associates, Inc. (Abt) under request for proposals (RFP) OAA-86-02
issued by the Department of Labor (DOL) to evaluate the effectiveness of
the Job Training Partnership Act (JTPA). SRI contends that the award to
Abt creates an improper organizational conflict of interest. Also, SRI
argues that DOL engaged in technical leveling and transfusion by
disclosing to other offerors SRI's innovative approach. We deny the
protest.
Background
The JTPA, 29 U.S.C. 1501 et seq. (1982), was established to help
reduce unemployment and under the ACT, DOL is required to assess its
impact on earnings, employment, welfare dependency, and educational
attainment for selected target groups and treatments in a small number
of service delivery areas. The JTPA replaced the Comprehensive
Employment and Training Act (CETA) as the vehicle for combating
unemployment and because of past difficulties in evaluating the
effectiveness of CETA, DOL requested that a technical advisory panel be
established to improve the evaluation design. Basically, past
evaluations of CETA used different statistical methods to correct
potential sample selection bias, and the studies produced such diverse
results that it was impossible to determine with any degree of
specificity the effects of CETA. The panel was comprised of 10
technical experts, including economists, statisticians and experts in
research design, and was charged with reviewing the major evaluations of
CETA, assessing the validity of these evaluations and recommending
alternatives to improve the reliability of future evaluations of the
JTPA. The panel met three times, in both open and closed sessions, and
issued a final report which strongly recommended that DOL switch to
classical experiments in evaluating the JTPA.
DOL reviewed the report and agreed with the panel's recommendations.
The current solicitation was then prepared which basically followed the
panel's suggestions, although varying in some respects. Under the RFP,
two separate awards were contemplated. Part A was for the operational
design and management of the experiments and Part B was for the
experimental design, collection of data and analysis of the experimental
results. Firms could submit proposals for either Part A or Part B or
for both parts. DOL issued the solicitation on January 6, 1986. Two
proposals were received for Part A and three proposals for Part B.
After a technical evaluation, Part A was awarded to Manpower
Demonstration Research Corporation, while Part B was awarded to Abt.
SRI's protest concerns only the award of Part B to Abt.
Conflict of Interest
SRI contends that the award to Abt is improper because three
individuals on Abt's proposed team served on the technical advisory
panel that recommended the evaluation methodology adopted by DOL for
this procurement.SRI alleges that these individuals were able to tailor
the recommendation of the panel to their advantage. In addition, SRI
argues that Abt had an unfair advantage in preparing its proposal since
these individuals were in a position to know DOL's predisposition as to
how certain problems were to be handled and were better able to
interpret unclear provisions of the RFP. SRI also complains that Abt
was able to recruit key consultants early because it had a good idea of
the scope of work prior to the RFP being issued. SRI argues that a
contractor is prohibited from providing services where that contractor
prepares or assists in preparing a work statement, that Abt in effect
assisted in preparing the statement of work (SOW) and that the award to
Abt is therefore improper.The three individuals that were on the
advisory panel and on Abt's team are Abt's principal investigator, an
employee of a subcontractor to Abt and a university professor hired by
Abt as a consultant for this project.
DOL indicates that all materials, including the advisory panel's
final report, appendices to the report and meeting minutes, were made
available to all firms and that as a result, Abt did not gain any unfair
advantage by having an employee of the firm on the panel or by adding
two additional panel members to its team for the project. In addition,
DOL indicates that the advisory panel merely acted as an industry
representative and set out a broad evaluation strategy for the JTPA
rather than an actual SOW. Also, DOL notes that the recommendations
were not prepared by Abt but rather by a panel of 10 individuals
representing the research community and since Abt did not prepare the
recommendations, there is no basis to exclude it from competing for this
requirement.
Also DOL argues that the specific allegations made by SRI are without
merit. DOL points out that two of Abt's team members that allegedly
tailored the panel's recommendations were not even affiliated with Abt
during the advisory panel proceedings. DOL contends that it is unclear
how any panel member could have structured the panel's recommendations
to favor a particular firm because the panel's basic recommendation was
for DOL to initiate scientifically sound experiments and that such a
recommendation does not favor any one firm. Moreover, DOL indicates
that the proposals were evaluated by DOL employees, none of whom were
members of the advisory panel and that, as a result, there is no basis
for SRI's allegation that panel members had any special information as
to how proposals would be evaluated. DOL argues that no conflict exists
and in view of the full disclosure of the panel's deliberations, there
is no reason to prohibit members of the panel from working on the
project.
In considering an allegation of organizational conflict of interest,
we note that the responsibility for determining whether a firm has a
conflict of interest if it is awarded a particular contract, and to what
extent a firm should be excluded form competing, rests with the
procuring agency and we will not overturn such a determination unless it
is shown to be unreasonable. NAHB Research Foundation, Inc., B-219344,
Aug. 29, 1985, 85-2 CPD 248. The procuring agency bears the
responsibility for balancing the competing interests between preventing
bias in the performance of certain contract which would result in a
conflict of interest and awarding a contract that will best serve the
government's needs to the most qualified firm. Battelle Memorial Inst.,
B-218538, June 26, 1985, 85-1 CPD 726.
The Federal Acquisition Regulation (FAR) recognizes that an
organizational conflict of interest exists when the nature of the work
to be performed under a proposed government contract may, without some
restriction on future activities, result in an unfair competitive
advantage to the contractor, or impair the contractor's objectivity in
performing the contract work. FAR, 48 C.F.R. 9.501 (1985);
SysteMetrics, Inc., B-220444, Feb. 14, 1986, 86-1 CPD 163. Generally,
where a firm prepares or assists the procuring agency in preparing
specification or a SOW, that firm should be precluded form providing the
item or performing the work required under the solicitation. FAR, 48
C.F.R. 9.505-2 (a)(1), 9.505-2(b)(1). However, notwithstanding the
disagreement between DOL and SRI as to whether the advisory panel
actually prepared the SOW for this solicitation, we point out that the
FAR does not specifically cover the present situation since Abt did not
draft the panel's recommendations. See Nelson Erection Co. Inc.,
B-217556, Apr. 29, 1985, 85-1 CPD 482. At best, 3 of the 10 panel
members were affiliated with Abt and even if we were to conclude on that
basis that Abt must therefore be considered to have been on the advisory
panel, we note that a contractor need not be excluded where more than
one contractor is involved in preparing the work statement. FAR, 48
C.F.R. 9.505-2(b)(1)(iii). Consequently, we see no regulatory
prohibition requiring DOL to exclude Abt from consideration.Section
9.505-2(a) covers the situation where a contractor prepares and
furnishes complete specifications for nondevelopmental items. Section
9.505-2(b) covers the situation where, as here, services are being
procured.
Furthermore, we think the record supports DOL's determination not to
exclude members of the advisory panel. While SRI complains that it was
denied total access to the appendices of the panel's report and was
required to read and take notes on these appendices, the fact remains
that access to all information generated by the advisory panel was
provided. In addition, we note that SRI has presented no evidence,
other than its bare allegations, to support its contentions that the
panel's recommendations were tailored to favor one firm or that panel
members had access to information not contained in the RFP as to how DOL
would evaluate proposals. We have held that firms should not be
excluded from competing on the basis of a theoretical or potential
conflict of interest; see Rxotech Sys., Inc., 54 Comp. Gen. 421 (1974),
74-2 CPD 281, and under the circumstances, we see nothing in the record
which indicates that Abt had an unfair advantage in this procurement.
Technical Leveling and Transfusion
SRI states that its technical approach was based on conducting
follow-up interviews with the complementary nonapplicant sample. Also,
SRI strongly recommended selecting sites using random sampling with
randomly selected backups. The RFP, in both cases, did not require the
approaches proposed by SRI, but during discussions, DOL issued an
amendment which included follow-up interviews and also indicated that
the sampling procedure proposed by SRI was DOL's preferred approach.
SRI argues that this is clear evidence of technical leveling and
transfusion. DOL indicates that there was nothing unique and innovative
about SRI's approach in these two areas. DOL states that the two other
offerors both included in their original offers a proposal for
conducting follow-up interviews as well as the interviews, DOL indicates
that this was inadvertently omitted from the statement of work and was
not added in response to SRI's proposal. In addition, DOL states that
random sampling of randomly selected backups was an integral part of
Abt's proposal. DOL argues that no unique features of SRI's proposal
were disclosed and that no technical leveling or transfusion occurred.
Technical transfusion is the disclosure to other offerors in a
negotiated procurement of one offerors innovative or ingenious solution
to a problem. Strobe Data, Inc., B-220612, Jan. 28, 1986, 86-1 CPD 97.
Our review of the record shows that Abt did offer the same alternatives
offered by SRI and under these circumstances, we find no basis to
conclude that DOL improperly disclosed SRI's technical approach. TEK,
J.V. Morrison-Knudsen/Harnischfeger, B-221320, et al., Apr. 15, 1986,
86-1 CPD 365. With respect to SRI's allegation of technical leveling, we
find no evidence that DOL improperly coached Abt with the intent of
bringing Abt's proposal up to SRI's level. C&W Equip. Co., B-220459, Mar
17, 1986, 86-1 CPD 258. In this respect, we note that Abt was ranked
higher technically throughout DOL's evaluation and our review of the
evaluation record shows that the comments directed to Abt concerned
areas of deficiencies in its proposal or solicited additional clarifying
information. Consequently, we find that no technical leveling occurred.
Finally, we note that SRI argues in its comments that DOL's issuance
of the two amendments resulted in technical leveling and transfusion if
they reduced SRI's original technical advantage in these two areas. We
disagree. The requirement for follow-up surveys was added to correct an
omission in the original RFP and ensure that all offerors competed on an
equal basis. In addition, an agency has an obligation to conduct
meaningful discussions by pointing out to all offerors weaknesses,
excesses or deficiencies in their proposals and technical leveling does
not occur unless discussions are utilized to point out weaknesses caused
by the offeror's lack of diligence or competence. TEK, J.V.
Morrison-Knudsen/Harnischfeger, supra. We note that the technical
scores of all offerors, including SRI's increased as a result of
discussions and since we find no evidence of improper coaching, we
conclude that no technical leveling occurred. The protest is denied.
B-222627 Date: October 7, 1986 In the Matter of: R.P. Densen Contractors, Inc.
66 Comp. Gen. 31
Procurement
Sealed Bidding
Contract Awards
Propriety
Evaluation Criteria
Defects
Protest is sustained where the evaluation method used by the agency
resulted in award of a contract to a bidder who was not low for any
possible combination of work that could be required.
R.P. Densen Contractors, Inc., protests the award of a contract to
Petroleum Recycling, Inc., under invitation for bids (IFB) No.
DLA140-86-B-0014, issued by the Defense Personnel Support Center (DPSC)
in Philadelphia. The fixed-price contract, which provided for increasing
or decreasing the price to be paid depending on the work required, was
for the clean-up of a section of the DPSC complex that had been
contaminated by oil. The protester complains that the agency's
application of the solicitation's evaluation formula resulted in its bid
being determined to be higher than the awardee's bid even though its bid
was lower for all possible combinations of work.
We sustain the protest. The solicitation provided that the contractor
would be required to excavate designated areas to a depth of two feet,
remove the debris, and backfill the resulting cavities. The estimated
amount of sand, ballast (which is gravel used in constructing railroad
beds), and earth to be removed was 170 tons. Also required was the
removal and storage of an estimated 12 railroad rails and the removal
and disposal of an estimated 64 railroad ties. The solicitation
required a lump-sum base price on these estimated quantities as well as
additive and deductive unit prices for either increasing or decreasing
the work required by up to 40 tons of sand, ballast or earth, 2 rails,
and 10 railroad ties. If the variations exceeded these quantities, a
price adjustment would be negotiated.
The IFB contained the following evaluation clause: "Bid evaluations,
for award purposes, will be based on the aforementioned base bid (170
tons of sand, ballast or earth, or any combination thereof and the 12
rails and 64 RR ties) with an adjustment in such bid price based on the
unit variation prices and material as shown on the bid form. The
algebraic sum of all the plus and minus adjustments (tonnage, rails,
ties) will be algebraically applied to the base bid will be used to
determine the apparent low bidder for award purposes." The bids of
Densen and Petroleum Recycling were as follows:
Densen Petroleum
Base Bid $39,611 $45,460 Unit price for increase in quantities: rails
+100 +550 ties +10 +75 sand, ballast, earth +233 +175 Unit price for
decrease in quantities: rails -50 -650 ties -3 -105 sand, ballast,
earth -140 -225 Using the evaluation formula described in the
solicitation, the agency totalled each bidder's additive and deductive
unit prices for the rails, ties, and earth. It then multiplied those
sums by the maximum variations in quantities specified in the
solicitation and added (or subtracted, if negative) the resulting
products from the base bids. The calculation of each bidder's evaluated
price can be illustrated as follows: Densen Base bid $39,611
Multiplier
Rails
+100
Ties
10 + (-3) 10 +70
Earth
Total $43,501
Petroleum
Base bid $45,460
Multiplier
Rails
$550 + (-650) 2 -200
Ties
75 + (-105) 10 -300
Earth
Total $42,960
This calculation produces the same result as adding an amount for the
maximum additive quantity and then subtracting an amount for the maximum
deductive quantity.
Because Petroleum's evaluated price of $42,960 was less than Densen's
evaluated price of $43,501, the agency awarded a contract to Petroleum.
Densen filed a protest with this Office alleging that no possible
combination of quantity increases or decreases would result in a lower
net price from Petroleum. For example, says Densen, if the agency
increased the work involved by the maximum 2 rails, 10 ties and 40 tons
of earth, Densen's net price would have been $49,231 while Petroleum's
net price would have been $54,310. Similarly, if the agency decreased
the work by the maximum 2 rails, 10 ties and 40 tons of earth, Densen's
price would have been $33,881 compared to Petroleum's price of $34,110.
The protester claims that the same holds true for any other possible
combination. The agency argues that Densen's protest is untimely. The
agency says that Densen's protest is essentially a challenge to the
reasonableness of the solicitation's evaluation clause. Since the
alleged impropriety was apparent from the face of the solicitation, the
agency contends that our Bid Protest Regulations require the protest to
have been filed prior to bid opening. See 4 C. F.R. 21.2 (a)(1)
(1986). Densen did not file a protest with the agency, however, until
after bid opening. The agency concludes that Densen's subsequent
protest to this Office is therefore untimely. 4 C. F.R. 21.2 (a)(3).
Although the protest is couched in terms that allege an improper
evaluation, we agree with the agency that Densen's protest to this
Office is untimely because it is basically a protest of an apparent
solicitation defect. The agency's evaluation of bids was based on the
terms of the evaluation clause contained in the solicitation, and the
protester has not shown how the clause reasonably could be read as
describing any evaluation formula other than that which the agency used.
If the protester objected to the formula described in the solicitation,
it was required to raise the issue prior to bid opening. Even if the
protester viewed the solicitation as confusing, that issue too should
have been raised prior to bid opening. Even though this protest is
untimely, we will consider it on merits nevertheless. In our view, the
solicitation's evaluation clause and the agency's determination of the
low bidder were so materially defective in light of clear statutory
requirements that we should consider the protest under the significant
issue exception to our timeliness rules. 4 C.F. R. 21.2(c);
Southeastern Services, Inc., et al., 56 Comp Gen. 668 (1977), 77-1 CPD
390, aff'd sub nom. Dyneteria, Inc.--Reconsideration, B-187872, Aug. 22,
1977, 77-2 CPD 134.
The agency contends that the solicitation provision for additive and
deductive prices was necessary because of the nature of the work
involved. The quantities of rails, ties, and earth listed in the
solicitation were only estimates, and the quantities actually to be
removed might vary. If the estimates should prove to be incorrect, says
the agency, a delay of 3 to 5 days to negotiate a price adjustment could
not be tolerated, particularly since once the contaminated area had been
disturbed, a rainstorm could result in further environmental damage.
The agency says it selected its evaluation scheme because it needed a
convenient means to compare prices that would take account of as many as
possible of the 8505 combinations of work that might actually be
required.
We have no reason to question the agency's decision to require
bidders to agree in advance to specific unit prices for increases or
decreases in quantity. See, e.g.,Thomas Constr. Co., Inc., B-184810,
Oct. 21, 1975, 75-2 CPD 248, aff'd Aug. 20, 1976, 76-2 CPD 179.
Agencies must use evaluation schemes, however, that are designed to give
reasonable assurance that award to the lowest evaluated bidder will
result in the lowest cost to the government during contract performance.
Exclusive Temporaries of Georgia, Inc., B-220331.2, et al., Mar. 10,
1986, 86-1 CPD 232. See Thomas Constr. Co., Inc., B-184810, supra (bids
containing additive and deductive prices for various alternatives
evaluated on the basis of the base bid and the alternatives actually
selected for contract award). To this end, when the exact amount of
work to be performed is not known precisely, the solicitation must
contain the agency's best estimate of what will be required, see
Downtown Copy Center, 62 Comp. Gen. 65 (1982), 82-2 CPD 503, and the
agency must use this estimate to determine the low bidder. Edward B.
Friel, Inc., 55 Comp. Gen. 231 (1975), 75-2 CPD 164. Where the method
for evaluating bids provides no assurance that an award will in fact
result in the most favorable cost to the government, the IFB is
materially defective. Temps & Co., B-221846, June 9, 1986, 65 Comp.
Gen. 640, 86-1 CPD 535. In this case, the IFB's evaluation clause
provided, in short, that the "algebraic sum of all the plus and minus
adjustments . . . will be algebraically applied to the base bid. As
applied by DPSC, the evaluation method essentially consisted of adding
an amount to the base bid to account for the maximum deductive
quantities. Although the agency may have thought its formula would serve
the government's best interests, its approach did not measure the
probable cost to the government for the work reasonably expected to be
required. Rather, the DPSC method assumed that the contract price would
be both increased and decreased by the maximum amounts. Since the
quantities of rails, ties, and earth actually removed obviously could
not at once be both greater than and less than the estimated quantities,
we do not think that this evaluation formula could reasonably assure
that the contract would be awarded to the firm whose price would prove
to be lowest. In fact, our analysis of the evaluation method shows, as
the protester contends, that the agency's interpretation of the
evaluation clause, and consequently its selection of the low bidder,
resulted in award of a contract to a bidder whose price could not be low
for any possible combination of increases and decreases in the work
actually required.
In the circumstances, we conclude that the DPSC's evaluation was
inconsistent with the requirement of the Competition in Contracting Act
of 1984 that award in a sealed bid procurement be made to the
responsible source that submits the lowest responsive bid. See 10 U.S.
C. 2305 (b)(3) (Supp. III 1985). We sustain the protest. The contract
was completed before the protest was filed; therefore, no remedial
action is possible. We deny Densen's claim for the costs of preparing
its bid because, as indicated above, the defect in the solicitation was
apparent prior to bid opening, yet Densen chose to incur the costs of
bidding rather than filing a protest at a time when corrective action
would have been possible. Similarly, we deny Densen's claim for the
costs of filing and pursuing its protest. See Temps & Co.--Claim for
Costs , B-221846.2, Aug. 28, 1986, 65 Comp. Gen. 819, 86-2 CPD 236.
B-224404, B-224405 Date: October 3, 1986 In the Matter of: International Alliance of Sports Officials
66 Comp. Gen. 26
Procurement
Sealed Bidding
Contractors
Eligibility
Professional Societies
No statute or regulation prohibits organizations, whose members are
required to return a percentage of their earnings to the organization to
cover its general and administrative costs, from bidding on federal
procurements.
International Alliance of Sports Officials (IASO) protests any award
under invitation for bids (IFB) No. DABT01-86-B-1016 issued by the
Department of the Army and IFB No. F05604-86-B-0059 issued by the
Department of the Air Force. The solicitations were issued to obtain
sports officiating services for agency sporting events. IASO states that
the officiating organizations in line for award under both procurements
require its members to pay the organization a percentage of the money
earned by each official for being assigned sports events to officiate.
IASO contends that this arrangement is an improper business practice
which should not be condoned by the government.
In International Alliance of Sports Officials, 63 Comp. Gen. 162
(1984), 84-1 CPD 63, we considered IASO's contention that bids submitted
by organizations, whose members were required to return a percentage of
their earnings to the organization to cover general and administrative
costs, should not be considered in determining whether other bids
received were reasonably priced. We found no statutory or regulatory
basis for objecting to the consideration of the bids submitted by such
organizations and held that the contracting agency could not ignore the
bid prices submitted. In view of our prior decision, permitting the
contracting agency to consider the bids submitted by these
organizations, IASO's protest that the Army and Air Force should have
excluded these firms under the current IFBs is denied.
B-224086 Date: October 6, 1986 In the Matter of: A.R.E. Manufacturing Co., Inc.
66 Comp. Gen. 26
Procurement
Sealed Bidding
Two-Step Sealed Bidding
Offers
Rejection
Propriety
Protester's technical proposal under step one of two-step sealed bids
improperly was rejected without the opportunity for revision where
several of the evaluated deficiencies were in error and the actual
design and informational deficiencies may not have been such that the
proposal failed to meet the solicitation's essential requirements. A
contracting agency generally must make reasonable efforts to qualify as
many technical proposals as possible under step one in order to obtain
full and open price competition under step two.
A.R.E. Manufacturing Co., Inc. protests the rejection of its technical
proposal under letter request for technical proposals (LRFTP) No.
N00104-86-R-ZU62, issued by the Department of the Navy, Navy Ships Parts
Control Center, Mechanicsburg, Pennsylvania. The RFTP initiates step 1
of two-step sealed bids to supply an estimated 2550 shipboard
self-contained air conditioners (in sizes of 3, 5 and 7.5 tons). The
air conditioners are essential to maintain the operation of ships'
computer and electronics systems and also are important for the welfare
of ships' personnel. We sustain the protest.
Two-step sealed bids is a hybrid method of procurement that combines
the benefits of sealed bids with the flexibility of negotiations. Step
one is similar to a negotiated procurement in that the agency requests
technical proposals, without prices, and may conduct discussion. Step
two consists of a price competition conducted in accordance with sealed
bid procedures, except that the competition is limited to those firms
which submitted acceptable proposals under step one. Midcoast Aviation,
Inc., B-223103, June 23, 1986, 86-1 CPD 577. The LRFTP initiating step
one contained more than 60 pages of technical specifications (including
quality assurance provisions), referenced more than 30 Department of
Defense specifications and standards, and further referenced various
standards of trade associations and a testing laboratory. Offerors were
advised that technical proposals must be sufficiently complete to
demonstrate an understanding of and the ability to comply with all
requirements. The LRFTP further advised offerors to structure proposals
to correspond to the LRFTP's numbering sequence prescribed for proposal
format, and warned that responses in one paragraph might not serve as
adequate responses to information required in others. The LRFTP stated
that the technical evaluation factors and weights would be design (60
percent), contractor capability (33 percent) and quality assurance (7
percent).
The Navy received seven timely proposals. Three proposals were
determined to be unacceptable but susceptible of being made acceptable
through reasonable discussions, while four proposals--including A.R.E.'
s proposal--were deemed unacceptable and rejected. In general terms,
the Navy determined that A.R.E.'s proposal failed to conform to
essential LRFTP requirements and would require such extensive revision
to conform to essential LRFTP requirements and would require such
extensive revisions to conform to minimum design and performance
requirements that the proposal was not susceptible of being made
acceptable except through the submission of an essentially new proposal.
Specifically, the Navy determined that A.R.E.'s proposed condenser
design did not comply with the requirements for condenser head depth nor
wall tubing thickness, and did not specify certain zinc components as
required by the LRFTP. The Navy also evaluated the proposed design as
not providing sufficient access for cleaning and maintenance of the
condenser notwithstanding the proposal's statement that cleaning and
maintenance could be accomplished as required by the LRFTP. Other design
deficiencies cited by the Navy were: 1) the location of a monitoring
device for the water-regulating valve, which modulates the flow of water
needed by the condenser, was improper, and the proposed valve had a
flat-disc design as opposed to the required tapered-disc design; 2) the
protester proposed to continuously energize the crankcase heater, to
provide required heating of compressor oil, in violation of the LRFTP;
3) no provision was made for stopping the compressor upon interruption
of the fan circuit; 4) the proposed design for draining condensate did
not meet LRFTP requirements for drainage during cyclical inclinations of
45 degrees, and included threaded fittings prohibited by the LRFTP; and
5) the proposed thermal expansion valve's inlet and outlet connections
were brazed to the valve in violation of the LRFTP's requirement that
they be cast or forged with the valve body.
In addition, the Navy cited numerous informational deficiencies in
A.R.E.'s proposal. One significant instance involved an amendment that
changed the LRFTP from originally requiring compliance with high impact
shock tests specified in MIL-S-901 for Grade B Class I equipment, to
requiring compliance with the more stringent tests specified for Grade
B, deck mounted, Class II, medium weight, Type A equipment. Discussion
of how the shock standards would be met was required and was considered
essential by Navy evaluators since in combat situations ships are
consistently subject to shock. According to the Navy, the A.R.E.
proposal failed to address the amended requirements. Among other cited
informational deficiencies, A.R.E. included performance data for a
cooling coil with different sized fins than those actually proposed,
failed to provide information showing how its materials would be
fabricated to resist corrosion, and failed to include required power
consumption plots and compressor motor torques.
The protester contends that its proposal complied with the stated
LRFTP design requirements except that the condenser heads for the
7.5-ton units did not meet the depth requirement. The protester
contends that this deficiency and any informational deficiencies in its
proposal can be modified by minor revisions to the proposal.
The regulations prescribing the procedures for two-step sealed bids
provide that if there are sufficient acceptable proposals to ensure
adequate price competition under step two, and further time and effort
to make additional proposals acceptable would not be in the government's
best interest, the contracting office may proceed directly to step two;
otherwise, as here, the contracting officer must identify the nature of
deficiencies and request additional information from offerors of
proposals that may be made acceptable. Federal Acquisition Regulation,
48 C.F.R. 14.503-1 (f) (1) (1985). In this regard, we have held that an
agency must make reasonable efforts to qualify as many technical
proposals as is possible for the purpose of obtaining maximum
practicable competition (now full and open competition) under step two.
Angstrom, Inc., 59 Comp. Gen. 588 (1980), 80-2 CPD 20; Wiltron Co.,
B-213135, Sept. 14, 1984, 84-2 CPD 293. A proposal need only comply
with the essential requirements, but not all the details of the
specifications, to be considered reasonably susceptible of being made
acceptable. See Angstrom, Inc., supra; Midcoast Aviation, Inc.,
B-223103, June 23, 1986, 86-1 CPD 577. The contracting agency
nonetheless may reject a proposal under step one where the agency
reasonably evaluates the proposal as not meeting essential requirements
or where the proposal can be made acceptable only through extensive
revisions. Midcoast Aviation, Inc., supra. In order to reject a
proposal for technical deficiencies alone, however, the agency must find
the proposal to be more than technically inferior--it must be
unacceptable in relation to the agency's requirements or so deficient
that essentially an entirely new proposal would be needed. See 52 Comp.
Gen. 382 (1972); Raytheon Co., B-218408, July 15, 1985, 85-2 CPD 51.
Regarding informational deficiencies, several factors are considered in
determining whether informational deficiencies are material enough to
warrant rejecting a proposal without the opportunity for revision.
Those are: the extent to which the solicitation required detailed
information; the nature of the deficiencies, e.g., whether that
indicated that the offeror did not understand the specifications, or
merely made the proposal inferior but not unacceptable; the scope of
the deficiencies, i.e., whether major revisions would be necessary to
correct them; the number of other proposals in the competitive range;
and (in negotiated procurements) the potential cost savings offered by
the proposal. See PRC Computer Center Inc. et al., 55 Comp Gen. 60
(1975), 75-2 CPD 35; Shaw Food Servs. Co., B-219415.2, Sept. 23, 1985,
85-2 CPD 320. Our review of A. R.E.'s proposal indicates that the
proposal included drawings, submitted in response to requirements for
design detail, that showed the required wall tubing thickness (on page
112), described the components for the condensers in the same language
as the RFP (on page 111) and also indicated an air-flow switch to stop
the compressor upon interruption of the fan circuit (on pages 68, 147
and 150). The proposal also clearly detailed a method of draining
condensate during cyclical inclinations of 45 degrees (on page 186).
The proposal (on page 176) additionally addressed and offered to comply
with the more stringent shock tests added to the LRFTP by amendment,
although the proposals did state that A.R.E. might request an extension
for the testing of the 3 and 5-ton units. We further find that the
specifications do not prohibit the crankcase heater from being
continuously energized and do not expressly state that the thermal
expansion valve's inlet and outlet connections must be cast or forged
with the valve's body, but state only that the connections must be "an
integral part of the valve body." Thus, in the absence of any indication
that the proposed crankcase heater and thermal expansion valve designs
were unworkable, they could not be found deficient properly without
clarification or revision to the specifications. Cf. Arthur Young &
Co., B-216643, May 24, 1985, 85-1 CPD 598 (rejection of a proposal based
on the agency's interpretation of a requirement, where the protester's
interpretation also was reasonable, resulted in unfair and unequal
competition).
Through its own technical analysis, the Navy apparently found
deficiencies in A.R.E.'s proposal notwithstanding the proposal's
language purporting to comply with the specifications. For example, the
Navy independently determined that A.R.E.'s design did not permit access
to both condensers for cleaning after removing one head as required by
the RFP, and that the sea water flow rate through the condenser exceeded
a stipulated maximum rate of 6.0 feet per second, whereas A.R.E.'s
proposal stated that the condensers were accessible for cleaning by
removing one head and specified a flow rate for each size of air
conditioner that was less than 6.0 feet per second. The Navy has not
explained how or why it reached the conclusions it did, and we therefore
cannot corroborate the reasonableness of its position. We note,
however, that the alleged maximum sea water flow rate through the
condenser was included in the LRFTP as a parameter for calculating
whether the air conditioners achieved a minimum performance factor of 10
Btu per hour per watt, and not expressly as a maximum limitation. The
remaining cited deficiencies are more or less supported by the record.
We therefore view the issue here to be whether the actual design
deficiencies (the nonconforming condenser head depth, and the
incorrectly located monitor and improperly designed disc for the
water-regulating valve) and the actual informational deficiencies
provided a sufficient basis for rejecting A.R.E.'s proposal.
On this record, we must conclude that they did not. First, there is
nothing indicating that the deficiencies involving the condenser head
depth and the water-regulating valve were of such a nature, relative to
the overall requirements, as to render the proposal unacceptable. We
recognize that these deficiencies could be serious ones--the record
shows that the LRFTP was amended to require a larger head depth in order
to protect the tube sheets beneath it, and required the tapered disc for
the water-regulating valve to assure the operability over a wide
seawater temperature range in both tropic and arctic conditions. On the
other hand, whether these two deficiencies can be corrected by a minor
engineering effort confined only to redesigning the condenser head and
the water-regulating valve disc is not addressed by the Navy and is not
clear from A.R.E.'s proposal. If the deficiencies could be corrected
without a significant impact on other aspects of A.R.E.'s proposal and
without a major engineering effort, as the protester contends, A.R.E.'s
design as a whole would be susceptible of being made acceptable. Second,
the informational deficiencies involve only a lack of supporting
documentation and detail that should be readily available or easily
generated if the protester performed a reasonably thorough design
analysis. For example, while A.R.E.'s proposal provided data for
cooling coils with thinner fins than actually proposes, we see no reason
why A.R.E., upon request, could not have been expected to quickly
provide data for the thicker fins (which should be more efficient than
the thinner ones which themselves met the specifications). Further, the
compressor motor, which originally refused to disclose the information.
In light of the scope of the overall requirements, we do not believe
that the cumulative effect of the informational deficiencies and the few
design deficiencies by themselves indicated that the proposal was so
deficient as to show a lack of understanding of the essential
requirements or to require a major rewrite. Even the Navy's
determination of unacceptability was based on additional perceived
deficiencies that we find were unfounded. Given the agency's obligation
to take reasonable steps to qualify as many proposals as possible, we
find that the Navy should have advised A.R.E. of the deficiencies and
requested revisions, or, at the very least, requested clarification from
A.R.E. concerning the deficiencies to ascertain whether the deficiencies
were reasonably susceptible to correction. An agency may issue requests
for information necessary to complete a technical evaluation. See,
e.g., Datron Sys. Inc., B-220423 et al., Mar. 18, 1986, 86-1 CPD 264.
Accordingly, we conclude that the Navy unreasonably rejected A.R.E.'s
substantial proposal as technically unacceptable, based predominantly on
informational deficiencies and a few design deficiencies, without
affording A.R.E. at least the opportunity to clarify its proposal.
The protest is sustained. We understand that the Navy advised each
offeror that had submitted a proposal susceptible of being made
acceptable of the deficiencies in its proposal and requested revised
proposals. We further understand that the Navy invited all three
offerors to submit bids and proceeded with bid opening under step two.
We therefore are recommending that the Navy reevaluate A.R.E.'s proposal
after appropriate action has been taken to clarify the proposal. If the
Navy ultimately finds that A.R.E.'s proposal is acceptable, the agency
should resolicit bids and include A.R.E. in step two.
B-224508 Date: October 2, 1986 In the Matter of: Southwest Marine of San Francisco, Inc.
66 Comp. Gen. 22
Procurement
Bid Protests
GAO Procedures
Interested Parties
Subcontractors
Procurement
Competitive Negotiation
Government Agents
Contract Awards
General Accounting Office will consider a protest by potential
subcontractor of a firm acting as a general agent for the Maritime
Administration, since the firm is acting "by or for" the government in
issuing a solicitation for ship repair and maintenance.
Procurement
Bid Protests
GAO Procedures
Agency Notification
Purposes
Purpose of requirement in Bid Protest Regulations that protesters
serve procuring agencies with copy of their protests within 24 hours of
filing with the General Accounting Office (GAO) is to inform the agency
promptly of the basis for protest and to enable it to prepare a report
within the required 25 working days. When an agency has actual notice
of the basis for protest and delivers its report in a timely fashion,
GAO will dismiss the protest because the protest served a firm action
for the government, rather than the agency itself.
Procurement
Sealed Bidding
Invitations for Bids
Oral Amendments
Contract Performance
Effective Dates
Under the Federal Acquisition Regulation, any change in delivery
schedules, including a previously unannounced starting date, must be in
writing and provided to all firms to which an invitation for bids has
been issued. When a protester categorically denies that it was orally
informed of a required starting date by a firm acting for the
government, statement in its bid that an anticipated starting 2 weeks
later would not alone be grounds for rejection of the bid.
Procurement
Sealed Bidding
Bids
Responsiveness
Contractor Liability
Liability Restrictions
A bid is rendered unacceptable when a bidder attempts to limit its
liability to the government. A bid stating that the contractor will
take every precaution to contain residue from abrasive blasting during
preparation of ship for painting, but will consider the firm acting for
the government in issuing a solicitation requiring such blasting to be
responsible for any environmental violations, therefore is not
acceptable. Southwest Marine of San Francisco, Inc., the low bidder for
a fixed price subcontract for repair and maintenance of the vessel SS
AUSTRAL LIGHTNING, protests the rejection of its $871,016 bid as
nonresponsive. American President Lines, Ltd., acting as general agent
for the Maritime Administration, U.S. Department of Transportation,
awarded an $882,395 contract to Triple A Shipyards, the second-low
bidder on July 16, 1986. We deny the protest.
A threshold issue involves our jurisdiction. Under the Competition in
Contracting Act of 1984 (CICA), 31 U.S.C. 3551 (Supp. III 1985), our
Office considers protests concerning solicitations issued by federal
agencies. Our implementing Bid Protest Regulations state that we will
not consider protests by subcontractors unless the procurement is "by or
for" the government. 4 C.F.R. 21.3(f) (10) (1985). In this case,
American President Lines issued the solicitation pursuant to a Service
Agreement with the Maritime Administration under which it manages and
conducts the business of vessels owned by the United States. See 46 C.
F.R. part 315 1(a) (1985). Thus, the procurement is reviewable as "by
or for" the government. ITT Telecom Products Corp., B-221325 et al.,
Mar. 21, 1986, B-216634, May 16, 1985, 85-1 CPD 554. As for our standard
of review, in general provision 17.a. of the solicitation, American
President Lines states that it and any of its contractors "shall comply
with ... any law or regulation applicable to federal contracts and
subcontracts." We therefore will apply the Federal Acquisition
Regulation (FAR) in considering whether American President Lines
properly rejected Southwest Marine's bid. Cf. Coflexip, supra
(discussing the Maritime Administration's qualified exception to the
general procurement statutes under 40 U.S.C. 474(16) (1982 and Supp.
III 1985). American President Lines issued the solicitation to eight
prospective contractors in the form of a letter dated July 7, 1986, with
specifications attached. The letter stated that the vessel was then
berthed at a Triple A facility at the Hunters Point Shipyard in San
Francisco; that the successful contractor would be required to transfer
it to its own facility and return it to Hunters Point; that the ship
would be available for visits upon request; that bids were due by 1
p.m. on July 15; and that the successful bidder would be required to
provide an itemized price breakdown within 24 hours of award.
An American President Lines official, in a statement prepared for the
protest report, states that in order to give bidders the maximum time to
work on the specifications, he telephoned all eight firms and invited
them to pick up the solicitation, rather than distributing it by mail.
The official states that during these calls he informed each bidder that
performance would begin on July 21. American President Lines received
four bids on the specified opening date, but advised the Maritime
Administration that it considered Southwest Marine's nonresponsive
"because it contained a counter-offer on the painting item and would not
start the work until August 4." With regard to the first of these bases
for rejection, Southwest Marine contends that it did not take any
exception to the specifications, but merely expressed concern that those
involving preservation and painting might specify products or procedures
prohibited by the Environmental Protection Agency (EPA). In its bid the
firm therefore stated: "Southwest Marine will adhere to the
requirements of the specification in the form of abrasive grit blasting,
and we shall take every precaution to contain the contaminate.
"In the event that EPA finds our procedures not acceptable, we
consider APL "American President Lines" to be the responsible party due
to the fact that the specifications mandate this type of procedure." It
offered to perform the work by an alternative method that would include
"hydroblast, mechanical cleaning and feather edging of good paint" at an
unspecified price. As for the second basis for rejection, Southwest
Marine asserts that it was never informed of the required July 21
starting date. The protester points out that the solicitation itself
did not contain any starting date; that it could not have relied on
oral advice by American President Lines purporting to amend the
solicitation; and that its submission merely indicated that it "would
anticipate the commencement of work on or about 4 August 1986."
In its administrative report, the Maritime Administration first
argues that we should dismiss the protest on procedural grounds. The
agency asserts that Southwest Marine served American President Lines,
but did not serve the agency within 24 hours of filing with our Office,
as required by our regulations, 4 C.F.R. 21.1(d). The agency also
points out that in its initial protest, Southwest Marine discussed only
the statement in its bid regarding possible violations of EPA
regulations. Because the bid was also nonresponsive as to the required
starting date, the agency urges, we should dismiss the protest a
academic. We will not dismiss the protest for failure to serve the
Maritime Administration. The purpose of our regulation is to inform
procuring agencies promptly of the basis of protest and to enable them
to prepare their reports within the 25 working days alotted by CICA.
Sixth and Virginia Properties, B-220584, Jan. 14, 1986, 86-1 CPD 37. In
this case, the Maritime Administration knew of the basis of protest
through notice both by our Office in a timely fashion. In the absence
of a showing that the agency was prejudiced because Southwest Marine
served its agent, we do not think that dismissal is appropriate.
Nor will we dismiss the protest academic, because we do not believe
the protester's bid properly could have been rejected due to its
reference to an anticipated August 4 starting date.
The only solicitation reference to a starting date is in general
provision 18, which states that "the contractor's responsibility with
respect to time is to commence at the time set forth when the contract
is awarded. . . ." As noted above, an American President Lines official
frankly admits that he used the telephone to advise bidders of the
required starting date, but Southwest Marine categorically denies that
it ever received this information. The FAR requires procuring agencies
to provide written solicitation amendments to all firms to which an
invitation has been issued whenever a change in delivery schedule
occurs. 48 C.F.R 14.208 (a)(1985). The requirement that material
changes be in writing ensures that bidders compete on an equal basis by
responding to the same terms and conditions. Consequently, we have
sustained protests where protesters denied that they were orally advised
of such changes. See CoMont, Inc., 65 Comp. Gen 66 (1985), 85-2 CPD 555
and cases cited therein. Thus, in the absence of a written amendment
here, we do not think that American President Lines could have rejected
the bid on the ground of a nonresponsive starting date. See Coflexip,
supra. On the main issue, however, we do not find the rejection
improper. The FAR states that an individual bid "shall be rejected when
the bidder imposes conditions that would modify requirements of the
government or limit the bidder's liability to the government." 48 C.F.R.
14.404-2(d).
The Maritime Administration states that the abrasive blasting
required by the solicitation is not prohibited by any statute or
regulation. The problem, the agency states, arises if shore water is
contaminated with residue, i.e., grit, rust, and dried paint, from the
process. Such contamination, the agency states, would violate not only
federal environmental statutes and regulation, but also state and local
water pollution laws. It is up to the contractor, who must obtain a
permit for this type of work from the state of California, to prevent
contamination by containment, the agency concludes, and Southwest Marine
is improperly attempting to shift the risk of contamination to the
government.
We agree. Although Southwest Marine stated in its bid that it would
take every precaution to contain the residue of abrasive blasting, its
statement also attempted to limit its liability to the government for
any environmental violation. By doing so, it rendered its bid
unacceptable and under FAR, 48 C.F.R. 14.404-2 (d), bid rejection was
proper. Protest denied.
B-224453 Date: October 2, 1986 In the Matter of: All Diesel Power, Inc.
66 Comp. Gen. 19
Procurement
Competitive Negotiation
Discussion
Offers
Clarification
Propriety
In a competitively negotiated procurement, it is not improper for
agency to obtain clarification of initial offer which appears to be
nonconforming to solicitation requirements where information requested
does not materially change offer.
All Diesel Power, Inc. (ADP) protests the award of a contract to
Flexonics, Inc. Under for proposals (RFP) No. DLA-700-86-R-1478, issued
by the Defense Logistics Agency (DLA) for 45 expansion bellows. ADP
protests the award on the basis of its assumption that it offered the
lowest price for the expansion bellows and that Flexonics did not offer
the item required. We deny the protest. The RFP solicited a specific
expansion bellow originally manufactured by Alco Power and identified by
its part number. The RFP also permitted offers of alternate products
and provided for evaluation and approval of alternates. Four companies
submitted offers under this RFP. The two low offerors, ADP and
Flexonics, offered alternate products. DLA requested that each firm
submit additional data for the evaluation of its alternate offer.
Flexonics was requested to provide evidence that it was a supplier of
the required bellows to Alco Power, the approved original equipment
manufacturer source. ADP states that it was requested to prove that its
supplier was a qualified source. DLA also asked that all offerors
extend their offers because of the need to evaluate the alternates.
Based on the data submitted, DLA found both offers technically
acceptable. The agency subsequently informed ADP that its proposal was
"not low after consideration of all evaluation factors," and that award
had been made to Flexonics, Inc. of
Bartlett, Illinois. In its protest to our Office, ADP contends that
the fact that the agency requested data concerning its supplier was an
indication that ADP was the low offerer. The protester alleges that
after it identified Flexonics, Ltd. of Canada as one of its suppliers,
and agreed its own offer, the agency improperly sought and obtained a
proposal from Flexonics, Inc. of Bartlett, Illinois. (According to
Flexonics, Flexonics of Bartlett, Illinois, is a "Sister Division" to
Flexonics of Canada, but they are separate entities with regard to their
business activities.) In its comments on the agency report, ADP argues
further that the award to Flexonics was improper because Flexonics'
offer was not for the item required.
The agency states that the information it requested from ADP was
necessary for the evaluation of the offers of alternate products. The
agency further states that, as a matter of standard procedure, it
requests the data for alternate offers from all such offerors at the
same time to facilitate evaluation. The agency asserts that while the
protester may have inferred from its request that it was the low
offeror, the contracting officials never advised ADP that it was in line
for award. The agency also explains that the offerors were requested to
extend the effective period of their offers because they were soon to
expire and more time was needed to complete the evaluation process.
We note that the record indicates that both offers were submitted
prior to April 2, 1986, the closing date for receipt of proposals.
Flexonics' offer bears the same date as ADP's--March 21, 1986. In
addition, the record shows that ADP's price was more than double that of
Flexonics. The record, therefore, provides no support for the
protester's speculation that it submitted the low offer, after receipt
of which the agency used information provided by the protester
concerning its sources of supply to solicit a late proposal from
Flexonics. Also without merit is ADP's allegation that the award to
Flexonics is improper because it is for an item different from that upon
which offers were solicited.
At the outset, we note that ADP appears to be under the mistaken
impression that this procurement is subject to the same solicitation
procedures that would be applicable to a sealed bid/formally advertised
procurement. The solicitation clearly specifies that the procurement is
a negotiated one. Under the procedures for competitive negotiations, an
offer which initially appears to be nonconforming to the solicitation
need not be rejected if it is reasonably susceptible of being made
acceptable. It is, therefore, not improper for the contracting agency
to request clarification of an initial offer where the necessary
information does not result in material changes to the offer. Los
Angeles Community College District, B-207096.2, Aug. 8, 1983, 83-2
C.P.D. 175 at 5. The RFP described the item being purchased by National
Stock Number and as one manufactured by Alco Power, Auburn, New York,
under its part No. 22820133-1. Beneath the item description were blanks
in which each offeror was to indicate the manufacturer's name and part
number on which its offer was based. On this page, immediately beneath
the Alco part number, Flexonics wrote: "Flexonics has all necessary
data to manufacture this item and has supplied same to Alco on "various
purchase orders" since 1966. If data presentation is necessary, please
call." In the blanks provided for this purpose, Flexonics indicated its
offer was based on Flexonics part No. "310-405-5001 (06116)." When,
subsequent to receipt of offers, Flexonics was asked to provide evidence
that was a supplier of the part to Alco Power, Flexonics responded by a
message in which it stated, in part, "We are taking no deviation of any
sort since we are quoting exactly to your request. We have made this
part for Alco many times in the past." Flexonics followed this advice by
a letter, to which it attached two telegrams from Alco "as proof that
Flexonics is the manufacturer of Alco Catalog #22820133-1." In these
telegrams, Alco identified its part No. 72-08120-559, its catalog No.
22820133-1, and Flexonics part No. 310-405-5006 all as referring to the
same item for which, Alco stated, "Flexonics has been an approved source
. . . for many, many years" and "still is the approved source "at the
present time".
The DLA buyer then asked her technical advisors whether Flexonics
part No. 310-0405-5001 (06116) was an acceptable item, and received the
reply that "Flexonics . . . P/N 310-405-5006 is an approved source for
Alco Power . . . P/N 72-08120-559."
In the Schedule portion of Flexonics' contract, beside the item
description and immediately above its price, is handwritten "96142
"Flexonics' source code" P/N 310-405-5006." It does appear that
Flexonics' initial offer was based on its own inappropriate part No.
-5001. When asked by DLA to establish that it was a manufacturing
source for the Alco part specified in the RFP, however, Flexonics
provided evidence upon which DLA concluded that Flexonics' part No.
-5006 was the equivalent of the Alco part, and it is the -5006 part
number which is written on the Schedule portion of Flexonics' contract.
Whatever uncertainty existed as to the part number Flexonics was
offering, and its acceptability, was cleared up through these
communications between Flexonics and DLA and we have no reason to
believe that DLA will receive anything other than an acceptable item.
The protest is denied.
B-224372 Date: October 2, 1986 In the Matter of: U.S. Technology Corporation
66 Comp. Gen. 16
Procurement
Specifications
Brand Name Specifications
Equivalent Products
Acceptance Criteria
Fact that a manufacturer has been granted exclusive rights to use a
brand name as a trademark does not affect the law to be applied in
determining whether an agency can properly accept an equivalent product
when the words "or equal" have inadvertently been omitted from a brand
name solicitation.
Procurement
Specifications
Defects
Brand Name/Equal Specifications
Omission
Although inadvertent omission of "or equal" language renders a brand
name or equal solicitation defective, the agency may make an award under
it if the government's needs are met and no offeror is prejudiced.
Procurement
Small Purchase Method
Requests for Quotations
Amendments
Notification
Where an apparently noncompetitive solicitation, i.e., one specifying
a brand name product only, becomes competitive, the procuring agency
generally must advise the manufacturer that it intends to consider
offers for equivalent products and allow the firm an opportunity to
amend its offer.
Procurement
Specifications
Brand Name Specifications
Ambiguous Specifications
Salient Characteristics
Equivalent Products
Where a solicitation specifies a brand name product only, but lists
salient characteristics for the product, the manufacturer should assume
that the agency will also consider offers for equivalent products.
Procurement
Bid Protests
Non-Prejudicial Allegation
GAO Review
Where the manufacturer of a brand name product does not argue that it
would have lowered its price or offered an equivalent product if it had
known that the agency would consider offers for such products, the
manufacturer has not shown that it was prejudiced by the omission of "or
equal" language from a solicitation.
U.S. Technology Corporation protests the award of a purchase order to
Budd Chemical Company under request for quotations (RFQ) No.
DAAC67-86-Q-0457, issued by the Letterkenny Army Depot, Chambersburg,
Pennsylvania. The solicitation was for abrasive plastic granules used
for cleaning metal, plastic, and other surfaces. The protester contends
that the purchase description restricted the procurement to its
trademarked products and did not permit the Army to consider the
awardee's equivalent products. We deny the protest. The RFQ included
four line items covering various types and quantities of the cleaning
compounds, which are used in conjunction with a pressurized air stream.
Line items 1 and 2 were described as "Blast, Plastic, Type III," with
salient characteristics such as hardness, density, and moisture content.
Line items 3 and 4 were described as "Blast, Media, Polyplus," with no
salient characteristics. The procurement was handled as a small
purchase and was synopsized in the Commerce Business Daily. Seven
firms, including U.S. Technology, submitted quotes; the agency awarded
a $11,665 purchase order to Budd, the low aggregate offeror, on June 13,
1986.
According to the protester, "Type III" and "Polyplus" are trademarks
that the Commissioner of Patents and Trademarks granted it the exclusive
right to use on September 10, 1985. The firm argues that in the absence
of "or equal" language, as well as salient characteristics for Polyplus,
only U.S. Technology can satisfy the Army's requirements. The protester
points out that each line item included a 5-digit federal supply code
for manufacturers that identified its parent company, U.S. Plastic and
Chemical Corporation, and that line item 4 also included a special item
number referenced in its own Federal Supply Schedule contract. The
protester concludes that the awardee will not be able to provide the
brand name product described in the solicitation, so that the Army
should have rejected its quote.
The Army states that although it intended to procure the cleaning
compounds on a competitive basis, it inadvertently left the words "or
equal" out of the purchase description. The agency argues, however,
that given the competitive response to the RFQ, the marketplace
understood its intent to procure competitively. The agency maintains
the "Type III" and "Polyplus" are recognized in the industry as generic
descriptions of specific hardness levels of the plastic granules, and
adds that it was not aware when it drafted the purchase description that
the two terms were trademarks. (An interested party further argues that
because the terms have previously been used in military and commercial
solicitations, they are in the domain and not entitled to trademark
protection.) The agency concludes that it considered quotes on an "or
equal" basis and determined that Budd's proposed products are equivalent
to U.S. Technology's products and meet its needs.
In our opinion, this procurement is similar to any other in which
only a brand name product is specified. The fact that the manufacturer
has been granted exclusive rights to use the brand names as trademarks
does not affect the law to be applied in determining whether the agency
could properly accept an equivalent product, and the protester does not
allege trademark infringement. Under the Federal Acquisition Regulation
(FAR) a purchase description generally should, at a minimum, identify
requirements by use of a brand name followed by the words "or equal."
FAR, 48 C.F.R. 10.004(b)(3) (1985). However, even if the omission of
the "or equal" language rendered the solicitation defective, the Army
here could nonetheless make an award under it if the government's needs
would be met and no offeror is prejudiced. See Contact International,
Inc.--Request for Reconsideration, B-210082.2, Sept. 2, 1983, 83-2 CPD
294. Since there is no dispute that Budd's products meet the
government's needs, the issue is whether U.S. Technology was prejudiced
by the defective solicitation. We have held that when an apparently
noncompetitive RFQ, for example, one identifying a specific firm's part
number, becomes competitive, the procuring activity must amend it and
provide the specified manufacturer with an opportunity to amend its
quotation. 47 Comp. Gen. 778 (1968); Sargent Industries, B-216761,
Apr. 18, 1985, 85-1 CPD 442. In such cases, we have identified two
circumstances where the brand name manufacturer was unaware of
competition and assertedly would have offered a lower price had it been
advised of it; and (2) where the brand name manufacturer also had an
"equal" product which it assertedly would have offered if the agency had
advised it of the competition. Id. In this case, the RFQ listed salient
characteristics for the "Type III" cleaning compound in line items 1 and
2. Therefore, even in the absence of "or equal" language, we believe
that the protester could reasonably assume that the Army would consider
offers of equivalent products for these items. See Environmental
Tetonics Corp., B-222568, Sept. 5, 1986, 86-2 CPD 267. Remaining at
issue are line items 3 and 4, where no salient characteristics for
"Polyplus" were listed. Although line item 3 included the brand name,
along with a federal supply code for manufacturers that identified U.S.
Plastic and Chemical Corporation, it did not include a national stock
number unique to the product. See Federal Property Management
Regulations, 41 C.F.R. subpart 101-30.1 (1985). In the absence of this
additional information, we think it less reasonable for the protester to
assume that the procurement was restricted to its trademarked products.
For line item 4, the purchase description included the brand name, the
federal supply code for manufacturers, and the special item number from
the protester's Federal Supply Schedule contract. This special item
number is unique to the protester's product. Under these circumstances,
we believe the protester might reasonably assume that only its
"Polyplus" would be acceptable for this item. We are not convinced,
however, that the protester was prejudiced by the omission of the "or
equal" language from any of the line items. The protester does not
argue, and it otherwise does not appear, that the firm would have been
able to offer its "Type III" and "Polyplus" products at a price less
than Budd's quoted price, even if it had been informed that the Army
sought competition. See Spacesaver, B-224339, Aug. 22, 1986, 86-2 CPD
219. Nor does the protester allege that it could have offered an
equivalent product at a competitive price. Consequently, the award to
Budd is not legally objectionable. The protest is denied.
B-223780 Date: October 2, 1986 In the Matter of: Korean Maintenance Company
66 Comp. Gen. 12
Procurement
Specifications
Minimum Needs Standards
Competitive Restrictions
Performance Specifications
Management Services
Agency is not required to separately purchase custodial services for
several buildings where the agency's overall needs can be most
effectively provided through a consolidated procurement approach
involving award of the total requirement for services necessary to
operate and maintain the buildings to one contractor.
Procurement
Specifications
Minimum Needs Standards
Risk Allocation
Performance Specifications
Utility Services
Protest that agency should estimate its need for utility services
rather than provide offerors information on historical usage is denied
where the solicitation contains sufficient information for offerors to
compete intelligently and on equal terms. There is no legal requirement
that specifications eliminate all risk for the contractor.
Procurement
Bid Protests
GAO Procedures
Protest Timeliness
Apparent Solicitation Improprieties
Protest of performance and payment bond requirements in a
solicitation is untimely where first raised after date set for receipt
of proposals since the alleged deficiency in the solicitation was
evident at that time. Korean Maintenance Company protests the terms of
request for proposals (RFP) No. GS-07-P-86-HT-C-0108/7PPB, issued by the
General Services Administration (GSA) for the operation and management
of several government facilities in Sante Fe, New Mexico. Korean
Maintenance believes that GSA should divide the solicitation to increase
competition from small businesses. We deny the protest in part and
dismiss it in part.
The solicitation sought offers to provide all services necessary for
operation and maintenance of five federal buildings, including
facilities management, janitorial services, insect and rodent control,
snow and trash removal, operation and maintenance of mechanical
equipment, utility services and building repair alterations. This
procurement was initiated under a GSA program to consolidate operation
and management services under one contract for large facilities in major
metropolitan areas where GSA's own staff does not meet existing needs,
where the work is largely obtained by contract already, and where
certain other factors are present. According to GSA, 12 contracts have
been issued under the program. Korean Maintenance currently performs
custodial services for GSA at four of the five locations included in the
protested procurement. GSA will not exercise any options under the
contract with Korean Maintenance, but will obtain custodial services
through the new, consolidated contract. The protester complains that if
the options are not exercised, it will be unable to recoup its
investment in snow removal and other equipment purchased to perform its
custodial services contract. The protester does not argue, however,
that GSA must exercise the options under its custodial services
contract, a question that is a matter of contract administration and not
within the scope of our bid protest function. The Big Picture Co.,
Inc., B-220859, Oct. 31, 1985, 85-2 CPD 512. Instead, the firm in
effect contends that GSA is foreclosed from exercising the options
because of the consolidated contract, and that Korean Maintenance and
other small businesses cannot compete effectively for the new contract
because of its size and the diversity of required work. Korean
Maintenance believes that its overall business will greatly suffer if
GSA consolidates building service contracts in other areas. Korean
Maintenance also contends that the specifications are defective by
requiring the contractor to provide utility services without providing
an estimate required of electric, water, sewage, and gas services or
otherwise reducing the risk to the contractor from the possibility that
its estimate of services required might be erroneous. Also, in its
comments on GSA's administrative report, the protester argues that it is
almost impossible for small businesses to provide the payment and
performance bonds required by the RFP. Consolidation of Required
Services The Completion of Contracting Act of 1984, 41 U.S.C.
253a(a)(2)(B) (Supp. III 1985), generally requires that solicitations
include specifications which permit full and open competition and
contain restrictive conditions only to the extent necessary to satisfy
the needs of the agency. The Caption Center, B-220659, Feb. 19, 1986,
86-1 CPD 174. Since procurements on a total package or consolidated
basis can restrict competition, we have objected to such procurements
where the approach did not appear necessary to satisfy the agency's
minimum needs. See, e.g., Systems, Terminals & Communications Corp.,
B-218170, May 21, 1985, 85-1 CPD 578; MASSTOR Systems Corp., B-211240,
Dec. 27, 1983, 84-1 CPD 23. On the other hand, we have recognized that
the possibility of obtaining economies of scale or avoiding unnecessary
duplication of costs may also justify such an approach. The Caption
Center, B-220659, supra at 5 and 6, and cases cited therein. In this
regard, we have found that CICA's requirement to increase the use of
full and open competition is primarily a means to an end--that of
fulfilling the government's requirements "at the lowest reasonable cost
considering the nature of the property or service procured." 41 U.S.C.
414 (1) (Supp. III 1985); see H.R. Rep. No. 861, 98th Cong., 2d Sess.
1434 (1984); The Caption Center, B-220659, supra at 6. In our opinion,
the decision whether to procure by means of a total package or
consolidated approach or to break out divisible portions of the total
requirement for separate procurements, a matter generally within the
discretion of the contracting agency, will not be disturbed absent a
clear showing that the agency's determination lacks a reasonable basis.
Servicemaster All Cleaning Service, B-223355, Aug. 22, 1986, 86-2 CPD
216. We find that GSA's decision to procure by means of a consolidated
facility management approach has a rational basis. GSA reports that the
use of a consolidated contract will reduce administrative costs and
duplicative managerial time, eliminate the problem of no offers being
received for some requirements, improve building service, and improve
repair, maintenance and management techniques. Also, there is no
evidence that inadequate competition results from GSA's consolidation of
building service contracts or will occur in this case. According to
GSA, small businesses have been strong competitors for the consolidated
contracts, receiving 3 out of the 12 consolidated contracts issued so
far. Two such contracts have been issued in the same GSA region as
Sante Fe, New Mexico; one of these was awarded to a small business and
the awardee under the second will subcontract over 50 percent of the
work to small businesses. GSA points out that small firms can
subcontract work in areas in which they do not have experience, and that
two out of three offerors on the protest procurement are small
businesses. On this record, we have no basis to object to GSA's
procurement approach. See Eastern Trans-Waste Corp., 65 Comp. Gen.
519.
Utility Services
Korean Maintenance contends that the RFP is defective because it
fails to provide an estimate of utility usage or to provide a method of
reimbursement for errors in the contractor's estimate. The protester
believes that contracting agencies must determine their requirements and
may not pass this responsibility to contractors. Solicitations must
contain sufficient information to allow offerors to compete
intelligently and on equal terms. Analytics Inc., B-215092, Dec. 31,
1984, 85-1 CPD 3. Specifications should be free from ambiguity an
should describe the agency's minimum needs accurately. Klein-Seib
Advertising and Public Relations, Inc., B-200399, Sept. 28, 1981, 81-2
CPD 251. There is no legal requirement, however, that a competition be
based on specifications drafted on such detail as to eliminate
completely any risk for the contractor, or that the procuring agency
remove every uncertainty from the minds of every prospective offer.
Security Assistance Forces & Equipment International, Inc., B-199366,
Feb. 6, 1981, 81-1 CPD 71. In this case, we do not consider the risk
imposed upon contractors to be unreasonable. GSA provided offerors with
the history of utility costs for the past 3 years, and, as manager of
the facilities, the contractor will have some control over usage in the
future. For example, the contractor has some discretion in limiting
water flow in lavatories and may adjust thermostats on water heaters to
conserve energy use. The protester has quoted language from decisions
of this Office to establish that agencies are primarily establishing
their minimum needs. Those cases, such as Radix II, Inc., B-211884,
Sept. 26, 1983, 83-2 CPD 375, concern allegations that agencies have
overstated their minimum needs and have thereby unduly restricted
competition. In contrast, Korean Maintenance does not claim that GSA has
inaccurately described its needs for utility service, but that GSA
should assume all risks of estimating future usage. We do not agree,
and deny this basis of the protest.
Bond Requirements
The protester believes that competition will be unduly restricted
because of the difficulty small business will have in obtaining required
performance and payment bonds for such a large and diverse contract.
The bond requirements for this procurement were contained in the
solicitation, and, for that reason, were required to be protested before
the closing date for receipt of proposals. 4 C.F.R. 21.2 (a)(1) (1985)
(protests based upon improprieties in a solicitation that are apparent
prior to closing must be protested by that date). Korean Maintenance did
not raise the issue until after GSA filed its report with our Office.
Although we dismiss this basis of protest as untimely, we note that bond
requirements are usually justified where, as here, the contract requires
use of substantial government property and the services are essential
for operation of the facility. Rampart Services, Inc., B-221054.2, Feb.
14, 1986, 86-1 CPD 164. We deny the protest in part and dismiss it in
part.
B-223326.2; B-223323.3 Date: October 2, 1986 In the Matter of: Space Communications Company
66 Comp. Gen. 2
Procurement
Competitive Negotiation
Offers
Competitive Ranges
Exclusion
Administrative Discretion
Protest is denied where, despite numerous allegations of agency
misconduct, the record establishes that the agency acted properly in no
longer considering for award a proposal which had not been made
technically acceptable through the course of discussions and which was
more than $40 million higher in price than that of sole remaining
competitive range offeror.
Procurement
Competitive Negotiation
Discussion
Adequacy
Criteria
Meaningful discussions have occurred where an offeror is reasonably
informed of the perceived deficiencies in its proposal and has been
given the opportunity to correct those deficiencies in a best and final
offer.
Procurement
Competitive Negotition
Best/final Offers
Technical Acceptability
Negative Determination
Propriety
A best and final offer was properly found to be technically
unacceptable where the protester continued to propose elements of high
risk despite agency concern and where its alternative approaches in
those areas were not sufficiently detailed to establish their
acceptability, since an offeror should not expect any further
discussions once it has submitted its best and final offer.
Procurement
Competitive Negotiation
Offers
Competitive Ranges
Exclusion
Administrative Discretion
The fact that a proposal was initially included within the
competitive range does not preclude the agency from later excluding it
from further consideration if it no longer has a reasonable chance of
being selected for award.
Procurement
Competitive Negotiation
Discussion Reopening
Propriety
Reopened discussions with only one offeror following receipt of best
and final offers were not improper where, as the result of the agency's
evaluation of best and final offers, only that offeror justifiably
remained within the competitive range. Space Communications Company
(Spacecom) protests the award of a contract to Communications Satellite
Corporation (Comsat) under request for proposals (RFP) No.
RFP1-23-5-LM, issued by the United States Information Agency (USIA).
The procurement is for a Satellite Interconnect System to enhance USIA's
Voice of America international broadcasting mission. Spacecom asserts
that the award was improper because of numerous violations of applicable
procurement regulations by the agency. We deny the protest.
Background
The RFP contemplated the award of a firm, fixed-price contract for a
Satellite Interconnect System (SIS) that initially would link three
domestic Voice of America facilities and would provide access from one
domestic site for satellite communications with overseas sites in the
Caribbean, Europe, and Africa. The proposed contract also contemplated
the exercise of various priced options, including the implementation of
satellite communication facilities at additional overseas sites and
access for services to Pacific region sites. The SIS requirements
involve the furnishing of earth stations, switching equipment, satellite
channels, and maintenance services.
The RFP was issued on March 27, 1985, and was subsequently amended
several times. Of the six proposals received in response to the
solicitation, those of Comsat, Spacecom, and ITT World Communications
were initially determined to be within the competitive range.
Discussions were then held with the three competitive range offerors,
the best and final offers (BAFO's) were requested and evaluated. ITT
did not submit a BAFO and, accordingly, the firm was eliminated from
further award consideration. In terms of relative technical scoring,
Spacecom's initial proposal received a score of 64 out of a possible 100
points, which increased to 72 upon submission and evaluation of its
BAFO. The score for Comsat's initial proposal was 80, subsequently
raised to 88 for its BAFO.The competitive range in a negotiated
procurement consists of all proposals that have a reasonable chance of
being selected for award, including deficient proposals which are
reasonably susceptible of being made acceptable through discussion. See
the Federal Acquisition Regulation, 48 C.F.R. 15.609(a) (1985);
Fairchild Weston Systems, Inc., B-218470, July 11, 1985, 85-2 CPD 39.
Here, only Comsat's proposal was deemed to be technically acceptable as
submitted; the initial proposals of both Spacecom and ITT were found to
contain unacceptable aspects which potentially could be corrected during
the discussion process. At this point in the procurement, USIA
determined that Comsat's offer was technically acceptable for purposes
of award, "subject to minor clarifications in the BAFO ..." However, the
agency determined that Spacecom's offer was not acceptable "because of
technical deficiencies that were not corrected through negotiations." In
this regard, the agency found that Spacecom's proposal remained
materially deficient in two areas.
Spacecom continued to propose the use of an international satellite
(INTELSAT) instead of a domestic communications, an approach which USIA
determined would violate current Federal Communications Commission (FCC)
policy. Although Spacecom had repeatedly urged that the national
security-related functions of the Voice of America would result in a
policy change by FCC which could be effected rapidly, the FCC had
indicated to USIA that although such a change might ultimately be
justified in the circumstances, it would entail an involved
administrative process before any final ruling in the matter could be
implemented. Because this policy change would be needed immediately to
enable Spacecom's performance of the agency's SIS requirements, the
agency concluded that the INTELSAT approach posed an unacceptable risk.
Furthermore, Spacecom had not altered its original intention to place
the earth station serving the Voice of America's Worldwide Operations
Control Center on the roof of the Health & Human Services - North
(HHS-N) building in Washington, D.C. This involved the installation of
a 25-foot diameter dish antenna on a corner of the building. Although
the HHS-N building, in fact, had been specified in the RFP as a possible
site for the earth station, offering certain technical advantages, USIA
was concerned that the designation of HHS-N as an historical building
would preclude the agency from obtaining the necessary local zoning
authorization for placement of the antenna in the face of public
opposition. The agency noted that it had been unsuccessful in recent
attempts to add any additional structures to the roof. Although
Spacecom again urged that the national security considerations would
overcome such opposition, USIA concluded that this approach, as in the
case with Spacecom's proposed INTELSAT concept, created and unacceptable
risk that the SIS requirements would not be met. Thus, upon the
evaluation of BAFOs, USIA determined that only Comsat's proposal
remained within the competitive range, and the agency continued
discussions with Comsat which resulted in certain technical and price
modifications to the firm's offer. Comsat's total evaluated price for
the effort was $40,017,145, whereas Spacecom's offer was much higher at
84,554,794. These discussions continued into April 1986, and Comsat was
not awarded the contract until May 30. During this time, Spacecom was
not notified that its BAFO had been found to be unacceptable. Upon
learning of the award to Comsat, Spacecom filed an action in the United
States Claims Court seeking injunctive relief. Because the Claims
Court's jurisdiction over this post-award controversy was doubtful,
Spacecom agreed to a stipulation dismissal of the action, and the firm
then protested to this Office. See 4 C.F.R. 21.3(f)(11); 21.9(a)
(1986).
Protest Position Spacecom asserts that the award to Comsat was
improper on several grounds. Spacecom's principal bases of protest may
be summarized for purposes of analysis as follows: (1) the agency
improperly failed to notify Spacecom after BAFO evaluations that its
offer was no longer in the competitive range; (2) the agency failed to
conduct meaningful discussions; (3) Spacecom's BAFO was unreasonably
found to be technically unacceptable resulting in the firm's exclusion
from further award consideration; (4) improper post-BAFO discussions
with only Comsat converted a competitive procurement into a sole-source
acquisition; (5) the agency failed to evaluate the proposals for
purposes of determining price realism; (6) the agency created an
auction situation and engaged in impermissible technical leveling and/
or technical transfusion; and (7) the agency was biased in favor of
Comsat's selection throughout the procurement process.
Analysis
Failure of Notice Spacecom urges that it was improper for USIA to
wait nearly 6 months after determining that its offer was technically
unacceptable before completing the procurement process. Spacecom
asserts that, by regulation, it was entitled to prompt notice that it
was not the successful offeror, and, because it incurred substantial
personnel and materials costs in keeping its offer open during that
period, that it should be allowed monetary relief in the form of its
protest and proposal preparation costs. The Federal Acquisition
Regulation (FAR), 48 C.F.R. 15.1001 (a) (1985), generally provides, with
respect to negotiated procurements, that the contracting officer shall
promptly notify each offeror whose proposal is determined to be
unacceptable or whose offer is not selected for award, unless disclosure
might prejudice the government's interest. See also FAR, 48 C.F.R.
15.1001 (b) (1) . We agree with Spacecom to the extent the agency's
action in not notifying the firm that its BAFO was unacceptable until
nearly 6 months later (through its award to Comsat) was inconsistent
with this provision. USIA argues that it did not provide Spacecom with
notice because it was concerned that Comsat would learn through industry
"gossip" that it was the only firm remaining in the competitive range,
and, hence, that the government would be at a disadvantage in seeking
any further price or technical revisions in Comsat's proposal through
continued discussions. However, since it is presumed that contracting
agencies, in advising offerors that they are no longer in consideration
for award, will take care at the same time not to reveal to offerors who
do remain in the competition of the elimination of their competitors,
USIA's action, in our view, was not justified by its concern that
notification to Spacecom would prejudice the government's interest.
Nevertheless, any impropriety on the agency's part in this matter does
not provide a basis to sustain the protest and to allow Spacecom the
recovery of its costs. The failure to notify a firm promptly that it is
no longer in consideration for award is directly akin to situations
where the agency has failed to provide the protester with prompt notice
of award to another firm. In those cases, we have consistently held that
such failure is only procedural in nature and does not affect the
validity of an otherwise properly awarded contract. See L.L. Rowe Co.,
B-220973, Feb. 27, 1986, 86-1 CPD 204. Concomitantly, since our
authority to allow the recovery of protest and bid or proposal
preparation costs is conditioned by our determination that a
solicitation, proposed award, or award does not comply with stature or
regulation, see 4 C.F.R. 21.6(d) and (e) (1986), Spacecom is not
entitled to monetary relief for what constitutes only a procedural
deficiency.
Absence of Meaningful Discussions We find no merit in Spacecom's
assertion that the agency failed to conduct meaningful discussions. It
is true that discussions, whether written or oral, are a fundamental
requirement of negotiated procurement and must be held with all
responsible offerors whose proposals are within the competitive range.
Price Waterhouse, 65 Comp. Gen. 205 (1986), 86-1 CPD 54. This
requirement includes advising offerors of deficiencies in their
proposals and affording them the opportunity to satisfy the government's
requirements through the submission of a revised proposal. Furuno
U.S.A., Inc., B-221814, Apr. 24, 1986, 86-1 CPD 400. Thus, it is well
settled that competitive range discussions must be "meaningful" in
nature--that is, agencies must point out weaknesses, deficiencies, or
excesses in proposals unless doing so would result in technical leveling
or technical transfusion. Price Waterhouse, 65 Comp. Gen. 205, supra;
Ford Aerospace & Communications Corp., B-200672, Dec. 19, 1980, 80-2 CPD
439. Although agencies are not obligated to afford all-encompassing
discussions, in other words, to address in express detail all inferior
or inadequate aspects of a proposal, agencies still generally must lead
offerors into the areas of their proposals which require amplification.
Furuno U.S.A., Inc., B-221814, supra. The record in this case,
significantly with respect to the two areas of its proposal which
ultimately were deemed to be unacceptable, belies Spacecom's assertion
that the agency failed to point out those deficiencies through
discussions. USIA states in its administrative report that Spacecom was
informed throughout the course of discussions that its INTELSAT approach
for domestic communications and its proposed HHS-N antenna location were
areas of significant agency concern. This is borne out by Spacecom's
own BAFO which, in detail, recognizes the potential problems associated
with the proposed implementation of these approaches. Thus, the extent
to which Spacecom addressed the agency's concerns in its BAFO refutes
the contention that the agency did not meet the general requirement of
leading the firm "into the areas of its proposal which required
amplifications." Price Waterhouse, B-222562, supra. Where perceived
proposal deficiencies have been communicated to an offeror, and the
offeror has been given the opportunity to submit a revised proposal,
this Office generally considers that meaningful discussions have taken
place. The Aerial Image Corp., Comcorps, B-219174, Sept. 23, 1985, 85-2
CPD 319. Determination of Technical Unacceptability In our view, then,
the determinative issue for resolution is whether the agency acted
properly in rejecting Spacecom's BAFO as technically unacceptable on the
ground that the firm continued to propose what the agency regarded as
high-risk approaches to satisfying the SIS requirements. It is well
settled that contracting agencies enjoy a reasonable degree of
discretion in determining the acceptability of submitted technical
proposals, and this Office, accordingly, will not substitute its
judgment for that of the agency by making an independent determination
unless the agency's action is shown to be unreasonable or in violation
of procurement statutes or regulations. APEC Technology Ltd., 65 Comp.
Gen. 230 (1986), 86-1 CPD 81. The protester clearly bears the burden to
show that the agency's technical evaluation was unreasonable. Id.;
Magnavox Advanced Products and Systems Co., B-215426, Feb. 6, 1985, 85-1
CPD 146. We do not believe that Spacecom has met that burden here. It
is clear from the record that USIA regarded the INTELSAT and HHS-N earth
station location approaches as elements of the proposal which posed
significant risks to successful implementation of the SIS requirements
because both concepts were dependent upon approval by outside
authorities. We have consistently viewed an agency's reasonable
concerns as to the levels of risk created by a particular proposal
approach as proper factors to be considered in the selection process.
See Consolidated Group, B-220050, Jan. 9, 1986, 86-1 CPD 21. Therefore,
an agency's judgment that a proposed approach presents high risk
generally will not be questioned unless the offeror has clearly
established the feasibility of the approach within the confines of the
proposal. See Laser Photonics, Inc. B-214356, Oct 29, 1984, 84-2 CPD
470; Ionics Inc., B-211180, Mar. 13, 1984, 84-1 CPD 290. Here,
although Spacecom repeatedly urged in its BAFO that the national
security-related aspects of the Voice of America mission would
eventually result in FCC approval of its INTELSAT concept for domestic
communications and would overcome any public opposition to placement to
the earth station antenna atop the HHS-N building, the statements in the
proposal were, in essence, nothing more than the firm's own belief and
cannot be read as providing the agency with firm assurances that its
proposal would allow for successful implementation of the SIS
requirements. Hence, we find no basis to question the agency's
determination that Spacecom's proposed approaches created unacceptable
risks. Consolidated Group, B-220050, supra. Spacecom further complains
that the agency acted improperly in rejecting its BAFO without further
discussions where the firm, in fact, had provided alternative approaches
in these areas. In this regard, Spacecom stated in its BAFO that it
would relinquish the INTELSAT approach in favor of DOMSAT use for
domestic communications--the current FCC policy--if a policy change
allowing for the former was not forthcoming from the FCC. Moreover,
Spacecom stated that it had identified alternative candidate sites in
Washington, D.C., for placement of the earth station antenna if local
authorization should not be obtained for placement on the HHS-N building
roof. Spacecom asserts that the agency was obligated to conduct further
discussion with regard to these alternative approaches before finding
the BAFO to be technically unacceptable. We emphasize, however, that a
BAFO is simply that--"a best and final offer"--and an offeror is
responsible for assuring that it submits just such an offer and should
not expect any further discussions once it has made a submission. Mount
Pleasant Hospital, B-222364, June 13, 1986, 86-1 CPD 549. It is USIA's
position that the firm failed to provide sufficient information in the
BAFO to establish the acceptability to these alternative approaches. It
is true, as Spacecom points out, that the elimination of a proposal from
the competitive range, thereby leaving a competitive range of one, is
improper where the record shows that the informational deficiencies in
the excluded proposal were not so material that a major revision would
have been required to make the proposal acceptable. Falcon Systems,
Inc., B-213661, June 22, 1984, 84-1 CPD 658. However, we find no such
impropriety here because it is clear from the BAFO itself that
Spacecom's alternative approaches were lacking in specifics to the
extent that the agency could not reasonably determine their
acceptability (the alternative approaches constituted only one page of
the firm's multi-volume BAFO), and we agree with USIA that a material
restructuring of the proposal would have been necessary to meet the SIS
requirements without high degrees of risk. It is well settled that an
agency should not permit on offeror to remedy major proposal defects
where the only manner of cure is by means of such an extensive revision.
Angstrom, Inc., 59 Comp. Gen. 588 (1980), 80-2 CPD 20; Midcoast
Aviation, Inc., B-223103, June 23, 1986, 86-1 CPD 577.
Post-BAFO Discussions USIA's subsequent post-BAFO discussions with
COMSAT cannot be viewed as converting a competitive procurement into a
sole-source acquisition. Although this Office will closely scrutinize
any determination that results in a competitive range of one, Falcon
Systems, Inc., B-213661, supra, our analysis here has revealed no
violation of the applicable procurement regulations. There is nothing
improper per se in an agency's making more than one competitive range
determination, and the fact that a firm's proposal was initially
included in the competitive range does not preclude the agency, upon
sufficient justification, from later excluding it from further award
consideration. Information Systems & Networks Corp., B-220661, Jan.
13, 1986, 86-1 CPD 30. As we have already concluded, there is no basis
to question the reasonableness of the agency's determination that
Spacecom's BAFO contained uncorrected deficient aspects that, in
consequence, rendered it technically unacceptable. Since the firm's
proposal no longer had a reasonable chance of being selected for award,
(noting as well that Spacecom's proposed price was more than twice that
of Comsat's) Spacecom, therefore, did not remain a competitive range
offeror after the evaluation of BAFOs. Id. The FAR, 48 C.F.R. 15.611
(c), provides that discussions should not be reopened after receipt of
BAFOs unless it is clearly in the government's best interest to do so,
and, if reopened, additional BAFOs shall be requested from "all offerors
still within the competitive range." USIA states that it conducted
post-BAFO discussions with Comsat to obtain certain technical and price
revisions in the best interests of the government, and further states
that the factors discussed would, in any event, have had no material
effect upon Comsat's selection for award over Spacecom. Regardless of
the nature and extent of these discussions, they were not legally
objectionable in the circumstances because only Comsat remained within
the competitive range. FAR, 48 C.F.R. 15.611 (c), supra. The only
downward revision in Comsat's price was a $750,000 reduction
unilaterally proposed by the firm representing less than 2 percent of
its offer. Moreover, we have held that negotiations after source
selection with the successful offeror to obtain a small reduction in
price are not improper. Environmental Enterprises, Inc., B-193090, Mar.
9, 1979, 79-1 CPD 168.
Price Analysis Spacecom asserts that the agency failed to conduct an
analysis of the proposals for purposes of determining price realism.
Here, we point out that the contemplated contract was a firm,
fixed-price, rather than a cost-reimbursement type, and although
contracting agencies must perform a cost realism analysis before
awarding the latter, see Norfolk Ship Systems, Inc., B-219404, Sept.
19, 1985, 85-2 CPD 309, there is no similar requirement with regard to a
firm, fixed-price contract. See Corporate Health Examiners, Inc.,
B-220399.2, June 16, 1986, 86-1 CPD 552. Nevertheless, it is within the
agency's discretion in a solicitation for a firm, fixed-price contract
to provide for a cost realism analysis for such purposes as measuring an
offeror's understanding of the requirements of a solicitation. Id.; Los
Angeles Community College District, B-207096.2, Aug. 8, 1983, 83-2 CPD
175.Strictly speaking, since Spacecom's proposal was found to be
technically unacceptable, there was no requirement that the agency
conduct any evaluation of its price proposal, as the firm was no longer
being considered for award. Progressive Learning Systems, B-218483,
July 23, 1985, 85-2 CPD 72. Spacecom is correct in noting that the RFP
provided at section M.3, as amended, that "price proposal, including
supporting cost information, will be evaluated to determine realism of
the proposal, probable cost to the government; and understanding of the
government requirements," and section L.3.1. clearly required the
submission of cost or pricing data. We cannot find from the record that
the agency performed a full analysis of the proposals to determine price
realism, although the agency, as also provided a section M.3, did
evaluate the proposals with respect to total aggregate price for
comparison purposes. However, since a price or cost analysis based on
cost or pricing data generally is concerned with whether an offeror's
prices are higher than warranted considering its costs, rather than
whether they are too low, Corporate Health Examiner, Inc., B-220399.2,
supra, a full analysis here likely would not have served to support
Spacecom's underlying contention that Comsat cannot implement the SIS
requirements at its offered price of $40.0 million. An assertion that an
offeror cannot perform at its offered price is a challenge to the
agency's determination that the offeror is a responsible contractor, and
this Office does not consider challenges to affirmative determinations
of responsibility except in limited circumstances which are not present
here. See Bobnreen Consultants, Inc., B-218214.4, Sept. 27, 1985, 85-2
CPD 558. The submission of a below cost or a low-profit offer, if that,
in fact, is what Comsat has done here, is not illegal and provides no
basis for challenging the award of a firm, fixed-price contract to a
responsible contractor, since it is the offeror's loss and not the
government's if the cost of performance exceeds the contract price.
Advanced Technology Systems, Inc., 64 Comp. Gen. 344 (1985), 85-1 CPD
315. We find no basis to question USIA's view that Spacecom's $84.5
million offered price was greatly overstated, rather than that comsat's
price was in any way understated for the work.USIA's award to Comsat, by
regulation, is a determination that the firm is responsible with respect
to that contract. Federal Acquisition Regulation, 48 C.F.R.
9.105-2(a)(1) (1985); Ameriko Maintenance Co., B-216247, Sept. 12,
1984, 84-2 CPD 287. Auction, Technical Leveling, Technical Transfusion
We find Spacecom's allegations that the agency created an auction
situation and engaged in impermissible technical leveling and/or
technical transfusion to be devoid of merit. An auction situation
arises when the agency, during the course of discussions, (1) indicates
to an offeror a cost or price that must be met for further
consideration; (ii) advises an offeror of its price standing relative
to another offeror; or (iii) otherwise furnishes information about
other offerors' prices. FAR, 48 C.F.R. 15.610 (d) (3). We find no
evidence in the record that the agency was involved in such improper
practices, and, more to the point, it is obvious that any knowledge by
Comsat of Spacecom's price relative to its own would have been of no
consequence where that price was more than $40 million higher. Such
information, even if revealed, would hardly have given the firm any
incentive to lower its price in order to enhance its competitive
standing. The allegation of improper auctioning is fundamentally
unreasonable in the circumstances. We reach a similar result with
respect to Spacecom's contention that the agency engaged in
impermissible technical leveling and/or technical transfusion.
"Technical leveling" involves helping an offeror to bring its proposal
up to the level of other proposals through successive rounds of
discussions, while "technical transfusion" is the government disclosure
of technical information pertaining to a proposal that results in the
improvement of a competitive proposal. FAR, 48 C.F.R. 15.610(d)(1) and
(d)(2); see also Price Waterhouse, B-222562, supra. Spacecom's
assertion that Comsat's proposal was somehow technically "leveled" is
not credible where Comsat's proposal always enjoyed a significant
scoring advantage in terms of its relative technical merit from the
beginning of the evaluation process. Technical leveling involves a
reverse of that situation, that is, an inferior proposal is improved
through repeated discussions whereby the agency improperly "coaches" the
offeror as to inherent weaknesses in the proposal stemming from the
offeror's own lack of diligence, competence, or inventiveness. See C&W
Equipment Co., B-220459, Mar. 17, 1986, 86-1 CPD 258. Since Comsat's
proposal was consistently judged to be superior, it could not have been
technically "leveled" with Spacecom's in the sense of the term. With
regard to Spacecom's allegation that technical transfusion occurred, the
firm, for example, points out that it had proposed the use of
commercially available, off-the-shelf equipment, and that this approach
only appeared for the first time in Comsat's BAFO. However, our review
reasonable establishes that this change in Comsat's proposal, which
affected only two limited areas (the firm, for the most part, had also
proposed the use of commercially available, off-the-shelf equipment in
its initial proposal) resulted from Comsat's particular decision not to
continue to propose the development if technically innovative equipment
in these two areas in the face of what it regarded as agency concern,
rather than from anything improperly conveyed by the agency during
discussions. C&W Equipment Co., B-220459, supra. On this point, as
well as others raised by Spacecom, we find no support for the firm's
allegation that technical transfusion occurred, especially given the
fact that the firm's proposal was ultimately rejected as technically
unacceptable. Finally, we reject Spacecom's contention that the agency
was biased in favor of Comsat's selection. Where a protester alleges
that procurement officials acted intentionally to preclude the protester
from receiving the contract award, the protester must submit virtually
irrefutable proof that the officials had a specific and malicious intent
to harm the protester, since procurement officials otherwise are
presumed to act in good faith, and prejudicial motives will not be
attributed to such officials on the basis of inference or supposition.
Rodgers-Cauthen Barton-Cureton, Inc., B-220722.2, Jan. 8, 1986, 86-1 CPD
19; Lear Siegler, Inc.--Reconsideration, B-217231.2, May 30, 1985, 85-1
CPD 613. Spacecom clearly has not met that burden here. The protest is
denied.
B-219355.4 Date: October 2, 1986 In the Matter of: City Wide Security Service, Inc.
66 Comp. Gen. 1
Procurement
Contractor Qualification
Licenses
State/local Laws
GAO Review
Allegation that firm does not comply with state and local licensing
requirements for providing guard services is a matter between the bidder
and state and local officials which does not affect the legality of the
award.
City Wide Security Service, Inc. (City), protests the Department of
Transportation's exercise of an option for security guard services under
a 1985 contract awarded Tecom Incorporated (Tecom) for base operational
support services. Under the terms of the contract, Tecom has been
providing all services, except security guard and firefighting services,
since October 1, 1985 and is to commence providing these services on
October 1, 1986. City contends that the original solicitation required
bidders to comply with all local laws and ordinances and that Tecom is
not licensed by the state of New Jersey to provide guard services. City
argues that exercise of the option will result in a violation of state
law and requests that Tecom be barred from providing these services. We
dismiss the protest.
The original IFB merely required that the successful bidder comply
with all state and local licensing requirements that might be
applicable. Where no specific license requirement is imposed as a
prerequisite to award, the contracting officer is free to make an award
without regard to whether the bidder is licensed under local law.
Cadillac Ambulance Service, Inc., B-220857, Nov. 1, 1985, 85-2 CPD 509.
Furthermore, we point out that a bidder's failure to comply with state
and local licensing requirements generally is a matter between the
bidder and state and local officials which does not affect the legality
of the contract award. 53 Comp. Gen. 51 (1973); 51 Comp. Gen. 377
(1971). Whether New Jersey's particular requirements would preclude
Alliance from performing is a decision to be made by state authorities,
and if New Jersey subsequently determines that a license is required,
the state may enforce its requirements, provided the application of
state law is not in conflict with federal laws or policies or does not
in any way interfere with the execution of federal powers. See Leslie
Miller, Inc. v. Arkansas, 352 U.S. 187 (1956). Should New Jersey's
enforcement of its requirements eventually preclude Tecom from
performing, Tecom then may be found in default and the contract
terminated. The award itself, at this point, however, is not improper.
51 Comp. Gen. 377, supra.
B-221594, 65 Comp. Gen. 912
Matter of: Riss International, September 29, 1986
Where a carrier issued a rate tender to the United States Government,
but the Military Traffic Management Command (MTMC) returned it to the
carrier because of formal defects and the carrier never refiled the
tender with MTMC, General Services Administration (GSA), in its audit
function, could not use the tender's rates as a basis for determining
overcharges on shipments tendered by components of the Department of
Defense (DOD). When MTMC, as the Department of Defense's traffic
manager, rejected the tender, it terminated the power of all DOD
agencies to accept the tender's terms. Therefore, GSA's deduction
action, taken on the basis of the rejected tender's rates, was improper.
Riss International (Riss), a motor carrier, asks the Comptroller
General to review deduction action taken by the General Services
Administration (GSA) to recover overcharges allegedly collected by Riss
for the transportation of numerous shipments by Department of Defense
components. The GSA's collection action was based on an audit
determination that lower rates offered in Riss Tender No. ICC 1544
(Tender 1544) were applicable. Riss, however, argues that Tender 1544
was not applicable because it had been rejected by the Department of
Defense. We agree with Riss and conclude that GSA's audit determination
was invalid.
Government Bill of Lading (GBL) No. S-5692241 /1/ illustrates the
material facts, which are not in dispute, and the erroneous audit
determination. The Army issued the GBL to Riss for the transportation
of 131 boxes of "Freight All Kinds," weighing 27,792 pounds, from
Plymouth, Indiana, to the new Cumberland Army Depot, Pennsylvania. Riss
received the shipment on September 7, 1983, and collected $942 for
transportation services, whereas GSA determined that the charges should
have been only $721.25 and collected the difference of $220.75 as
overcharges.
The basis for GSA's determination is Tender 1544. The tender shows
that Riss issued it to the United States Government, effective January
15, 1983, under 49 U.S.C. Section 10721 (1982).
Riss filed Tender 1544 with the Military Traffic Management Command
(MTMC) in January 1983. MTMC returned the tender to Riss, with MTMC
Form 25B, dated February 17, 1983, requesting revision concerning two
details -- clarification of point locator codes and whether rates shown
were in dollars and cents or cents only. Riss never refiled the tender
with MTMC. In addition to MTMC, the record shows that the tender was
sent to the Government Printing Office, the United States Postal
Service, and to GSA. Apparently the latter agencies did not return the
tender to Riss.
Riss contends that even though Tender 1544 was filed with GSA, that
agency, in its audit function, could not apply Tender 1544 rates to
shipments tendered to Riss by a DOD component because MTMC terminated
the offer by returning the tender to Riss on February 17, more than 6
months after the transportation was performed.
The GSA contends that MTMC's return of the tender did not constitute
a rejection of the offer since the defects cited on the Form 25 were not
major. GSA argues that the required Standard Point Locator Code
designations are required simply for use in MTMC's data processing, and
the question of whether the rates were intended as dollars and cents or
only cents relates to mere form. The foundation of GSA's audit position
is the principle that a tender represents a continuing offer empowering
the government to make a series of independent acceptances until
terminated by the carrier.
Under very similar circumstances we held that MTMC's return of a
carrier's tender operates as a rejection of the offer, which may not
later be accepted. See Starflight, Inc., B-212279, November 13, 1984,
modified on other grounds by Starflight, Inc., B-212279, September 2,
1986. We believe that decision is controlling here. In Starflight, as
here, MTMC returned the tender to the carrier for formal deficiencies.
We hold that, in the absence of evidence that MTMC approved the tender
before the transportation was performed, MTMC's reasons for returning a
carrier's tender are irrelevant, and the return terminates the power to
later accept the lower rates offered therein. Since the Commander,
MTMC, has the authority to perform all traffic management functions for
DOD, MTMC's act of returning the tender deprived all DOD components,
including the Army, from accepting its rates. See Military Traffic
Management Regulation DLAR 4500.3, paragraph 101004.
Our holding does not conflict with the rules that tenders are
continuing offers to enter into a series of contracts. We agree with
GSA that this is a well-established principle of long standing. See
O.K. Trucking Company, 53 Comp. Gen. 747 (1974); and Providence
Philadelphia Dispatch, Inc., B-189961, May 26, 1978; and 39 Comp. Gen.
352 (1959). However, the principle is inapplicable here because when
MTMC returned Tender 1544, the carrier's offer of lower rates terminated
and with it the power of all DOD agencies to later accept them, in the
absence of subsequent refiling and MTMC approval. Starflight, Inc.,
B-212279, September 2, 1986. Since the offer was terminated on February
17, the Army was without power to accept the rates on September 7.
We recognize that tenders offered to the government generally grant
the power to all government agencies to accept their rates. See Trans
County Van Lines, 52 Comp. Gen. 927 (1973). However, we agree with Riss
that even though Tender 1544 was issued to the United States Government
and Riss filed the tender with GSA, GSA could not apply the tender's
lower rates in its audit of DOD bills because MTMC as DOD's traffic
manager rejected the carrier's offer before any DOD transportation agenc
could accept its terms. /2/
Accordingly, GSA's audit determination was invalid, and all similar
claims arising from the controversy should be settled consistent with
this decision, in the absence of proof that Riss refiled the tender and
MTMC approved it.
(1) The GSA's report addressed two GBL shipments. The other
shipment, received by Riss on August 23, 1983, involved S-5694340.
(2) MTMC's rejection of Tender 1544, of course, would not affect its
application to shipments made by agencies not subject to the traffic
management jurisdiction of MTMC unless those agencies too had rejected
it.
B-221462, 65 Comp. Gen. 910
Matter of: Department of the Air Force - Reimbursement of Industrial
Fund Agency for Damage to Vehicle, September 29, 1986
Rule that a Federal agency or entity does not pay inter- or
intra-agency claims for damage to public property does not apply in the
case of a reimbursable or revolving fund. Air Force Industrial Fund
activity may therefore be reimbursed for damage to vehicles which it
loaned to another Air Force unit for use on a project unrelated to the
Fund's purpose.
The Acting Deputy Assistant Comptroller for Accounting and Finance,
Department of the Air Force, has requested our decision on whether the
San Antonio Real Property Maintenance Agency (SARPMA) should be
reimbursed for the cost of repairs to two of its vehicles damaged while
on loan to another Air Force unit. As explained below, we concluded
that reimbursement in this case is authorized.
SARPMA is an administrative subdivision of the Air Force Industrial
Fund established by the Secretary of Defense under the authority of 10
U.S.C. Section 2208 (1982). It loaned two of its pick-up trucks to a
base-level unit at Lackland Air Force Base, called the Prime Base
Engineering Emergency Force (BEEF) team, which needed them for a project
unrelated to SARPMA's mission. There was no formal agreement and no
provisions to reimburse SARPMA for use of the vehicles. The vehicles
were damaged while in the custody of the BEEF team. SARPMA sought to be
reimbursed for the repair costs ($650.07) from appropriations for the
project on which the trucks had been used. In view of the traditional
prohibition against inter- or intra-agency tort liability, the Office of
the Staff Judge Advocate, Air Force Accounting and Finance Center,
considered the matter sufficiently doubtful to warrant this decision.
The Air Force Industrial Fund, technically termed a "working capital
fund," is a type of revolving fund. Initially capitalized by Congress,
it provides services generally on a reimbursable basis. 10 U.S.C.
Section 2208(c). SARPMA provides real property maintenance services,
its primary customers being military bases. The issue in this case
arises because loaning the vehicles to the BEEF team was outside the
scope of the services SARPMA normally provides and thus not covered by
its standard reimbursement procedures.
Reimbursement to an Air Force Industrial Fund is based on a rate
which is stabilized for each fiscal year. /1/ Repair of Fund property
is generally classified as an indirect cost /2/ and factored into the
rate. Thus, if SARPMA cannot be reimbursed for the damage in this case,
the repair cost will be allocated among and borne by SARPMA's customers.
It has long been the rule that "where a Federal agency damages
property of another Federal agency, funds available to the first may not
be used to pay claims for damages by the second." 46 Comp. Gen. 586, 587
(1966). The rule is recognized in Air Force regulations (AFR 112-1,
para. 18-10). The prohibition applies equally to transactions between
elements of the same department or agency.
The prohibition is based primarily on the concept that "property of
the various agencies * * * is not the property of separate entities but
rather of the Government as a single entity, and there can be no
reimbursement by the Government for damages to or loss of its own
property." 46 Comp. Gen., supra, at 587. In cases involving the loan of
personal property, a further reason for the prohibition is that repair
of the damaged property upon its return to the lending agency will
benefit primarily the lending agency, and thus is not within the
purposes for which the appropriations of the borrowing agency were made.
E.g., 30 Comp. Gen. 295, 296 (1951). A major exception is where
reimbursement for damages has been provided for in an agreement under
the Economy Act (31 U.S.C. Section 1535) or similar statutory authority.
30 Comp. Gen. 295, supra.
It is our opinion, however, that even in the absence of an Economy
Act or similar agreement, the prohibition should not apply where the
fund that would be charged with the cost of repair if reimbursement were
not permitted is a reimbursable or revolving fund.
In 3 Comp. Gen. 74 (1923), we considered whether the Department of
the Interior should reimburse the Reclamation Fund for the use and
depreciation of supplies and equipment purchased and charged to the
Reclamation Fund, which the Department had used to conduct
investigations funded under another appropriation. In holding that the
Reclamation Fund should be reimbursed, we said:
The general rule is that where a branch of the service permits
the use of equipment by another there is no authority to demand a
return or compensation based on the use alone. (citation
omitted.) This applies equally with respect to interbureau
matters; however, the rule is predicated on appropriations not
reimbursable. The reclamation fund is reimbursable, and the use
of equipment purchased therefrom is on a somewhat different basis,
the equipment being an asset which should not be permitted to be
depreciated from use on other than objects for which the fund was
created. 3 Comp. Gen. at 75.
What we said in 3 Comp. Gen. 74 with respect to depreciation applies
equally, in our view, to the repair costs in this case. SARPMA's
customers should not bear the costs resulting from use of the vehicles
"on other than objects for which the fund was created."
Accordingly, we conclude that SARPMA should be reimbursed from the
appropriate Lackland account. The voucher submitted with the request
for decision in this case may therefore, if otherwise correct, be
certified for payment.
(1) Department of Defense Regulation 7410.4-R, ch. 9, sec. E (April
1982).
(2) Id., ch. 10, sec. I.6.
B-219013, 65 Comp. Gen. 906
Matter of: Gene Bassette, et al. - Seasonal Employees - Per Diem
Entitlement, September 29, 1986
Eleven seasonal employees of the Forest Service's Northern Region
claim per diem for a 3-month assignment to fight fires in the
Southwestern Region from April to July 1983. The Forest Service denied
per diem under the Northern Region's Supplement to Federal Travel
Regulations (FTR) para. 1-1.3 which provides that when a seasonal
employee is assigned to a new location for over 2 weeks, the new
location becomes the employee's official station. The denial of per
diem is sustained. The Supplement is a valid exercise of discretion and
is consistent with the FTR and our decisions.
This decision is in response to a request from Mr. C.E. Tipton,
Authorized Certifying Officer, Forest Service, United States Department
of Agriculture, as to whether 11 seasonal employees of the Forest
Service are entitled to per diem for approximately 3 months at a
seasonal worksite in Sacramento, New Mexico. /1/ For the reasons
hereafter stated, we conclude that per diem allowances may not be paid
the 11 seasonal employees for the 3-month tour of duty at Sacramento,
New Mexico.
After the 1982 fire season, the Southwestern Region of the Forest
Service decided to disband a fire crew from the Coronado National Forest
and establish a new crew at the Lincoln National Forest with its
official duty station at Sacramento, New Mexico, because of better
accessibility to fires. All members of the 1982 crew were given an
opportunity to relocate to the new site, but only 2 members of the
20-person crew chose to do so. The Director of the Forest Service's
Northern Region suggested that, rather than hire inexperienced
firefighters for the normal fire season of April 1 to July 15, 1983, the
vacant positions be filled with the Northern Region's unemployed
smokejumpers who traditionally are not employed by the Forest Service
during this time period. The Northern Region's fire season begins later
in the year than the Southwestern Region's. The Southwestern Region
accepted the proposal provided the employees were reassigned, as the
cost of a detail in excess of 100 days would be prohibitive.
The Northern Region's smokejumpers were GSA-6's with career or career
conditional appointments and a guaranteed tour of duty of 6 pay periods
(12 weeks) per year. They were in intermittent status for the balance
of the year and could be called to duty. Rather than reappoint the
smokejumpers as ground attack firefighters (GS-3 or GS-4) for the period
of reassignment, it was decided to keep them under their regular
appointments at GS-6 so that they could be activated into a smokejumper
crew if necessary.
The actual assignment began on March 20, 1983, when 14 smokejumpers
(11 of whom have filed a claim) reported for duty at Missoula, Montana.
They received 1-week refresher smokejumping training. On March 28,
1983, under written travel orders, they departed the Northern Region for
transfer to Sacramento, New Mexico. Personnel actions were processed
establishing Sacramento as the new official duty station effective April
3, 1983. All 11 claimants worked out of the Sacramento Work Center as
members of the firefighting crew until they returned to the Northern
Region on July 9 and 10. At that time, their official duty station was
changed by personnel action to various sub-bases in the Northern Region.
The transferred employees were volunteers. They were given prior
notice that they would not receive per diem and they were required to
sign a waiver foregoing per diem benefits before they could be selected.
The claimants state that they objected to the waiver requirement, but
signed under duress because they needed the early season employment.
Claimants state that they were advised by management officials that
housing at Sacramento would be provided at no cost, but on arrival they
were told they would have to pay for their quarters. Also when they
arrived they discovered that groceries and supplies could be obtained
only at Alamagordo, New Mexico, a 3-hour round trip over poor roads.
They were not paid per diem while at Sacramento, but they did receive it
when they traveled to fight fires away from Sacramento and also for
their travel to and from Sacramento.
The claimants contend they were on temporary duty at Sacramento while
away from their regular duty station and are, therefore, entitled to per
diem for that period. They believe their duty station was unreasonably
changed by the Forest Service specifically to deny them per diem. They
also feel that they were coerced into signing the "waiver" of per diem.
Finally, they were disgruntled because another group of Missoula
smokejumpers detailed to Silver City, New Mexico, for 3 months was
granted per diem.
The attorney for the 11 claimants argues that Missoula, Montana, was
their official duty station during their 1983 detail to Sacramento, New
Mexico, because that is where they spent the major part of their time.
He cites our decisions for the longstanding rule that the official
station of an employee is a matter of fact and not merely administrative
designation and that it is the place where the employee performs the
major part of his duties and is expected to spend the greater part of
his time. Gretchen Ernst, B-192838, March 16, 1979. See also 32 Comp.
Gen. 87 (1952) and 58 Comp. Gen. 744 (1979).
The attorney also argues that our decisions have placed great weight
on the duration of an assignment (33 Comp. Gen. 98 (1953)) and that the
3 months involved here was well within the duration reasonably
considered to be temporary (36 Comp. Gen. 757 (1957) and 57 Comp. Gen.
147 (1977)). Therefore, he concludes that under 5 U.S.C. Section
5702(a) and the Federal Travel Regulations, the claimants are entitled
to per diem for the detail period.
The Forest Service contends that Sacramento, New Mexico, was the
employees' official duty station and that they may not be paid per diem.
In the Forest Service's view, the critical issue is whether it can
distinguish between the duration of seasonal and permanent appointments
when designating an official station.
The Forest Service points out that the smokejumpers were seasonal
employees with a guaranteed duty tour of 6 pay periods (12 weeks) of
employment each year and were in intermittent status for the rest of the
year. The decision to relocate these employees to Sacramento was made
in accordance with the Northern Region's Supplement to the Federal
Travel Regulations (FTR), para. 1-1.3. The Suppplement provides for all
temporary and WAE (When Actually Employed) employees that:
Assignments away from the official station planned to exceed 2
weeks at one location will be considered as reassignment. This
new location will be established as the official duty station by
personnel action.
The Northern Region's Supplement to FTR 1-1.3 has been in effect
since 1977. The Forest Service states that, following a series of
congressional inquiries, there was a clear need to clarify for seasonal
employees what constitutes a change of station versus a detail for
temporary duty. The resulting Supplement was developed with input and
concurrence from the unions and from management officials and, according
to the Forest Service, has worked well since then without complaints or
grievances.
The Forest Service does not take issue with our decisions on the
duration of temporary duty assignments cited by the claimants, but
points out that these decisions pertain to permanent, not seasonal,
employees and that the Northern Region's Supplement to the FTR
recognizes the essential difference between the duration of seasonal and
permanent appointments.
As to the claimants' complaint about the smokejumpers detailed to
Silver City who did receive per diem, the Forest Service states that
those smokejumpers, in contrast to claimants, were essentially full-time
employees who spent the greater part of their time in the Northern
Region. They were not seasonal employees and were covered by different
regulations.
We must agree with the Forest Service on this matter because we are
unable to find that the Northern Region's Supplement to paragraph 1-1.3
of the Federal Travel Regulations, FPMR 101-7, incorp. by ref., 41
C.F.R. Section 101-7.003 (1985) (FTR), is arbitrary, capricious, or an
abuse of discretion. The Supplement is consistent with the governing
Federal Travel Regulations and with our decisions.
As recognized by both parties, this Office has long held that the
location of an employee's official duty station is a question of fact,
not limited by the agency's designation, to be determined from the
orders directing the assignment, and from the nature and duration of the
assignment. Frederick C. Welch, 62 Comp. Gen. 80 (1982). We have
stated that the duration and nature of the duties assigned are of
particular importance in making the determination of whether an
assignment to a particular duty station is a permanent change of
station. 36 Comp. Gen. 757 (1957); 33 Comp. Gen. 98 (1953). We have
also determined that there is no hard and fast rule as to the length of
time which an employee may be entitled to subsistence at a particular
place. It is dependent not so much on the length of time as upon the
nature of the duties and whether, as a matter of fact, that place
constitutes his permanent duty station or a temporary assignment. 18
Comp. Gen. 423, 424 (1938). The actual facts in each case are
controlling.
The length of the claimants' assignment to Sacramento (approximately
3 months) would not be of such duration as to raise a prima facie
question concerning the validity of an agency designation as temporary
duty. However, we have recently recognized the significant difference
between permanent employees and seasonal employees for per diem
purposes. In Daisy Levine, 63 Comp. Gen. 225 (1984), the Department of
the Interior had hired seasonal employees to serve approximately 5
months beginning in April 1983 on an archeological field survey at Chaco
Canyon, New Mexico. We held that, since the seasonal employees were
assigned to duty and performed their actual work at Chaco Canyon, it was
their official duty station for purposes of 5 U.S.C. Section 5702 and
payment of per diem there was not authorized.
Similarly, in the present case, we conclude that the Sacramento Work
Center was properly designated as the smokejumpers' official station for
the period in question since they performed their actual duties there.
As seasonal employees, they were subject to the Northern Region's
Supplement to FTR para. 1-1.3. Since the assignment to the Southwestern
Region was for more than 2 weeks, the Forest Service properly designated
the Sacramento Work Center as their official station for the period of
the assignment.
Accordingly, the claimants are not entitled to per diem payments for
the 3-month period in question.
(1) The 11 employees are: Gene L. Bassette, Michael J. Brick, Scott
W. Chehock, Kenneth W. Heare, Larry L. Lackner, Philip A. Mason, M.
Bradley Morigeau, Donald C. Rees, James W. Stephens, Ernest R. Trujillo,
and Everett A. Weniger.
B-218645, 65 Comp. Gen. 900
Matter of: Thomas D. Mulder - Relocation Expenses - Inter-Agency
Transfer, September 29, 1986
An employee involved in an inter-agency transfer in the interest of
the government without a break in service, which also involved vested
overseas return travel rights from Alaska, is entitled to relocation
expenses under 5 U.S.C. 5724 and 5724a. Milton J. Parsons, 58 Comp.
Gen. 783 (1979), distinguished.
An employee transferred in the interest of the government was not
issued travel orders. However, travel orders are not essential for
relocation expense reimbursement. While the issuance of travel orders
demonstrates an agency's intention to transfer an employee, the absence
of such orders is not fatal to those relocation expense reimbursement
rights if there is other objective evidence of that transfer intention.
Orville H. Myers, 57 Comp. Gen. 447 (1978).
An employee transferred in the interest of the government did not
execute a service agreement incident to that transfer. However, lack of
such an agreement does not defeat relocation expense reimbursement. The
statutory condition to payment of relocation expenses incident to such a
transfer is that the employee remain in government service without a
break in service for a minimum of 12 months following transfer. So long
as that condition is met, relocation expenses may be paid. Baltazar A.
Villarreal, B-214244, May 22, 1984. Time with a particular agency is
not a condition precedent to relocation expense reimbursement. Finn. v.
United States, 192 Ct. Cl. 814 (1970).
Ordinarily, all relocation expense reimbursements under 5 U.S.C. 5724
and 5724a associated with an inter-agency transfer are the sole
responsibility of the gaining agency. 5 U.S.C. 5724(e). However, where
an employee also has vested return travel rights under 5 U.S.C. 5722,
these are to be paid by the losing agency so long as return travel is
performed before the transfer is effected. Milton G. Parsons, 58 Comp.
Gen. 783 (1979); 46 Comp. Gen. 628 (1968).
This decision is in response to a request from the Director, Fiscal
and Accounting Management, Forest Service, United States Department of
Agriculture. It involves several questions concerning the entitlement
of a Forest Service employee, Mr. Thomas D. Mulder, to be reimbursed for
various relocation expenses incident to several inter-agency transfers.
For the reasons stated hereafter, we conclude that Mr. Mulder is
eligible for the full range of relocation expense payments under 5
U.S.C. Sections 5724 and 5724a. We also conclude that the Bonneville
Power Administration (BPA), to which Mr. Mulder transferred upon return
from service with the Interior Department in Alaska, is responsible for
payment of Mr. Mulder's expenses under 5 U.S.C. Sections 5724 and 5724a.
However, Interior remains liable for the portion of those expenses
representing Mr. Mulder's return travel benefits under 5 U.S.C. Section
5722.
Mr. Thomas D. Mulder was an employee of the Minerals Management
Service (MMS), Department of the Interior, in 1983, stationed in
Anchorage, Alaska. On December 2, 1983, he was offered and accepted a
position with the Bureau of Land Management (BLM), Department of the
Interior, in Salem, Oregon, to be effective December 11, 1983. At the
time he accepted that position, he had completed his agreed upon tour of
duty with MMS in Alaska and, thus, under the provisions of 5 U.S.C.
Section 5722(a)(2) (1982), was entitled to return travel benefits at the
expense of MMS.
On December 6, 1983, prior to performing return travel, Mr. Mulder
received a second offer, this time from BPA, Department of Energy, for a
position in Portland, Oregon. BPA informed him that payment of travel
expenses and shipment of household goods was not authorized. Mr.
Mulder, in turn, informed BPA of his acceptance of a job with BLM and
that it carried with it transfer entitlement rights. According to Mr.
Mulder, BPA then offered to at least match the transfer benefit offer
made by BLM. Mr. Mulder cancelled his acceptance of the BLM position,
accepted the BPA position, and began to arrange his move to Portland,
Oregon.
On December 9, 1983, Mr. Mulder left Anchorage, Alaska, and he
arrived in Portland, Oregon, on December 15, 1983. He was terminated by
MMS effective December 24, 1983, and appointed by BPA effective December
25, 1983. Since the Christmas legal holiday in 1983 was Monday,
December 26, he first reported for duty at the BPA office in Portland on
Tuesday, December 27. No travel authorization was issued to Mr. Mulder
by either MMS or BPA. He was informed by BPA that a travel
authorization would not be issued until his old agency, MMS, returned a
Memorandum of Understanding to BPA regarding MMS's agreement to
reimburse BPA 50 percent of the expenses incurred by BPA incident to his
transfer. That Memorandum of Understanding, prepared by BPA, was agreed
to by MMS and returned to BPA on December 30, 1983. It provided in
part:
1. Mr. Mulder will be entitled to all the normal expense
reimbursements provided for Federal employees associated with
permanent change of duty station.
On January 11, 1984, while in the employ of BPA, Mr. Mulder received
an offer of a position from the Forest Service. Since he had yet to be
reimbursed for the expenses incurred as a result of his transfer from
Anchorage to Portland incident to his employment by BPA, he expressed
concern to the Forest Service as to the effect his acceptance of their
offer would have on his entitlement to expense reimbursement for his
move from Anchorage to Portland. Based on the Forest Service's
assurances that his acceptance and transfer to the Forest Service from
BPA would not adversely affect his reimbursement rights, Mr. Mulder
accepted the position. Effective January 22, 1984, he transferred to
the Forest Service for duty in its Wind River Ranger District, Gifford
Pinchot National Forest, Oregon.
There is considerable confusion as to what entitlements Mr. Mulder
has as a result of the above transactions and which agency or agencies
are responsible to pay Mr. Mulder's entitlements. Initially, BPA agreed
to pay all Mr. Mulder's normal relocation expenses incident to his
transfer to BPA and, upon payment of those expenses, to bill MMS for 50
percent of that cost. However, the submission points out that, based on
our decision Milton G. Parsons, 58 Comp. Gen. 783 (1979), MMS determined
that its responsibility was limited to Mr. Mulder's return travel
expenses to Portland, Oregon, but not the other expenses agreed to by
BPA, such as real estate expenses, miscellaneous expenses, and temporary
quarters subsistence expenses.
We also understand that, following Mr. Mulder's transfer from BPA to
the Forest Service, BPA, in spite of its agreement to provide normal
relocation expense reimbursement, has refused to reimburse Mr. Mulder
for any of the expenses he incurred. The BPA's position is that, since
Mr. Mulder was employed by it for such a short period of time, BPA
should not have to incur expenses from which it did not derive any
benefit by virtue of the transfer. Further, BPA asserts that since it
did not appoint Mr. Mulder until after he arrived in Portland, all of
his travel from Alaska to Portland constituted return travel, the
expenses of which must be borne by MMS.
Because of the several inter-agency transfers involved, the lack of
travel orders and an executed service agreement, as well as the
perceived limitation imposed on Mr. Mulder's travel and relocation
expense reimbursement rights by our decision in Parsons, above, the
Forest Service is uncertain as to the extent of his travel and
relocation expense rights and the agency or agencies which are
responsible for that reimbursement. Based on that uncertainty, the
Forest Service has requested our decision on these questions.
The initial question concerns the extent of Mr. Mulder's relocation
reimbursement rights in the first instance. The basic provisions of law
governing transfer travel and relocation rights are contained in 5
U.S.C. Sections 5724 and 5724a (1982). Subsection (a) of section 5724
authorizes reimbursement of the travel expenses incurred by a government
employee who is "transferred in the interest of the Government from one
official duty station or agency to another for permanent duty," as well
as the transportation expenses of his immediate family and movement of
his household goods. Those employees who qualify for reimbursement
under section 5724 also become entitled under 5 U.S.C. Section 5724a to
the payment of family per diem, temporary quarters subsistence expenses,
house sale and purchase expenses, and other relocation expenses.
All expense reimbursement rights associated with relocation travel
between duty stations where permanent duty is to be performed at the new
duty station come within the purview of 5 U.S.C. Sections 5724 and
5724a. The only statutory limitations on those rights are that the
transfer must be (1) in the interest of the government, and (2) without
a break in service. /1/ Further, if the transfer is between agencies, 5
U.S.C. Section 5724(e) mandates that " * * * the agency to which * * *
(an employee) transfers pays the expenses authorized by this section.
In contrast to the above, 5 U.S.C. Section 5724(d) provides that when
an employee is transferred to a post of duty outside the continental
United States, his travel entitlements to that location and his return
travel "shall be allowed to the same extent and with the same
limitations prescribed for a new appointee under * * * (5 U.S.C. Section
5722)." Section 5722 provides, in part:
(a) Under such regulations as the President may prescribe * * *
an agency may pay from its appropriations --
(1) travel expenses of a new appointee and transportation
expenses of his immediate family and his household goods and
personal effects from the place of actual residence at the time of
appointment to the place of employment outside the continental
United States; and
(2) these expenses on the return of an employee from his post
of duty outside the continental United States to the place of his
actual residence at the time of assignment to duty outside the
United States.
It is clear that Mr. Mulder is entitled to return travel and
transportation expenses under 5 U.S.C. Section 5722 by virtue of his
service with MMS in Alaska. The question is whether he is also entitled
to the full range of relocation benefits under 5 U.S.C. Sections 5724
and 5724a. /2/ We conclude that he is so entitled.
In the present case, Mr. Mulder made an inter-agency transfer from
Anchorage, Alaska, to Portland, Oregon. Since his transfer was in the
interest of the government and occurred without a break in service, Mr.
Mulder meets the statutory conditions for entitlement to the full range
of relocation benefits in 5 U.S.C. Section 5724 and 5724a. See Richard
E. Whitmer, B-196002, March 18, 1980. We find no basis for
distinguishing between the relocation rights of an employee who makes an
inter-agency transfer where both posts of duty are in the continental
United States and an inter-agency transfer involving a return from a
post of duty in Hawaii or Alaska to a post of duty in the continental
United States.
Contrary to BPA's suggestion, our decision in Milton G. Parsons,
above, does not limit Mr. Mulder's relocation entitlements under 5
U.S.C. Sections 5724 and 5724a. Indeed, this decision deals only with
the allocation of liability between a transferee and transferor agency
for the payment of return travel and transportation expenses under 5
U.S.C. Section 5722, discussed previously. Parsons applied the rule
first established in 46 Comp. Gen. 628 (1968) and followed in subsequent
decisions /3/ that when an employee returns to the continental United
States prior to transfer, the transferor (losing) agency must pay the
employee's return travel expenses; however, when the transfer is
effected before the employee's return to the continental United States,
the transferee (gaining) agency is liable for such expenses. The
Parsons line of decisions has no bearing on a transferred employee's
entitlement to relocation benefits under 5 U.S.C. Sections 5724 and
5724a. Cf., William F. Krone, supra, at pages 5-6, which recognized
that payment of relocation benefits under these authorities was a matter
separate from the question of liability for return travel expenses under
5 U.S.C. Section 5722.
The absence of travel orders and a signed service agreement does not
defeat Mr. Mulder's entitlement to relocation expenses. We have held
that, while travel orders are generally recognized as being the
authorizing document upon which reimbursement of transfer expenses may
be allowed, the absence of travel orders is not fatal if there is other
objective evidence of an intent to transfer the employee. Orville H.
Myers, 57 Comp. Gen. 447 (1978), and decisions cited; see also James F.
Hansard, B-201732, June 30, 1981. In this case there is no question
regarding the intent to transfer Mr. Mulder.
Likewise, we have held that the absence of a signed service agreement
is not fatal to payment of relocation expenses where the employee in
fact performs the required minimum service. Baltazar A. Villarreal,
B-214244, May 22, 1984, and decisions cited. In this regard, time with
a particular agency is not a condition precedent to relocation expense
reimbursement. Finn v. United States, 192 Ct. Cl. 814 (1970). Thus, an
employee need only remain in government service without a break in
service for a minimum of 12 months following the transfer for which
reimbursement is claimed. Mr. Mulder has performed well in excess of
the required 1 year's minimum federal service following his transfer to
BPA, most of it being with the Forest Service.
Having concluded that Mr. Mulder is entitled to the full range of
relocation benefits, the remaining question is which agency's
appropriations are to be charged for these expenses?
The first sentence of 5 U.S.C. Section 5724(e) provides:
When an employee transfers from one agency to another, the
agency to which he transfers pays the expenses authorized by this
section. * * *
This language clearly serves to place responsibility for
reimbursement of employee relocation expenses upon the gaining agency.
Therefore, since Mr. Mulder was transferred to BPA, that agency has the
basic responsibility under 5 U.S.C. Section 5724(e), as the gaining
agency, to reimburse Mr. Mulder for the travel and relocation benefits
attendant to his permanent change-of-station transfer. To the extent
applicable, these benefits include travel and transportation for the
employee and his family, their travel per diem, movement of household
goods, real estate sales expenses, a miscellaneous expense allowance,
and temporary quarters subsistence expenses. While Mr. Mulder spent
only 4 weeks with BPA, such a brief period of service has no bearing
upon BPA's payment obligation under the plain terms of section 5724(e).
As noted previously, however, under the rule applied in the Parsons
line of decisions, MMS remains liable for that portion of Mr. Mulder's
expenses which represent return travel and transportation benefits
payable under 5 U.S.C. Section 5722. This is because Mr. Mulder's
transfer to BPA was effective after he returned from Alaska.
(1) As it relates to real estate transaction expenses, 5 U.S.C.
Section 5724a(a)(4) requires that the old and new duty stations must be
within the United States (including Alaska), its territories or
possessions, the Commonwealth of Puerto Rico, or the Canal Zone.
(2) An employee's return travel expense reimbursement rights under 5
U.S.C. Section 5722 are significantly more limited than those under 5
U.S.C. Sections 5724 and 5724a. While an employee is eligible under 5
U.S.C. Sections 5724 and 5724a for the full range of relocation expense
reimbursements (including those payable under 5 U.S.C. Section 5722),
items such as family per diem, cost of househunting, subsistence while
occupying temporary quarters, miscellaneous expense allowance, and
residence sale and purchase expenses are not authorized under 5 U.S.C.
Section 5722. See FTR para. 2-1.5. See also Dr. Arnold Krochmal,
B-213730, April 17, 1984.
(3) See, in addition to Parsons, B-163364, June 27, 1968; 51 Comp.
Gen. 14 (1971); B-170639, July 29, 1971; and William F. Krone,
B-213855, May 31, 1984.
B-217181, 65 Comp. Gen. 893
Matter of: Termination of Claims Against Federal Civilian and
Military Personnel Based on Costs of Collection, September 29, 1986
Agencies may, on a case-by-case basis, take the anticipated costs of
required administrative hearings into consideration when determining
whether to compromise or terminate collection of debts owed to the
United States pursuant to the Federal Claims Collection Standards, 4
C.F.R. ch. II. However, those costs (like other kinds of administrative
costs) should be included only when there is a substantial likelihood
that they will actually be incurred in the particular case.
Agencies should not consider the anticipated costs of administrative
hearings or reviews when establishing minimum debt amounts and points of
diminishing returns for their debt collection programs.
Agencies may, without conducting cost studies, provide that debts of
$1 or less that are owed to the United States by Federal civilian and
military personnel need not be collected. Similarly, refunds of $1 or
less that are owed to such personnel need not be paid, unless a specific
claim for the refund is made.
Questions have arisen concerning the authority of Government
agencies, under the Federal Claims Collection Act of 1966 (as amended
and codified in 31 U.S.C. ch. 37 (1982)), to terminate the collection of
debts owed the United States. Two agencies have asked that we clarify
the extent to which that authority applies to debts owed by Government
employees. /1/
For the reasons set forth below, we conclude that:
-- When determining whether to compromise or terminate the
collection of debts owed by Federal employees, agencies may, on a
case-by-case basis, consider the costs of providing administrative
due process-styled procedures that are required by law, including
oral or paper hearings and other procedures required by provisions
of the Debt Collection Act of 1982.
-- Agency debt collection policies may include realistic points
of diminishing returns and minimize debt amounts (beyond which
collection need not be undertaken) for debts owed the United
States by Federal employees. However, agencies may not consider
the anticipated costs of administrative due process-styled
procedures when establishing those policies.
The DOT Proposal. The Director of Financial Management of the
Department of Transportation (DOT) seeks our views regarding a draft
change to DOT collection procedures. According to its submission, DOT
presently "pursues all collection and refund actions regardless of the
amounts involved." DOT observes that, when the amounts involved are
"nominal," DOT's policy "results in resource investments which cannot be
justified." For this reason, DOT is considering modifying its policies
to state that:
(1) Operating administrations shall not initiate collection
action of $1 or less on the assumption, without cost studies, that
collection costs will always exceed the amount recoverable. They
may, however, on their own initiative, establish higher minimums
provided that the dollar figure is reasonable and supported by
cost studies.
(2) The dollar figures and criteria provided for collections
are also relevant in the case of refunds with one exception.
Refunds shall be processed, regardless of the amount involved,
when a specific claim is made.
DOT notes that GAO has previously endorsed similar proposals
regarding debts owed by persons other than current Government employees.
E.g., 58 Comp. Gen. 372 (1979). The question is whether the same
policy may be legally applied to debts and refunds involving current
Federal employees.
The DOE Inquiry. The Department of Energy (DOE) asks whether, in
view of the procedural requirements imposed on the process of salary
offset by the Debt Collection Act of 1982 (DCA) (Pub. L. No. 97-365,
Section 5, 96 Stat. 1749, 1751-52), agencies may terminate the
collection of debts owed by employees when the amounts to be recovered
would be exceeded by the costs of conducting administrative hearings
required by law. The DOE submission notes that the Debt Collection Act
of 1982 requires agencies to accord employees with certain due
process-styled procedures prior to taking salary offsets under 5 U.S.C.
Section 5514. DOE makes the following argument:
Many of the hearings that are planned in (DOE), will result in
costs in excess of the debt. In the past, the Comptroller General
has held that termination is not authorized in overpayment cases
where payroll withholding under 5 U.S.C. 5514 is available for
remedy. However, with the current revision to 5 U.S.C. 5514 and
the additional costs of conducting hearings, reconsideration of
this position is necessary.
(DOE believes) that in the interest of economy, hearings of
this type should have a "diminishing returns" standard applied to
ensure efficient use of resources in carrying out the debt
collection program. By this we do not mean that an employee's
right to a hearing hinges on the amount of the indebtedness;
rather, the Federal Government should have the right to terminate
collection activity when it is cost effective to do so. * * *
In 1966, Congress passed the Federal Claims Collection Act (FCCA) to
require Government agencies to administratively attempt to collect all
debts owed the United States. The FCCA also gave agencies limited
authority to suspend, compromise, and terminate collection action on
certain types of claims that do not exceed $20,000. Among the criteria
specified in the FCCA for the exercise of this authority is a statement
that agencies should consider whether "the cost of collecting the claim
is likely to exceed the amount of recovery." /2/ The FCCA is implemented
in joint regulations -- the Federal Claims Collection Standards (FCCS),
4 C.F.R. ch. II (1985) -- issued by GAO and the Department of Justice.
Unless another statute either specifies different procedures to be
followed in collecting debts under it, or authorizes an agency to set
different procedures in its regulations (and the agency does so), each
agency's collection activities are required to be consistent with the
FCCS. /3/
At the time of the FCCA's enactment, agencies were already authorized
by a number of statutes to take salary offsets, that is, to make
involuntary deductions from an employee's pay in order to collect debts
owed to the United States. /4/ Few of those statutes specified what (if
any) procedures were to be followed by the Government when it took
salary offset under them. However, in 1982, Congress passed the DCA to
"put some teeth into Federal (debt) collection efforts" by giving the
Government more of "the tools it needs to collect those debts, while
safeguarding the legitimate rights of privacy and due process of
debtors." /5/ Section 5 of the DCA amended 5 U.S.C. Section 5514 to
expand the number and type of debts that can be collected by salary
offset. /6/ Section 10 of the DCA amended the FCCA to include a
provision concerning administrative offset against debtors who are not
subject to more specific statutory offset authority. /7/ In both cases,
however, the DCA in keeping with its stated purposes also imposed
specific due process-styled procedures to be followed, prior to taking
offset under those provisions. The procedures dictated by those
sections, though somewhat different in their details, require the
Government to notify debtors of the amount and existence of their debts,
and to afford them opportunities for oral or paper hearings, as
appropriate. /8/
In addition, GAO has consistently expressed the view that agencies
should establish "minimum debt amounts" and realistic "points of
diminishing returns" in their debt collection activities. /9/ Both
concepts derive from the notion of cost effectiveness -- that is,
agencies should not spend more money to attempt to collect a debt than
is likely to be recovered on it.
The term "minimum debt amounts" refers to the designation of
categorical thresholds beneath which collection action need not be
initiated because the amounts of the debts in that class are so small
(in relation to the costs of attempting any collection efforts) that it
would not be cost effective to make any effort to collect those debts.
Except for nominal amounts, minimum debt amounts should be supported by
cost studies. /10/ "Diminishing returns" refers to an agency's
designation of thresholds at which the agency will discontinue
collection efforts (already initiated) when it appears that for that
class of debts, the costs of additional collection actions would exceed
the amounts likely to be recovered. For example, initial demand letters
may be relatively inexpensive to prepare and send, even when compared to
the value of very small debts. However, if the debtors refuse to pay in
response to the initial letters, the small size of those debts may not
justify further collection actions.
It will be seen from this brief summary that in addressing the
requests in this case, we are dealing with two conceptually related but
nevertheless different things: (1) the authority to compromise a claim
or terminate collection action on a case-by-case basis, and (2) the
authority to establish "minimum debt amounts" and "points of diminishing
returns" to be applied categorically.
1. Compromise/Termination
The FCCS recognize the concept of cost-effectiveness with respect to
both compromise and termination. Thus, an agency may compromise a claim
"if the cost of collecting the claim does not justify the enforced
collection of the full amount." 4 C.F.R. Section 103.4. Similarly, an
agency may terminate collection action "when it is likely that the cost
of further collection action will exceed the amount recoverable
thereby." 4 C.F.R. Section 104.3(c). The question has arisen frequently
in our previous decisions whether this authority applies to debtors who
are currently employees or military members of the Federal Government.
Viewed in the aggregate, the thrust of our prior decisions in this
area is that, while the statutory authority to compromise or terminate
applies to all debtors, some of the specific criteria in the FCCS (e.g.,
diminishing returns, 4 C.F.R. Section 104.3(c)) would rarely if ever
apply in the case of current Federal employees. /11/ As noted above,
the DCA and its implementing regulations (FCCS and Subpart K) now
require Federal agencies to afford debtors with certain procedural
rights, including notice and an opportunity to be heard (through either
an oral or a paper hearing) prior to taking offset. Some of these
procedural requirements necessarily entail significant administrative
costs. Thus, as DOE suggests, these new developments in the law warrant
reconsideration of whether agencies may, if the costs of administrative
procedures required by law would exceed the amounts likely to be
recovered, compromise or terminate collection, with regard to debts owed
by Federal employees who are subject to salary offset.
We think it is legitimate for agencies to take the cost of required
administrative procedures into account when evaluating debt collection
options. We also think it is fundamental that agencies should generally
terminate collection when the costs of collection would exceed the
amount to be recovered. We say "generally," because there may be cases
in which sound countervailing Government policies dictate that
collection be attempted, despite the costs. For example, it may be
desirable for the agency to disregard the costs of collection when it
wishes to "set an example," and thereby discourage or deter other
persons from incurring similar debts or resisting payment of them. /12/
Consequently, we think that agencies may (but are not required to)
take the costs of administrative procedures required by law into account
when deciding whether to terminate the collection of debts. This holds
true for all kinds of debtors, including Federal employees. We stress,
however, that these costs constitute only one of the factors to be
considered in the agency's exercise of sound discretion under the FCCS.
These conclusions are consistent with advice that GAO and the Justice
Department have already issued regarding the authority to compromise
debts under section 103.4 of the FCCS. When the FCCS were promulgated,
the following guidance was included in the Supplemental Information
Statement that accompanied the final regulations:
(A) Federal agency queried whether the cost of collecting a
claim for purposes of Section 103.4 includes the cost of various
administrative hearings and appeals, such as a pre-offset oral
hearing where required or an appeal from an audit disallowance.
In brief, the answer is yes, and we think the existing language is
sufficient to cover the desired ground. However, we caution
agencies to be realistic in their estimation of costs. Inclusion
of an item should be triggered by a substantial likelihood that
the cost will actually be incurred in the particular case, not
merely because it is vaguely possible. With rare exceptions, the
cost of a pre-offset oral hearing will normally not be relevant
for purposes of (Section 102.13(d)). 49 Fed. Reg. 8889, 8895
(1985). /13/
The same caveats applicable to compromise apply also to termination.
For example, there must be a substantial likelihood that the particular
type of cost will be incurred in the particular case before that cost
may serve as a basis for termination. Moreover, although agencies must
accord debtors with their full procedural rights, agencies should take
all necessary and appropriate steps to assure that this is done in the
most efficient and cost-effective manner, so that when such costs are
taken into consideration, they are as accurate, realistic, and as
minimal as possible. Otherwise, the viability of the Government's debt
collection programs could be jeopardized.
3. Minimum Debt Amounts/Diminishing Returns
What we have said thus far applies to case-by-case determinations.
In our opinion, these same considerations do not apply to the
establishment of categorical minimum debt amounts and points of
diminishing returns, and agencies normally should not include the costs
of administrative hearings in their calculations when establishing these
categorical levels.
First, the procedures prescribed by the DCA are still evolving and
their costs are uncertain. Agencies are still learning the parameters
of the statutory requirements, and it is not yet clear just how costly
they will ultimately prove.
Second, factoring in the cost of administrative proceedings when
setting categorical levels necessarily requires agencies to assume that
a significant number of "small" debt cases would, in fact, result in
requests for administrative review. We doubt that the agencies are
presently in a position to accurately estimate whether a significant
number of such requests will in fact be filed. Many small claim debtors
may be willing to pay their debts once notified of them. Under these
approaches, however, on the assumption that debtors would resist
collection efforts and request costly hearings, those debtors would
never be advised of the existence of their debt or afforded the
opportunity to voluntarily pay.
Third, inclusion of these costs in the determination of points of
diminishing returns could tend to encourage frivolous requests for
administrative procedures. Under the FCCS termination authority,
agencies must evaluate the costs of administrative procedure on
case-by-case basis. Under diminishing returns, by contrast, termination
would be automatic. Many debtors who learn of the establishment of this
point of diminishing returns would automatically request hearings in
order to manipulate the debt into a posture that would necessarily
preclude its collection. /14/
Finally, and most importantly, these approaches require an agency to
automatically forego or discontinue collection without considering
whether there may be countervailing reasons (such as those mentioned
earlier) which militate in favor of collection, despite the potential
costs. In essence, adopting the minimum debt amount and diminishing
returns approaches could result in the loss, to an extent we consider
undesirable, of agency flexibility and discretion.
We think that, at least for now, it is sufficient that agencies have
the ability to take into consideration, on a case-by-case basis, the
anticipated costs of administrative procedures, which the debtor has
actually requested, when considering whether to compromise or terminate
collection on particular debts. At least until there has been
sufficient experience to warrant re-evaluation, agencies should not
include the costs of required due process-styled procedures in their
calculations of minimum debt amounts and diminishing returns. Of course
the considerations noted above do not apply when the minimum debt amount
is nominal, as in the DOT proposal. Nominal amounts do not require cost
studies (58 Comp. Gen. at 375). We see no reason why a proposal such as
DOT's should not apply to all debtors equally.
(1) An agency may, on a case-by-case basis, take the cost of required
administrative hearings into consideration when determining whether to
compromise a debt claim or terminate collection action, if there is a
substantial likelihood that the cost will actually be incurred in the
particular case. This applies to Government employees as well as other
debtors. (Department of Energy request.)
(2) Agencies should not use the anticipated costs of administrative
hearings or reviews when establishing categorical minimum debt amounts
or points of diminishing returns.
(3) An agency policy not to initiate collection action on debts of $1
or less may, without cost studies, be applied to debts owed by Federal
employees. Similarly, refunds to such persons in amounts of $1 or less
need not be made unless a specific claim is made (Department of
Transportation proposal). As we have suggested in the past, a refund
policy along these lines should be announced in appropriate regulations.
(1) For purposes of this decision, the terms "Government employees"
and "Federal employees" should be read as including military personnel.
(2) Pub. L. No. 89-508, Section 3, 80 Stat. 308, codified in 31
U.S.C. ch. 37 (1982). See also FCCS, 4 C.F.R. Sections 102.14, 103.4,
104.3(c).
(3) FCCS, 4 C.F.R. Section 101.4. Cf., e.g., 64 Comp. Gen. 142, 148
(1984).
(4) E.g., 5 U.S.C. Sections 5511(b) (debts owed by employees removed
for cause), 5512(a) (accountable officer debts), 5513 (disallowed
payments), 5514 (erroneous payments of pay), 5522(a)(1) (advance
payments for evacuations), 5705 (travel advances), 5724(f) (advances for
travel and transportation); 37 U.S.C. Section 1007 (debts owed by Army
and Air Force members). (Note: some of these statutes were amended
subsequent to enactment of the FCCA.)
(5) 128 Cong. Rec. S12328 (daily ed. Sept. 27, 1982) (remarks of Sen.
Percy). Cf., e.g., 64 Comp. Gen. 142, 143 (1984); 64 Comp. Gen. 816,
817 (1985).
(6) DCA, Section 5, 96 Stat. 1751-52, codified in 5 U.S.C. Section
5514, as implemented in 5 C.F.R. pt. 550, subpt. K (hereafter cited as
"Subpart K").
(7) DCA, Section 10, 96 Stat. 1754-55 codified in 31 U.S.C. Section
3716; as implemented in FCCS, 4 C.F.R. Sections 102.3, 102.4 (1985).
(8) 5 U.S.C., Section 5541(a)(2), as implemented in Subpart K,
Section 550.1102(b), 49 Fed. Reg. at 27472; 31 U.S.C. Section 3716(a),
as implemented in FCCS, 4 C.F.R. Section 102.3.
(9) E.g., 18 Comp. Gen. 838 (1939); 55 Comp. Gen. 1438 (1976). As
is indicated below, this policy is reflected in the FCCS, 4 C.F.R.
Section 102.14 (1985).
(10) E.g., 58 Comp. Gen. 372 (1979).
(11) The cases are collected and discussed in GAO's Principles of
Federal Appropriations Law, pp. 11-186 through 11-189 (1982).
(12) Cf., e.g., FCCS, 4 C.F.R. Section 103.5 (Debts may be
compromised "if the agency's enforcement policy in terms of deterrence
and securing compliance, both present and future, will be adequately
served by acceptance of the sum to be agreed upon. Mere accidental or
technical violations may be dealt with less severely than willful and
substantial violations.").
(13) When the FCCS were published, a typographical error was included
in this passage. The last sentence referred to "Section 103.4." The
reference should have been Section 102.13(d).
(14) We recognize that this same problem exists to an extent even in
the context of case-by-case determinations. Once it is known that an
agency will consider the cost of administrative hearings in evaluating
its collection options, a debtor whose case has little merit may request
a hearing solely to encourage compromise or termination by "puffing up"
the agency's collection costs. We do not have a perfect solution. The
views expressed in this decision reflect an attempt to balance
cost-effectiveness with what we think is necessary agency flexibility.
An agency can minimize the problem by not permitting termination to
become automatic.
B-221065, 65 Comp. Gen. 891
Matter of: Glenn A. Truglio - Claim for Relocation Income Tax
Allowance Pursuant to IPA Assignment, September 26, 1986
An employee who incurred relocation expenses as the result of an
Intergovernmental Personnel Act (IPA) assignment is entitled to a
relocation income tax allowance under 5 U.S.C. 5724b (Supp. III, 1985).
The IPA relocation expenses are payable under the authority of 5 U.S.C.
5724 and 5724a while the income tax allowance applies to reimbursements
or allowances under the same statutes. Prior decisions are
distinguished.
This is in response to a request from the Social Security
Administration for a decision as to whether the relocation income tax
(RIT) allowance may be paid to an employee who incurred relocation
expenses as a result of an assignment under the Intergovernmental
Personnel Act of 1970 (IPA). For the reasons stated below, we hold that
the employee is entitled to a RIT allowance.
Pursuant to an IPA assignment, the employee, Glenn A. Truglio, was
assigned from his position in the Office of Child Support Enforcement,
Department of Health and Human Services, to the New Jersey Department of
Citizen Services. The assignment was from January 23, 1984, through
January 23, 1986, and necessitated Mr. Truglio's relocation from Mount
Laurel, New Jersey, to Livingston, New Jersey. Mr. Truglio was
authorized travel expenses to his new assignment, shipment of his
household goods, temporary quarters, and miscellaneous expenses, and he
has been reimbursed for those expenses in the amount of $8,162.18. The
issue to be decided is whether Mr. Truglio is entitled to a relocation
income tax allowance to reimburse him for the income tax he paid on
these relocation expense reimbursements.
The Intergovernmental Personnel Act of 1970, Pub. L. No. 91-648, 84
Stat. 1909 (1970), codified at 5 U.S.C. Sections 3371-3376 (1982),
provides for the temporary assignment of personnel between Federal
agencies and State and local governments and other organizations in
situations where such an assignment would facilitate work of mutual
benefit to both the Federal agency and the State or local jurisdiction
concerned. See B-209132, October 3, 1983. The entitlement to
reimbursement for travel expenses incurred as a result of an IPA
assignment is subject to section 3375 of title 5, United States Code,
which provides for (1) travel expenses to and from the assignment
location and per diem allowance during assignment, (2) transportation
and per diem for the employee's family, (3) shipment or storage of the
household goods, (4) a temporary quarters allowance, and (5) a
miscellaneous expense allowance. Although the relocation income tax
allowance, 5 U.S.C. Section 5724b (Supp. III, 1985), is not specifically
listed among the travel expenses authorized for an IPA assignment, we
believe the allowance is applicable to employees who incur certain
relocation expenses for which they are reimbursed in connection with the
IPA assignment.
The IPA statute authorizes payment of certain travel expenses that
are in fact relocation expenses authorized under 5 U.S.C. Sections 5724
and 5724a (1982). See 5 U.S.C. Section 3375. The statute governing the
RIT allowance provides reimbursement for Federal, State, and local
income taxes incurred for any moving or storage expenses furnished in
kind or for which reimbursement or an allowance is provided. 5 U.S.C.
Section 5724b (Supp. III, 1985). The term "moving or storage expenses"
is defined in section 5724b(b) to mean travel and transportation
expenses under section 5724 and other relocation expenses under sections
5724a and 5724c. Since some of the expenses Mr. Truglio incurred were
payable in accordance with sections 5724 and 5724a, the RIT allowance
statute by its terms applies to allowances or reimbursements for those
expenses.
We note that we have previously held that if a travel or relocation
expense is not specified under 5 U.S.C. Section 3375, an employee
assigned under the IPA may not be reimbursed for that expense. Forest
Service, B-209132, October 3, 1983; Roy A. Harlan, B-198939, April 3,
1981; Burnell F. Peters, B-193443, June 7, 1979; James D. Broman,
B-185810, November 16, 1976; William S. Harris, B-183283, August 5,
1975; Alan O. Mann, B-183042, April 24, 1975; and Donald B. Kornreich,
B-170589, September 18, 1974. We would distinguish those prior
decisions in this instance in view of the language of section 5724b
which authorizes a tax allowance for expenses incurred under sections
5724 and 5724a.
Similarly, we would distinguish those prior decisions which held that
an IPA assignment is not a permanent change of station and that the
assignment site is considered a temporary duty station. Richard M.
Morse, B-217301, June 4, 1985; Philip A. Jarmack, B-206258, June 16,
1982; Harris, cited above; and Kornreich, cited above. The language
of section 5724b is not strictly limited to expenses incurred by
employees incident to a permanent change of station, but rather it
applies to "moving and storage expenses" authorized under sections 5724
and 5724a.
We note that the regulations prescribed by the General Services
Administration (GSA) to administer the RIT allowance state that
"(p)ayment of a RIT allowance is authorized for employees transferred *
* * from one official station to another for permanent duty." Federal
Travel Regulations, para. 2-11.2a (Supp. 14, April 1, 1985), incorp. by
ref., 41 C.F.R. Section 101-7.003 (1985). However, these regulations do
not specifically address IPA assignments, and we have been informally
advised by GSA officials that, in their opinion, the RIT allowance may
be paid to employees under an IPA assignment. Therefore, to the extent
an employee incurs tax liability for reimbursements or allowances
payable during an IPA assignment under the authority of sections 5724
and 5724a, we conclude that the employee may be reimbursed for the RIT
allowance under section 5724b.
B-220227, 65 Comp. Gen. 888
Matter of: Allowances on Homeport Change, September 26, 1986
The Joint Travel Regulations may be amended to authorize payment of
overseas station allowances authorized by 37 U.S.C. 405 to members with
dependents after the date a change in homeport of the vessel or staff or
mobile unit to which they are assigned or are being transferred has been
officially announced. Allowances may be paid even though travel of
dependents occurs before the effective date of the vessel's or unit's
change of homeport. 45 Comp. Gen. 689 (1966); 43 Comp. Gen. 505 (1964)
overruled.
This responds to a request for our decision as to whether Volume 1 of
the Joint Travel Regulations (1 JTR) may be changed to permit the
payment of overseas station allowances when the homeports of vessels are
changed from the contiguous United States to overseas locations and the
members' dependents arrive at the overseas station prior to the
effective date of the homeport change. /1/ The provisions of 1 JTR may
be changed to authorize the payment of overseas station allowances under
these circumstances.
The Assistant Secretary of the Army indicates that payment of the
allowance in question is prohibited by principles set forth in two of
our decisions, 45 Comp. Gen. 689 (1966) and 43 Comp. Gen. 505 (1964).
These decisions held that the temporary lodging allowance and other
overseas station allowances authorized by 37 U.S.C. Section 405 (Supp.
III, 1985) are not payable until vessel's change-of-homeport orders
become effective. According to the Assistant Secretary, this often
occurs 3 or 4 months after the dependents arrive overseas. The
Assistant Secretary says that the rule presents a burdensome financial
problem for members who find it difficult to pay the substantial costs
of hotel-type accommodations and restaurant meals for their dependents
during the period between arrival of the dependents and the effective
date of the homeport change.
The proposed changes would permit payment of the temporary lodging
allowance and other overseas station allowances, if appropriate, after
the dependents arrive at the new homeport for members ordered on a
permanent change of station to a vessel or staff or mobile unit that has
an announced but not yet effective homeport change to an overseas
homeport. /2/ Payment is also proposed for members on permanent duty in
a vessel after the homeport change to an overseas homeport is announced.
The Assistant Secretary states that the principles established in the
two cited decisions defeat members' plans that would otherwise provide
some relief from relocation problems. He points out that service
members and their dependents can use permanent-change-of-station
entitlements before the effective date of a homeport change. Thus,
travel and transportation allowances are available to dependents who
relocate to the new homeport during the period between the announced
homeport change and its effective date. Also, based on 60 Comp. Gen.
561 (1981), paragraph M4156 of 1 JTR (cases 12 and 16) even permits
members to travel for the purpose of assisting their dependents in
making travel and transportation arrangements.
The Assistant Secretary contends that to postpone payment of the
station allowances for several months after arrival of dependents at the
vessel's new overseas homeport until the effective date of the vessel's
orders creates a serious gap in a statutory plan intended to relieve
members of undue financial burdens:
Since overseas station allowances are, like dependent travel,
household goods transportation, and POV transportation, related to
permanent changes of station, it would appear logical not to stop
(in reality) the use of three entitlements and the service
member's ability to help with a move by limiting one entitlement
to use only on or after the effective date of orders. In the case
of members serving in ships or with staffs or mobile units when
the homeport change is announced, they must frequently travel with
the unit when it relocates thereby further complicating the
member's ability to actually assist with the household relocation.
The inability of service members to pay out-of-pocket, the
expenses normally covered by TLA (Temporary Lodging Allowance) and
other station allowances can prevent well-planned moves. (I note
that on inter-overseas PCA moves, JTR par. M4301-9b permits the
payment of station allowances (including TLA) on arrival of
dependents if that arrival is after the issue date of the PCA
order).
This problem is not isolated. As ships undergo homeport
changes following regular overhaul or construction from the
continental United States to overseas homeports, the crew members
assigned to or ordered to the vessel face this problem.
Normally, the change to an overseas homeport from a continental
United States homeport occurs two or more times per year.
Permitting the payment of station allowances on behalf of a member
and/or dependents upon arrival at the promulgated overseas
homeport but after the issuance date of PCS orders or promulgation
date of a homeport change would be a logical continuation of the
provision JTR par. M4301-9b and would alleviate a significant and
recurring problem.
The pertinent part of 37 U.S.C. Section 405(a) is:
Without regard to the monetary limitations of this title, the
Secretaries concerned may authorize the payment of per diem,
considering all elements of the cost of living to members of the
uniformed services under their jurisdiction and their dependents,
including the cost of quarters, subsistence, and other necessary
incidental expenses, to such a member who is on duty outside of
the United States or in Hawaii or Alaska, whether or not he is in
a travel status. * * *
We refused in 45 Comp. Gen. 689 to approve amendments to the
regulations to authorize payment of the allowances upon arrival of
dependents or members overseas prior to the effective date of orders
changing the vessel's homeport. The holding was based on the rule
established in 43 Comp. Gen. 505, where we viewed the allowances as
permanent station allowances and determined that the change of homeport
constituted the permanent change of station and that the overseas
allowances could not be paid until the permanent station overseas has
become effective.
Having reconsidered our prior decisions, we now agree that the JTR's
may be amended to provide for payment of overseas station allowances to
commence once a homeport change has been announced. As described above,
the Assistant Secretary has presented compelling practical reasons in
support of such an approach. Moreover, contrary to the implication of
our decision in 45 Comp. Gen. 689, we find nothing in the statute to
limit the exercise of discretion to amend the JTR's for this purpose.
Under 37 U.S.C. Section 405(a), the overseas station allowance is
available to the dependents of a member "who is on duty outside of the
United States or in Hawaii or Alaska." We have consistently held that
the permanent duty station of a member assigned to a vessel is the
vessel itself. The vessel's homeport is regarded as a duty station for
administrative convenience in applying the travel and transportation
entitlements of the member's dependents, as well as the overseas station
allowances. See, e.g., 45 Comp. Gen. 689, supra, at 692. Since use of
the homeport for purposes of dependent allowances is a matter of
administrative discretion, we believe that it may be applied with some
flexibility.
In sum, while the effective date of a homeport change may have
significance from an administrative standpoint, it need not limit the
availability of overseas station allowances under 37 U.S.C. Section 405.
Such a result is not required by the statutory language, and it can
result in inefficiencies which were obviously not contemplated when 37
U.S.C. Section 405 was enacted. We hold, therefore, that with respect
to these entitlements, the Joint Travel Regulations may be changed to
provide that such entitlements may commence once the dependents have
relocated, as authorized, to the designated new homeport outside the
United States even though the specified effective date for change in
homeport has not arrived.
(1) The request was made by the Assistant Secretary of the Army
(Manpower and Reserve Affairs) on behalf of the Per Diem, Travel and
Transportation Allowance Committee.
(2) Subsequently we will refer only to vessels, although that term
should be read to include other mobile units which have homeports.
B-219958, 65 Comp. Gen. 884
Matter of: Sergeant Paul D. Wilson, USMC, and others, September 26,
1986
When travel orders given to military members specify travel by
commercial airline with Government Transportation Requests (TR's) to be
used, and the members are unable to obtain TR's and instead personally
pay for their commercial flights, they may be reimbursed if an
appropriate official certifies that TR's were not available to them.
Such certification does not entail a retroactive modification of the
travel orders and is instead simply a factual determination concerning
the conditions that existed at the time travel was performed.
Military travel orders may not be amended retroactively to increase
or decrease rights which have become fixed under statute and regulation
after the travel has been performed, except to correct plain errors.
Retroactive modification of a Marine Corps sergeant's orders to delete a
provision requiring group travel is appropriate under this rule to
correct a plain error, where it was demonstrated that no group existed
with which he could travel and that the order-issuing authority had not
intended to specify group travel at the time the orders were published.
The travel and transportation entitlements of members of the
uniformed services are for computation under the statutes and
regulations in effect at the time the travel is performed. Generally,
if the applicable statutes and regulations are amended after the
issuance of orders but before the completion of travel, no retroactive
modification of the travel orders would be involved, and instead the
orders would be automatically brought into conformity with the statutes
and regulations at the time of their amendment.
Major W.J. Byrne, Jr., a disbursing officer of the Marine Corps at
Camp Lejeune, North Carolina, has requested an advance decision
regarding whether two individuals' travel orders may be amended
retroactively to authorize them to travel by commercial airlines at
personal expense, instead of using a Government Transportation Request
as initially specified in their orders. First Lieutenant D. B. Jennings
of the Disbursing Office, Marine Corps Air Station New River,
Jacksonville, Florida, questions whether another individual's travel
orders may be amended retroactively to change the orders to read
"individual" rather than "group" travel. In forwarding these cases, the
Marine Corps Finance Center appended two more general questions
regarding retroactive amendments of travel orders. The Per Diem, Travel
and Transportation Allowance Committee approved the submission and
assigned it control number 85-29.
Initially, we note that travel allowances are authorized under
statute and regulation for service members for their expenses in
complying with travel requirements imposed on them by competent orders
issued by the services. See Private Vincent A. Manaois, 63 Comp. Gen.
621, 623 (1984). If the travel is for the benefit of the service and
the service member is directed by competent orders issued in advance to
perform the travel, the member is entitled to be reimbursed in
accordance with the applicable statutes and regulations in effect at the
time the travel is performed. See Ensign Cheryl R. Dallman, USNR, 64
Comp. Gen. 489, 491 (1985). The general rule is that legal rights and
liabilities with regard to travel allowances vest under the statutes and
regulations when travel is performed in compliance with competent
orders. As a result, such orders may not be revoked or modified
retroactively so as to increase or decrease the rights which have become
fixed under statute and regulation after the travel has been performed.
An exception to this rule has been recognized in cases involving errors
which are apparent on the face of the original orders, or where all the
facts and circumstances surrounding the issuance of the original orders
clearly demonstrate that some provision which was previously determined
and definitely intended had been inadvertently omitted in their
preparation. See Warrant Officer John W. Snapp, USMC, 63 Comp. Gen. 4,
8 (1983), and decisions therein cited.
Major Byrne of Camp Lejeune has presented two cases involving
purported retroactive modifications of travel orders to approve
reimbursement of a member's travel by commercial airlines at the
member's expense. The two cases involve Sergeant Paul D. Wilson and
Warrant Officer Ronald W. Bentley.
On June 18, 1984, Sergeant Wilson was issued temporary additional
duty orders specifying he was to report on June 21, 1984, to Field
Artillery School at Fort Sill, Oklahoma. The specified mode of travel
was commercial air procured by Government Transportation Request, but he
purchased an airline ticket at his own expense instead. Subsequently,
the Commanding General of Sergeant Wilson's division determined that he
had been unable to obtain a Government Transportation Request in time to
report to Fort Sill by June 21, 1984, and issued an order retroactively
authorizing his travel by commercial air without a Government
Transportation Request.
In the second case, on February 5, 1985, Warrant Officer Bentley was
issued travel orders directing him to perform temporary duty at
Bardufoss, Norway, but the orders authorized "variation of itinerary."
His orders directed him to use Government transportation if available.
Otherwise he was to obtain a Government Transportation Request. Upon
leaving Camp Lejeune, Warrant Officer Bentley was given Transportation
Requests enabling him to travel from Camp Lejeune to Bardufoss, Norway,
and back to Camp Lejeune. While in Bardufoss, the member performed
temporary duty at Oslo, Norway, for which travel he purchased commercial
airline tickets with his personal funds. Upon return to Camp Lejeune,
Warrant Officer Bentley's travel orders were retroactively amended to
authorize the use of commercial transportation at personal expense so as
to enable him to be reimbursed the cost of his travel between Bardufoss
and Oslo for which travel he could not use a Government Transportation
Request.
In situations such as those involving the two military members
discussed above, there is a regulation in Volume 1 of the Joint Travel
Regulations (1 JTR) which is applicable. This provision, 1 JTR, para.
M4203-3e, states:
e. Orders Direct Utilization of Transportation Requests. When
travel orders specifically direct (as distinguished from
authorize) the issuance of transportation requests via specific
modes of transportation but the member travels by common carrier
at personal expense, reimbursement is prohibited unless the
appropriate authority responsible for furnishing such
transportation requests certifies that transportation requests
were not available or the mode of transportation directed was not
available at the time and place required in time to comply with
the orders. * * *
Under the regulation, the two members may be reimbursed since the
appropriate authority has made the certification required by this
provision that Transportation Requests were not available. Gunnery
Sergeant Michael M. McClure, 64 Comp. Gen. 234 (1985). Although the
certifications were made in the form of purported retroactive
modifications to the members' travel orders, our view is that no
modification of the orders was actually involved. That is, the
certifications were simply factual determinations that Transportation
Requests were not available and no corrections of error in the original
orders were involved. See B-170423, February 18, 1972. See also
Gunnery Sergeant Michael M. McClure, 64 Comp. Gen. 234, supra.
First Lieutenant Jennings of Marine Corps Air Station New River
presents a question in regard to a change in a travel order designation
from group travel to individual travel. Since members in a group travel
status normally do not receive per diem (see 1 JTR, para. M4101-2), a
change from group travel to individual travel generally will result in
an increase in travel entitlements bringing into effect the rule against
retroactive modifications of travel orders.
The facts are that on July 13, 1984, Master Gunnery Sergeant Ray F.
Garrett was issued travel orders directing him to report for temporary
duty at Cecil Field, Florida. Group travel was designated.
Subsequently, according to the administrative officer at the member's
duty station, his travel orders were modified to authorize individual
travel instead of group travel because "(h)e was erroneously placed on
Group Orders after the original orders had been executed and the
personnel had already arrived at Cecil Field, Florida."
The regulations regarding group travel are found in 1 JTR, paragraphs
M4100-M4104. As the regulations point out, among other things, group
travel should be used when several members are to travel from the same
point of origin to the same destination. In this situation, our view is
that since there were not several members traveling from the same point
-- the other members having departed prior to the issuance of Sergeant
Garrett's orders -- the orders were not consistent with the regulations
and were retroactively modified properly on the basis of plain error.
Compare 44 Comp. Gen. 405, 407-408 (1965).
The first question is "(w)ould increased amounts for transportation
or per diem, because of computations made under appropriate regulations
be considered retroactive modification?"
As indicated, travel and transportation allowances are for
computation under the statutes and regulations in effect at the time the
travel is performed. Generally, if the applicable statutes or
regulations are amended after the issuance of orders but before the
completion of travel, no retroactive modification of the orders would be
required. Instead, the amendment of the statute or regulation would
operate simultaneously and automatically to amend the orders
prospectively, since travel orders must conform to the governing
provisions of statute and regulation in effect at the time the travel is
performed. See Warrant Officer John W. Snapp, USMC, supra, 63 Comp.
Gen. at page 7.
The Finance Center's second question is:
Would the increased costs of a government procured airline
ticket, born by the traveler, which is caused by deregulation or
change in air carrier be considered a retroactive modification?
The entitlement to transportation has been vested in the basic
order but the amount has been increased.
Generally, an increase in the cost of transportation under the
situation described would not appear to require a retroactive
modification, since travel would be accomplished in the manner specified
in the travel orders.
The questions presented are answered accordingly. The vouchers
presented for decision are returned for payment, if otherwise correct.
B-219940, et al., 65 Comp. Gen. 881
To the Honorable Lawrence B. Gibbs, Internal Revenue Service,
September 26, 1986
Requests for relief for losses incurred in the routine business
operation of the Tax Lien Revolving Fund of the Internal Revenue Service
(IRS) (those where the cost of redeeming property financed out of the
fund exceeds the resale price received for the property which is
deposited to the Fund) are inappropriate for consideration under 31
U.S.C. 3527(a) since such losses do not constitute "physical losses or
deficiency" for the purpose of this relief statute. Request for relief
for illegal, erroneous, or incorrect payments are for consideration
under 31 U.S.C. 3527(c), or 3528. However, mere fact that subsequent
sale does not recover the amount spent by IRS for redemption does not by
itself serve to make the redemption an "illegal, improper, or incorrect"
payment.
Internal Revenue Service (IRS) operating appropriations are not
available for transfer to Tax Lien Revolving Fund to restore Fund's
funding level which has been reduced as a result of the amounts IRS pays
from the Fund in order to redeem property subject to junior tax liens in
favor of the Government exceeding the amount received by the IRS and
deposited to the Fund when the property is sold. The Fund is the
appropriation specifically available to IRS for redeeming property
subject to junior tax liens in favor of Government. Therefore, more
general appropriation available to IRS for operations may not be used to
finance this activity. Thus, absent any statutory authority authorizing
transfer, the only way IRS could replenish losses to the Fund would be
for it to specifically request appropriations from Congress for this
purpose.
This decision is in response to three submissions from John Wedick,
Jr., Assistant Commissioner (Planning, Finance and Research), Internal
Revenue Service (IRS), concerning a loss to IRS' Federal Tax Lien
Revolving Fund as a result of its inability to resell certain property
for at least as much as the IRS expended to redeem the property from a
foreclosing lien holder. Two of the submissions seek relief from a
physical loss to the Fund, under 31 U.S.C. Section 3527(a), apparently
on behalf of the District Directors of the Atlanta and Las Vegas
Districts, while the third seeks clarification of the authority of IRS
to transfer funds appropriated for Internal Revenue Collection to the
Tax Lien Revolving Fund to offset losses incurred in the operation of
the Fund. For the reasons stated below, it is our opinion that the
losses incurred in the routine business operations of the Revolving Fund
are inappropriate for consideration under 31 U.S.C. Section 3527(a) and
we are unaware of any authority under which the IRS may transfer funds
from annual appropriations for Internal Revenue Collection to the
Revolving Fund to offset these losses.
The Tax Lien Revolving Fund is established by 26 U.S.C. Section 7810
to fund the redemption (purchase) of property by the United States from
those who have purchased the property from a foreclosing lienholder
whose lien was senior to the Government's tax lien. /1/ Property is
redeemed by the IRS in anticipation that it will be resold at a price in
excess of the redemption price. The Revolving Fund is reimbursed from
the proceeds in an amount which may not exceed the amount the United
States paid at redemption and any excess is credited towards the
taxpayer's indebtedness to the United States. Thus, as is the case
generally with regard to revolving funds, the law authorizes both
expenditures from the Fund and deposits to the Fund. There are two
separate and distinct transactions, the propriety of either under the
law being independent of the other.
The actions taken which prompted the requests for relief, while
factually complex, may, for purposes of our discussion, be summarized as
follows:
-- In the Atlanta case, property was redeemed at the cost of
$14,923.43 and it could be resold for only $9,000. As a result, the
Revolving Fund has been reduced by the amount of $5,923.43.
-- In the Las Vegas case, property was redeemed at the cost of
$143,941.87 and it could be resold for only $91,000. As a result, the
Revolving Fund has been reduced by the amount of $52,941.87.
Additionally, IRS indicates that it incurred another $12,189.57 in
administrative expenses which apparently were paid out of its annual
appropriations.
In both cases, the submissions suggest that there may be some
question as to whether the officials involved in deciding to redeem the
property (neither submission clearly identifies these persons) exercised
reasonable judgment. The Las Vegas case raises the question of whether
internal procedures which apparently require that a purchase bid be in
hand prior to redemption had been properly waived. The Atlanta case
raises the question of the propriety of permitting a bid to expire
before the property was offered for resale.
The important point for purposes of this response is that 31 U.S.C.
Section 3527(a), the statute under which relief was requested in both
cases, is inapplicable. Under 31 U.S.C. Section 3527(a), the
Comptroller General may relieve a present or former accountable officer
or agent from liability for the physical loss or deficiency of public
money upon concurrence with determinations by the head of the agency
that the officer was carrying out official duties when the loss or
deficiency occurred, that the loss was not attributable to fault or
negligence on the part of the officer, and that the loss or deficiency
was not the fault of an illegal or incorrect payment. As to whether a
particular transaction constitutes a "physical loss or deficiency," we
have stated:
In sum, "physical loss or deficiency" includes such things as
loss by theft or burglary, loss in shipment, and loss or
destruction by fire, accident, or natural disaster. It also
includes the totally unexplained loss, that is, a shortage or
deficiency with absolutely no evidence to explain the
disappearance. E.G., 48 Comp. Gen. 566 (1969). Finally, * * *
losses resulting from fraud or embezzlement by subordinate finance
personnel may continue to be treated as physical losses. With
this exception, however, the disbursement of public funds by a
disbursing officer or his subordinate is a payment, and if it is
illegal or erroneous, the proper relief statute is 31 U.S.C.
Section 3527(c). B-202074, July 21, 1983.
It is clear that a loss to the Revolving Fund such as those involved
in the Atlanta and Las Vegas cases, cannot be considered for relief as a
physical loss or deficiency under 31 U.S.C. Section 3527(a). Generally,
questions concerning responsibility for losses resulting from illegal or
erroneous payments from appropriation accounts (and the Revolving Fund
is an appropriation account) are determined under 31 U.S.C. Sections
3527(c) or 3528, which apply to finance personnel (specifically,
disbursing officers and certifying officers). It does not appear that
the agents charged with deciding whether to redeem the property fit into
either of these categories. Non-accountable officers are not fiscally
responsible for errors in judgment.
In any case, the error, if one existed, did not amount to a violation
of a statutory requirement. 26 U.S.C. Section 7810(b) provides:
The fund shall be reimbursed from the proceeds of a subsequent
sale of real property redeemed by the United States in an amount
equal to the amount expended out of such fund for such redemption.
It is clear that this language is intended to be merely a limitation
on the amount that may be deposited to the Fund from the proceeds of the
sale, and not an unalterable legislative requirement below which
deposits may not be made. For example, the Committee on Ways and Means,
in its report on the Federal Tax Lien Act of 1966 which enacted this
provision into law, commented on this provision as follows:
" * * * It is anticipated that the proceeds on the resale of
redeemed property will replenish the revolving fund so that
additional appropriations will not be necessary." H.R. Rep. No.
1884, 89th Cong., 2d Sess. 30 (1966). See also S. Rep. No. 1708,
89th Cong., 2d Sess. 32 (1966).
This language thus appears to recognize that there may be some
instances where circumstances may result in resales that do not recover
the amount expended for the redemption (although these should be rare).
Since the request is inappropriate for consideration under any of the
accountable officer relief statutes, IRS may not avail itself of the
authority to restore losses in accounts from current agency
appropriations in 31 U.S.C. Section 3527(d) (when relief is granted) or
31 U.S.C. Section 3530 (when relief is denied and the loss is determined
uncollectible).
One of the letters from Assistant Commissioner Wedick suggests that
IRS operating appropriations may be available to replenish the Revolving
Fund under our decision A-42511, June 1, 1932, which held that operating
appropriations could be used to fund redemptions. See also A-42511,
August 24, 1932. However, these decisions were rendered prior to the
Revolving Fund's establishment in 1966.
As a general rule, an appropriation for a specific object is
available for that object to the exclusion of a more general
appropriation which might otherwise be considered available for the same
object, and the exhaustion of the specific appropriation does not
authorize charging any excess payment to a more general appropriation.
/2/ Therefore, establishment of the Revolving Fund precluded the use of
a more general appropriation which otherwise might have been available.
The only way IRS can replenish losses to the Tax Lien Revolving Fund
is to specifically request appropriations to the Revolving Fund in the
amount it deems necessary in order to carry on its authorized activity.
Such appropriations are specifically authorized by 26 U.S.C. Section
7810(a), quoted in footnote 1, supra.
(1) 26 U.S.C. Section 7810(a) provides:
There is established a revolving fund, under the control of the
Secretary, which shall be available without fiscal year limitation
for all expenses necessary for the redemption (by the Secretary)
of real property as provided in section 7425(d) and section 2410
of title 28 of the United States Code. There are authorized to be
appropriated from time to time such sums (not to exceed $1,000,000
in the aggregate) as may be necessary to carry out the purposes of
this section.
(2) E.g., 38 Comp. Gen. 758, 767 (1950); 46 Comp. Gen. 198 (1966);
B-70219, January 19, 1948; B-183922, August 5, 1975; B-202362, March
24, 1981.
B-215735, 65 Comp. Gen. 879
Matter of: 9-1-1 Emergency Number Fee, September 26, 1986
Maryland 9-1-1 fee may not be paid by Department of Health and Human
Services, because the fee amounts to a tax from which the United States
is constitutionally immune. 64 Comp. Gen. 655 (1985).
The Director of the Division of Finance of the Social Security
Administration of the Department of Health and Human Services (HHS)
requested an advance decision under 31 U.S.C. Section 3529 (1982) on the
question of whether Federal agencies must pay a 9-1-1 fee to the State
of Maryland and to Maryland counties. We decided in 64 Comp. Gen. 665
(1985) that, where 9-1-1 service is authorized or required by law to be
offered by state or local governments and a service fee assessed to
defray 9-1-1 costs, the fee amounts to a tax which the Federal
Government may not constitutionally be required to pay. This decision
applies to Maryland's 9-1-1 fees.
The provisions for a statewide 9-1-1 emergency telephone system are
contained in Md. Ann. Code, art. 41, Sections 204H-1-204H-8 (1983). As
of July 1, 1985, all Maryland counties were required to have a 9-1-1
system in operation. (Section 204H-2). The law created an Emergency
Number System Board to supervise the operation of the various county
9-1-1 plans. The State Board is responsible for issuing statewide
operational guidance and for reviewing and auditing county plans and
systems. (Section 204H-3.)
Maryland law established a state 9-1-1 fee of 10[ per month to be
added to current bills rendered for switched local exchange access in
the State. It also empowered counties to adopt, by ordinance, a local
9-1-1 charge of up to 30[ per month, "to cover the total amount of
eligible (9-1-1) operation and maintenance costs of the county."
(Section 204H-5.) As to both charges, the telephone company serves
strictly as a collection agency who is charged to remit the 9-1-1 fees
to the State Comptroller for deposit in a 9-1-1 Trust Fund, held in the
State Treasury. Id. The telephone company is authorized to withhold an
administrative fee of 1 1/2 percent in return for its services.
The Trust Fund may disburse to the counties amounts needed to finance
all equipment acquisition and maintenance costs. Use of 9-1-1 fees for
personnel cost is limited to 50 percent of costs in counties with
100,000 or fewer residents and 30 percent in counties with over 100,000
population. (Section 204H-8.) The Trust Fund is not permitted to
advance funds to the counties in anticipation of future receipts, and
therefore any shortfalls in funding must presumably be covered by local
tax revenues. (Section 204H-7(e).)
It is an unquestioned constitutional principle that the United States
and its instrumentalities are immune from direct taxation by states and
their inferior governmental units. McCulloch v. Maryland, 17 U.S. (4
Wheat.) 316 (1819). Direct taxation occurs where the legal incidence of
the tax falls directly on the United States as the buyer of goods or the
consumer of services. Alabama v. King and Boozer, 314 U.S. 1 (1941);
53 Comp. Gen. 410 (1973). Despite its immunity from taxation, the
United States is entitled to the same municipal services that tax payers
receive, including police and fire protection. 53 Comp. Gen. 410
(1973); 49 Comp. Gen. 284 (1969); 24 Comp. Gen. 599 (1945). The 9-1-1
service used to expedite contacting these municipal services in an
emergency seems to be a logical extension of the services themselves,
and hence one which must be provided despite Federal entities' tax
exempt status.
In 64 Comp. Gen. 665, we identified the additional characteristics of
9-1-1 fees which make them constructive taxes. First, 9-1-1 service is
provided by a local government or by a quasi-governmental unit. Second,
public funding of the service requires legal authority, e.g. an
ordinance or referendum. Third, the fee is based on a flat rate per
telephone line, and not related to actual levels of service.
It is our opinion that the Maryland 9-1-1 emergency service fee is a
tax, the legal incidence of which falls directly on the United States as
the user of telephone services. The telephone company only acts as a
collection agent for the State and county. This decision is in
accordance with our previous decision in 64 Comp. Gen. 665 (1985).
Accordingly, payment of the Maryland 9-1-1 fee would be improper, and
HHS should withhold the 9-1-1 fee from its payments for telephone
services in the State.
B-214561.3, 65 Comp. Gen. 876
To Mark S. Mandell, Esquire, Mandell, Goodman, Famiglietti &
Schwartz, Ltd., Attorneys at Law, September 26, 1986
Upon reconsideration, the clerk of a Federal district court is
granted relief from financial liability (pursuant to 31 U.S.C. 3527
(1982)) for the unexplained physical loss of U.S. currency entrusted as
evidence to his subordinates. Relief is granted because it is not clear
that the clerk's negligence (as compared to that of his subordinates)
was the proximate cause of the loss. Decision in 63 Comp. Gen. 489
(1984) overruled.
We understand that you represent Mr. Frederick R. DeCesaris (Clerk of
the Court of the United States District Court for the District of Rhode
Island) in the matter of his liability for the loss in 1981 of $4,301
entrusted to persons under his supervision. This letter responds to his
request (dated July 18, 1985) for reconsideration of our previous
decision which declined to relieve Mr. DeCesaris (under 31 U.S.C.
Section 3527 (1982)) from financial liability for this loss. See 63
Comp. Gen. 489 (1984). As explained below, we now conclude, on the
basis of the new evidence he has submitted, that our original decision
in this matter should be reversed to grant Mr. DeCesaris relief from
financial liability for this loss.
On October 22, 1981, it was discovered that a total of $4,301 in
United States currency was missing from an evidence "cage" used by the
Clerk of the United States District Court for the District of Rhode
Island. Those funds were being kept as physical evidence in two matters
then pending before the court. The loss was initially discovered by the
two deputy courtroom clerks to whom those funds had been entrusted. An
investigation by the Federal Bureau of Investigation (FBI) proved
inconclusive, and was closed without further action or recommendations.
For this reason, the Director of the Administrative Office of the United
States Courts (AOUSC) requested that we grant relief from financial
liability (pursuant to 31 U.S.C. Section 3527) to the two deputy
courtroom clerks. The Director suggested that their supervisor, the
Clerk of the Court (Mr. DeCesaris), should not be held liable for the
loss.
Accountable officers are automatically and strictly liable for funds
entrusted to them. 64 Comp. Gen. 607 (1985). However, GAO is
authorized by 31 U.S.C. Section 3527 to relieve an accountable officer
from liability for a physical loss of funds, if GAO concurs with
administrative determinations made by the requesting agency to the
effect that the loss occurred while the accountable officer was acting
in the discharge of official duties and the loss occurred without fault
or negligence on the part of the accountable officer. For this reason,
the loss of funds entrusted to an accountable officer ordinarily raises
a rebuttable presumption of negligence on the part of the accountable
officer. 63 Comp. Gen. at 492.
In accordance with these principles, our previous decision held that
relief should be given to the two deputy courtroom clerks who actually
had custody of the missing funds. Although we found them to be
negligent, we did not believe that their negligence was the proximate
cause of the loss.
In our previous decision, relief was granted to the deputy clerks,
despite our finding that they did not "behave as reasonably and
prudently as they might have." This was because on the basis of the
evidence provided to us at that time, consisting of documentary
evidence, including affidavits, investigational reports, and FBI
interview reports, all submitted by the AOUSC, we concluded that
"pervasive laxity in the policies, procedures, and facilities
established in the clerk's office was responsible for the loss." 63
Comp. Gen. at 494. That conclusion rested upon five basic findings:
(1) The evidence cage combinations were not kept confidential or
periodically changed.
(2) The design and construction of the cages assigned to the deputy
courtroom clerks were obviously deficient.
(3) Access to the vault (which contained the cages) was not
adequately controlled. This left it vulnerable to unsupervised visits
by various authorized and unauthorized persons.
(4) There were not adequate procedures governing the protection of
evidence (including money and other valuables) that was entrusted to the
deputy courtroom clerks in the normal course of their duties.
(5) Two deputy courtroom clerks were assigned to the same cage. This
deprived them of exclusive control over the evidence entrusted to them,
and deprived the clerk's office of accountability among the deputy
courtroom clerks for items entrusted to them. 63 Comp. Gen. at 494.
The new evidence submitted by Mr. DeCesaris consists of his 19-page
letter and 27 attachments to it (including a number of new affidavits
and excerpts from several documents). The documents submitted by Mr.
DeCesaris include an excerpt from a report made by an AOUSC "Management
Review Team" prior to the loss in question which states, "The present
system of maintaining exhibits in (Mr. DeCesaris') office is one of the
more secure systems observed by Management Review."
We have carefully reconsidered our previous decision in light of the
new submissions by Mr. DeCesaris. On some points, the new submissions
conflict with the findings of our original decision. In this regard,
Mr. DeCesaris has presented additional information which casts doubt on
the basic findings in our original decision.
For example, Mr. DeCesaris has presented new evidence by way of
affidavits that employees of the Clerk's office were well aware that
office procedure required the combinations on the evidence cage locks to
be periodically changed, that the deputy clerks in charge of the
evidence cage from which the missing money disappeared were specifically
informed of the procedure, that the lock on that particular cage had
been replaced following an attempt to change the combination "on or
before" January 14, 1981, and that specific instructions as to the need
to preserve confidentiality of the combinations were given to the deputy
clerks in question. While this new evidence does not demonstrate that
the combination in question was in fact different when the loss occurred
than the one that had been in use for several years, or that
confidentiality was in fact maintained by the deputy clerks, it does
tend to support Mr. DeCesaris' claim that reasonable procedures were in
place and that reasonable steps were taken to enforce them.
Similarly, the new evidence suggests that controls over access to the
vault in which the evidence cages were located were in place and that an
alarm system designed to preclude unauthorized access to the cages was
customarily in operation in the vault. Thus, while the cages themselves
(which have since been modified) may have been deficiently designed and
constructed, as we originally concluded, the new evidence tends to
support Mr. DeCesaris' claim that control over access to the vault and
the cages nevertheless was reasonably adequate.
Finally, the favorable report of the AOUSC "management review team"
demonstrates that the procedures governing the protection of evidence
were considered to be adequate before the loss in question was
discovered.
While it remains true that the assignment of two clerks to the same
cage makes a determination of pecuniary liability in the event of a loss
difficult, if not impossible, Mr. DeCesaris explains that this procedure
was dictated by the Senior Judge in order to assure ready access to
evidence when needed by judges. In any event, even had Mr. DeCesaris,
rather than the Senior Judge, been responsible for the procedure which
provided for dual access to the evidence cages, this factor alone would
not, in our view, support a finding that he was responsible for the loss
in question.
The additional facts presented by Mr. DeCesaris raise sufficient
doubt as to whether lax procedures were the proximate cause of the loss
to cause us to change our original conclusion. Accordingly, we now
conclude that Mr. DeCesaris should be granted relief from liability for
this loss pursuant to 31 U.S.C. Section 3527. A refund for the full
amount of the loss, which we understand has been withheld from his pay,
should be made to him promptly. Our decision in 64 Comp. Gen. 489 is
overruled accordingly.
B-220283.2, 65 Comp. Gen. 874
Matter of: Robertson and Penn, Inc., d/b/a National Service Co.,
September 25, 1986
Mere fact that awardee of service contract set aside for small
business indicated in bid that it would perform services at facility
owned by large business is not sufficient to require contracting officer
to challenge self-certification in awardee's bid as to its size status,
since it is not legally objectionable for a small business to
subcontract with a large business on a set-aside contract.
Robertson and Penn, Inc. d/b/a National Service Co. (NSC), protests
the contracting officer's failure to question the small business status
of Crown Laundry & Dry Cleaners, Inc. (Crown) in making an award to the
company under invitation for bids (IFB) No. M00264-85-B-0009, issued by
the Marine Corps as a small business set-aside for base laundry and dry
cleaning services at Quantico, Virginia. We deny the protest.
The IFB was part of a cost comparison to determine whether it would
be more economical to accomplish the work in-house using government
employees, or by contract. For various reasons, there were a number of
delays in completing the cost comparison and bid evaluation, which
ultimately led to the Marine Corp's determining that Crown's bid, as
adjusted, represented the most economical method of performance. Over
the next several months following the Marine Corp's selection of Crown,
NSC, next in line, raised various concerns with the agency regarding
Crown's subcontracting arrangements for a site where the work would be
performed. Immediately prior to the award to Crown, NSC filed a protest
with the contracting officer against the small business certification in
Crown's bid.
Since the bids had been opened almost a year earlier and since NSC
had received early notification of the selection of Crown for award, the
contracting officer concluded that the size status protest was untimely
and could not affect the outcome of the procurement. See Federal
Acquisition Regulation (FAR), 48 C.F.R. Section 19.302(d) (1985).
Nevertheless, the contracting officer forwarded NSC's protest to the
Small Business Administration (SBA) for consideration regarding Crown's
status for future procurements. In the meantime, a contract was awarded
to Crown with performance scheduled to begin in late September 1986.
NSC filed a protest with our Office after receiving notification from
the Marine Corps that its protest against Crown's small business status
was untimely. In NSC's view, the contracting officer had information in
his possession casting sufficient doubt on Crown's small business status
that he should have filed his own SBA protest challenging Crown's
status; according to NSC, this information indicated that Crown
improperly would have the overwhelming majority of the contract work
performed by a large business subcontractor. In this respect, a
contracting officer generally may accept at face value a bidder's
self-certification that it is a small business unless he has information
prior to award that would reasonably impeach the certification or has
received a timely size protest. Foam-Flex Inc., 62 Comp. Gen. 300
(1983), 83-1 C.P.D. Paragraph 383.
The Marine Corps responds that the contracting officer found no
reason to question Crown's certification that it was a small business
either from any information provided by Crown with its bid or from any
information subsequently provided by other sources. Further, the Marine
Corps argues that the entire protest now is academic because the SBA has
dismissed NSC's challenge to Crown's small business status.
We do not consider the matter academic. The SBA dismissed NSC's
protest because it was untimely as to the instant procurement and
because it alleged an affiliation between Crown and a large business for
this procurement only, so that a decision also would have no prospective
application. The procurement regulations, however, provide that a
contracting officer may on his own protest an offeror's small business
representation in any given procurement by forwarding the protest to the
SBA either before or after award, FAR, 48 C.F.R. Section 19.302(c)(1),
and that any such protest always is considered timely. FAR, 48 C.F.R.
Section 19.302(d)(2). The SBA thus presumably would render a decision
on Crown's small business status for this particular procurement if the
contracting officer were to file his own protest at this time.
Accordingly, it is appropriate for our Office to consider whether
Crown's size status should have been, and thus now should be, challenged
by the contracting officer himself for purposes of award under the
protested IFB.
The only information in Crown's bid bearing on NSC's point is a
listing of the address of the facility at which the company intends to
perform laundry services. The facility located at this address
apparently is owned by a large business. We do not believe this fact,
by itself, is sufficient to have required the contracting officer to
question the validity of Crown's small business certification, since it
is not legally objectionable for a small business to subcontract with a
large business on a small business set-aside service contract. See Mann
Rental Service, B-216868, Oct. 31, 1984, 84-2 C.P.D. Paragraph 493.
While a small business cannot transfer or impute its small business
status to an established joint venture composed of itself and a large
business for purposes of competing for small business set-asides,
Mantech International Corp., B-216505, Feb. 11, 1985, 85-1 C.P.D.
Paragraph 176, nothing on the face of Crown's bid indicated it was doing
so here.
Aside from the face of Crown's bid, the only information currently
before the contracting officer is NSC's contention that there is an
improper affiliation between Crown and the large business based on the
amount of contract work to be performed at the large business facility.
Nothing in the record indicates, however, that the contracting officer
has any information supporting NSC's assertions as to the extent of the
work Crown intends to subcontract, and we do not think a contracting
officer is required to question an offeror's status based solely on a
competitor's bare assertions. (Crown itself disputes NSC's assertion
and alleges that a number of services required by the solicitation in
fact will be performed at other sites.)
Given the absence of a timely protest by NSC or another bidder or
information that would reasonably impeach Crown's self-certification,
the contracting officer properly accepted Crown's small business
certification as correct on its face. See Keco Industries, Inc., 56
Comp. Gen. 878 (1977), 77-2 C.P.D. Paragraph 98. The protest is denied.
B-223594, 65 Comp. Gen. 871
Matter of: Kinetic Builders, Inc., September 24, 1986
As a general rule, a bid bond which erroneously references another
solicitation number is materially defective in the absence of other
objective evidence which clearly establishes at the time of bid opening
that the bond was intended to cover the bid for which it was actually
submitted. If uncertainty exists that the bond is enforceable by the
government against the surety, the bond is unacceptable and the bid must
be rejected as nonresponsive.
Kinetic Builders, Inc. (Kinetic), protests the proposed award of a
contract to Fitzgerald & Company, Inc. (Fitzgerald) under invitation for
bids (IFB) No. F08620-86-B0019, issued by the Department of the Air
Force. The procurement is for the construction of a weather facility.
Kinetic complains that the agency has improperly determined that
Fitzgerald's bid is responsive despite the fact that the accompanying
bid bond was materially defective.
We sustain the protest.
The IFB required the submission of a bid bond or other suitable bid
guarantee in the amount of 20 percent of the bid. Bids were opened on
June 24, 1986. Fitzgerald was the apparent low bidder, but submitted a
bid bond which referenced another solicitation number (IFB No.
"F08620-86-B0051" instead of IFB No. "F08620-86-B0019"). The Air Force
ultimately determined that the incorrect solicitation number on the bond
was only a minor defect which did not render the bid nonresponsive,
since IFB No. F-08620-86-B0051, as erroneously referenced, was a
solicitation for building alteration with an amended bid opening date of
July 17, three weeks later. In the Air Force's view, the fact that the
bond referenced a June 24 bid date and was executed on that date was
sufficient evidence that the bond was intended to cover IFB No.
F08620-86-B0019, and not IFB No. F08620-86-B0051. Kinetic, the second
low bidder, then protested the Air Force's determination to this Office.
Kinetic asserts that Fitzgerald's bid should be rejected as
nonresponsive and the award made to itself because the incorrect
solicitation number referenced in the bond created a material defect in
the bond which rendered it unacceptable. We agree.
The submission of a required bid bond is a material condition of
responsiveness with which there must be compliance at the time of bid
opening. Baucom Janitorial Service, Inc., B-206353, Apr. 19, 1982, 82-1
CPD Paragraph 356. When a bond is alleged to be defective, the
determinative question is whether the bond is enforceable by the
government against the surety notwithstanding the defect. See J.W.
Bateson Co., Inc., B-189848, Dec. 16, 1977, 77-2 CPD Paragraph 472. If
uncertainty exists at the time of bid opening that the bidder has
furnished a legally binding bond, the bond is unacceptable and the bid,
therefore, must be rejected as nonresponsive. See A & A Roofing Co.,
Inc., B-219645, Oct. 25, 1985, 85-2 CPD Paragraph 463.
With respect to the effect of an erroneous solicitation number
referenced in a bid bond, we held in Custodial Guidance Systems, Inc.,
B-192750, Nov. 21, 1978, 78-2 CPD Paragraph 355, that a bid bond was
enforceable by the government against the surety even though it
contained the incorrect solicitation number where the error was
obviously clerical in nature (the transposition of two digits -- "19145"
instead of "19154"), the bond correctly stated the schedule bid opening
date, the agency conducted only one bid opening on that date, and the
incorrect number was for a prior procurement for which bonds were not
required and in which the bidder had not submitted a bid. We analogized
the situation in Custodial Guidance to earlier cases which held that
erroneously dated or undated bid bonds -- which nevertheless were
identifiable with the only invitation outstanding for a particular
procurement -- were only technically defective and could be enforced
against the surety. See 39 Comp. Gen. 60 (1959); B-160659, June 9,
1967; B-159209, June 23, 1966. Therefore, we found in Custodial
Guidance that since the erroneous solicitation number had apparently
created no confusion as to the bid covered by the bond, the defect would
not affect the enforceability of the bond by the government against the
surety.
We reached a different result in A & A Roofing Co., Inc., B-219645,
supra. There, the bond was materially defective because it referenced
not only the wrong solicitation number but also the wrong bid opening
date, and there was no other objective evidence of the intent of the
surety to provide a bond on the bid in question. Significantly, the
solicitation number and date entered on the bond specifically and
accurately identified another solicitation for the same kind of work at
the same facility, the bid opening for which had been only 11 days
earlier than that of the protested procurement. Since, given the
existence of the other solicitation, it was uncertain at the time of bid
opening whether the surety had consented to be bound on the solicitation
for which the bond was actually submitted, the bond was materially
defective requiring rejection of the bid as nonresponsive.
We believe that our holding in A & A Roofing, rather than that in
Custodial Guidance, is more applicable to the facts here. It is
undisputed that IFB No. F08620-86-B0051, as erroneously referenced in
Fitzgerald's bond, was an on-going solicitation for building alteration
with an original bid opening date of June 12, 1986, later amended to
June 25, and then to July 17. Fitzgerald's bond typically identified
the work to be performed in general terms as "Construction," which, in
our view, reasonably refers to building alteration under IFB No.
F08620-86-B0051 as well as to weather facility construction under IFB
No. F08620-86-B0019. Thus, apart from the June 24 date referenced in
the bond, /1/ there are no other indicia in the bond to identify it with
IFB No. F08620-86-B0019. Moreover, unlike the facts in Custodial
Guidance, the erroneous solicitation number does not involve a mere
transposition of digits, and we cannot regard the insertion of "-B0051"
instead of "-B0019" as only a minor clerical error.
Although the surety's agent in this case has stated after bid opening
that it had made a typographical error in the bond with regard to the
solicitation number and has consented to a correction, thereby
indicating that the bond was intended to cover Fitzgerald's bid under
IFB No. F08620-86-B0019, the fundamental rule remains that a
nonresponsive bid cannot be made responsive by actions taken to correct
a defective bond after bid opening. Truesdale Construction Co., Inc.,
B-213094, Nov. 18, 1983, 83-2 CPD Paragraph 591. Therefore, it is also
immaterial that facts subsequent to bid opening have established that
Fitzgerald submitted a bid in response to IFB No. F08620-86-B0051 in the
July 17 opening date, which included a bid bond executed on that date by
the same surety. A bond must be determined to be enforceable at the
time of bid opening, and not afterwards.
Because the erroneous solicitation number created uncertainty at the
time of bid opening as to the enforceability of the bond, not overcome
by other objective evidence, the bond was unacceptable. Accordingly, by
separate letter of today, we are recommending to the Secretary of the
Air Force that Fitzgerald's bid be rejected as nonresponsive and that
award be made to Kinetic, the apparent remaining low bidder, if the
firm's bid is otherwise proper and the firm is determined to be a
responsible prospective contractor.
Since we have recommended that Kinetic be awarded the contract, we
will not allow the firm to recover its claimed costs of filing and
pursuing the protest, including attorney's fees. 4 C.F.R. Section
21.6(e) (1986); see also EHE National Health Services, Inc., 65 Comp.
Gen. 1 (1985), 85-2 CPD Paragraph 362.
The protest is sustained.
(1) The Air Force states that there was one other bid opening at the
activity on June 24, but that Fitzgerald did not submit a bid.
B-220734, 65 Comp. Gen. 865
Matter of: Jeffrey Kassel - Backpay - Computations and Deductions,
September 24, 1986
Unemployment compensation benefits must be deducted from backpay
awards where state law requires employer, rather than employee, to
reimburse the state for overpayments and where appropriate state agency
has determined that an overpayment has occurred and has notified
employing agency. Here, state agency determined that, since employee
would receive backpay for period covered by unemployment compensation,
he had been overpaid, and it so notified Veterans Administration (VA).
The VA properly deducted the overpayment from backpay. Absent such a
state determination and requirement, unemployment compensation should
not be deducted from backpay. Glen Gurwit, 63 Comp. Gen. 99 (1983),
modified.
Agency properly deducted from backpay an amount representing the
lump-sum annual leave payment made to employee when he was removed.
Lump-sum leave payments must be offset from backpay awards. Vincent T.
Oliver, 59 Comp. Gen. 395 (1980). Waiver is denied because deduction of
this amount did not result in a net indebtedness.
The agency's action in offsetting refunded retirement contributions
from an employee's backpay award is consistent with Federal Personnel
Manual requirements which were sustained in our decision in Angel F.
Rivera, 64 Comp. Gen. 86 (1984). Therefore, we will not disturb the
agency's action, although the issue of whether refunded retirement
contributions are deductible from a backpay award is now in litigation.
Employee requests waiver of collection of several items offset from
backpay, but waiver may be granted only to the extent there has been a
net overpayment. The backpay computations were complex and subject to
many revisions and corrections and the agency did make an overpayment.
The overpayment is largely attributable to unemployment compensation.
The employee relied upon published authority providing that unemployment
benefits should not be offset from backpay, and he could not be expected
to know how the impact of state law would alter the agency's
determination on this issue. The agency found no evidence of fraud,
misrepresentation, or lack of good faith. In these circumstances, it
would be against equity and good conscience to collect the net
overpayment; therefore, the net overpayment is waived.
This is an appeal by Dr. Jeffrey Kassel from the settlement of our
Claims Group which affirmed the deductions made by the Veterans
Administration (VA) from Dr. Kassel's backpay award and denied waiver.
We hold that state unemployment benefits must be offset from backpay
where the state agency has notified the employing agency that there has
been an overpayment of unemployment compensation and state law requires
the employer to reimburse the state for overpayments. We also hold that
the Veterans Administration correctly deducted the lump-sum annual leave
payment from the backpay award. No waiver is granted of the lump-sum
leave payment because there is no net indebtedness owed in this regard.
The VA's deduction of refunded retirement contributions from the
employee's backpay is consistent with Federal Personnel Manual
requirements which were sustained in a recent Comptroller General
decision. Finally, we grant waiver of the net overpayment received by
Dr. Kassel.
Dr. Jeffrey Kassel was employed as a clinical psychologist at the
Veterans Administration Medical Center in Manchester, New Hampshire. He
was removed from his position on November 4, 1982. He grieved his
dismissal under the collective bargaining agreement in effect between
the VA and the National Association of Government Employees and the
grievance was submitted to arbitration. On August 15, 1983, Arbitrator
Jerome J. Judge issued an award ordering, in pertinent part,
reinstatement of Dr. Kassel without loss of pay or benefits. Dr. Kassel
was reinstated on May 14, 1984. This decision concerns the computation
of his backpay award for the period November 4, 1982, through May 14,
1984. /1/
Since the backpay award in this case is the result of an arbitration
proceeding, both the agency and union representatives were provided with
notice and the opportunity to comment on the submission to GAO. No
comments were received from the agency's representative in the
arbitration proceeding or from the union representative, but additional
comments and information were received from Dr. Kassel and the VA
Director of Budget and Finance.
Dr. Kassel's submission also referred to an unfair labor practice
charge filed with the Federal Labor Relations Authority (FLRA) alleging
that the agency had failed to comply with the arbitration award. Since
this allegation could conceivably include issues pertaining to backpay,
we obtained the public case documents from the FLRA. It appears that
two unfair labor practice charges were filed. One charge, 1-CA-40263,
was withdrawn at the union's request and with the approval of the FLRA
on July 23, 1984. The other charge, 1-CA-40302, was settled by the FLRA
on August 6, 1984, prior to issuance of complaint. Our review of the
charges and settlement indicates that neither charge raised any of the
backpay issues considered herein, and we are aware of no objections to
our assertion of jurisdiction over the backpay issues raised by Dr.
Kassel's submission.
The Veterans Administration has provided several different breakdowns
of backpay computations to Dr. Kassel and to this Office. There are
revisions and corrections in each of these. Because of these ongoing
revisions, the backpay check issued to Dr. Kassel exceeded the amount
actually due. Only the final corrected figures will be discussed
herein, with notations where necessary to explain discrepancies.
Dr. Kassel's gross backpay was $65,871.20 plus $493.02 in night
differentials, for a total of $66,364.22. From this amount, $113.60 in
interim earnings was deducted.
The agency's initial computation of backpay due Dr. Kassel did not
include a deduction for refunded retirement contributions.
Subsequently, however, the agency became aware of the new requirement
established by the Office of Personnel Management (OPM) in the Federal
Personnel Manual (FPM) that refunds of retirement fund contributions
withdrawn at the time of discharge must be offset from backpay awards
and returned to the retirement fund. See FPM Letter 550-76, July 15,
1982; FPM Supplement 990-2, Book 550, Subchapter 8 at 550-64.02 (Inst.
73, April 20, 1984). Accordingly, the agency offset $21,439.65 in
refunded retirement contributions and has paid that amount to the OPM.
/2/
Dr. Kassel had received a lump-sum payment in the amount of $5,944.25
for 295 hours of annual leave at the time of his discharge. This amount
was also deducted from his backpay and the leave was restored. Also
deducted were retirement contributions for the period of the backpay
award in the amount of $4,610.98. Federal taxes were initially
calculated at $13,272.82 but this figure was later revised and is now
$12,964.96. As corrected, $491.40 was deducted for medicare payments.
/3/
The agency also deducted $6,660 which had been received by Dr. Kassel
from the State of New Hampshire in the form of unemployment benefits
during the period of his removal.
Thus, using the agency's final corrected figures, the agency's action
on Dr. Kassel's claim for backpay can be summarized as follows:
TABLE OMITTED
Thus, according to our calculations using the agency's corrected
figures, Dr. Kassel should have received net backpay of $14,139.38.
However, because of the agency's ongoing revisions to backpay
computations, particularly the uncertainty as to the deduction of
unemployment compensation and the delay in learning of the FPM
requirement that refunded retirement contributions for the period prior
to discharge must be offset from backpay awards, the agency overpaid Dr.
Kassel. Specifically, in June 1984, the agency paid $19,501.72 in
backpay to Dr. Kassel. Thus, according to the above calculations, Dr.
Kassel received an overpayment of $5,362.34. The record shows that the
agency issued a bill for collection of $6,660 as the overpayment. As is
apparent, however, using our calculations based on the agency's
corrected figures, the correct net overpayment is $5,362.34.
There are three items in dispute: the deduction from backpay of
$6,660 in New Hampshire unemployment benefits, the deduction of the
$5,944.25 lump-sum annual leave payment, and the deduction of $21,439.65
in refunded retirement contributions. Dr. Kassel argues that none of
these items should have been offset from his backpay award. In the
alternative, he argues that assuming such deductions are required, they
should be waived in his case. We will consider each item separately.
Dr. Kassel argues that unemployment compensation should not have been
offset from backpay because the Federal Personnel Manual Supplement
990-2, Book 550-64.02 (June 16, 1977) says that it should not be
deducted. /4/
We considered the issue of whether or not unemployment benefits
should be offset from backpay awards in Glen Gurwit, 63 Comp. Gen. 99
(1983). We held that state unemployment benefits should not be deducted
from backpay awards because the reinstated employee may be required to
refund that amount to the state. In this case, however, the agency
points out that under New Hampshire law the employer, not the employee,
is liable to make full restitution to the state unemployment fund for
any unemployment benefits paid to an employee for a period covered by or
included in any arbitration or backpay award.
Further, the record here contains a copy of a determination by the
State of New Hampshire Department of Employment Security, dated July 27,
1984, and addressed to Dr. Kassel, advising him that, since he had
received backpay for the period November 4, 1982, to May 14, 1984, the
state had determined that he had been overpaid unemployment compensation
in the amount of $6,660. The notice advises that recovery of the
overpayment will be accomplished administratively as his "employer is a
so called reimbursable employer." A copy of the notice was sent to the
VA and it proceeded to deduct that amount from the backpay.
As noted in Gurwit, determinations of whether there have been
overpayments of unemployment compensation are in all respects committed
to state agencies for action in accordance with that state's
unemployment compensation law. In this case, the appropriate state
agency determined that an overpayment had occurred, and under New
Hampshire law, the employer, rather than the employee is required to
refund the money to the state fund. Therefore, giving deference to the
state law the VA properly deducted the overpayment of unemployment
compensation benefits from Dr. Kassel's backpay.
Accordingly, our decision in Gurwit is hereby modified in part. We
now hold that unemployment benefits must be deducted from backpay awards
where the appropriate state agency has determined that an overpayment
has occurred and has notified the employing Federal agency and where
state law requires the employer, rather than the employee, to refund
overpayments. Absent such a determination and requirement under state
law, the rule in Gurwit applies and unemployment compensation should not
be deducted from backpay awards.
Dr. Kassel also objects to the deduction of $5,944.25 he received as
a lump-sum leave payment. He states that he was told by Personnel that
he would not have to repay that money.
We have held that lump-sum leave payments must be offset from backpay
awards. Vincent T. Oliver, 59 Comp. Gen. 395 (1980). For the reasons
stated in Oliver, the agency's action in deducting this amount from the
backpay award is sustained. Where such deductions leave the reinstated
employee in debt to the government, the indebtedness may be considered
for waiver. Oliver, supra, and Angel F. Rivera, 64 Comp. Gen. 86
(1984). However, in this case, the deduction of Dr. Kassel's lump-sum
leave payment from backpay did not result in net indebtedness to the
government. Therefore, waiver is denied.
Dr. Kassel argues that he was told several times that he would not
have to repay the $21,439.65 in refunded retirement contributions that
he withdrew when he was discharged. He points out the agency officials
also initially believed that this money would not have to be offset from
backpay, and first became aware of the FPM requirements in June 1984.
The VA's action in deducting refunded retirement contributions and
transmitting them to OPM were consistent with the FPM requirements; and
we sustained the legality of these requirements in our decision in
Rivera, supra. Therefore, we will not disturb the VA's action. We note
that the issue of the deductibility of refunded retirement contributions
from backpay awards is the subject of a class action filed on July 18,
1986, in the United States Claims Court, entitled Jerris Wise v. United
States, Cl. Ct. No. 447-86C.
With respect to Dr. Kassel's request for waiver, we note that waiver
may be granted only to the extent there has been an overpayment. As
stated above, the VA paid Dr. Kassel $19,501.72 in backpay. Using the
agency's later revised figures, however, we calculate that Dr. Kassel
was overpaid $5,362.34. Accordingly, based upon the present record,
this overpayment is subject to waiver consideration.
We grant waiver of the net overpayment received by Dr. Kassel. The
backpay computations in this case were complex and were revised and
corrected by the VA on several different occasions over an extended
period of time. Further, with respect to the offset of unemployment
compensation from backpay, Dr. Kassel relied upon published authority
which provided that it should not be offset. Since the issue is one of
first impression, it would be unreasonable to assume that he knew or
should have known how the impact of state law would alter the VA's
determination on this issue. We also note that the VA waiver committee
found that no evidence of fraud, misrepresentation, or lack of faith on
the part of Dr. Kassel with respect to these proceedings. Given these
circumstances, we find that it would be against equity and good
conscience to collect the net overpayment from Dr. Kassel. Accordingly,
we grant waiver of the net overpayment.
In summary, we have decided that: (1) where the appropriate state
agency has determined that an overpayment of unemployment compensation
has occurred and state law requires that the employer, rather than the
employee, reimburse the state, unemployment compensation should be
deducted from backpay; (2) the Veterans Administration acted properly
in deducting the lump-sum leave payment and refunded retirement
contributions from backpay; and (3) the net overpayment received by Dr.
Kassel is waived.
(1) In his appeal dated September 16, 1985, Dr. Kassel also requested
waiver of an overpayment of $652.93 in FICA which occurred after his
reinstatement and was unrelated to his backpay award. By letter dated
December 8, 1985, Dr. Kassel advised that that issue has been resolved.
Accordingly, it is not considered or discussed herein.
(2) The Agency states that OPM initially informed it that interest on
the $21,439.65 at a rate of 3% compounded annually was also due the
retirement funds. The agency therefore deducted an additional $926.33
from Dr. Kassel's backpay. However, the agency states that OPM later
changed its position on this issue and said no interest was due.
Accordingly, Dr. Kassel has been paid the $926.33.
(3) The VA had deducted a total of $997.47 for 1984 for medicare.
Since this exceeded the maximum allowable deduction of $491.40, the VA
says the excess of $506.07 has been refunded to Dr. Kassel.
(4) FPM Supplement 990-2, Book 550, has since been revised. The new
Subchapter 8 on Backpay, dated April 20, 1984, does not specifically
discuss unemployment compensation.
B-217114, 65 Comp. Gen. 858
To Mr. Clyde E. Jeffcoat, U.S. Army Finance and Accounting Center,
Indianapolis, Indiana, September 24, 1986
Relief for Army disbursing officer under 31 U.S.C. 3527(c) is denied
where the officer paid fraudulent travel voucher after learning that one
of the recipients of fraudulent payments had admitted the fraud and the
means by which the fraud was accomplished to a subordinate of the
officer. Relief granted for payments before this admission when
investigation did not uncover fraud.
Under the Federal Claims Collection Standards, 4 C.F.R. 101 et seq.,
collections received from a recipient of an improper payment who is both
individually liable for some improper payment and jointly and severably
liable with an accountable officer for other improper payments should be
credited first to the payments for which the recipient is individually
liable unless the recoveries are identified as repayments of the joint
indebtedness.
An accountable officer faced with questionable vouchers, based on the
fact that a criminal investigation into fraudulent claims is being
conducted, does not exercise reasonable care by relying on advice from
authorities within his agency in lieu of seeking an advance decision
from the General Accounting Office (GAO).
This replies to your October 29, 1985 request that we grant relief
under 31 U.S.C. Section 3527(c) to Mr. Paul F. Kane, a former Special
Disbursing Agent at the Buffalo, New York District Office of the North
Central Division, U.S. Army Corps of Engineers, for some $12,615.22 of
fraudulent travel claims which were paid out of Mr. Kane's account. /1/
Although we grant relief to Mr. Kane, we limit that relief to payments
made before January 1, 1982.
On July 7, 1980, Mr. Kane assumed his duties as the Chief of the
Finance and Accounting Section of the U.S. Army Corps of Engineers
Buffalo District Office. In that position Mr. Kane was responsible for
assuring that temporary duty travel expense reimbursements paid to
Buffalo District employees were proper. A significant portion of the
Buffalo District's employees were members of survey teams whose job
duties required extensive travel.
Sometime in late 1980 or early 1981, Ms. Patricia Sadler, who served
under Mr. Kane as a supervisory voucher examiner, brought to Mr. Kane's
attention certain receipts submitted with travel reimbursement claims
for survey crew members which she viewed as questionable. Specifically,
these were receipts for the use of recreational vehicles as lodging
which were not accompanied by receipts for hook-up charges, and many
other receipts for lodging which were handwritten. Ms. Sadler also had
noted unusual patterns in travel reimbursement claims, such as members
of a survey team requesting reimbursements for widely varying amounts
for lodging within the same city at the same time, and amounts on
receipts for lodging increasing when the Government's maximum
reimbursable expense for lodging increased. /2/ Mr. Kane instructed Ms.
Sadler and the other voucher examiners to continue with the existing
expense verification procedures, which included confirming the amounts
of handwritten receipts by telephoning the lodging providers.
In April 1981, Mr. Charles Laycock, the Deputy Division Counsel for
the U.S. Army Corps of Engineers North Central Division, who had been
involved in the prosecution of Corps employees for travel reimbursement
fraud at the other District Offices, spoke to Ms. Sadler about
questionable receipts at Buffalo. Mr. Kane was advised of this contact
and was aware that Mr. Laycock was given samples of questionable
receipts. Mr. Laycock turned over the materials he had collected to
Lieutenant Colonel Lefew, the Chief of Law Enforcement and Security for
the North Central District of the Corps. On May 14, 1981, a U.S. Army
Criminal Investigation Command (CID) investigation into travel claims at
the Buffalo District was begun at the request of Lieutenant Colonel
Lefew. On May 18, 1981, Mr. Kane became aware of the CID investigation.
In August 1981, Ms. Sadler, at Mr. Kane's direction, distributed a
notice to all Buffalo District employees. That notice emphasized the
documentation requirements for travel reimbursement claims. During this
time, Mr. Kane was advised by the Buffalo District Office of Counsel to
continue making travel reimbursement payments to employees under
investigation.
On September 11, 1981, the CID investigation into the Buffalo
District's travel claims was closed because no evidence of fraud or
larceny had been discovered. While the CID investigation was in
process, to informal Buffalo District investigations were conducted and
also failed to detect any fraud.
The essential reason for the failure of the CID and Buffalo District
internal investigations, and of the voucher verification procedures
enforced by Mr. Kane to detect the fraud, was in assuming that lodging
providers listed on the questionable receipts were not involved in the
suspected fraud. In fact, lodging providers were part of a series of
conspiracies to defraud the Government by providing fraudulent receipts
to Buffalo District employees, many of whom were their friends or
relatives. Each of the investigations, as well as the verification
procedures, assumed that the suspected fraud took place when employees
altered or manufactured receipts, and that contacting the lodging
providers would reveal the true amounts paid. When the lodging
providers incorrectly and fraudulently stated that the amounts shown on
the receipts had actually been paid, the investigators and voucher
examiners concluded that no fraud had occurred. It was not until the
CID investigation was reopened that the possibility that lodging
providers had conspired to commit the fraud was pursued. /3/
During December 1981, the CID investigation was reopened. Also
during December 1981, Ms. Sadler received a telephone call at her home
from a Buffalo District employee. This employee told Ms. Sadler that he
and other employees were submitting false travel reimbursement claims
and that lodging providers were supplying inflated receipts. Ms. Sadler
relayed this information in turn to Mr. Kane and the CID. On December
28 and 30, 1981, Mr. Kane turned over to the CID evidence dealing with
the specific allegations made in the telephone call to Ms. Sadler.
On February 5, 1982, the First Supplement to the initial CID report
was prepared by the CID. This supplement reported clear evidence of
fraud. Second and third supplements on April 8 and May 28, 1982,
reported further evidence of fraud. However, Mr. Kane continued to
allow payments until August 1982 when the investigation was first
submitted to the U.S. Attorney's Office for prosecution.
A total of $169,581.89 in improper and illegal payments were made
from 1975 to 1982. Pecuniary liability against the accountable officers
involved cannot be assessed for the vast majority of these payments
because the accounts are considered closed by operation of law upon the
running of the applicable statute of limitations. 31 U.S.C Section
3526(c) (1982). On December 29, 1984, the GAO issued a Notice of
Exception which tolled the statute of limitations on $22,848.46 paid out
of Mr. Kane's account after October 9, 1981. You have requested relief
for Mr. Kane for that portion of this amount that represents payments
made before June 1, 1982, totaling $12,615.22, but have not requested
relief for the remaining $10,233 in payments made between June 1 through
August 1982.
A disbursing official who is responsible for an account is liable for
payments on fraudulent vouchers made out of his account. See, e.g.,
B-221395, March 26, 1986. Under 31 U.S.C. Section 3127(c) (1982), this
Office has the authority to relieve a disbursing official from liability
for an improper payment when the record shows that the payment was not
the result of bad faith or lack of reasonable care.
In this case we are asked to determine when, during the course of a
series of fraudulent claims, did a disbursing official cease to exercise
reasonable care in paying claims. Generally, we consider reasonable
care to be what a reasonably prudent and careful person would have done
to take care of his own funds under like circumstances. 54 Comp. Gen.
112 (1974). In considering requests for relief of disbursing officers
in cases involving fraud, our cases frequently examine the question of
whether the official had notice of the fraud. For example, relief for a
Navy disbursing officer who improperly paid lodging reimbursements based
on inflated hotel receipts was denied because the record indicated that
the officer had notice that overpayments were being made.
B-146729-O.M., May 9, 1967. Conversely the lack of notice is a factor
in deciding that reasonable care was exercised even though a criminal
scheme was successful in defrauding the Government. E.g., B-221395,
supra.
In your submission, you argue that Mr. Kane acted with reasonable
care in making payments until June 1, 1982. You take that date to be
the point at which Mr. Kane had either actual or constructive knowledge
of the February 5, April 8, and May 28, 1982 Supplements to the CID
report, each of which concluded that fraudulent travel claims had been
submitted to and paid by Mr. Kane. Prior to June 1, you argue that Mr.
Kane's actions in continuing to abide by and enforce existing procedures
to verify the amounts of suspicious travel vouchers constitute
reasonable care in processing travel claims.
We do not agree that Mr. Kane continued exercising reasonable care
until June 1, 1982. This theory of determining liability assumes that
Mr. Kane became negligent in making payments only after the CID
investigations substantiated the existence of fraud. We would agree if
this were a case where no prior evidence of improper payments existed.
In such a case, a CID investigation report establishing fraud might well
establish when further payments became negligent. But the measure of an
accountable officer's negligence is taken against the reasonableness of
his conduct under all the circumstances before him. Further, the
purpose of accountable officer liability is to make the officer an
insurer of Government funds. See, 54 Comp. Gen. 112, 114 (1974). That
purpose would be ill served if liability could be avoided by merely
avoiding exposure to evidence of fraud. When there are longstanding
questions about payments, the exercise of reasonable care may require
action, such as strengthening verification procedures (B-212603, et al.,
March 27, 1984, rev'd. B-212603, et al., Dec. 12, 1984) or requesting an
advance decision from this Office, long before clear evidence of actual
fraud is discovered (49 Comp. Gen. 38 (1969)).
We conclude that Mr. Kane's continued payments based on the
fraudulent vouchers had become negligent by January 1, 1982. During
December 1981, Mr. Kane learned that the CID investigation had been
reopened and that Ms. Sadler had received a telephone call exposing the
device by which the fraudulent schemes had previously evaded detection.
At that point, Mr. Kane was actually aware that the procedures in place
for verifying travel vouchers were not adequate to ensure that payments
would be proper. A person exercising reasonable care in protecting his
own funds under similar circumstances would have, at a minimum, ceased
relying on a verification system shown to be faulty. Mr. Kane however,
continued to accept telephone verification of handwritten lodging
receipts until the time that the evidence of fraud was turned over to
the U.S. Attorney's Office.
Mr. Kane apparently did ask the Buffalo District Office of Counsel
whether he should withhold travel reimbursements between the time he
learned of the first CID investigation and June 1982. That Office
advised Mr. Kane to continue making the payments. This advice does not
appear to have been predicated on the needs of furthering the CID
investigation. An accountable officer faced with a questionable voucher
does not exercise reasonable care by relying on advice from others
within his agency in lieu of seeking an advance decision from this
Office. 49 Comp. Gen. 38 (1969).
We, therefore, relieve Mr. Kane only for payments which were made
prior to January 1, 1982. We conclude that he was not negligent as to
these payments because their suspicious nature, although recognized, had
been investigated without success. These payments total $7,615.73. Mr.
Kane remains jointly and severably liable with the recipients of the
improper disbursements for the balance of the improper payments. These
payments total $15,232.49.
As an accountable officer liable for a loss of Government funds, Mr.
Kane is jointly and severally liable with the recipients for the
improper payments. However, because the recipients' liability for the
improper payments they received is not foreclosed by the statute of
limitations covering Mr. Kane, they remain liable for all fraudulent
payments they have not returned. 31 U.S.C. Section 3527(d)(2).
Accordingly, this case has two classes of debts owed to the United
States -- one class consisting of payments made before January 1, 1982
for which only the recipients are liable, and a second class consisting
of payments made after January 1, 1982, for which Mr. Kane and the
recipients are jointly and severally liable. Your submission indicates
the collections made from the recipients will be credited first to the
payments in the second class, thereby reducing the liability of both the
recipient involved and Mr. Kane. We do not agree that this is the
correct allocation.
As a basis for this allocation, you rely on several comments in our
publication, Principles of Federal Appropriation Law. Specifically, we
stated there that agencies "should seek to recover from the recipient if
possible" and that "(a)ny amounts recouped will reduce the accountable
officer's liability." You have taken these statements to mean that any
amounts collected from the recipients in this case must be credited to
reduce the debt owed by Mr. Kane. This interpretation takes our
language out of context. Our discussion was meant to be a guide to
agencies on how to approach accountable offer debts in the typical case
where the amount of recipient debt and accountable officer debt arose
from one transaction. In those cases, collection from the recipient
will, in fact, reduce the accountable officer's liability. This
statement does not apply to the situation where, as here, the recipient
of payments is liable for debts arising from several transactions and
which total more than the liability of the accountable officer.
The allocation of collections between the two classes of debts in
this case must be determined by reference to the Federal Claims
Collection Standards. 4 C.F.R. Part 101 et seq. (1986). Section
102.11(b) of the Standards specifies that when debtors owe more than one
debt to the United States, and they do not specify which debt a payment
will be credited toward, the agency involved should apply payments to
liquidate the various debts in accordance with the best interests of the
United States. In this instance, the best interests of the United
States are clearly served by applying payments made by the recipients to
the class of debt for which only the recipients are liable. The United
States has, by virtue of the joint liability, greater assurance that the
debt owned jointly by the recipient and Mr. Kane will be repaid. The
interests of the United States are best served by retiring the least
secure debts first. In addition, Section 103.6 of the Standards
specifies that agencies should not attempt to allocate the burden of
paying debts between joint and several debtors. Instead, agencies are
instructed to liquidate the debt as quickly as possible. Although we
have noted the appropriateness of first seeking recovery from the
perpetrators of the fraud, the allocation of repayments first to the
class of debt for which Mr. Kane and the recipients are jointly liable
is not consistent with Section 103.6.
In response to your request, we grant relief for payments made by Mr.
Kane based on fraudulent vouchers from October 19, 1981 to January 1,
1982. However, we deny relief for Mr. Kane for all of the fraudulent
travel payments made after January 1, 1982. In addition, any
collections already received from the recipients of the fraudulent
payments, with whom Mr. Kane is jointly and severally liable, should be
first credited to the debts which these recipients owe individually,
rather than the debts which they owe jointly and severally with Mr.
Kane.
(1) The fraudulent payments made out of Mr. Kane's account, for which
he is liable, occurred between October 19, 1981 and September 31, 1982.
The total amount of these payments is $22,848.22. Your submission
requests relief only for those payments made between October 19, 1981
and June 1, 1982, which total $12,615.22.
(2) These were longstanding concerns of Ms. Sadler, dating back to
1974 when she was first assigned to voucher examining duties in the
Buffalo District. These concerns had also been the subject of an
Inspector General investigation prior to Mr. Kane's tenure as the Chief
of the Finance and Accounting Section. That investigation failed to
detect the fraudulent nature of the travel claims.
(3) In this regard, we note that Mr. Charles Laycock was instrumental
in assuring that the CID investigation was reopened and that the full
scope of the fraud was discovered. Had Mr. Laycock not pursued the
matter of the incomplete investigation, the fraudulent travel claims
might still be occurring.
B-223157, et al., 65 Comp. Gen. 854
Matter of: Gateway Cable Company, September 22, 1986
Protest concerning agency's failure to solicit protester filed more
than 10 working days after bid opening is untimely since the protest was
not filed within 10 working days after the basis for protest was known
or should have been known, whichever was earlier, as required by Bid
Protest Regulations.
Protest concerning agency's failure to furnish request for quotations
to protester under two procurements conducted under simplified small
purchase procedures is sustained where, despite agency contention that
it was not aware that protester was a potential supplier, record
contains clear evidence that agency should have been aware of
protester's interest in competing. Agency's actions are not consistent
with Competition in Contracting Act requirement that competition for
small purchases be obtained to the maximum extent practicable.
Gateway Cable Company (Gateway) protests the awards of contracts
under invitation for bids (IFB) No. 102PI-86060, and request for
quotations (RFQ) Nos. 102PI-86074 and 102PI-86077 issued by the Federal
Prison Industries, Inc. (FPI), Department of Justice, for connectors,
band markers and terminal lugs, respectively. Gateway contends that FPI
acted arbitrarily in not providing Gateway with copies of the IFB and
RFQ's despite repeated telephonic requests. In addition, Gateway
contends FPI had in its possession price quotations from Gateway for
these items which were lower than the awarded contract prices, and that
FPI should have considered Gateway in its award decision.
The protest under IFB No. 102PI-86060 is denied in part and dismissed
in part. The protests related to the RFQ's are sustained.
FPI is a wholly-owned government corporation engaged in the
manufacture of goods, and responds to solicitations issued by other
agencies. In response to a U.S. Army Tank-Automotive Command (TACOM)
request for proposals for cable kits, FPI's Electronics Division in
Washington, D.C. solicited suppliers' quotations on component parts in
order to arrive at a unit cost estimate for submission to TACOM.
Between January 2 and January 8, 1986, telephonic quotations were
obtained from 10 companies and these price quotes were used by FPI to
arrive at a unit cost estimate. Gateway was not solicited by FPI, but
on January 20, 1986, Gateway hand-delivered to FPI's Washington location
a letter containing price quotations for all components of the cable
kits including band markets, terminals and cables. Gateway also
indicated that it had been the "main supplier" of these cable kits in
recent years.
On March 14, 1986, TACOM issued an order for cable kits directly to
the FPI factory in Englewood, Colorado. Thereafter, FPI's Electronics
Division in Washington, D.C. forwarded the telephonic quotations it had
received to the FPI factory. Gateway's January 20 letter quotation
apparently was not sent to the factory, although the telephonic
quotation records were forwarded.
The contracting officer at the FPI factory divided the total
requirements into four separate solicitations. IFB Nos. 102PI-86060 and
102PI-86061, for connectors and cables, respectively, were synopsized in
the Commerce Business Daily (CBD) on March 4, 1986, and FPI states that
it mailed copies of the solicitations to prospective bidders, including
Gateway, on that date. Bid opening for both IFB's was scheduled for
April 4, 1986. RFQ Nos. 102PI-86074 and 102PI-86077, for band markets
and terminal lugs, respectively, were issued as small business
set-asides under small purchase procedures as required by the Federal
Acquisition Regulation (FAR), 48 C.F.R. Section 13.106(b) (1985). Both
RFQ's involved amounts of less than $10,000. The record shows that RFQ
No. 102PI-86074 was issued on March 31, while RFQ No. 102PI-86077 was
issued on April 10.
Gateway received a copy of IFB No. 102PI-86061 and submitted a bid.
Its bid of $296,983.50 was found to be low and Gateway was awarded the
contract for cables on April 15, 1986. Gateway did not submit a bid
under IFB No. 102PI-86060 nor a quotation under the RFQ's, and FPI
awarded all three contracts to other firms.
Gateway complains that FPI ignored its repeated requests for copies
of IFB No. 102PI-86060 and RFQ Nos. 102PI-86074 and 102PI-86077. As
evidence, Gateway has submitted copies of its telephone bill, which
shows 19 telephone calls to the agency from March 4 through April 21.
Gateway states that in these conversations it requested that it be sent
the appropriate forms. Further, Gateway contends that FPI was otherwise
aware of its interest in the RFQ's from its January 20 quotation letter,
which contained prices for all the items solicited and which was
attached to the contract it was awarded on April 15.
In addition, Gateway contends that its January 20 letter constituted
a valid offer to provide the items solicited by FPI. Consequently,
although Gateway did not submit a bid on IFB No. 102PI-86060 or
quotations for RFQ Nos. 102PI-86074 and 102PI-86077, Gateway argues that
the prices contained in its January 20 letter should have been
considered by FPI in its award determinations.
Gateway's protest of the nonreceipt of the IFB is untimely. Our Bid
Protest Regulations require that a protest be filed (either initially
with the contracting agency or with this Office) not later than 10
working days after the basis for protest was known or should have been
known, whichever is earlier. 4 C.F.R. Section 21.2(a) (1986). The
synopsis of the IFB included the scheduled April 4 bid opening date.
Gateway therefore had constructive knowledge of the bid opening date and
knew it had not received a copy of the IFB by that date. See G&L Oxygen
& Medical Supply Serv., B-220368, Jan. 23, 1986, 86-1 CPD Paragraph 78.
Gateway, however, did not file its protest with FPI until April 22,
1986, which was more than 10 working days after bid opening. The
protest as it pertains to the failure to solicit Gateway under the IFB,
therefore, is dismissed as untimely.
With respect to Gateway's contention that its January 20 price
quotation letter constituted a valid bid and should have been considered
under IFB No. 102PI-86060, we note that it is a basic principle of
contract formation that an offer must be sufficiently definite to show
the offeror's intent to form a binding agreement upon acceptance. See
George Rosen & Sons, Inc., VABCA No. 429, reprinted in 65-2 BCA
Paragraph 4936 (1965). A price quotation, standing alone, is not a firm
offer that can be accepted. Best Western Quantico Inn/Conference Center
et al., B-209500 et al., Feb. 17, 1983, 83-1 CPD Paragraph 164; see
also Ordnance Parts & Eng'g Co., ASBCA No. 2820, reprinted in 68-1 BCA
Paragraph 6870 (1968). Further, the quotation letter was not sufficient
to indicate compliance with all the terms of the subsequently-issued
IFB. Accordingly, Gateway's January 20 letter, submitted to FPI
approximately 3 months before the issuance of the IFB, did not
constitute a valid offer that could be accepted under the IFB. Best
Western Quantico Inn/Conference Center, et al., supra.
FPI states that the RFQ's were only issued to the suppliers whose
telephonic quotations were forwarded to the contracting officer.
Gateway's written quotation was not included with the telephonic
quotations and the contracting officer asserts that he was not aware
that Gateway was a supplier at the time the RFQ's were issued. The
contracting officer states that he was unaware of Gateway's January 20
letter. In addition, FPI maintains that it diligently searches out new
sources of supply, that adequate competition was obtained under the
RFQ's, and that orders were issued to suppliers at reasonable prices.
Under the small purchase procedures, agencies must promote
competition to the "maximum extent practicable." 41 U.S.C. Section
253(g)(4). Generally, the solicitation of three suppliers may be
considered to promote competition to the maximum extent practicable.
FAR, 48 C.F.R. Section 13.106(b)(5); see also S.C. Svcs. Inc.,
B-221012, Mar. 18, 1986, 86-1 CPD Paragraph 266.
The solicitation of three or more suppliers, however, does not
automatically mean that the maximum practicable competition standard has
been met. In procurements expected to exceed $10,000, an agency is
required to publish notice of the intended procurement in the Commerce
Business Daily and make available to any business concern requesting it
a complete solicitation package. 41 U.S.C. Section 416. This provision
obviously requires an agency to do more than simply solicit a minimum
number of suppliers. Further, the Small Business Act, as amended, 15
U.S.C. Section 637b (1982), expressly requires that procuring agencies
provide a copy of a solicitation to any small business concern upon
request, and the record indicates that Gateway is a small business.
While the publication requirement itself is not applicable to the
protested small purchases since they involve amounts under $10,000, the
point is that the procurement statutes and the Small Business Act
obviously contemplate that, regardless of whether three suppliers are
solicited, responsible sources requesting a copy of the solicitation and
the opportunity to compete should be afforded a reasonable opportunity
to do so.
In short, we view the requirement for maximum practicable competition
to mean that an agency must make reasonable efforts, consistent with
efficiency and economy, to give a responsible source the opportunity to
compete, and cannot therefore unreasonably exclude a vendor from
competing for an award. Cf. Instruments & Controls Serv. Co., B-222122,
June 30, 1986, 65 Comp. Gen. 686, 86-2 CPD Paragraph 16 (agency should
consider a small purchase quotation received prior to award where the
RFQ did not prohibit late quotations).
In light of the above, we must sustain this portion of the protest.
The agency's only reason for failing to provide the RFQ's to the
protester was that the agency allegedly was unaware of the protester's
interest in competing. The record shows, however, that Gateway called
the FPI contracting officer 19 times prior to the issuance of the two
orders under the RFQ's. The contracting officer has denied that Gateway
requested a copy of IFB No. 1021PI-86060 after March 10, 1986, but has
not similarly denied Gateway's allegation that it subsequently requested
that it be sent copies of the RFQ's. Under these circumstances, the
contracting officer should have been aware of Gateway's express interest
in competing under the particular procurements, and we therefore find
that the failure to send Gateway copies of the RFQ's lacked any
reasonable basis. In this respect, we note that FPI is not arguing
that, in defining the scope of competition, it relied on a mailing list
from which it inadvertently had omitted a previous supplier or a firm
that previously had asked to be included on the list. Rather, what
seems clear is that FPI disregarded Gateway's repeated expressions of
interest in competing under the particular procurements. Cf. S.C.
Servs. Inc., supra.
Accordingly, Gateway's protest concerning the RFQ orders are
sustained. However, since the ordered items have already been delivered
and paid for, no other corrective action is appropriate. We therefore
find that Gateway is entitled to recover its cost of filing and pursuing
the protest insofar as it relates to the RFQ's. See 4 C.F.R. Section
21.6(e).
B-221248, 65 Comp. Gen. 849
To The Honorable James V. Hansen, House of Representatives, September
22, 1986
Federal mineral land lease monies distributed to a county, and used
by the county to carry out functions it would otherwise provide and pay
for with county revenues, must be deducted from the county's Payments in
Lieu of Taxes payments. 31 U.S.C. 6903(b).
Multi-county associations of local government, created in accordance
with state law, can receive state distributions of Federal mineral lease
funds. 30 U.S.C. 191; Utah Code Ann. 63-52-1, 63-52-3, and 11-13-5.5.
As with direct county receipts of state distributions of Federal
mineral lease monies, association expenditures of such monies to provide
services for their members which otherwise would be provided by county
members with county revenues, must be deducted from the Counties'
Payments in Lieu of Taxes payments on a pro rata basis.
This is in reply to your letter dated November 27, 1985, signed
jointly with Representatives Monson and Neilson, concerning the uses to
which Federal mineral lease monies may be put by local entities without
incurring losses in their payments under the Payments in Lieu of Taxes
Act (PILT), as amended, 31 U.S.C. Sections 6901-6907. In your letter
you asked three specific questions, which will be answered in detail
below. In brief, you asked 1) whether state distributions of Federal
mineral lease monies to a county would lead to a loss of PILT funds if
the state prescribes how the county is to use the funds; 2) whether
multi-county associations of local government, created under Utah law,
may receive Federal mineral lease monies; and, if so, 3) whether
multi-county association members' PILT payments would be subject to
deductions for their shares of the mineral lease funds they receive.
We have reviewed the legislative history of PILT, our prior decisions
concerning its application, the formal views of the Department of the
Interior, and the relevant Utah Code provisions. Our brief responses
are as follows: 1) If the mineral lease funds provided to the county
are used to assist it in carrying out functions or activities that it
would otherwise provide and pay for with county funds, then, regardless
of whether or not the state has prescribed how the county is to use
these funds, they must be deducted from the county's PILT receipts; 2)
multi-county associations of local government can receive mineral lease
funds; and 3) as with direct county receipts of mineral lease monies,
they must be deducted from each multi-county association member's share
of PILT funds if the association spends these monies to provide services
for its members that would otherwise be provided by county members with
county revenues.
The Payments in Lieu of Taxes Act of 1976, as amended, authorizes and
directs the Secretary of the Interior to make payments on a fiscal year
basis to each unit of general local government in which certain types of
Federal lands are located. Section 2 of PILT, 31 U.S.C. Section
6903(b), sets forth alternative formulae to be used in determining the
amount of these payments:
(b)(1) A payment under section 6902 of this title is equal to
the greater of --
(A) 75 cents for each acre of entitlement land located within a
unit of general local government (but not more than the limitation
determined under subsection (c) of this section) reduced (but not
below 0) by amounts the unit received in the prior fiscal year
under a payment law; or
(B) 10 cents for each acre of entitlement land located in the
unit (but not more than the limitation determined under subsection
(c) of this section).
Among the payment laws specified in section 6903(a) is the Mineral
Lands Leasing Act, as amended, 30 U.S.C. Section 191, which provides in
part that:
All money received from sales, bonuses, royalties * * * and
rentals of the public lands under the provisions of this chapter
and the Geothermal Steam Act of 1970 * * * shall be paid into the
Treasury of the United States; 50 per centum thereof shall be
paid by the Secretary of the Treasury to the State other than
Alaska within the boundaries of which the leased lands or deposits
are or were located; * * * to be used by such State and its
subdivisions, as the legislature of the State may direct giving
priority to those subdivisions of the State socially or
economically impacted by development of minerals leased under this
chapter, for (i) planning, (ii) construction and maintenance of
public facilities, and (iii) provision of public service * * * .
Relevant provisions of the Utah Code provide for the deposit of
Federal mineral lease monies into a special account within the general
fund, from which the state legislature is to make appropriations
consistent with 30 U.S.C. Section 191 for the alleviation of the impacts
of natural resource development. Utah Code Ann. Sections 65-1-64(9),
65-1-64.5 (hereinafter "Code"). To further this purpose, the state has
created a Permanent Community Impact Fund into which it directly
appropriates a fixed portion of the mineral lease funds, Code, Sections
65-1-64.5(3)(a), 63-52-1.5, and an impact board which, among other
things, makes grants and loans from the fund "to state agencies and to
subdivisions which are or may be socially or economically impacted,
directly or indirectly, by mineral resource development for: (a)
Planning; (b) Construction and maintenance of public facilities; and
(c) Provision of public services." Code, Section 63-52-3(1).
The State also has enacted the "Interlocal Co-operation Act", which
authorizes local governmental units to act jointly to provide services
and facilities economically and "for the overall promotion of the
general welfare of the state." Code, Section 11-13-2. Services and
facilities may be provided for, among others, education, health care,
and streets or roads, Code, Section 11-3-3(6). Under this act, any two
or more public agencies may agree to create a separate legal or
administrative entity to accomplish the purpose of their joint or
co-operative action, and such entity "is deemed a political subdivision
of the state." Code, Section 11-13-5.5(1). We have been advised
informally by our staff that a number of such entities have been
created, are called "associations of government," and are administered
by governing boards which consist generally of the mayors and
commissioners from the cities and counties that are members of the
association.
The first question in your letter is:
1. May a county receive federal mineral lease monies without a
loss of PILT if federal lease monies are first distributed to the
state and from the state to the counties with the state
prescribing the use to which these monies may be employed?
In 58 Comp. Gen. 19 (1978), the opinion referred to in your letter,
we were not concerned with whether the funds received by local
government units from the state under the payment laws specified in
section 6903(a) were to be used for discretionary or state-mandated
purposes. Rather, we interpreted "payments received by" units of local
government as funds actually received and available to the counties for
obligation and expenditure to carry out the counties' own
responsibilities, thereby alleviating the fiscal burdens imposed on
local governmental units by the presence imposed on local governmental
units by the presence of tax-exempt Federal lands within their
jurisdictions. We accordingly concluded that Congress did not intend
that payments to local governments under the Act be reduced by amounts
which, by virtue of state law, merely pass through these governments on
the way to politically and financially independent school or
single-purpose districts which are alone responsible for providing the
services in question. Such payments are not meaningfully received by
local governments, which would be acting solely as "conduits" for the
funds. This is the only exception to the deduction requirement of
section 6903(b) which we recognized.
As indicated above, Utah law does not mandate that mineral lease
funds be passed on by the counties to politically and financially
independent governmental entities. Rather, in prescribing the duties of
the impact board in distributing the funds (Code, Section 65-52-3(1)),
it outlines the priority uses to be made of the funds, in language that
parallels the Mineral Lands Leasing Act, 30 U.S.C. Section 191. The
broad language in both the Federal and state statutes leaves room for
much discretion in how the counties make use of the funds.
The issue raised in your first question was addressed in our opinion
B-214267, August 28, 1984 (copy enclosed). In that case, a county had
argued that certain mineral lease funds it received from the state were
"non-discretionary special purpose" funds, and should not be deducted
from its PILT payments. We disagreed on the ground that there is
nothing in the legislative history of PILT that distinguishes between
discretionary and non-discretionary state distributions to counties of
section 6903(a) funds to be used to carry out county responsibilities.
We stated:
As long as section 6903(a) funds are given to a county to carry
out the county's own responsibilities, they are funds subject to
the deduction provision of the PILT payment formulae, even though
the County may have no discretion as to the programs for which
they must be used. Id., p. 4.
In our view, this statement is equally applicable here, and therefore
the answer to your first question is that if a county received Federal
mineral lease funds for carrying out functions or activities that it
would otherwise provide and pay for with county revenues, then,
regardless of whether the state has prescribed these uses, the mineral
lease funds must be deducted from the county's PILT funds.
Your second question is:
2. Is it possible for multi-county associations of local
government to receive federal mineral lease disbursements from the
state with or without a prescription from the legislature as to
the use of the funds?
As noted in the quoted portion of the Mineral Lands Leasing Act,
above, these funds are to be used by the state and its subdivisions as
directed by the state legislature, in accordance with statutory
priorities concerning the impacts of mineral development. The Utah
legislature has directed that the funds are to be used to alleviate
impacts in the state resulting from the development of natural resources
covered by the Act, and that the impact board which it established to
distribute the funds is to do so to affected state agencies and
subdivisions. Code, Sections 63-52-1 and 63-52-3.
The Interlocal Co-operation Act authorizes the creation of separate
legal or administrative entities to carry out agreements entered into by
two or more counties or other public agencies for the purpose of
economically providing services and facilities needed by all the parties
to the agreement. (These agreements can, of course, include joint
actions, to provide the services enumerated in the Act, that will best
alleviate the particular impacts of natural resource development
affecting the parties.) By law these entities, commonly known as
"associations of government," are deemed political subdivisions of the
state, and have many of the powers exercised by their constituent
members. Code, Section 11-13-5.5. Since these associations are legal
subdivisions of the state, and the state has authorized distributions to
them of Federal mineral lease monies, such distributions are in
compliance with both Federal and state law, with or without a
legislative prescription as to the specific use of the funds.
Your final question is:
3. If it is possible for multi-county associations to receive
lease monies, would there be any penalty to a member jurisdiction
who is a PILT recipient?
As noted above, associations of government have been created in the
state, and are administered by governing boards consisting generally of
the mayors and commissioners from the cities and counties participating
in the association. To the extent that the governing board utilizes
mineral lease receipts to pay for providing services or facilities that
benefit the county members, and thereby relieves them from carrying out
county responsibilities that would otherwise have been paid for with
county revenues, in our view, and consistent with 58 Comp. Gen. 19,
supra, each county's PILT receipts should be reduced by an amount that
reflects its pro rata share of these mineral lease monies. This is so
whether the mineral lease funds are passed on by the association to one
or more member counties, or whether the funds are retained by the
association and spent for purposes benefiting its members.
In a report provided us by the Department of the Interior, the
Solicitor noted that "if the funds were retained by the association, and
spent for general association purposes, not directly benefiting the
public, there would be no deduction from PILT." The purpose of the
Interlocal Co-operation Act is broader than that of the Mineral Lands
Leasings Act, since the former authorizes cooperative efforts to provide
services and facilities in ways that "will accord best with geographic,
economic, population and other factors influencing the needs and
development of local communities and to provide the benefit of economy
of scale, economic development and utilization of natural resources for
the overall promotion of the general welfare of the state." Code,
Section 11-13-2.
Conceivably, an association could authorize a project that would
comply with this broad purpose, and with the Federal statute, yet would
not benefit its county members by relieving them of county
responsibilities. However, given the list of allowable services and
facilities in the Interlocal Co-operation Act, we find it difficult to
see how an approval project could be in compliance but not directly
benefit the public. See Code, Section 11-13-3(6). Nevertheless, should
an association of government use mineral lease monies to fund such a
project, this expenditure would not have to be deducted from the
counties' shares of PILT receipts. An expenditure of this nature would
be, in the words of the Solicitor, "the same as if the state had
retained and itself expended the monies with no pass-through to the
units of local government." With the exception of projects of this
nature, however, association expenditures of mineral lease monies
generally will provide services for which the counties otherwise would
be financially responsible, and therefore, are required to be deducted
from those counties' PILT payments, on a pro rata basis.
On the basis of our review of the legislative history of PILT, our
prior decisions, the formal views of the Department of the Interior, and
the relevant Federal and Utah statutory provisions, we conclude that (1)
Federal mineral lease monies distributed to a county, and used by the
county to carry out functions that it would otherwise provide and pay
for with county revenues, must be deducted from the county's PILT
payments; (2) multi-county associations of local government, created in
accordance with state law, can receive state distributions of Federal
mineral lease funds; (3) as with direct county receipts of state
distributions of mineral lease monies, association expenditures of such
monies to provide services for their members which otherwise would be
provided by county members with county revenues, must be deducted from
the counties' PILT payments on a pro rata basis.
In accordance with our usual procedures, and with the agreement of
Mr. Sam Klemm of your staff, copies of this opinion will be made
available upon request to interested parties 30 days after it is issued.
We hope this information is useful to you.
B-220226, 65 Comp. Gen. 847
Matter of: Pedestrian-Operated Traffic Signal - Army Material
Command, September 22, 1986
Needed traffic signals may be installed at government expense if
private entities requesting a signal would be charged for installation
in similar circumstances, and the government is the primary beneficiary
of the light. 61 Comp. Gen. 501 (1982). City's determination that
light does not meet its priority criteria means that a private entity
would be charged for signal installation on the same basis. Fact that
the building where the signal will be installed is leased by GSA from a
private owner does not shift the primary benefit of the signal
installation to the lessor, because the government will have full
benefit of increased safety for its employees for the remainder of the
lease term.
By letter dated September 4, 1985, Major General Jimmy D. Ross,
United States Army, requested GAO's approval of a proposed $14,400
expenditure to install a pedestrian-operated traffic signal at the
entrance of the U.S. Army Material Command Headquarters (AMC HQ) in
Alexandria, Virginia. Although there are some differences between this
and our other traffic light cases, we have no objection to the proposed
expenditure.
AMC HQ occupies GSA-leased space in a privately-owned building. The
premises are held under a 20-year lease that will expire in 1993. The
building is situated on a busy, four-lane street, and its main entrance
is directly across from a bus stop in the middle of a long block.
Approximately 100 to 200 AMC employees commute by bus, and they must
cross the street once a day during rush hour traffic. Some of these
employees are handicapped. AMC also experienced increased pedestrian
crossings when an employee fitness program began in the fall of 1985 at
facilities located across the street.
AMC requested the signal on public safety grounds. The City of
Alexandria, however, has determined that the site does not qualify for
signal installation based on its analysis and the priority criteria
established by the Federal Highway Administration's Manual on Uniform
Traffic Control for Streets and Highways (1978). However, the City is
willing to approve installation of a pedestrian-activated signal at the
AMC location, provided the requester pays the one time installation cost
of $14,400. The City will pay for maintenance thereafter.
AMC recommended approval of the signal installation based on our
decision 61 Comp. Gen. 501 (1982). That case established a new rule
liberalizing traffic signal funding. If the particular signal
installation is not among the services the local jurisdiction is
required by law to provide, and any party requesting that traffic signal
would be required to pay, then the government can fund the signal. 61
Comp. Gen. 501, 502 (1982).
In this case, the City of Alexandria is not required by law to
provide a signal at AMC HQ, because it has determined that the
installation is not justified by the priority criteria. Any business or
other entity that wanted to install a traffic signal in similar
circumstances would be required to pay. The government is not being
singled out for different treatment.
The other criterion in 61 Comp. Gen. 501 for traffic signal funding
is that the installation must be for the primary benefit of the
government. That issue arises in this case because the building where
AMC HQ is housed is a privately-owned structure leased by GSA. This
means that when the lease expires the building owner will retain the
benefit of the traffic signal as a permanent improvement to the
property.
We held in B-211044, June 15, 1984, that appropriations could not be
used to construct a crosswalk across a state road that connected a
federally-owned building with a privately-owned federally-leased
building on the other side. Our decision was based on several factors,
including the fact that city and state officials had not been requested
to provide funds. Among the several factors we considered in that
decision was the general prohibition on making improvements to
non-government property. The decision concluded that the walkway there
involved "would appear to benefit the Government and the owner of the
privately-owned building equally." See 55 Comp. Gen. 872 (1976);
B-187482, Feb. 17, 1977.
In this case, however, we do not regard installation of a traffic
light as providing an equal benefit to the property owner. AMC's
tenancy will continue at least another 6 years. During that time, AMC
will enjoy the full benefit of the increased safety to its employees who
commute by bus, and the efficiency of time saved crossing to and from
the fitness facility. Amortized over the remainder of the lease term,
the expenditure does not seem unreasonable in proportion to the gain.
Any residual benefit to the property owner at the end of the lease term
is purely coincidental, and we therefore conclude that the government
would be the primary beneficiary of the traffic light here.
In view of the foregoing, we have no objection to AMC funding the
installation of a pedestrian-activated traffic signal at the AMC HQ.
B-219480, 65 Comp. Gen. 845
Matter of: John W. Richardson, Jr. - Cost of Daughter's Travel -
Change of Duty Station, September 22, 1986
Employee was transferred from Washington, D.C., to Ogden, Utah. He
had been divorced and legal custody of his daughter had been awarded to
his former wife who lived in Claremont, California. Although the
daughter had resided with employee for some 10 months prior to
employee's transfer, at the time employee reported to his new duty
station he was neither accompanied by his daughter nor did she later
join him in Utah. Under the Federal Travel Regulations, a dependent
must be a member of the employee's household at the time he or she
reports for duty. Accordingly, amployee may not be reimbursed for the
cost of his daughter's travel from his old duty station to his former
spouse's home upon his transfer.
This decision is in response to a request by Mr. W. D. Moorman,
Authorized Certifying Officer, National Finance Center, United States
Department of Agriculture, as to whether a travel voucher submitted by
Mr. John W. Richardson, Jr., an employee of the Forest Service, may be
certified for payment. The issue presented is whether Mr. Richardson is
entitled to reimbursement for the cost of an airline ticket for his
daughter Kristina incident to his change of official station. For the
reasons stated below, the travel voucher may not be certified for
payment.
By travel authorization dated May 30, 1984, Mr. Richardson was
authorized a permanent change of station from Reston, Virginia, to
Ogden, Utah. At the time that he was notified of the transfer, his
daughter was residing with him.
The travel authorization listed Mr. Richardson's immediate family as
consisting of his daughter, Kristina Renee, age 14. Common carrier
(airlines) transportation was authorized for the employee and his
daughter.
The record discloses that Mr. Richardson was divorced in February
1983. Mrs. Richardson was awarded legal custody of Kristina. However,
by mutual agreement between Mr. Richardson and his former wife, Kristina
had resided with Mr. Richardson since August 1983 and attended school in
Reston, Virginia, during the 1983-84 school year. Mr. Richardson states
that, at the time of his transfer, he and his former wife were
considering allowing Kristina to remain with him for the summer so that
she could attend a soccer camp in Virginia. He and his former wife were
also considering allowing Kristina to continue to live with Mr.
Richardson and to attend school in Reston during the 1984-85 school year
so that she could play in the fall soccer league.
In submitting his request for authorization to travel, Mr. Richardson
included Kristina for travel, transportation, and temporary quarters
benefits. Prior to commencement of travel, however, Kristina was
injured while playing in a soccer tournament. The parents then agreed
that it would be too difficult for Kristina to make the long trip
cross-country by automobile and to be left unattended in temporary
quarters while her father was working and looking for a permanent
residence. Hence, they agreed that it would be in the best interests of
Kristina for her to live with her mother in Claremont, California. An
airline ticket was purchased at a cost of $269 and Kristina traveled to
Claremont.
Paragraph 2-2.2a of the Federal Travel Regulations (September 1981)
(FTR), incorp. by ref., 41 C.F.R. Section 101-7.003 (1985), provides
that the cost to the Government for transportation of the employee's
immediate family shall not exceed the allowable cost by the usually
traveled route between the employee's old and new official stations.
Accordingly, Mr. Richardson has submitted a travel voucher requesting
reimbursement of $168, representing the cost of a one-way airline ticket
for Kristina from Washington, D.C., to Claremont, California, not to
exceed that airline fare from Washington, D.C., to Salt Lake City, Utah.
The certifying officer asks the following questions:
1. Since Kristina was residing with Mr. Richardson at the time
he was notified of his transfer, would she be considered a member
of his immediate family even though Mrs. Richardson had legal
custody of her?
2. If Mr. Richardson's daughter had transferred with him to
his new official station, would he have been allowed reimbursement
for transportation and temporary quarters on her behalf, even
though Mrs. Richardson had legal custody?
The statutory basis for reimbursement of the transportation expenses
of the immediate family of a Federal employee is contained in 5 U.S.C.
Section 5724(a)(1). The definition of the phrase immediate fmaily in
FTR para. 2-1.4d (Supp. 4, August 23, 1982), includes the employee's
children who are unmarried, under 21 years of age, and members of the
employee's household "at the time he/she reports for duty at the new
permanent duty station * * * ."
Although her mother had legal custody of her, Kristina may well have
been regarded as a member of Mr. Richardson's household when he lived in
Virginia. Under the express terms of FTR para. 2-1.4d, however, the
relevant question in this case is whether Kristina was a member of Mr.
Richardson's household at the time he reported for duty in Utah.
Clearly the answer to this question is no. As indicated above, Kristina
did not accompany her father to Utah, nor did she later join him to live
in Utah. Instead, she went to live with her mother in California.
Accordingly, there is no basis under FTR para. 2-1.4d to allow the
claim.
B-214479, 65 Comp. Gen. 842
Matter of: Prompt Payment Act Interest on Utility Bills, September
22, 1986
The Army should include Prompt Payment Act interest penalties when it
makes late payments to public utility companies that do not have a
tariff-authorized late charge. The Act requires that interest penalties
be added to late payments made to "any business concern." Utilities are
not excluded from the definition of this term. Our decision in 63 Comp.
Gen. 517 (1984) concerned a public utility which had adopted
tariff-authorized late charges and other express payment terms. We held
only that, just as is the case with other contractors, such express
terms take precedence over provisions in the Act which were intended to
provide contractors with a substitute penalty when none was provided in
the contract.
The Army's payment as a result of this decision of interest owed on
utility bills should include compound interest as required by section
3902(c) of title 31.
An Army Finance Officer asked for an advance decision on the
propriety of paying Prompt Payment Act (Act) interest penalties on late
payments for telephone services in states where the applicable tariff
approved by the public utility commission does not provide that the
telephone supplier may assess late charges against its customers. The
Act, codified at 31 U.S.C. Sections 3901-06 (1982), defines late
payments and imposes interest penalties on all such payments made by the
Government. We conclude that the payments inquired about fall within
the statutory parameters, and are subject to statutory penalties. A
second question in the request, regarding the computation of tariffed
late charges should be resolved by the cognizant state regulatory
bodies, not this Office.
A tariff approved by the state utility commission constitutes the
contract for services between a regulated public utility and its
customers (including the Federal Government). State public utility
commissions generally regulate the rates charged to consumers to insure
that the utility recovers its costs plus a specified return on
investment and to protect consumers from possible overcharging by a
state-chartered monopoly. Most tariffs authorize a late payment charge
to compensate the utility for the extra costs associated with delayed
payments. This Office first held more than 10 years before enactment of
the Prompt Payment Act that the terms of a regulated public utility's
approved tariff constitutes the terms of a contract for service,
including tariffed late charges, and therefore such late charges were
properly payable, 51 Comp. Gen. 251 (1971).
Recently, we analyzed the relationship between the Prompt Payment
Act's interest penalties and tariffed late charges of public utilities
in 63 Comp. Gen. 517 (1984). We held that the Act was not intended to
supplant existing contractual requirements for late payment charges or
interest, but rather to provide a statutory right to recover late
payment interest when the contract itself did not provide for such
payments. Accordingly, we found that tariffed payment terms must be
complied with strictly.
The GSA temporary regulations incorporating the requirement of the
Act into the Federal Procurement Regulations mirrored our decision.
They exempted public utility contracts with tariffed late charges from
the application of the terms and conditions for late payments specified
in the Act. 41 C.F.R. Part 1-29 (1983) (expired). The regulations also
took the same position as did our decision that tariffed late charges
were payable in lieu of, not in addition to, Prompt Payment Act interest
penalties. See 63 Comp. Gen. at 519.
The question before us now, however, is whether Prompt Payment Act
interest penalties are applicable to late payments made to public
utilities when the approved tariffs do not provide for or require the
use of a specific late charge. Our earlier case did not deal with this
situation.
The Act defines a "business concern" as "a person carrying on a trade
or business." Using the same broad determination of "person" as is found
in Federal procurement statutes and regulations, we have no doubt that
the term covers both individual and corporate suppliers of service. The
Act then goes on to provide:
* * * the head of an agency acquiring property or service from
a business concern, who does not pay the concern for each complete
delivered item of property or service by the required payment
date, shall pay an interest penalty to the concern on the amount
of the payment due. * * * 31 U.S.C. Section 3902(a).
The Act also specified that the required payment date is the date set
forth in the contract or, if no due date is specified, 30 days after
receipt of a proper invoice. 31 U.S.C. Section 3903(1). For service
contracts such as those under discussion here, the Act further
establishes a 15-day grace period after the due date during which
interest is calculated but is not paid. If payment occurs after the
grace period expires, interest is due from the day after the due date
until payment is made. 31 U.S.C. Section 3902(b)(3).
Thus, the Government is obligated to add interest to all its overdue
bills following the contract or tariff terms, if any, or the terms of
the Prompt Payment Act, discussed above. There are no exceptions in the
statute based on the nature of the service acquired or the type of
industry providing it.
The legislative history of the Act also supports a conclusion that
the interest penalty applies without exception. In addition to
compensating vendors for the cost of delayed payment, a corollary
purpose of the Act was to encourage timely remittance and ultimately
change the Government's reputation as a slow payer. See H.S. Rep. No.
461, 97th Cong., 2d Sess. 1, 8.
Considering the plain meaning of the statute and its legislative
history, we find that the Army should add interest penalties to invoices
for telephone service when it pays more than 15 days after the invoice
due date and there is no tariff authorized late charge.
At the same time the Army requested an advance decision, the Finance
Officer informed the affected telephone suppliers that the Army would
continue to pay its bills, but would decline to add interest penalties
until advised to do so by the Comptroller General. Since we are now
advising that interest should be paid, the Army Finance Officer has
asked informally how much is owed.
As we indicated above, if payment is not made during the 15-day grace
period, the interest penalty accrues from the day after the due date
until the day payment is made. 31 U.S.C. Section 3902(b). Interest
shall be computed at the rate established by the Secretary of the
Treasury for interest payments under the Contract Disputes Act. Id. at
3902(a).
The Act generally requires the compounding of interest at 30-day
intervals. Subsection 3902(c) provides:
An amount of an interest penalty unpaid after any 30-day period
shall be added to the principal amount of the debt, and a penalty
accrues thereafter on the added amount. (Roman supplied.)
OMB Circular A-125, the implementing regulation for the Prompt
Payment Act, clarified the compound interest requirement as follows:
When an interest penalty that is owed is not paid, interest
will accrue on the unpaid amount until paid. 47 Fed. Reg. 37321,
37323.
The OMB Circular makes it clear that Section 3902(c) should be
interpreted as requiring compound interest on the Army's unpaid
interest. The amount of interest owed at the time each invoice was paid
should be calculated, and compounded thereafter at 30-day intervals for
1 year or until payment. Payment is naturally subject to the
availability of funds from the appropriate fiscal year.
A second question submitted with the request involves late charges
authorized by tariff but assessed on the basis of the monthly total
billing by telephone utilities. The question arises because companies
which provide only local telephone services frequently collect long
distance and other telecommunications billings for the company which
provides those services. The tariffed late charge is then assessed
based on the combined billings of the two companies. The Army does not
question whether the late charge should be paid. Rather it questions
the late charge being assessed on the combined billings.
Our Office is not the appropriate forum in which to decide this
question. We held in 63 Comp. Gen. 517 (1984) that it is the tariff
which constitutes the agreement between the parties. If this billing
practice has the approval of the state public utility commission (which
we assume it does in those situations where late charges are assessed on
combined billings), the Army is constrained to abide by it. It follows
then that the proper place to contest the reasonableness of this billing
practice is the cognizant state regulatory body.
B-220210, 65 Comp. Gen. 838
Matter of: Army Corps of Engineers - Disposition of Funds Collected
in Settlement of Faulty Design Dispute, September 8, 1986
Faulty design by an architect-engineer (A-E) caused the Air Force to
incur additional corrective expenses in the ensuing construction
contract. The corrective expenses -- added costs paid to construction
contractor plus added amounts paid to Army Corps of Engineers for
supervision and administration (S&A) -- were charged to Air Force's 1982
5-year Military Construction appropriation. In 1985, Government
recovered the amount of the additional costs from the A-E. Since the
appropriation charged was still available for obligation at the time of
the recovery, it may be reimbursed from the recovery to the extent of
the additional costs actually incurred. However, portion of recovery
representing S&A expenses in excess of amount actually charged Air Force
must be deposited as miscellaneous receipts.
The disbursing officer for the United States Army Corps of Engineers,
Norfolk District, has collected $46,324 from an architect-engineer (A-E)
who provided a faulty design for construction work. The disbursing
officer requested our decision on whether the collected funds may be
used to reimburse the appropriation used to pay the construction
contractor for the extra expenses it incurred to correct the A-E's
faulty design, and the revolving fund available for the Corps'
supervision and administration (S&A) expenses, or whether the funds must
be deposited into the Treasury as miscellaneous receipts pursuant to 31
U.S.C. Section 3302. As explained below, since the agency has already
paid the additional construction expenses plus a 5 1/2 percent flat rate
representing additional S&A expenses, these sums collected from the A-E
may be credited to the agency's appropriation. The balance of the S&A
collection must be deposited into the general fund of the Treasury as a
miscellaneous receipt.
The Air Force awarded an architect-engineering contract to O'Dell
Associates to design a Consolidated Support Center and Softball Complex
at Langley Air Base, Virginia. When the design was completed, O'Dell
was paid from the Air Force's 1981 Military Construction appropriation.
The Air Force used O'Dell's design to solicit bids and procure a
contract for the construction of the Complex and Center.
The Air Force awarded the contract to the Kenbridge Construction
Company. The Army Corps of Engineers supervised and administered the
project. The construction contract was funded by the Air Force's 1982
Military Construction appropriation. After beginning work, Kenbridge
experienced construction problems caused by O'Dell's faulty design.
Consequently, Kenbridge was issued a contract modification to cover
additional construction expenses incurred to make corrections for the
faulty design. The contract modification was also funded from the 1982
appropriation.
Subsequently, O'Dell argued that it was liable for the faulty design
in the amount of $46,324 and it forwarded a check in that amount to the
disbursing officer. $40,324 represents the amount paid to the
construction contractor to cover the additional expenses it incurred in
making the adjustments necessary to compensate for the architect's
faulty design. The remaining $6,000 represents compensation for the
extra costs of S&A incurred by the Corps. Originally, the S&A expenses
were charged to the revolving fund established by the Civil Functions
Appropriations Act, 1954, Pub. L. No. 83-153 (July 27, 1953), 67 Stat.
197, 199. The Corps charges S&A expenses against the fund and the fund
is later reimbursed from appropriations of the "client" agency. The
Corps charges a procuring agency a flat 5 1/2 percent of the contract
price for S&A. The 5 1/2 percent rate is calculated so that in the long
run the Corps will "break even" in providing supervision and
administration of agency projects. Thus, in this case, the Corps
charged $2,218 of the additional S&A expenses incurred in supervising
and administering the contractor's adjustments to the Air Force's
project account. The remaining $3,782 was absorbed by the revolving
fund. The disbursing officer deposited the settlement monies into a
suspense account pending this decision. The Corps suggests that
retention of the recovery here would be consistent with our decision in
62 Comp. Gen. 678 (1983).
Early decisions of the Comptroller of the Treasury held that "excess
reprocurement costs" recovered from a defaulting contractor need not be
deposited in the Treasury as miscellaneous receipts, but could not be
retained by the agency to fund a replacement contract. 21 Comp. Dec.
107 (1914); 16 Comp. Dec. 384 (1909). The theory was that the money
should be used "to make good the appropriation which will be damaged" by
having to incur costs in excess of the original contract price to
receive the goods or services that would have been received under the
original contract but for the default. 21 Comp. Dec. at 109.
Some years later, without ever explicitly overruling or modifying the
earlier cases, decisions began to hold that the recoveries had to be
deposited as miscellaneous receipts, and this new rule was then followed
consistently for decades. /1/ At the same time, the decisions drew a
distinction between default situations and situations in which faulty
work was discovered after completion of the contract. In the latter
situation, the agency could retain the recovery to fund necessary
replacement or corrective work, on the theory that payment to the
original contractor in excess of the value of satisfactory performance
constituted an erroneous payment, and the recovery of erroneous payments
has always been treated as a refund to the appropriation originally
charged. /2/
In 62 Comp. Gen. 678 (1983), we recognized that the distinction
between default and defective workmanship should not control the
disposition of funds recovered from the original contractor. Modifying
several earlier decisions, we held that "excess reprocurement costs"
recovered from a contractor, whether occasioned by a default or by
defective workmanship, could be retained by the contracting agency to
the extent necessary to fund a replacement contract coextensive in scope
with the original contract. If the agency could not retain the funds
for the purpose and to the extent indicated, it could find itself
effectively paying twice for the same thing, or possibly, if it lacked
sufficient unobligated money for the reprocurement, having to defer or
forego a needed procurement, with the result in many cases that much if
not all of the original expenditure would be wasted.
Thus, with respect to defective workmanship cases, the thrust of our
1983 decision was essentially to affirm the holding of decisions such as
34 Comp. Gen. 557, with the additional feature of applying the same
result where the recovery, by virtue of factors such as inflation or
underbidding, exceeded the amount paid to the original contractor. With
respect to default cases, we, in effect, returned to both the rule and
the rationale of the early Comptroller of the Treasury decisions.
In 64 Comp. Gen. 625 (1985), we gave 62 Comp. Gen. 678 its logical
application and held that an agency could use the proceeds of a
performance bond forfeited by a defaulting contractor to fund a
replacement contract to complete the work of the original contract.
The instant case clearly presents a situation of "defective
workmanship" rather than "default." As explained below, we think agency
retention of the recovery in this case would have been permissible even
prior to 62 Comp. Gen. 678.
Prior decisions permitting agency retention of recoveries from
breaching or defaulting contractors have involved either no-year
appropriations /3/ or, where annual appropriations were involved,
situations in which the replacement or corrective costs had not yet been
paid. /4/ In either situation, agency retention of the recovery enables
the agency to avoid depletion of appropriations that are still available
for obligation at the time of the recovery.
For example, 44 Comp. Gen. 623 (1965) involved a "defective
workmanship" recovery where the appropriation originally charged was an
expired annual appropriation. We said that the recovery "may be
credited to the appropriation or its successor ("M") account." Id. at
626. In that case, however, since the corrective work had not yet been
undertaken, crediting the recovery to the successor account would still
serve the purpose of avoiding depletion of a current appropriation in
view of the established rule that expired appropriations remain
available beyond the expiration date to fund a proper replacement
contract. This is the same result the Comptroller of the Treasury had
reached in 21 Comp. Dec. 107 (1914). /5/
The appropriation sought to be reimbursed in this case is the Air
Force's 1982 Military Construction appropriation. By its terms, that
appropriation is a 5-year appropriation, remaining available until
September 30, 1986. /6/ While our prior decisions have not dealt
specifically with a multiple-year appropriation, we think the result
follows logically and directly from those decisions. As noted, where
the replacement or corrective costs have not been incurred at the time
of the recovery, the decisions have permitted retention by the agency,
to the extent necessary to fund the replacement work, regardless of the
type of appropriation (annual, multiple-year, or no-year). Where the
replacement costs have already been paid and the appropriation from
which they were paid is still available for obligational purposes at the
time of recovery, the type of appropriation would again make no
difference.
Accordingly, we think it follows from decisions such as 34 Comp. Gen.
577 that the $40,324 recovered from O'Dell for additional contractor
expenses and $2,218 representing 5 1/2 percent of that additional
contract amount which the Corps actually charged the Air Force for S&A
expenses need not be deposited in the Treasury as miscellaneous
receipts, but may be credited to the Air Force's 1982 Military
Construction account.
On the other hand, the $3,782 which represents monies collected for
S&A expenses over and above the Corps' actual 5 1/2 percent charge must
be deposited into the Treasury as miscellaneous receipts. To allow that
portion of the collection to be deposited in the revolving fund would
result in an augmentation to that fund. As indicated earlier, the Corps
calculates that charging a flat rate of 5 1/2 percent of contract price
for S&A expenses will, on the average, cover its actual expenses in
providing services. Allowing the Corps to retain collections above its
calculated 5 1/2 percent rate would result ultimately in collecting more
than actual costs, causing an augmentation of the revolving fund.
Accordingly, so as to preclude a violation of 31 U.S.C. Section 3302,
the Corps should deposit the $3,782 into the Treasury as miscellaneous
receipts.
(1) E.g., 26 Comp. Dec. 877 (1920); 10 Comp. Gen. 510 (1931); 40
Comp. Gen. 590 (1961).
(2) 8 Comp. Gen. 103 (1928); 34 Comp. Gen. 577 (1955); 44 Comp.
Gen. 623 (1965).
(3) 62 Comp. Gen. 678 (1983) (involved a no-year appropriation,
although the decision failed to so state); 34 Comp. Gen. 577 (1955);
16 Comp. Dec. 384 (1909).
(4) Comp. Gen. 625 (1985); 44 Comp. Gen. 623 (1965); 8 Comp. Gen.
103 (1928); 21 Comp. Dec. 107 (1914).
(5) We have not held, nor do we suggest here, that the result would
necessarily be the same if the corrective costs had already been paid
from an appropriation which, at the time of the recovery, was no longer
available for obligation.
(6) Military Construction Appropriation Act, 1982, Pub. L. No. 97-106
(Dec. 23, 1981), 95 Stat. 1503, 1504.
B-218990.2, 65 Comp. Gen. 835
Matter of: Internal Revenue Service, Installation of Telephone
Equipment in Employee Residences, September 8, 1986
Use of appropriated funds to install telephone equipment in the
residences of Internal Revenue Service employees to be used for portable
computer data transmission is prohibited by 31 U.S.C. 1348(a)(1) (1982).
However, there are circumstances, involving telephone service of
limited use or when there are numerous safeguards and the service is
essential, when the prohibition has been held inapplicable. Here, IRS
has demonstrated the essential nature of the service, and an exception
to the prohibition is warranted. Prior to installing the equipment, IRS
should establish safeguards to prevent misuse.
This decision is in response to a request for guidance from Mr.
Richard C. Wassenaar, Assistant Commissioner (Criminal Investigation) of
the Internal Revenue Service (IRS). Assistant Commissioner Wassenaar
requests a decision regarding the propriety of installing telephones in
the residences of certain IRS criminal investigators in New York City to
be used for portable computer data transmission. For the reasons set
forth below, we conclude that the installation of the telephone
equipment in question, in the circumstances presented to us for review
would be proper, provided that IRS establishes sufficient safeguards to
prevent misuse.
The circumstances posed by Assistant Commissioner Wassenaar involve a
group of eight IRS criminal investigators in New York City who have been
authorized to work from their residences whenever possible, using the
telecommunications capabilities of portable computers to communicate
with the district office computer system. This program is designed to
benefit both the IRS and the individual agents. Thus the "Project
Summary" included with the IRS submission indicates that the program
will help to decrease "unproductive staff hours spent travelling" as
well as "agent stress and fatigue brought on by the type of travel
encountered in New York City.
According to the submission, it was necessary for IRS to install
telephone lines and telephone equipment in the residences of the agents
participating in the program for the following reasons:
(1) For security purposes, the telephone instrument has to be
located in the area set up by the agents as their working space.
This working space is located as far away as possible from the
main living area.
(2) The installation of a dedicated line prevents the
possibility of other household members inadvertently picking up an
extension phone and overhearing a portion of a discussion of a
case related matter or machine recorded dictation.
(3) Inasmuch as this phone use is considered "commercial" by
the telephone company, and therefore billed at a high rate, it
would not be practical to use the agent's personal phone.
(4) A separate line was needed so as not to tie up the agent's
personal telephone with official business. All agents in the
group are required to maintain a personal telephone for personal
calls. The separate line is for official calls only.
Background: The use of appropriated funds to install telephones in
private residences is prohibited by 31 U.S.C. Section 1348(a)(1) (1982):
Except as provided in this section, appropriations are not
available to install telephones in private residences or for tolls
or other charges for telephone service from private residences.
This statute generally constitutes a mandatory prohibition against
the use of appropriated funds to pay any part of the expense of
furnishing telephone service to an employee in a private residence,
without regard to the desirability of such service from an official
standpoint. See, e.g., 35 Comp. Gen. 28 (1956); 15 Comp. Gen. 885
(1936). We have invoked the statutory prohibition even when the
employees who would use the telephone service had no office out of which
they could work and were required to work out of their homes. B-130288,
February 28, 1957. See also 26 Comp. Gen. 668 (1947). In a recent
decision, we held that the statutory prohibition applied even when the
volume of Government business effectively precluded the employee's
family from using his personal telephone. 59 Comp. Gen. 723 (1980).
Nonetheless, although generally the statute has been strictly
applied, there have been instances in which we have determined that the
prohibition was not applicable. Exceptions have been recognized in two
general circumstances. The first general circumstance is when the
telephone is installed in Government-owned quarters serving as a
residence and office simultaneously. See, e.g., 4 Comp. Gen. 891 (1925)
(installation of a telephone in an office in a Government-owned house
provided to a lighthouse superintendent); 53 Comp. Gen. 195 (1973)
(installation of telephone in an Army barracks).
The second general circumstance in which we have recognized the
inapplicability of the statutory prohibition is when the telephone
service is one of limited use or it is a service involving numerous
safeguards and the separate service is essential. See, e.g., 32 Comp.
Gen. 431 (1953) (installation of a special telephone in the residence of
the Pearl Harbor fire marshall); B-128114, June 29, 1956 (installation
of direct telephone lines from Air Force command post to residences of
high officials).
In 61 Comp. Gen. 214 (1982), we approved the installation of Federal
Secure Telephone Service (FSTS) in the residences of certain high level
civilian and military officials to ensure secure communications required
for reasons of national security. The FSTS had several unique features
which supported our holding. The telephones required a special key and
could be programmed to respond only to a user code. The agency head was
to certify that the telephones were to be used for official business
only and the system was subject to audit to ensure that only official
business was transacted. Finally, the system was to be installed in the
residences of relatively few officials whose status would minimize the
likelihood of abuse. In concluding that the statutory prohibition was
not applicable to the installation of FSTS, we distinguished several
previous cases in which the prohibition had been strictly applied:
The cited cases, however, including 59 Comp. Gen. 723, supra,
are distinguishable from the proposal under consideration here.
In the first place, no provisions were made in those cases to
assure that private calls would not be made since the telephones
to be installed in private residences were no different than those
normally installed for private use. In this case, access and use
will be controlled. Secondly, the telephones in the cited cases,
while desirable from an official standpoint, were, in essence, to
serve as a convenience for the Government officials involved.
This is because official calls to and from the official's
residences could have been placed and received, if necessary, from
their private telephone, even though this might have caused some
personal inconvenience. Here, the official calls to and from
private residences could not be made over private telephones
because of the need for security.
Analysis: If the installation of the equipment in the case at hand
is to be permissible, it must fall within one of the two recognized
exceptions to the prohibition of 31 U.S.C. Section 1348, discussed
above. The first exception, installation of a telephone in
Government-owned quarters, is clearly inapplicable in the circumstances
here under review, which involve the installation of telephone equipment
in privately-owned residences.
We conclude, however, that the second exception, installation of
essential telephone service of limited or involving numerous safeguards,
would be applicable in the instant case, provided that IRS establishes
sufficient safeguards to prevent misuse of the equipment. The IRS has
adequately demonstrated that the installation of a dedicated line is
essential to maintain the security of information regarding confidential
tax investigations. The submission of IRS does not indicate, however,
what safeguards IRS contemplates to prevent misuse of the equipment. In
the Federal Secure Telephone Case, 61 Comp. Gen. 214 (1982), discussed
above, the equipment in question had certain mechanical and electronic
safeguards and was subject to audit. Here, IRS must establish similar
safeguards. The intent of 31 U.S.C. Section 1348 is to ensure that the
Government does not bear the cost of private use of telephone equipment
by Government employees. See 63 Comp. Dec. (1912) cited in 61 Comp.
Gen. 214, 216 (1982). Accordingly, a system of safeguards would be
sufficient if it, at a minimum, effectively ensured that the equipment
in question could not be put to an employee's personal use, resulting in
added expense to the Government.
B-224343, 65 Comp. Gen. 831
Matter of: Aerojet TechSystems Company, September 5, 1986
General Accounting Office (GAO) will dismiss a protest to the extent
that it raises an issue which is before a court of competent
jurisdiction and the court has not expressed interest in GAO's opinion.
Where contracting agency issues a request for proposals (RFP)
soliciting offers for comparison with protester's existing options for
the same items, protester, as a potential offeror under the RFP, is an
interested party to challenge alleged deficiencies in the RFP.
When contracting agency decides to issue a request for proposals
(RFP) for the purpose of deciding whether to exercise existing options,
RFP must advise offerors that their offers will be compared with the
options, in order to ensure competition on an equal basis. In view of
the discretionary nature of the decision to exercise an option, however,
RFP need not describe the factors on which the option exercise decision
will be based in the same detail as the evaluation criteria used to
compare offers under the RFP with each other.
Aerojet TechSystems Company protests any award under request for
proposals (RFP) No. N00024-86-R-6246(S) issued by the Navy for
acquisition of major components of the MK 65 Quickstrike Mine. Aerojet
challenges the Navy's decision to issue the RFP instead of exercising
options for the mines under an existing contract with Aerojet. Aerojet
also contends that the RFP is defective for failing to specify in
adequate detail the criteria the Navy will use in comparing offers
received under the RFP with Aerojet's existing options for the mines.
We dismiss the protest in part and deny it in part.
In December 1985, Aerojet was awarded contract No. N00024-86-C-6160
for a basic quantity of mines, with two options for variable quantities
exercisable in fiscal years 1986 and 1987. The 1985 acquisition was the
subject of a protest to our Office by Aerojet. Aerojet TechSystems Co.,
B-220033, Dec. 6, 1985, 85-2 CPD Paragraph 636. The Navy made award to
Aerojet after we sustained the protest based on our finding that the
Navy had improperly rejected Aerojet's bid as nonresponsive. On May 5,
1986, in order to decide whether to exercise the options under Aerojet's
existing contract, the Navy issued the current RFP for a basic quantity
of mines equal to the quantities available under the Aerojet options,
plus additional option quantities. The Navy plans to base its decision
whether to exercise the options on a comparison of the offers received
under the RFP with the Aerojet options. Aerojet did not submit an offer
under the RFP.
According to the Navy, the RFP was issued to determine whether the
Navy could obtain lower prices for the mines than under the Aerojet
options. The Navy's belief that lower prices might be available was
based on the prices submitted in connection with the initial
procurement, before the first Aerojet protest was sustained and award
made to Aerojet under its original bid. Specifically, the original
acquisition was conducted as a two-step formally advertised procurement.
The Navy received three offers, all of which were found technically
acceptable. The three offerors then submitted bids under the second
step of the procurement. The contracting officer found all three bids
nonresponsive, however, and canceled the solicitation. After the
cancellation, the contracting officer decided to complete the
acquisition using negotiated procedures. The proposals subsequently
received from the three offerors were lower in price than the bids under
the original invitation for bids. After the Aerojet protest was
sustained, however, award was made to Aerojet under its original bid.
In its current protest Aerojet challenges both the Navy's decision to
issue the new RFP and the Navy's failure to include sufficient detail in
the RFP regarding the manner in which new offers and the Aerojet options
will be compared. On July 11, Aerojet filed suit in the U.S. District
Court for the Eastern District of California raising the first issue in
the protest, the propriety of the Navy's decision to issue a new RFP.
Since that issue is now before a court of competent jurisdiction and the
court has not expressed interest in our decision, we dismiss this part
of the protest. Bid Protest Regulations, 4 C.F.R. Section 21.9(a)
(1986); C&M Glass Co., B-218227, Apr. 15, 1985, 85-1 CPD Paragraph 430.
With regard to the remaining issue in the protest -- whether the RFP
adequately describes how offers under the RFP will be compared with the
Aerojet options -- the Navy contends as a preliminary matter that
Aerojet is not an interested party to raise this issue because Aerojet
did not submit an offer under the RFP. Aerojet's failure to submit an
offer under the RFP, however, is not determinative of its status as an
interested party to challenge alleged deficiencies in the RFP.
Both the Competition in Contracting Act of 1984 (CICA), 31 U.S.C.
Section 3551(2) (Supp. III 1985), and our Bid Protest Regulations, 4
C.F.R. Section 21.0(a), define an interested party entitled to maintain
a protest as "an actual or prospective bidder or offeror whose direct
economic interest would be affected" by the award or failure to award
the challenged contract. Here; Aerojet characterizes itself as a
potential offeror under the RFP and states that the lack of sufficient
detail in the RFP regarding how new offers will be compared with the
existing options prevented it from making a reasonable decision
regarding whether to submit an offer under the RFP. In our view, the
alleged prejudice to Aerojet's interest as a potential offeror is
questionable, since Aerojet in effect is claiming that there is
insufficient detail in the RFP to determine whether to compete against
itself as the obligor under the options by submitting a new offer under
the RFP. Nevertheless, as a potential offeror, Aerojet technically has
the requisite interest to protest alleged solicitation defects, whether
or not it eventually submits an offer. /1/ See Tumpane Services Corp.,
B-220465, Jan. 28, 1986, 86-1 CPD Paragraph 95.
Aerojet argues that the RFP is defective for failing to advise
offerors in sufficient detail how the Navy will compare their offers
with the Aerojet options in choosing whether to exercise the options or
make award under the RFP. Specifically, Aerojet contends that the RFP
should, but does not, indicate how the Navy will compensate for the
variations in quantities between offers under the RFP and the Aerojet
options; how first article and warranty costs will be considered; or
to what extent nonprice factors will be considered. We find Aerojet's
argument to be without merit.
With regard to the comparison between offers under the RFP and the
Aerojet options, section M, paragraph D of the RFP provides:
Offerors are advised that the Government has FY 86 and FY 87
options to acquire quantities of Mine Mark 65 Mod O Components and
related supplies and services under Contract N00024-86-C-6160.
The Government intends to compare these option prices with the
prices of the responsible technically acceptable offeror with the
lowest evaluated price under the instant solicitation. Prices for
both the basic and option quantities under the instant
solicitation will be analyzed when determining whether to award
under the instant solicitation or to exercise the options in
Contract N00024-86-C-6160. The Government evaluation will
compensate for variations in quantity between the two procurements
and provide a common basis for price comparison. Consequently,
offerors should submit their most favorable prices for both firm
and option quantities in their price proposals.
The Government will also consider the price of first article
line items under the instant solicitation, as well as the fair
market rental value of any Government Production and Research
Property intended for use on a rent free basis under the instant
solicitation and for the option items under Contract
N00024-86-C-6160. Award will be made under either the instant
solicitation or Contract N00024-86-C-6160 based upon which under
the planned price comparison offers the best overall value to the
Government.
By issuing an RFP to solicit new offers for the items covered by the
Aerojet options, the Navy assumed an obligation to advise offerors under
the RFP that their offers will be compared with the options, since that
comparison will be decisive in whether award will be made under the RFP.
See Milwaukee Valve Co., Inc., B-206249, Feb. 16, 1982, 82-1 CPD
Paragraph 135. This duty to disclose derives from a contracting
agency's general obligation to give offerors sufficient detail regarding
the evaluation criteria to ensure competition on an equal basis known to
all offerors. See Klein-Sieb Advertising and Public Relations, Inc.,
B-200399, Sept. 28, 1981, 81-2 CPD Paragraph 251. Here, as noted above,
the RFP advised offerors that award would be made to the lowest priced,
technically acceptable offeror under the RFP only if its offer compared
favorably with Aerojet's existing options. The RFP described generally
how that comparison would be made, clearly indicating that the Navy
would equalize the offeror's prices and the option prices to account for
variations in quantity and other factors such as first article costs.
We are aware of no requirement that the Navy specify in any further
detail how the offeror's prices and the Aerojet option prices will be
adjusted for purposes of comparison, since, even where no option is
involved, a solicitation need not contain the precise formula to be
used. See Prosearch, B-206316, June 30, 1982, 82-1 CPF Paragraph 636.
With regard to nonprice factors, we agree that the Navy could have
described the factors it will consider, for example, the impact on
defense readiness of longer delivery times if award is made under the
RFP instead of exercising the options; however, we do not believe that
the Navy was required to do so. Aerojet's options, like options
generally, are exercisable at the sole discretion of the government, see
Federal Acquisition Regulation (FAR), 48 C.F.R. Section 17.201 (1985)
(option is unilateral right of the government), and the decision to
exercise an option is based on a discretionary judgment by the
contracting officer as to whether it is the most advantageous method of
fulfilling the government's needs, all factors considered. See FAR, 48
C.F.R. Section 17.207(c)(3). By notifying offerors that their offers
would be compared with Aerojet's options, the RFP put offerors on notice
that award under the RFP ultimately would depend on the contracting
officer's discretionary judgment regarding the advantages of exercising
the options, considering both price and nonprice factors. In our view,
the RFP in this way strikes an appropriate balance between advising
offerors of the basis on which award will be made and maintaining the
Navy's flexibility in determining whether to exercise the Aerojet
options. Cf. Cincinnati Electronics Corp., et al., 55 Comp. Gen. 1479,
1484-1485 (1976), 76-2 CPD Paragraph 286.
The protest is dismissed in part and denied in part.
Aerojet requested that it be awarded the costs of pursuing the
protest. Recovery of costs is allowed only where a protest is found to
have merit. 31 U.S.C. Section 3554(c)(1); 4 C.F.R. 21.6(d). Since we
have not found the protest to have merit, we deny Aerojet's claim for
recovery of costs.
(1) Aerojet also argues that its existing options should be regarded
as an offer under the RFP sufficient to confer standing on Aerojet as an
"actual offeror" under CICA. We need not address this argument in view
of our finding that Aerojet's status as a potential offeror qualifies it
as an interested party to protest the alleged RFP deficiencies.
B-223059; B-223243, 65 Comp. Gen. 828
Matter of: Charles A. Martin & Associates, September 5, 1986
Protest against an evaluation preference for minority-owned firms
contained in a synopsis for a small business set-aside for
architect-engineer (A-E) services issued under the Brooks Act, 40 U.S.C.
541-544 (1982), is denied because the procuring agency has statutory
authority to give preference to minority-owned or -controlled small
business firms under the Small Business Act, 15 U.S.C. 644(g) (1982).
Where an agency, in its report to GAO, rebuts an argument raised in
the protest and the protester fails to respond to the agency's rebuttal
in its comments on the agency report, the argument is deemed abandoned.
Charles A. Martin & Associates (Martin) protests against an
evaluation preference for minority-owned firms appearing in two synopses
advertised in the Commerce Business Daily (CBD) for award of contracts
for architect-engineer (A-E) services for Tinker Air Force Base,
Oklahoma (Air Force). Martin contends that there is no legal basis for
these evaluation preferences.
We deny the protests.
The solicitations were issued under the Brooks Act, 40 U.S.C.
Sections 541-544 (1982), which prescribes procedures for acquiring A-E
services. Under these procedures, an agency must first publicly
announce its requirements and the evaluation criteria. An evaluation
board set up by the agency then evaluates under the stated criteria the
A-E performance data and statements of qualifications of firms already
on file, as well as data submitted by firms in response to the specific
project. Discussions then must be held with "no less than three firms
regarding anticipated concepts and the relative utility of alternative
methods of approach" for providing the services requested. The board
then prepares a report for the selection official, ranking in order of
preference no fewer than the three firms considered most qualified. The
selection official makes the final choice of the three most qualified
firms and negotiations are conducted with the highest ranked firm. If
the contracting officer is unable to reach agreement with that firm on a
fair and equitable price, negotiations are terminated and the
second-ranked firm is invited to submit its proposed fee.
One procurement calls for A-E services necessary for the alteration
of electrical and mechanical building systems and interiors of three
buildings at Tinker Air Force Base and was synopsized in the April 28,
1986, CBD, issue No. PSA-9077. The synopsis stated that the procurement
was a "100% small business set aside." This synopsis also contained a
minority evaluation preference which stated that "qualified
minority-owned firms will be assigned additional points of consideration
for selection."
The second procurement calls for multi-discipline A-E design services
for maintenance, repair, alteration and new construction projects at
Tinker Air Force Base, and was synopsized in the May 16, 1986, CBD,
issue No. PSA-9091, page 6. The synopsis stated that the selection of
an A-E firm would be based upon six listed criteria and, as one
criterion, noted that "qualified minority-owned firms will be assigned
additional points for consideration for selection." /1/
Martin argues that the selection preference for minority-owned firms
violates the Brooks Act, 40 U.S.C. Section 542 (1982), which requires
that the award of A-E contracts be based upon "demonstrated competence
and qualification for the type of professional services required."
The Air Force states that it has adopted a goal of awarding 15
percent of its A-E contracts to minority businesses (i.e., those owned
or controlled by socially or economically disadvantaged persons). This
goal, according to the Air Force, was established because of the
congressional mandate in the Small Business Act, 15 U.S.C. Section
644(g) (1982), that directs federal agencies to establish goals for
participation of minority-owned small businesses in procurements with a
value of $10,000 or more. The Air Force states that "as a vehicle for
achieving the congressionally mandated goal," Air Force Federal
Acquisition Regulation Supplement (AFAR) Section 36.602-1(a)(6) (1984),
directs that additional points shall be assigned to small disadvantaged
businesses in the point system used to evaluate potential contractors
for A-E contracts.
The Small Business Act, at 15 U.S.C. Section 644(g), states:
The head of each Federal agency shall, after consultation with
the (Small Business) Administration, establish goals for the
participation by small business concerns, and by small business
concerns owned and controlled by socially and economically
disadvantaged individuals, in procurement contracts of such agency
having values of $10,000 or more. Goals established under this
subsection shall be jointly established by the Administration and
the head of each Federal agency and shall realistically reflect
the potential of small business concerns and small business
concerns owned and controlled by socially and economically
disadvantaged individuals to perform such contracts and to perform
subcontracts under such contracts. Whenever the administration
and the head of any Federal agency fail to agree on established
goals, the disagreement shall be submitted to the Administrator of
the Office of Procurement Policy for final determination.
In addition to the policy in 15 U.S.C. Section 644(g), encouraging
the participation of small business and small business concerns owned
and controlled by socially and economically disadvantaged individuals,
15 U.S.C. Section 644(i) expressly permits exclusive small business
set-asides for procurements of A-E services.
The Air Force argues that its policy of giving a preference to
minority-owned or -controlled small business firms does not violate the
requirement of the Brooks Act that A-E contracts be awarded to firms
with "demonstrated competence and qualification" because the amount of
points typically given to experience and capability outweigh the
minority preference points by a factor of 3. The Air Force also
contends that since A-E procurements may properly be set-aside for small
business under 15 U.S.C. Section 644(i), it is therefore no less proper
for the Air Force to not only set aside specific procurements for small
business, but also to incorporate a small business minority preference
in order to help satisfy its goal established pursuant to 15 U.S.C.
Section 644(g). Finally, citing our decision in Agency for
International Development, Developing Countries Information Research
Services (AID) - Reconsideration, B-218622.2; B-218622.3, Sept. 25,
1985, 85-2 C.P.D. Paragraph 336, the Air Force suggests that GAO should
grant considerable deference to the Air Force's interpretation and
implementation of the statutes encouraging small disadvantaged business
participation in procurements which the Air Force is charged with
administering.
While we have questioned the propriety of restricting awards to
minority firms in the absence of specific statutory authority for the
action, see Image 7, Inc., B-195967, Jan. 2, 1980, 80-1 C.P.D. Paragraph
6, we have not objected to the establishment of an evaluation
preference, that is, the assignment of additional points to a firm based
on its small business minority status, in order to implement the
statutory policy of encouraging the participation of such firms in
government contracting. See Leon Whitney, Certified Public Accountant,
B-190792, Dec. 19, 1978, 78-2 C.P.D. Paragraph 420. Here, in order to
meet goals for participation by small business concerns, including those
owned or controlled by socially and economically disadvantaged
individuals, the Air Force has, by regulation, provided that,
"additional points shall be assigned to potential contractors that are
8(a) or small disadvantaged businesses." Air Force Regulation Section
36.602-1 (1986). The regulation is a reasonable implementation of the
statutes encouraging small disadvantaged business participation in
procurements which the Air Force conducts. Further, we have accepted
the basic prinicple of granting deference to the agency's interpretation
of statutes which the agency is charged with administering. AID --
Reconsideration, B-218622.2; B-218622.3, supra. Under these
circumstances, we cannot conclude that the Air Force acted improperly by
giving additional points to minority-owned or -controlled firms under
these procurements for A-E services.
Martin asserts that the ecaluation preference for minority firms has
resulted in a disproportionate number of awards to minority firms in
Northern California. In this regard, Martin points out that since April
1984, seven out of eight Department of Defense electrical engineering
projects in Northern California, in which Martin competed, were awarded
to small minority-owned firms.
As indicated above, we find that the evaluation preference for small
minority-owned firms is not legally objectionable. The fact that a
higher proportion of awards have been made to small minority firms in
Northern California does not alter our conclusion since these awards are
the result of the implementation of a legitimate government goal to
increase awards to small business minority firms. The Air Force also
explains that one of the reasons so many awards have been made to small
minority-owned firms in Northern California is simply that there are a
large number of these firms located in that area. There is no
indication that the minority firm evaluation preference is being
administered unfairly by the Air Force.
Finally, we note that Martin raised additional arguments in its
initial protest letter (for example, that the minority preference
violates the United States Constitution), but failed to comment on the
Air Force's rebuttal of these contentions. We therefore consider Martin
to have abandoned these arguments. See The Big Picture Co., Inc.,
B-220859.2, Mar. 4, 1986, 86-1 C.P.D. Paragraph 218.
We deny the protests.
(1) Although the synopsis did not restrict the procurement solely to
small business, the Air Force reports that the preference is applicable
only to small business minority-owned firms.
B-222246, 65 Comp. Gen. 826
Matter of: Work Performed at Home, September 4, 1986
The Department of Housing and Urban Development proposes to allow an
employee with multiple sclerosis to work at home during temporary
periods when the employee will not be able to commute to an office
because of that illness. While generally Federal employees may not be
compensated for work performed at home rather than at their duty
stations, under limited circumstances, when actual work performance can
be measured against established quantity and quality norms so as to
verify time and attendance reports, and there is a reasonable basis to
justify the use of a home as a workplace, payment of salaries for work
done at home may be authorized under an established and approved
program. Thus, if the agency has determined that appropriate measures
have been taken to ensure quantity and quality of work done and time and
attendance, the employee may be paid for work done at home.
This action is in response to a request for an advance decision from
the U.S. Department of Housing and Urban Development regarding a
proposed temporary work-at-home arrangement for an employee of the
agency. /1/ The agency proposes to allow the employee to work at home
during periods when, due to illness, the employee will be unable to
report to the office to work. The employee was recently diagnosed as
having multiple sclerosis and while she may be capable of performing her
duties, aspects of her illness would prevent her from commuting to the
office from time to time. Her absences will be temporary and are
generally not expected to exceed 1 week at a time.
The employee's position is that of Intergovernmental Relations
Officer, and her position is described by the agency as one which
requires the writing of letters, speeches, position papers, and
memoranda, as well as the performance of other measurable tasks. The
agency states that the employee's supervisors will know the number of
written products and other items of work completed on a weekly basis and
the approximate time needed to complete each task. The agency proposes
that the employee work at home for between 15 and 25 hours a week, not
to exceed 6 hours a day.
With regard to work-at-home programs, we have expressed the view that
under most circumstances, Federal employees may not be compensated for
work performed at home rather than at their duty stations. However, we
have authorized exceptions to this general rule under limited
circumstances. When actual work performance in the home can be measured
against established quantity and quality norms so as to verify time and
attendance reports, we have interposed no objection to payment of
salaries. We have allowed Federal employees to be compensated for work
performed at home in a variety of circumstances, provided the work was
of a substantial nature, the employing agency was able to verify that
the work had in fact been performed, and there appeared to be a
reasonable basis to justify the use of the home as a workplace. In
appropriate circumstances, we have authorized compensation for work at
home involving the preparation of written documents, and also the making
of telephone calls. /2/
In the present case, the agency proposes to allow one employee with
multiple sclerosis to work part-time, temporarily, at home. Under the
proposed program, the employee would "compose drafts of letters or
memoranda, make phone calls, draft position papers or speeches and
complete other measurable tasks." The employee would call in at the
beginning and end of her workday and would record working hours in a
log. The agency states that a staff member would review the work done
and make determinations regarding time required to complete the tasks.
The agency states that the work is measurable since the office will be
aware of the number of tasks performed on a weekly basis and the
approximate time needed to complete a task.
We point out that the situation in this case is not to be confused
with the usual case of an employee who is ill and unable to perform his
or her ordinary duties at the assigned workplace, or the employee who
for personal reasons or convenience would prefer a more flexible
schedule or to take some time off. The government's sick leave and
disability retirement programs are directed toward the first category
and the annual leave, flexible and compressed work schedules, and
part-time programs are directed toward the latter category. The present
case, however, involves an employee who apparently wishes to work and is
capable of performing her duties, the only problem being that at times
she is unable to commute to the office. In these circumstances, it
appears that work of a substantial and measurable nature will be
performed at home, that the employing agency will be able to verify the
performance of the work, and that the employee's physical condition
affords a reasonable basis to justify her to work at home from time to
time. Hence, we have no objection to the implementation of the agency's
proposal.
(1) The request was made by Judith L. Tardy, Assistant Secretary for
Administration, U.S. Department of Housing and Urban Development,
Washington, D.C.
(2) See 65 Comp. Gen. 49, 52 (1985); B-214453, December 6, 1984;
B-182851, February 11, 1975; B-169113, March 24, 1970; and B-131094,
April 17, 1957.
B-224090, 65 Comp. Gen. 825
Matter of: Barrier Construction Company, September 2, 1986
Protest that agency awarded contract despite timely challenge to
awardee's small business size status is dismissed where written
confirmation of oral size protest was received by the contracting
officer more than 5 days after bid opening and was postmarked later than
1 day after the oral protest.
Barrier Construction Company (Barrier) protests the award of a
contract under invitation for bids (IFB) No. N62474-86-B-4839, issued by
the Navy for maintenance of chain link fence at the Naval Air Facility,
El Centro, California. Barrier contends that the contracting officer
awarded the contract to the apparent low bidder despite Barrier's timely
challenge of the awardee's small business size status.
We summarily dismiss the protest without obtaining an agency report
from the Navy, since it is clear from information furnished by Barrier
that the protest is without legal merit. 4 C.F.R. Section 21.3(f)
(1986).
According to Barrier, bid opening was August 4, 1986. Barrier states
that it notified the contracting officer by telephone on August 6 that
it would be submitting detailed information to protest the small
business size status of the apparent low bidder. Barrier mailed its
written confirmation of its oral protest by certified mail on August 8.
The contracting officer awarded the contract to the apparent low bidder
on August 11, and received Barrier's letter on August 12. Barrier
alleges that the contracting officer awarded the contract in the face of
a timely protest made in accordance with Federal Acquisition Regulation
(FAR) procedures.
In order to affect a specific solicitation, a protest concerning the
small business representation of any bidder must be received by the
contracting officer by the close of business of the 5th business day
after bid opening. FAR, 48 C.F.R. Section 19.302(d)(1) (1985). A
protest may be made orally if it is confirmed in writing either within
the 5-day period or by letter postmarked no later than 1 day after the
oral protest. FAR, 48 C.F.R. Section 19.302(d)(1)(i) (1985). Here the
Navy did not receive Barrier's confirmation of its size protest until
August 12, 6 days after bid opening. Since Barrier also did not mail
its confirmation letter until 2 days after its oral protest, its protest
was untimely and did not affect the solicitation in question.
The protest is dismissed.
B-222532, 65 Comp. Gen. 823
Matter of: Associated Healthcare Systems, Inc., September 2, 1986
Where a solicitation for indefinite quantities of oxygen solicits
prices for gaseous and liquid oxygen supplies, but provides that the
contractor may provide whichever type of oxygen it prefers, evaluation
based on the prices for both types of oxygen provides no assurance that
the low evaluated price will result in the lowest actual cost to the
government and thus, provides no valid basis for award.
Associated Healthcare Systems, Inc. (AHS), protests the rejection of
its low bid as nonresponsive and the award of a contract to Home Health
Care Products, Inc. (HHCP), under invitation for bids (IFB) No.
528-33-86 issued by the Veterans Administration (VA), VA Medical Center,
Buffalo, New York, for furnishing oxygen and inhalation supplies.
We sustain the protest.
The VA rejected AHS's low bid for failing to comply with the VA's
interpretation of a clause limiting the government's cost under the IFB.
The IFB specified estimated quantities and requested unit prices for
each of six sizes of oxygen cylinders, and for regulators, liquid oxygen
systems, and oxygen concentrators. The solicitation provided:
The Contractor can provide oxygen in any form of liquid if
he/she prefers; however, the cost of liquid oxygen, including
monthly rental of system and cost per pound of liquid oxygen,
shall not be in excess of equivalent oxygen provided by 'H' (244
cubic feet) cylinders.
The VA interpreted this provision as requiring a bidder to submit an
offered price for liquid oxygen which did not exceed the bidder's
offered price for an equivalent unit of gaseous oxygen provided in "H"
cylinders, while permitting the bidder to provide at its discretion "H"
oxygen cylinders or liquid oxygen systems to meet the agency's needs
(while nothing similarly prohibited the price of gaseous oxygen from
exceeding the price of liquid oxygen). AHS submitted prices of $16.50
per "H" cylinder and $1.40 per pound of liquid oxygen. Each "H"
cylinder contains gaseous oxygen equivalent to 20.19 pounds of liquid
oxygen. By dividing AHS's price of $16.50 per "H" cylinder by 20.19,
the VA determined that AHS's price per pound of $1.40 for liquid oxygen
exceeded its price of an equivalent amount of gaseous oxygen in "H"
cylinders ($0.817 per pound). Because of this, and the VA's
interpretation that the offered price for liquid oxygen could not exceed
the offered price for an equivalent unit of gaseous oxygen, the VA
rejected the AHS bid as nonresponsive.
The protester states that it interpreted the provision in question
not as imposing a limit on the prices it could offer, but as limiting
the monthly amount the contractor could be paid for liquid oxygen to the
cost of supplying an equivalent amount of gaseous oxygen at the bidder's
"H" cylinder price. As the protester interpreted the provision, it
could offer and charge $1.40 per pound for liquid oxygen, but the
maximum monthly cost per patient could not exceed the cost of providing
the patient with gaseous oxygen. The protester argues that if it was
mistaken in this interpretation, it should be allowed to correct its bid
so that its price for liquid oxygen is equal to its originally offered
price for an equivalent amount of gaseous oxygen in "H" cylinders. We
understand this argument to mean that, if the VA applied the provision
as a bidding limitation, AHS should be allowed to modify its bid to
reflect the VA's interpretation.
By its terms, the IFB referred to the contractor's performance and
prohibited the cost of liquid oxygen, including monthly rental of the
attendant equipment, from exceeding the cost of equivalent oxygen in "H"
cylinders and attendant equipment. The provision did not expressly
limit what price a bidder could offer for liquid oxygen. Further, if
the costs of the different types of oxygen and attendant equipment were
to be compared on the basis of a common quantity, it was impossible to
determine the equivalent costs without factoring in the number of months
the systems would be rented, a a number entirely in the contractor's
control based on the type of oxygen the contractor chooses to supply.
Thus, it was, at best, unclear whether the IFB prohibited offering
higher prices for liquid oxygen than for equivalent gaseous oxygen in
"H" cylinders, or merely placed a limit on the amount the contractor
could be paid for liquid oxygen systems during performance.
Further, we find that the IFB did not provide a proper basis for an
award. An award must be based on the most favorable cost to the
government measured by the actual and full scope of work to be awarded.
A to Z Typewriter Co. - Reconsideration, B-218281.2, Apr. 8, 1985, 85-1
CPD Paragraph 404. If the IFB's evaluation scheme does not assure that
an award to the lowest evaluated bidder will result in the lowest cost
to the government in terms of actual performance, the IFB is defective
per se and no bid can be evaluated properly. Exclusive Temporaries of
Ga., Inc., B-220331.2 et al., Mar. 10, 1986, 86-1 CPD Paragraph 232.
The fact that the IFB provided that the contractor could supply any
type of oxygen, but that the low bidder would be evaluated based on
prices for both types of oxygen, provided no assurance that the
evaluated low bid would result in the least costly performance. A
bidder could have bid a minimal unit price for liquid oxygen and an
excessive unit price for gaseous oxygen with the intention of providing
only gaseous oxygen, as allowed by the IFB, and therefore the evaluated
total price would not reflect the actual cost to the government. In
this regard, we note that the awardee's price for gaseous oxygen was
higher than the protester's.
We also note that although the IFB apparently contemplated a
requirements contract and provided estimated quantities of anticipated
requirements for gaseous oxygen, it provided no estimates of the amount
of oxygen to be used with liquid oxygen systems. It therefore was not
clear whether the liquid oxygen merely represented an alternative to the
estimated requirements for gaseous oxygen or an additional requirement.
If the line item for liquid oxygen represented an additional
requirement, the IFB should have included an estimated quantity for
liquid oxygen and provided for a price evaluation based on the estimated
quantities of the items to be purchased. See North American Reporting,
Inc., et al., 60 Comp. Gen. 64 (1980), 80-2 CPD Paragraph 364. In
addition, the IFB solicited prices for two sizes of gaseous oxygen
cylinders where in each case the estimated quantity was stated as zero.
Because of these deficiencies, it is impossible to determine whether
any award under this solicitation would be in the government's interest
of obtaining the least costly responsible firm. We recommend that the
VA expeditiously prepare a revised solicitation that accurately states
the agency's needs and provides a basis for evaluation that takes those
needs into account and assures award at the lowest cost to the
government. In this regard, we suggest that if the contractor will be
able to provide whichever type of oxygen it prefers, the IFB should
require a fixed price for a common measure of oxygen (including
necessary equipment) without regard to type. This would alleviate the
need for any limitation on the pricing or cost of liquid oxygen relative
to gaseous oxygen. We further recommend that the VA then resolicit and
award a contract as soon as possible, terminating the current contract
for convenience if feasible. Since it is quite possible that this
action cannot be effected before a substantial portion of the current
contract's 1-year term has expired, we find that the protester should be
reimbursed the reasonable costs of filing and pursuing the protest,
including attorney's fees. 4 C.F.R. Section 21.6(e) (1986).
The protest is sustained.
B-221846.2, 65 Comp. Gen. 819
Matter of: Temps & Co. -- Claim for Costs, August 28, 1986
Although original protest was sustained, subsequent claim for the
recovery of protest costs on the ground that the recommended corrective
action -- non-exercise of options and resolicitation -- is an
ineffective remedy is denied where the protester was largely responsible
for the substantial performance of the base year of an improperly
awarded contract due to the fact that the firm's submission alleging
material defects in the solicitation had been untimely filed, and the
General Accounting Office (GAO) only considered the merits of the
protest under its "significant issues" exception to its filing
requirements because this was the first instance in which the
contracting agency was before GAO in a bid protest matter.
Claim for the recovery of bid preparation costs is denied where there
has been no reasonable showing that the protester would have had a
substantial chance of receiving the award but for the agency's
utilization of a materially defective method for evaluating bids.
Temps & Co. submits a claim for the recovery of its protest and bid
preparation costs pursuant to our decision in Temps & Co., B-221846,
June 9, 1986, 65 Comp. Gen. 640, 86-1 CPD Paragraph 535. In that
decision, we sustained Temps' protest against the award of a contract
for temporary clerical services to Woodside Temporaries, Inc., under
invitation for bids (IFB) No. C66025, issued by the Federal Home Loan
Bank Board (FHLBB). We concluded that the IFB was materially defective,
as alleged by Temps, because the method for evaluating bids involved
only a simple numerical averaging of submitted labor category hourly
rates, and did not provide for the extension or "weighing" of those
hourly rates by the government's best estimate of the quantities of
hours required to determine the bid that would result in the lowest
ultimate cost to the government. Thus, since Woodside's submitted
hourly rates had no direct relationship with the total amount of work to
be performed, the agency had no reasonable assurance that the award to
Woodside would, in fact, result in the most favorable acquisition cost.
Accordingly, we recommended that no options be exercised under
Woodside's current contract and that any remaining requirement be
resolicited under a properly constructed IFB. The agency has advised
this Office that it is implementing our recommendation.
Temps now claims the recovery of its costs for filing and pursuing
the protest, including attorney's fees, and its bid preparation costs,
on the ground that so little time remains until the end of the base year
of performance that termination of Woodside's contract and
resolicitation at this point will not provide Temps with meaningful
relief. The firm also asserts that it is entitled to its costs,
regardless of whether other effective relief will be afforded, on the
basis that it is the prevailing party in the protest.
In the circumstances, we deny the claim for costs.
Our Bid Protest Regulations provide for the recovery of the costs of
filing and pursuing a protest, including attorney's fees, in situations
where the contracting agency has unreasonably excluded the protester
from the procurement, except where this Office recommends that the
contract be awarded to the protester, and the protester receives the
award. 4 C.F.R. Section 21.6(e) (1986). The recovery of protest costs
may be allowed where, because recompetition of the base year of
performance is not feasible, we have recommended that the agency not
exercise any options under the contract and resolicit using proper
procedures after the initial contract term expires. EHE National Health
Services, Inc., 65 Comp. Gen. 1 (1985), 85-2 CPD Paragraph 362; E.H.
Pechan & Assoc., Inc., B-221058, Mar. 20, 1986, 86-1 CPD Paragraph 278.
Temps urges that those cases are applicable here. Temps contends
that Woodside's substantial performance of the base year was the direct
result of the FHLBB's failure to provide Temps with timely notice of the
award, thus precluding the firm from filing its protest within 10
calendar days of the award so as to invoke an immediate suspension of
further contract performance. See 31 U.S.C. Section 3553(d)(1) (Supp.
III 1985); 4 C.F.R. Section 21.4(b).
We do not believe that Temps is entitled to its protest costs.
Despite any delay on the agency's part in providing notice of the award,
/1/ the firm itself was largely responsible for Woodside's substantial
performance of the base year. As noted in our June 9 decision, Temps'
protest alleged improprieties existing in the IFB which should have been
apparent to the firm prior to the bid opening date, but Temps did not
file its protest with this Office until 1 month later. However, while
the protest submission was clearly untimely, 4 C.F.R. Section
21.2(a)(1), we considered the matter under our "significant issues"
exception to our timeliness requirements, 4 C.F.R. Section 21.2(c),
because this was the first occasion when the FHLBB was the affected
"federal agency" in a bid protest matter. If Temps had protested the
alleged IFB defects in a timely manner prior to bid opening, the agency,
absent a determination of urgent and compelling circumstances, would
have been required to withhold the making of any award while the protest
was pending, 31 U.S.C. Section 3553(c)(1); 4 C.F.R. Section 21.4(a),
and the result of which Temps now complains, the near expiration of the
base contract term, would not have occurred.
Therefore, although Temps has lost the opportunity to compete for the
base year of performance as did the protesters in EHE National Health
Services, Inc., 65 Comp. Gen. 1, supra, and E. H. Pechan & Assoc., Inc.,
B-221058, supra, we conclude that recovery of the firm's protest costs
is not warranted.
To the extent Temps also seeks to recover its bid preparation costs,
we will allow the recovery of bid or proposal preparation costs only
where (1) the protester had a substantial chance of receiving the award
but was unreasonably excluded from the competition, and (2) the remedy
recommended by this Office is not one delineated in our Regulations at 4
C.F.R. Section 21.6(a)(2-5). Asbestos Abatement of America, Inc.,
B-221891, et al., May 7, 1986, 86-1 CPD Paragraph 441.
We never determined in our prior decision that Temps would have had a
substantial chance of receiving the award if the agency had utilized a
proper method for evaluating bids. Given the defective nature of the
solicitation, there is nothing to establish that Temps would have been
in line for award. Hence, because the "substantial chance" test has not
been reasonably met, we also conclude that Temps is not entitled to
recover its bid preparation costs. Cf. Motorola, Inc., B-222181, July
11, 1986, 86-2 CPD Paragraph 59 (proposal preparation costs recoverable
where protester should have received the award under the specifications
as written).
Finally, Temps asserts that, regardless of the effectiveness of the
relief provided, it is entitled to its costs as the prevailing party.
Temps refers to a recent decision by the General Services Board of
Contract Appeals (GSBCA), which held that the Competition in Contracting
Act of 1984 (CICA) should be construed as permitting the recovery of
attorney's fees by the prevailing party even where an adequate remedy
has been afforded the party. (In the case in question, the agency
agreed to conduct a new procurement on an unrestricted basis.) NCR
Comten, Inc., GSBCA No. 8229, Feb. 10, 1986, 86-2 BCA Paragraph 18822.
However, it is our standards for the recovery of costs that govern
here, in reflection of the express authority granted to this Office
under section 2741(a) of CICA to determine whether a solicitation for a
contract, proposed award, or award of a contract complies with statute
or regulation, and, if not, to declare whether an appropriate interested
party is entitled to its costs. 31 U.S.C. Sections 3554(b) and (c).
Applying those standards to the facts of the case, we have determined
that Temps is not so entitled.
The claim for costs is denied.
(1) The record does not support Temps' assertion. The FHLBB stated
in its administrative report on the protest that written notice of the
award to Woodside was mailed to all unsuccessful bidders 1 day after the
award had been made.
B-222570, B-222571, 65 Comp. Gen. 817
Matter of: G.W., Inc., August 26, 1986
Agency decision to negotiate for the procurement of hazardous waste
disposal services, requesting competitive proposals instead of sealed
bids, is appropriate under the Competition in Contracting Act of 1984
where complex requirements demand discussions to assure the quality and
safety of performance and award is based on both technical and
price-related factors.
G.W., Inc. (GWI), protests the Defense Logistics Agency's method of
acquiring hazardous waste disposal services for over 50 military
installations under requests for proposals (RFP) No. DLA200-86-R-0035
(B-222570) and DLA200-86-R-0029 (B-222571), issued by the Defense
Reutilization & Marketing Service, Battle Creek, Michigan. GWI contends
that DLA should have asked for sealed bids instead of competitive
proposals. We deny the protest.
Both RFP's require technical proposals and unit prices for hazardous
waste disposal services. The contractor has to pick up the waste at
various military installations and transport it from there to approved
disposal sites. Different sites are approved for particular kinds of
hazardous waste. The waste consists of toxic, flammable, and corrosive
materials and includes asbestos, cyanide, items contaminated with PCP,
flame powder, magnesium chips, and sulfuric acid.
Offerors were advised that the lowest, single responsible offeror
submitting a technically acceptable proposal would receive the award.
The following equally weighted criteria determine technical
acceptability: (1) disposal methods and sites plan; (2) transporters;
(3) interim storage sites; (4) safety procedures; and (5) operations
plan.
GWI advances several arguments why DLA's decision to procure the
services by competitive proposals instead of sealed bids is improper.
GWI argues that by law sealed bidding is the preferred method of
procurement. Moreover, it maintains, the services are not so unduly
complicated or technical as to require discussion or negotiation. GWI
urges that procurement of hazardous waste disposal is a simple process
because the activity is "mature, highly refined, and thoroughly
regulated." GWI contends that DLA does not need technical proposals, but
only has to assure itself that offerors have required licenses and
permits because state and federal environmental agencies will
affirmatively determine an offeror's technical capability and
understanding before issuing those documents. GWI points out that the
services were previously procured using sealed bid procedures.
DLA reports that it acted under the aegis of the Competition in
Contracting Act of 1984 (CICA), 10 U.S.C.A. Section 2304(a)(2) (West
Supp. 1986) and Federal Acquisition Regulation (FAR), Section
6.401(b)(1) (FAC 84-5, Apr. 1, 1985, pursuant to which it decided to use
competitive proposals because it needed to conduct discussions with
responding offerors. DLA admits that it used sealed bidding in the
past, but states that it obtained unsatisfactory results. The agency
reports that it needed detailed technical data concerning the ability of
offerors and their subcontractors (transporters and disposal facilities)
to comply with constantly changing state and federal environmental
regulations. Under sealed bidding procedures, bidders had only one
opportunity to provide all of the required technical data and DLA had to
reject as nonresponsive any bid which failed to include all the required
data. DLA reports that this adversely impacted on competition because
the bulk of the offers received are capable of being made acceptable
through negotiation. A related problem was the bidder's inability to
change its price should DLA disapprove of a proposed subcontractor.
In the past there was a statutory preference for formal advertising
(sealed bidding); however, CICA eliminates that preference. The Saxon
Corp., B-221054, Mar. 6, 1986, 86-1 C.P.D. Paragraph 225. CICA directs
agencies to ask for sealed bids only if four conditions are
simultaneously present -- (i) time permits, (ii) the award will be based
on price, (iii) discussions are not necessary, and (iv) there is a
reasonable chance of receiving more than one bid. 10 U.S.C.A. Section
2304(a)(2)(A). In the absence of any of the four conditions, an agency
is required to request competitive proposals. Integrity Management
International, Inc., B-219998.2, Feb. 18, 1986, 10 U.S.C.A. Section
2304(a)(2)(B). Where an agency's service requirements demand both the
evaluation of technical proposals, to assure the adequacy of offerors'
technical capabilities, and discussions to assure understanding of
complex requirements, the use of competitive proposals is proper for two
reasons -- the award is not based on price alone, and discussions are
required. United Food Services, Inc., B-220367, Feb. 20, 1986, 86-1
C.P.D. Paragraph 177.
We find that DLA properly asked for competitive proposals instead of
sealed bids because of its need to conduct discussions and to evaluate
technical proposals. In our view, DLA's concerns regarding offerors'
understanding of state and federal regulations governing the
environmental activities they were offering to undertake is a sufficient
basis for conducting discussions. We have found this area complex and
subject to conflicting interpretations. See Monterey City Disposal
Service, Inc., 64 Comp. Gen. 813 (1985), 85-2 C.P.D. Paragraph 261
(federal agencies compliance with local environmental requirements).
Further justification for discussions lies in two solicitation
provisions. First, the RFP contains a Use of Subcontractor provision
granting DLA a veto power over the offeror's use of proposed
subcontractors. The identities and capabilities of proposed
subcontractors are disclosed in the offerors' respective technical
proposals. Without the ability to conduct discussions concerning the
identity, capabilities and cost of a substitute subcontractor, the
presence of a single objectionable subcontractor could prevent DLA from
accepting an otherwise advantageous offer. Likewise, the RFP's Clean
Air and Water Certification provision requires the offeror to notify DLA
immediately, before award, if a proposed subcontractor is under
consideration for listing on the Environmental Protection Agency's List
of Violating Facilities. This notice, which could result, at DLA's
option, in the preaward substitution of another subcontractor for the
proposed subcontractor, also requires discussions between the offeror
and DLA. GWI does not question DLA's inclusion of either of the above
provisions in the RFP.
We further find it appropriate for DLA to evaluate the technical
capabilities of both offerors and proposed subcontractors in view of the
danger that improper performance of their duties can pose to the public
health. An award following such an evaluation is necessarily based on
both technical and price factors.
In our judgment, DLA properly solicited competitive proposals.
The protest is denied.
B-222138, 65 Comp. Gen. 813
Matter of: Lucille Eaton, August 26, 1986
Services may not calculate a social security offset against a
Survivor Benefit Plan annuity as if the beneficiary were receiving an
unreduced social security payment when that payment has actually been
reduced because the sponsoring retired member had elected to receive a
reduced social security benefit prior to reaching full eligibility age.
Similarly, the services may not calculate the offset as if the
beneficiary were receiving an unreduced social security payment when the
retired member had never received social security benefits, but the
spouse of the retired member elected to receive reduced benefits prior
to reaching full eligibility age.
This action is in response to a request for an advance decision
regarding the social security offset to be made against the Survivor
Benefit Plan annuity of Mrs. Lucille H. Eaton. /1/ Mrs. Eaton elected
to receive a reduced social security widow's benefit at the age of 60.
The question is whether the offset against her Survivor Benefit Plan
annuity should be based on the actual amount of her social security
benefit or the larger benefit she would have received if she had not
delayed her social security application until age 62. It is our view
that the social security offset in her case may not exceed the actual
amount of her social security benefits.
Mrs. Lucille Eaton is the widow of the late Colonel Alfred F. Eaton,
USAF, who retired from the Air Force in 1977. When Colonel Eaton
retired from the service he elected to participate in the Survivor
Benefit Plan in favor of Mrs. Eaton. Colonel Eaton received reduced
retired pay due to the deduction for Survivor Benefit Plan participation
costs. He did not receive any social security benefits during his
lifetime. On October 28, 1979, Colonel Eaton died. A Survivor Benefit
Plan annuity became available to Mrs. Eaton on October 29. On November
17, 1979, Mrs. Eaton reached age 60 and shortly thereafter began
receiving social security benefits, apparently based solely on her late
husband's service in the Air Force. On November 17, 1981, Mrs. Eaton
reached age 62 and under the provisions of 10 U.S.C. Section 1451 the
service began offsetting social security benefits against her Survivor
Benefit Plan annuity.
Mrs. Eaton receives a monthly payment of $470 from social security.
The social security deduction from her Survivor Benefit Plan annuity has
been $478, however, which is the amount of the monthly social security
benefit she would have been eligible to receive if she had delayed her
social security application until age 62. The Social Security
Administration and the service have both verified that the amounts
concerned are correct. Mrs. Eaton questions whether the service is
properly deducting a larger amount from her annuity than that which she
is receiving as a social security benefit and has requested an
adjustment of the social security offset based on our decision Dora M.
Lambert, 62 Comp. Gen. 471 (1983).
The concerned service officials note that the Lambert decision is
limited to situations in which the service member has drawn social
security benefits prior to his death. They ask whether the deductions
should also be recalculated for widows or widowers whose member spouses
had not received social security benefits, but the widow or widower
elected to receive reduced benefits prior to reaching age 62, thus
decreasing the actual amount of social security payments received by the
individual.
Pursuant to 10 U.S.C. Sections 1447-1455, a retired service member
may elect to provide an annuity for his dependents under the Survivor
Benefit Plan. The member accepts a reduced amount of retired pay during
his life and upon his death, an annuity is payable to his spouse, former
spouse or his other dependents. However, as in Mrs. Eaton's case, when
a widow is eligible for social security benefits based upon the member's
military service in addition to the Survivor Benefit Plan annuity, 10
U.S.C. Section 1451 provides for the deduction of an amount equal to the
social security benefit from the Survivor Benefit Plan annuity. In Mrs.
Eaton's case, the deduction from the annuity imposed when she attained
the age of 62 years was in excess of the actual amount which she
received from the social security benefit.
In Dora M. Lambert, supra, a widow was receiving a reduced benefit
from social security due to the fact that her spouse had been receiving
a reduced benefit prior to the time he reached full eligibility age. We
held that the computation of setoffs from the Survivor Benefit Plan
annuities which were required to be made must take into account the
reduction in the spouse's social security benefits when the retiree
received reduced benefits. We held that when a widow's benefit was
reduced because of the reduction in the retiree's benefit, the services
could not calculate the offset against the Survivor Benefit Plan annuity
as if the beneficiary were receiving an unreduced social security
payment.
In the present case, Colonel Eaton did not receive any social
security benefit prior to his death. However, his widow elected to
receive a reduced social security benefit prior to reaching age 62. The
service officials ask whether adjustments to the amount deducted for the
social security offset should be made under these circumstances. It is
our view that the rationale of the Lambert decision should also be
applied under the circumstances presented here and that the deductions
made from Mrs. Eaton's Survivor Benefit Plan annuity should not be in
excess of the amount she actually received.
The Survivor Benefit Plan was established in 1972 as an income
maintenance program for the dependents of members of the uniformed
services, through the enactment of Public Law 92-425, September 21,
1972, 86 Stat. 706. It was designed to complement the social security
benefits received by the surviving spouses and dependents of retired
military members, and active duty personnel who die while eligible to
retire. The Survivor Benefit Plan annuity and social security benefit
were integrated since the government contributes to both programs on
behalf of the member for his service. The history of the original Plan
legislation shows that the social security offset against the annuity
was intended to be the equivalent of the social security payment which
was attributable to the retired member's military service. The method
of computing the offset was intended to be a "most generous formula * *
* to assure that a widow will receive at least 55 percent of the man's
military retired pay." See H.R. Rep. No. 481, 92d Cong., 1st Sess. 14
(1971). Similar statements appear on pages 30, 31, and 53 of S. Rep.
No. 1089, 92d Cong., 2d Sess., reprinted in 1972 U.S. Code Cong., & Ad.
News 3288, 3304-3305, 3316.
In the Lambert decision, supra, we observed that if a Plan
participant elected to receive social security benefits prior to full
eligibility age, this would operate to reduce the social security
benefit of the surviving spouse, but that if the social security offset
were instead calculated as though the spouse-beneficiary were receiving
unreduced benefits, then the spouse-beneficiary's combined entitlements
would be reduced to an amount less than 55 percent of the Plan
participant's military retired pay. We concluded that this result would
be impermissible, since it would be contrary to the statute and the
intent of the Congress, in light of the legislative history described in
the previous paragraph. /2/
Just as the surviving spouse's social security annuity is reduced as
a result of the member's election to receive benefits prior to full
eligibility age, under 42 U.S.C. Section 402(q) the surviving spouse's
annuity is also reduced if he or she elects to draw benefits before
attaining age 62. It would seem that regardless of whether the social
security annuity is reduced on account of the early election of benefits
by the military retiree or by the surviving spouse, the survivor benefit
annuity of the surviving spouse should take into account the actual
amount of the social security annuity received.
Consistent with the foregoing, our view is that in the case of Mrs.
Eaton, the social security offset should have been set at $470, the
actual amount of her monthly social security benefit, rather than at
some higher amount predicated on her hypothetical receipt of unreduced
social security benefits. We therefore conclude that she is entitled to
a retroactive recomputation of her Survivor Benefit Plan annuity using
the lower social security offset figure in the computation of her
entitlements. We further conclude that other annuitants in the same
situation as Mrs. Eaton may receive the same type of retroactive
adjustment in their annuities. Compare Sergeant Franklin L. Secrest,
USMC, B-210827, September 21, 1983.
The voucher presented for decision is returned for payment, if
otherwise correct.
(1) The request was made by Lieutenant Colonel J. N. Johnson, USAF,
Accounting and Finance Officer, United States Air Force Accounting and
Finance Center, who questions the propriety of approving a voucher in
favor of Mrs. Lucille H. Eaton in the amount of $353, representing
additional Survivor Benefit Plan annuity monies due her for the period
from November 1, 1981, to September 30, 1985, if it may properly be
concluded that the social security offset may not exceed her actual
social security entitlements. The request has been assigned submission
number DO-AF-1460 by the Department of Defense Military Pay and
Allowance Committee.
(2) We note that in amending 10 U.S.C. Section 1451 through
legislation contained in Public Law 99-145, Section 711, November 8,
1985, 99 Stat. 666, Congress eliminated the social security offset and
established a two-tier system under which the survivor would receive 55
percent of retired pay before age 62 and 35 percent thereafter in
recognition of entitlement to social security. See. H.R. Rep. No. 81,
99th Cong., 1st Sess. 251, reprinted in 1985 U.S. Code Cong. & Ad. News
472, 527-528. Provision was made, however, to retain the social
security offset for persons who, like Mrs. Eaton, were eligible Plan
beneficiaries on October 1, 1985, if that were advantageous to them.
See 10 U.S.C. Section 1451(e)(current).
B-223873, 65 Comp. Gen. 812
To: Mr. Clyde E. Jeffcoat, August 18, 1986
Relief is granted Army disbursing official under 31 U.S.C. 3527(c)
from liability for improper payment resulting from payee's negotiation
of both original and substitute military checks. Proper procedures were
followed in the issuance of the substitute check, there was no
indication of bad faith on the part of the disbursing official and
subsequent collection attempts are being pursued. However, for losses
recorded after June 1, 1986, where the payee has left the Army or its
employ, we will no longer grant relief if Army delays more than 3 months
in forwarding the debt to your collection division.
This responds to your request of August 1, 1986, that we relieve
Lieutenant Colonel (LTC) R. C. Lee, Finance Corps, DSSN 5008, Finance
and Accounting Officer, 1st Infantry Division (MECH) and Fort Riley,
Fort Riley, Kansas, under 31 U.S.C. Section 3527(c) for an improper
payment of a $208.96 check payable to Ms. Mary J. Milner. For the
reasons stated below, relief is granted.
The loss resulted when the payee negotiated both the original and a
substitute check. Both checks were in the same amount. The substitute
check was issued on the basis of the payee's allegation that the
original check had not been received and a request for stop payment had
been made. Both checks were issued by the Army under authority
delegated by the Department of the Treasury. 31 C.F.R. Section 245.8.
It appears that the request for stop payment and the issuance of a
substitute check in this case were within the bounds of due care as
established by Army Regulations. See AR 37-103, paras. 4-161, 4-162 and
4-164. There was no indication of bad faith on the part of the
disbursing officers and it appears that adequate collection efforts are
now being made. Accordingly, we grant relief.
Although we have granted relief to the disbursing officers in this
case, we do not believe that the Army's collection procedures, taken
together, meet the diligent claims collection requirement of 31 U.S.C.
Section 3527(c). Once the debit voucher was received from Treasury, it
took Army 8 months to refer the matter to your collection division. As
we previously indicated to you, for losses recorded after June 1, 1986,
where the payee has left the Army or its employ, we will no longer grant
relief if Army delays more than 3 months in forwarding the debt to your
collection division. However, since this case occurred prior to that
date, we will not deny relief here.
B-223503, 65 Comp. Gen. 811
To: Mr. Clyde E. Jeffcoat, August 18, 1986
Relief is granted Army disbursing official under 31 U.S.C. 3527(c)
from liability for improper payment resulting from payee's negotiation
of both original and recertified checks. Proper procedures were
followed in the issuance of the recertified check, there was no
indication of bad faith on the part of the disbursing official and
subsequent collection attempts are being pursued. However, for losses
recorded after June 1, 1986, where the payee has left the Army or its
employ, we will no longer grant relief if Army delays more than 3 months
in forwarding the debt to your collection division.
This responds to your request of June 19, 1986, that we relieve
Lieutenant Colonel (LTC) T. S. Sharp, Jr., Finance Corps, Finance and
Accounting Officer, U.S. Army Finance and Accounting Center, 1st
Infantry Division and Fort Riley, Fort Riley, Kansas, under 31 U.S.C.
Section 3527(c) for an improper payment of a $511.25 check payable to
Mr. George J. Bruce. For the reasons stated below, relief is granted.
The loss resulted when the payee negotiated both the original and a
recertified check. This is our first opportunity to consider a relief
request involving the new recertification procedures. A recertified
check, unlike a substitute check, bears a different check serial number
from the original instrument and is disbursed from a new budget clearing
account. Under Treasury Fiscal Requirements Manual for Guidance of
Departments and Agencies, Bulletin No. 83-28, the Treasury Department
redelegated authority to administrative agencies to certify replacement
payments to payees who claim nonreceipt, loss, theft, mutilation,
destruction or forgery of U.S. Treasury checks and made the agency
certification of replacement checks mandatory. To implement the new
recertification procedures, the Army issued a Letter of Instruction on
February 6, 1985.
Under these instructions, a finance officer when notified by the
payee or claimant of nonreceipt of an original check will require the
payee or claimant to complete and sign DA Form 3037 (Statement of
Claimant Requesting Stoppage of Payment on Check). On the basis of the
DA Form 3037, the finance officer may issue a replacement check
immediately or delay the new payment until a later time. After the
form(s) are signed, the finance office will prepare and process a SF
1184, "Unavailable Check Cancellation."
Under the recertification procedures, upon receipt of the SF 1184,
the Treasury Department, Division of Check Claims processes the check
cancellation form to determine the payment status of the check. The
payment status of the check and the action to be taken by Treasury is
then transmitted to the finance officer by means of the Daily Advice of
Status (DAS). If the payment status of the check is "outstanding" the
Treasury Department is to credit the Army's budget clearing account.
If, after credit has been given by Treasury, the check is negotiated,
Treasury will issue a chargeback to the Army's budget clearing account
and the finance officer should begin collection action at that time.
In this case, nonreceipt of the original check was claimed on April
12, 1985. The DAS from Treasury, dated April 19, 1985, indicated that
the check was outstanding. The recertified check was issued May 6,
1985, on the basis of the claimant's original allegation that the first
check for damaged household goods had not been received. On July 17,
1985, the finance officer was informed by means of a chargeback from
Treasury that both the original and recertified check had been
negotiated.
It appears that the issuance of recertified check in this case was
within the bounds of due care as established by the Army's Letter of
Instruction on the Recertification of Checks Disbursing and Accounting
Procedures, February 6, 1985. There was no indication of bad faith on
the part of the disbursing officer and adequate collection efforts are
now being made. Although we have granted relief to the disbursing
officer in this case, we do not believe that the Army's collection
procedures, taken together, meet the diligent claims collection
requirement of 31 U.S.C. Section 3527(c). Once the chargeback was
received from Treasury, it took Army over 10 months to refer the matter
to your collection division. As we previously indicated to you, for
losses recorded after June 1, 1986, where the payee has left the Army or
its employ, we will no longer grant relief if Army delays more than 3
months in forwarding the debt to your collection division. However,
since this case occurred prior to that date, we will not deny relief
here.
B-222184, 65 Comp. Gen. 806
Matter of: Internal Revenue Service -- Imprest Fund Reimbursement
for Advertising Services, August 18, 1986
Imprest funds are available to pay the costs of recruitment
advertising so long as that advertising is authorized under 44 U.S.C.
3702 and the payment otherwise meets applicable requirements for imprest
fund payments.
Where the authority under 44 U.S.C. 3702 to authorize publication of
advertisements in newspapers has been properly delegated to Internal
Revenue Service contracting officers, exercise of that authority in any
written form satisfies the statute even though under internal agency
procedures, the wrong form may have been used. In any event, the
authorization requirement of 44 U.S.C. 3702 is not a limitation of the
method by which the advertising may be procured.
The handwritten initials of a vendor's agent on a receipt are
sufficient to support the reimbursement of an imprest fund. Although a
full handwritten signature represents the maximum protection of the
Government, the initials were sufficient evidence of the vendor's intent
to acknowledge receipt of payment.
Advance payments for advertisements were not authorized by an
appropriation act or other law and were therefore improper under 31
U.S.C. 3324(a). However, upon verification that the advertisements paid
for were published, no loss to the Government will have occurred and the
imprest fund which made the improper payment may be reimbursed.
An authorized certifying officer of the Internal Revenue Service
(IRS) has requested our decision on whether certain employment
advertising costs paid out of two IRS imprest funds may be reimbursed
out of appropriated funds. We hold that the use of imprest funds for
recruitment advertising was proper, that the procurement of advertising
was properly authorized, and that the receipts submitted by the vendors
were legally sufficient. We also hold that the payments for advertising
out of imprest funds in advance of the services being provided were
improper but that the payments may be reimbursed upon verification that
the services were in fact performed.
The payments in question were made from two separate imprest funds,
one at the Cincinnati District Office and the other at the Cincinnati
Service Center. All of the payments were authorized on a Treasury Form
1334, Requisition for Equipment, Supplies or Services, signed by a
contracting officer. The payments made at the Cincinnati District were
in the amounts of $56 paid to the Cincinnati Herald, and $349.44 paid to
the Cincinnati Enquirer. Both of these payments were made on September
24, 1985, for advertisements to run on September 26 and 27. The
Cincinnati Herald submitted an invoice which was stamped "paid." A
Standard Form 1165, Receipt for Cash -- Subvoucher, acknowledging
payment was signed by the Herald's agent and was attached to the
invoice. The Cincinnati Enquirer did not submit an invoice, but a
Standard Form 1165 acknowledging payment was signed by the Enquirer's
agent. The payment made at the Cincinnati Service Center was in the
amount of $80, paid to The Northerner, a newspaper at Northern Kentucky
University. The payment was made on October 4, 1985 for advertisements
which had already run on September 3 and 10. The Northerner submitted
an invoice which was stamped "paid" and was annotated "Rec'd $80.00, JZ,
10-4-85" by an agent of The Northerner.
The IRS first questions whether recruitment advertising is a proper
use of imprest funds. The IRS notes that its Small Purchases Imprest
Fund Handbook does not specifically provide for or prohibit the use of
imprest funds for recruitment advertising. The IRS handbook does
provide that imprest funds are available for procurement of supplies or
nonpersonal services "when vendors are reluctant to honor small purchase
orders * * *" or "when the imprest fund method of small purchase
procurement is advantageous to the government * * *." This handbook is
consistent with the general regulations on the use of imprest funds.
See, GAO, Policy and Procedures Manual for Guidance of Federal Agencies,
tit. 7, Section 22 (TS No. 7-40, July 14, 1983); Treas. Fiscal
Requirements Manual, vol. 1, Sections 4-300, et seq.; and 48 C.F.R.
Subpart 13.4 (Federal Acquisition Regulation). These regulations show
that imprest funds may be used to make contract payments so long as they
are in small amounts and the applicable documentation of payments is
provided. There is no subject matter limitation on the services which
may be paid for out of imprest funds. Therefore, use of imprest funds
in the situation presented is not legally objectionable.
The IRS also questions whether the advertising services were properly
contracted for. The IRS Fiscal Audit Handbook and Administrative
Accounting Handbook require that recruitment advertising "be authorized
by SF 147, Order for Supplies or Services, or other contractual
arrangement (e.g., oral purchase, formal contract, etc.) signed by a
contracting officer." The advertising services here were authorized by
using Form 1334. The IRS notes that Form 1334 is typically used to
document oral purchases but states that, although the Forms 1334 in this
case were signed by contracting officers, the purchases were not oral.
The IRS asks what the phrase "formal contract" in its handbook section
on authorizing advertising means, and whether the Form 1334 used here
was sufficient to authorize the advertising procurement.
In order to respond to these questions we must distinguish between
authorizing the use of newspaper advertising and contracting for that
advertising. 44 U.S.C. Section 3702 (1982) requires all newspaper
advertisements placed by an executive department to be authorized in
writing by the head of the department. 5 U.S.C. Section 302(b)(2)
(1982) authorizes the head of an agency to delegate the authority to
authorize advertisements to subordinate officials. Treasury Department
Order Number 150-51, January 11, 1960, delegated to IRS contracting
officers the authority to authorize advertisements for the recruitment
of IRS personnel. It is this authorization of advertising under 44
U.S.C. Section 3702 (1982) that the IRS handbooks are discussing. The
handbooks merely specify that the necessary authorization will be
documented by the contract to procure the advertising services. The
handbook should not be viewed as a limitation on the form in which
contracts for advertising will be awarded. Since the IRS states that
the Forms 1334 at issue were properly prepared and signed by a
contracting officer, 44 U.S.C. Section 3702 has been satisfied. In
light of the above, we do not consider the term "formal contract" in the
IRS handbooks to be a limitation on the means that a contracting officer
uses to procure advertising. The advertisements were authorized in
writing by officials to whom the authority had been properly delegated.
This is all that 44 U.S.C. Section 3702 requires. The fact that the
wrong form may have been used does not, in these circumstances, affect
the propriety of what was done.
The IRS further questions whether the advance payments for
advertising made to the Cincinnati Herald and the Cincinnati Enquirer
were proper. IRS notes that advance payments are allowed for periodical
subscriptions and post office box rental and asks if there are other
exemptions. /1/ IRS also asks whether, in the event that the advance
payments were improper, it can reimburse the Cincinnati District Imprest
Fund because the services have been received.
31 U.S.C. Section 3324 (1982) generally prohibits advance payments
unless authorized by a specific appropriation or other law. We have
held that the prohibition against advance payments applies to contracts
for advertising services. B-180713, April 10, 1974. Our research has
not revealed any appropriation act or other law which would allow the
IRS to make advance payments for advertising. Therefore the advance
payments made by the Cincinnati District were improper.
In B-180713, supra, we noted that the purpose of the advance payments
prohibition was to avoid losses to the Government which would result if
contractors failed to perform the services which had been paid for. In
this case, the Cincinnati Herald and Cincinnati Enquirer have apparently
performed their obligations by publishing the requested advertisements.
If so, there would be no loss to the Government and we would not object
to IRS reimbursing the imprest fund. Therefore, upon verifying that the
advertisements have in fact been published, the IRS may reimburse the
Cincinnati District Imprest Fund.
The final question raised by the IRS is whether the receipts executed
by the newspapers were adequate to support the imprest fund payments.
The IRS imprest fund handbook requires that each payment be documented
by a receipt itemizing the supplies or services obtained, the amounts
charged, and, for payments over $15, the signature of the vendor or the
vendor's agent. This receipt will normally be noted on the vendor's
invoice or, if no satisfactory invoice is available, on Standard Form
1165, Receipt for Cash-Subvoucher. The handbook also provides that if
any of the required information cannot be noted on the receipt, it
should be placed on an attachment.
The invoice of the Cincinnati Herald does not contain the signature
of the Herald's agent. That signature is present on a SF 1165 which was
attached to the invoice. We believe that these two documents together
satisfy the documentation requirements of the IRS handbook.
The invoice of The Northerner does contain the required receipt
information but is noted with the initials "JZ" rather than the
signature of The Northerner's agent. The IRS asks whether the full
signature of the vendor or its agent is required. A signed receipt is
necessary in order to protect the Government from a second presentation
for payment. The signature of the vendor acts as an acknowledgement of
payment and releases the Government from any further obligation to pay.
The most universally accepted form of signature in the United States is,
of course, the handwritten full name of the person signing. A receipt
with a full signature, therefore, represents the maximum protection for
the Government and should be solicited from a vendor whenever possible.
However, we do not believe that the use of initials in lieu of a full
signature on the receipt here is adequate grounds to refuse to reimburse
the imprest fund. Our decisions have not dealt with precisely the issue
of whether initials are sufficient to act as a signature on a receipt.
We have held that a facsimile rubber stamped signature which had been
adopted by a vendor was a proper signature on an invoice, 33 Comp. Gen.
297 (1954), and that initials appearing on an unsigned bid were adequate
evidence of the bidder's intent to be bound by its bid, B-184488, Oct.
17, 1975. These decisions are applications of the rule, as stated in
B-104590, Sept. 12, 1951, that "any symbol adopted as one's signature
when affixed with his knowledge and consent is a binding and legal
signature." For purposes of interpreting Federal statutes, the rule is
codified in 1 U.S.C. Section 1 (1982). Based on these authorities, we
hold that the initials of The Northerner's agent on the receipt here
adequately reflect the intent of The Northerner to acknowledge receipt
of payment. The Cincinnati Service Center imprest fund may therefore be
reimbursed for the amount of this receipt.
(1) It is not feasible to discuss in this decision other exceptions
which do not relate to the particular case. The certifying officer can
find a detailed discussion in our publication, Principles of Federal
Appropriations Law, at chapter 4 (1982).
B-222087, 65 Comp. Gen. 805
Matter of: David E. Nowak - Expenses Incurred in Connection With
Temporary Quarters, August 18, 1986
A relocated IRS employee is not entitled to reimbursement for a
reletting fee incurred by the premature settlement of a lease when
moving from temporary to permanent quarters at his new duty station
since it is a security deposit, as distinguished from a subsistence
expense in the nature of rent for lodging, and since it did not occur at
the old duty station. The employee may also not be reimbursed for a
telephone installation charge in temporary quarters at his new duty
station since it is not for a service ordinarily included in the price
of a hotel or motel room.
This decision is in response to a request from Mr. Larry W. Faulkner,
Chief of the Internal Revenue Service (IRS), Southwest Regional Office
Accounting Section, concerning the disallowance of certain travel
expenses claimed by Mr. David E. Nowak, an IRS employee.
The issues in this decision are whether Mr. Nowak is entitled to
claim a reletting fee of $361.25, and telephone installation charges of
$69, that were incurred in his temporary quarters at his new duty
station. For the reasons that follow we hold that the reletting fee and
telephone installation charges are not allowable subsistence expense.
On October 10, 1983, Mr. Nowak was authorized moving expenses for his
relocation from Detroit, Michigan, to Houston, Texas. In Houston, he
signed a 6-month lease for temporary quarters from February 4, 1984,
through July 31, 1984. The record is unclear as to when Mr. Nowak
actually terminated his lease but he submitted a voucher covering the 60
days from February 4, 1984, through April 2, 1984. The IRS disallowed a
reletting fee of $361.25, and telephone installation charge of $69.
However, the IRS allowed a forfeited security deposit of $150.
Mr. Nowak submitted a supplemental voucher on October 10, 1984 and
resubmitted it on January 8, 1985, each time attaching an explanation of
his claim. Mr. Nowak contends that the reletting fee should be
reimbursed since it is a cost of renting temporary quarters for the
period of occupancy, and is in the nature of a nonrefundable security
deposit or additional rental premium for the privilege of renting an
apartment month-to-month. He contends that the $69 telephone expense
should be reimbursed since it is for telephone service and not for
telephone installation.
Our decisions have consistently held that the premature settlement of
an unexpired lease is not allowable when moving from temporary to
permanent quarters at a new duty station. 55 Comp. Gen. 779 (1976);
and Walter V. Smith, B-186435, February 23, 1979. Thus, an employee who
is reimbursed for temporary quarters subsistence expenses at his new
duty station is not entitled to reimbursement for settlement of an
unexpired lease since the governing statute only applies to an unexpired
lease at the old duty station. 5 U.S.C. Section 5724a(a)(4) (1982).
Further, the Federal Travel Regulations, FPMR 101-7, incorp. by ref.,
41 C.F.R. Section 101-7.003 (1985), provides in para. 2-5.4a that only
actual charges for meals, lodging, and other items not applicable here,
are allowable subsistence expenses. Thus, a reletting fee, which is in
the nature of a security deposit, is distinguished from a subsistence
expense in the nature of rent for lodging, and also cannot be reimbursed
since it did not occur at the old duty station.
Further, as the agency correctly points out, we have also denied
reimbursement of a security deposit on temporary quarters for the same
reasons shown above. 55 Comp. Gen. 779, supra, at 783. Therefore, Mr.
Nowak's claim for reimbursement of a reletting fee is denied, and the
amount he was reimbursed for the security deposit should be collected
back.
As with lease settlements, our decisions have consistently held that
telephone installation charges in temporary quarters are not allowable
as a lodging expense. James L. Palmer, 56 Comp. Gen. 40, 42 (1976);
and 52 Comp. Gen. 730 (1973). Thus, we held in the latter decision that
the cost of lodgings reimbursable under the statutes and regulations
includes those items of expense which are for accommodations or services
ordinarily included in the price of a hotel or motel room. We therefore
held that a telephone user charge, but not the cost of installation, is
reimbursable as a cost of lodging.
Mr. Nowak characterizes the $69 fee as a user charge and claims that
it is therefore reimbursable. However, we note that it is a one-time
charge for work done on January 8, 1984, and consists of $5 for
equipment, $40 for order processing, and $24 for telephone office line
connection. This cost would not be billed on a monthly basis, and
therefore it is a phone installation charge. Accordingly, Mr. Nowak's
claim for the $69 fee is denied.
B-221982, 65 Comp. Gen. 800
Matter of: Equal Employment Opportunity Commission - Withholding of
Taxes From Judgments, August 18, 1986
The Equal Employment Opportunity Commission (EEOC) is not required to
withhold employee payroll taxes or pay employer excise taxes under the
Railroad Retirement Tax Act, 26 U.S.C. 3201-3233, when it distributes
judgment proceeds to the employees of railroad companies unless provided
for in the judgment.
The Equal Employment Opportunity Commission (EEOC) appropriation is
not available to pay employment taxes on amounts distributed to
employees from back pay judgments paid to the EEOC in enforcement
actions brought by the EEOC. Appropriations can be used only for their
intended purposes. Payment of these taxes cannot be viewed as a
"necessary expense" under EEOC's appropriations because it would not
contribute to fulfilling the purposes for which those appropriations
were made.
The Equal Employment Opportunity Commission (EEOC) has requested our
decision on whether the EEOC may pay certain employment taxes from its
appropriated funds. The Internal Revenue Service (IRS) has determined
that under the Railroad Retirement Tax Act, 26 U.S.C. Sections 3201-3233
(1982) (RRTA), the EEOC must pay employer excise taxes, and should have
withheld employee payroll taxes, on judgment proceeds it distributed to
220 former employees of 2 railroad companies. The proceeds were
deposited with the EEOC when it settled an age discrimination case
against those companies. We hold that the EEOC is not required to
withhold employee taxes when the judgment involved does not provide for
withholding. We also hold that the EEOC's appropriations are not
available to pay either tax.
On March 9, 1984, a judgment which incorporated the terms of a
settlement reached between the parties was rendered in the case of Equal
Employment Opportunity Commission v. The Baltimore and Ohio Railroad
Company and the Chesapeake and Ohio Railway Company. No. N-74-637 (D.
Md. 1984). Under the judgment, the companies were to pay to the EEOC
$3.5 million, $3 million in settlement of Age Discrimination in
Employment Act back pay claims of former employees and $500,000 in
interest on the back pay. Under the judgment, the EEOC was required to
distribute the funds to the 220 former employees according to a
specified formula. In making these distributions, the EEOC was required
to withhold Federal income taxes. By the end of 1984, the EEOC had
withheld a total of $630,005 and distributed the balance of the
settlement funds to the employees.
On March 22, 1985, the EEOC asked for ruling from the IRS on whether
the EEOC or the railway companies were responsible for paying the
employee's and employer's portions of any other taxes on the back pay
awards. On December 23, 1985, the IRS replied that the EEOC was
responsible for paying employer's excise and withholding the employee's
taxes under the RRTA. The EEOC then wrote to our Office to determine
whether it could pay out of its appropriations both the employer excise
taxes and the employee taxes which were not withheld from judgment
proceeds. /1/ Although the IRS has not stated that EEOC must pay the
employee taxes which were not withheld, the EEOC has assumed it is
liable for these payments.
The IRS position is based on two separate conclusions. First, the
IRS holds that the distributions of the settlement proceeds to the
railroad employees were taxable as wages under the applicable statutes,
regulations, and IRS rulings. Second, the IRS holds that the EEOC, as
the party which controlled the payment of the judgment proceeds to the
employees, was the "employer" responsible for the withholding and excise
taxes.
The latter conclusion is based on the IRS's reading of section
3401(d)(1) of the Internal Revenue Code (26 U.S.C. Section 3401(d)(1)
(1982)) and several cases which construe that section. Section
3401(d)(1) provides that, for income tax withholding purposes, the
person who controls the payments of wages to employees is the employer
responsible for withholding. In Otte v. United States, 419 U.S. 43
(1974), the Supreme Court construed Section 3401(d)(1) to uphold a
district court order requiring a trustee in bankruptcy to withhold
Federal income taxes from the payment of wages due to former employees
of the bankrupt. The Court also held that the definition of "employer"
for Federal income tax purposes should be applied to require the trustee
to withhold amounts required under the Federal Insurance Contribution
Act (FICA), 26 U.S.C. Sections 3101-3126 (1982). In In Re Armadillo
Corporation, 410 F. Supp. 407 (D. Col. 1976) aff'd. 561 F.2d 1382 (10th
Cir. 1977), the district court applied Otte to require a trustee in
bankruptcy to withhold both Federal income and FICA taxes from payments
of wages to former employees of the bankrupt. The court then expanded
this holding to require the trustee, as the employer for FICA purposes
under Otte, to pay the FICA excise tax on employers.
The IRS has applied these cases by analogy to hold that the EEOC
controlled the payment of wages to the railroad companies' former
employees. IRS therefore concludes the EEOC is required to withhold
Federal income tax under 26 U.S.C. Section 3402 (1982), withhold the
RRTA tax on employees under Otte, and to pay the RRTA excise tax on
employers under In Re Armadillo. Since only the Federal income taxes
were withheld by the EEOC, the IRS apparently considers the withholding
and excise taxes under the RRTA to be due from the EEOC.
At the outset, we of course accept the determinations of the IRS as
to what is or is not taxable under the various tax laws it administers.
Our comments are directed solely at the obligations of the EEOC under
the circumstances presented, and at the availability of its
appropriations. Because the issues involved are not limited to this one
case, we think it is important, before reaching the appropriations
issue, to address the EEOC's obligations in more general terms.
To begin with, we note that the EEOC's powers to enforce the Age
Discrimination in Employment Act, 29 U.S.C. Section 626(b) (1982), are
the same as those granted to the Secretary of Labor to enforce the Fair
Labor Standards Act, 29 U.S.C. Section 216(b) (1982). These powers
include the ability to bring suit in any court of competent
jurisdiction, and to deposit any sums recovered on behalf of an employee
into a special account to be paid "directly to the employee or employees
affected." If applied literally, this authority to accept and distribute
proceeds paid by defendants might prohibit payment by EEOC to anyone
other than employees, including the United States. Under this
interpretation the EEOC would lack authority to withhold any employee
taxes.
However, we do not believe that this authority need be so strictly
construed. The authority of the courts to order income tax withholding
under the Fair Labor Standards Act awards has long been upheld. E.g.,
Martin v. HMB Construction Co., 279 F.2d 495 (5th Cir. 1960). We have
previously stated our views that back pay awards are properly subject to
taxation and therefore withholding when the judgments entered so
provide. B-124720/B-129346, Sept. 23, 1981.
However, we do not agree with the IRS that withholding is required,
even though the judgment does not expressly provide for it. A similar
situation was considered in our decision B-124720/B-129346, supra. In
that case the IRS sought reversal of a prior decision that GAO would not
deduct amounts for income tax withholding when certifying back pay
judgments against the United States. We declined to reverse our
decision on the grounds that the judgments, which had become final, did
not provide for withholding. These judgments were fully binding on the
parties and could not be altered by GAO. See, B-124720/B-129346, supra.
In our view, this principle applies equally in this case. We believe
that EEOC's involvement in the distribution of judgment proceeds under
29 U.S.C. Section 216(b) is analogous to GAO's function in certifying
the payment of judgments against the United States. Here the judgment
only provided for Federal income tax withholding and had become final.
EEOC was then bound to comply with the terms of the judgment and could
not withhold amounts under the RRTA.
We do not think that the Otte and In Re Armadillo decisions, on which
the IRS relies, alter this conclusion. As we pointed out in
B-124720/B-129346, supra, the Otte case involved a ruling by the referee
that the trustee in bankruptcy was not required to withhold, which was
reversed by the district court prior to becoming final. Likewise, the
decision of the bankruptcy judge in Armadillo that the trustee was not
liable for FICA excise employers taxes was reversed by the district
court prior to becoming final. These cases are therefore inapplicable
to the situation in this case where the judgment has become final and
does not provide for withholding.
To accept the IRS conclusion is to place the EEOC in the position of
risking court-imposed sanctions for violating the terms of the judgment.
As we stated in our 1981 decision, the time to raise a tax withholding
issue is before the judgment has become final. If this has not been
done, even though the Government may have lost a significant collection
device, unilateral action by a Government agency which is at variance
with the terms of the judgment is not the solution.
Even if we were to conclude that the EEOC was required to withhold
and pay the taxes as asserted by the IRS, we would still be required to
hold that the EEOC appropriation is not available to pay these taxes.
31 U.S.C. Section 1301(a) (1982) limits the use of appropriated funds to
the purposes for which they were appropriated. The annual EEOC
appropriation provides funds for the necessary expenses of the EEOC as
authorized by Title VII of the Civil Rights Act of 1964 and the Age
Discrimination in Employment Act. See, e.g., 99 Stat. 1136, 1160
(1985).
Under 31 U.S.C. Section 1301(a), an expenditure is proper if it is
expressly authorized in the appropriation act or some other applicable
statute, or if it can be viewed as reasonably necessary to carry out the
purposes of the appropriation. E.g. 6 Comp. Gen. 619 (1927); 56 Comp.
Gen. 111 (1976). Our review of the EEOC authorizing legislation and
appropriation does not reveal any authority to pay the taxes asserted by
the IRS. Thus, the expenditure would be authorized only if it could be
justified as a "necessary expense" of the EEOC. While the payment would
certainly further a purpose of the IRS, we cannot see how it would
materially contribute to fulfilling the objects of EEOC's appropriation,
i.e., to administer and enforce certain anti-discrimination laws. In
the absence of specific legislative authority, therefore, we hold that
these taxes cannot be paid from the EEOC appropriation. See 54 Comp.
Gen. 205 (1974).
The EEOC cannot pay the Railroad Retirement Tax Act withholding tax
on employees and excise tax on employers out of its appropriation.
Despite the IRS's assertion that the EEOC was the employer for tax
purposes when it distributed judgment proceeds to employees it
represented, the final judgment did not provide for withholding and EEOC
cannot unilaterally change the terms at the request of the IRS.
In litigating similar cases in the future, we recommend that the EEOC
consider all relevant taxes and seek to assure that they are reflected
in any judgment or settlement. EEOC management should take appropriate
steps to bring this matter to the attention of its litigating personnel.
(1) The EEOC also asked whether certain employer excise taxes under
the Railroad Unemployment Insurance Act, 45 U.S.C. Sections 351-367
(1982), could also be paid out of EEOC's appropriated funds. The
Railroad Retirement Board, which administers this Act, has not asserted
this tax against the EEOC. If the Board does assert this tax, our
analysis of the excise taxes, under the RRTA will control the
availability of appropriated funds. The language of the applicable
sections of these two Acts are substantially similar and our analysis of
the two would be identical.
B-221698, 65 Comp. Gen. 799
Matter of: Louis G. Fiorelli, August 18, 1986
An Army employee was authorized to rent a car for use with other
employees while on temporary duty in Germany. A tire on the rental car
was damaged while being driven to the duty assignment and the gas cap
was stolen from the car while parked. Under the rental agreement, the
employee was required to reimburse the rental company for any tire
damage and any other damage not caused by accidents. Since the damages
occurred while the vehicle was being used for official business, he may
be reimbursed for the expenses.
An Army employee was authorized to rent a car for his use together
with other employees while on a temporary duty assignment in Germany.
While the rental car was being driven to the temporary duty site, the
tire on the car was severely damaged by a sidewall tear. Further, the
gas cap was stolen while the car was parked on an American Army base.
We are asked whether the Government may reimburse the employee for the
amounts paid to the rental company for the tire damage and stolen gas
cap. /1/ We conclude that payment may be made since the damages
occurred while the vehicle was being used for official business.
Mr. Louis G. Fiorelli, an Army employee, was ordered to perform
temporary duty to support operations in Heidelberg, Germany. Mr.
Fiorelli was authorized a rental car on his travel orders for his use
together with other Army employees while on the assignment.
Mr. Fiorelli rented a car from Eurorent Rent a Car, Frankfurt,
Germany, on September 10, 1985. Mr. Fiorelli declined the collision
damage waiver, which was offered under the car-rental contract for an
additional fee to relieve the renter for damages caused by accidents
only to the rented vehicle. Further, the rental agreement specified
that any tire damage would be at the hirer's expense.
On September 21, 1985, Mr. Fiorelli passed through a construction
site in Heidelberg on a one lane road where a pipe welded to a workman's
sign sticking from the curbside struck his tire, causing a tear in the
sidewall. He was required by the rental company to pay $80 for the cost
of a new tire. He was also required to pay $13.80 for a new gas cap to
replace the gas cap stolen from the rental car while he was at dinner in
an Army base in Heidelberg. Mr. Fiorelli paid the usual rental charges
and has been reimbursed. He has submitted his claim for $93.80, the
amount he became contractually obligated to pay the rental company and
paid from personal funds.
The submission states that costs for maintenance and operation of
rental vehicles are usually limited to gasoline and oil, garage rent,
hanger or boathouse rent, and similar expenses by Volume 2, Joint Travel
Regulations, paragraph C4702, and questions whether tire damages
required to be paid by the employee under the rental agreement may be
reimbursed. Further, they question whether payment for the gas cap is a
non-collision loss covered by the renter's comprehensive policy.
Mr. Fiorelli was authorized the use of the rental car as advantageous
to the Government by his travel orders. Our review of the record
indicates that no insurance covered the losses for which Mr. Fiorelli
was required to pay the rental company. Since the car was being used
for official travel when the tire damage occurred and the gas cap was
stolen, Mr. Fiorelli may be reimbursed the $80 for tire damage and
$13.80 for the gas cap he was required to pay the rental company. 47
Comp. Gen. 145 (1967).
Accordingly, the voucher submitted with the claim is returned to the
finance officer for payment.
(1) Mr. Paul J. Dominick, Finance and Accounting Officer,
Headquarters, Tobyhanna Army Depot, Tobyhanna, Pennsylvania, submitted
the request for a decision and it has been assigned control number 86-2
by the Per Diem, Travel and Transportation Allowance Committee.
B-221191, 65 Comp. Gen. 797
Matter of: Continuing Education Credits to Attendees of HUD's Real
Estate Seminars, August 18, 1986
General Accounting Office (GAO) will not question HUD's use of
appropriated funds to obtain a certificate of authority to grant
continuing education credits to attendees of seminars HUD conducts,
provided HUD administratively determines such expenditure constitutes a
necessary expense.
The Director of the Office of Finance and Accounting, Department of
Housing and Urban Development (HUD) requests an advance decision as to
whether HUD may pay the State of California $500 for a certificate
authorizing HUD to grant continuing education credits incident to
certain seminars it conducts. Consistent with our discussion below, we
will not question the proposed expenditure.
Recently, HUD officials in California have conducted training
seminars for real estate professionals on the subject of HUD's programs
and procedures. In order to increase attendance at these seminars, HUD
wishes to apply to the State of California for authority to grant
continuing education credits to attendees. The credits could be used to
meet California's real estate licensing requirements. California's
2-year certificate of authority to grant such credits would cost HUD
$500.
HUD officials ask whether the proposed expenditure may properly be
made from HUD's appropriated funds. They acknowledge that since the
seminar is designed for real estate professionals, HUD would essentially
be spending appropriated funds in order to confer a private benefit on
select non-Government employees, i.e., those who attend the seminars.
Nonetheless, HUD officials suggest that granting the credits "would not
only increase attendance (at the seminars), but would increase business
for HUD programs and disseminate more current information into the real
estate field which would assist HUD in carrying out its mission."
The letter of request from HUD's Office of Finance and Accounting
does not identify any specific source of authority under which the
training seminars are conducted. Accordingly, we must assume the
seminars are conducted pursuant to HUD's general authority "to encourage
private enterprise to serve as large a part of the Nation's total
housing and urban development needs as it can and develop the fullest
cooperation with private enterprise in achieving the objectives of the
Department." Pub. L. No. 89-174, 79 Stat. 667, 668 (1965) (codified at
42 U.S.C. Section 3531 (1982). We were informally advised that the
amount to be charged with the proposed expense would be HUD's
"Management and Administration" account. This account provides for
"necessary administrative and non-administrative expenses of the
Department of Housing and Urban Development." Pub. L. No. 99-160, 99
Stat. 914 (1985).
Except as otherwise provided by law, appropriations may be used only
for the objects for which they were made. 31 U.S.C. Section 1301(a)
(1982). A well-established corollary to this rule is that an
appropriation confers authority to incur expenses which are necessarily
incident to achieving an authorized objective. B-211531, July 18, 1983;
6 Comp. Gen. 619 (1927). In this context, we have construed the term
"necessary expense" to be a "current or running expense of a
miscellaneous character arising out of and directly related to the
agency's work." 52 Comp. Gen. 504, 505 (1973).
An agency has considerable discretion in determining how it will
achieve the objects of its appropriations. Accordingly, GAO will grant
substantial deference to an agency's administrative determination that a
given expenditure constitutes a necessary expense. 63 Comp. Gen. 110
(1983); B-130053, Dec. 20, 1956.
In the present case, it appears that HUD's activities in actually
conducting the seminars are directly related to the statutory authority
directing HUD's interaction with the private sector. See Pub. L. No.
89-174, supra. In view of this, we cannot conclude that the cost of
providing continuing education credits to seminar attendees is so
removed from the agency's mission as to preclude it from constituting a
necessary expense.
Accordingly, if HUD administratively determines that the cost in
question is a necessary expense, we will not question the expenditure.
B-219474, 65 Comp. Gen. 795
Matter of: Liability for Prompt Payment Interest Penalties Under
Interagency Agreement, August 18, 1986
Provision in interagency agreement between Federal Emergency
Management Agency (FEMA) and General Services Administration (GSA)
required FEMA to reimburse GSA for "expenses incurred by GSA in
providing the requested assistance." Under this provision, FEMA should
reimburse GSA for interest penalties incurred under Prompt Payment Act,
since late payment interest is an ordinary business expense and thus
within scope of reimbursement provision. 63 Comp. Gen. 338 (1984)
distinguished.
In separate submissions, officials of the Federal Emergency
Management Agency (FEMA) and the General Services Administration (GSA)
have sought our opinion regarding which agency is ultimately liable for
late payment interest penalties owed to a private contractor under the
Prompt Payment Act. The contract under which these interest penalties
were incurred was executed by GSA on behalf of FEMA, pursuant to an
interagency agreement between the two agencies. For the reasons given
below, we find that FEMA must reimburse GSA for the interest penalties
at issue.
Under the Disaster Relief Act of 1974, GSA and FEMA entered into an
interagency agreement intended to assist FEMA in carrying out its
responsibilities in the event of a disaster. In that agreement, GSA
agreed to provide various services at FEMA's request. The relevant
portion of the interagency agreement states:
GSA, upon the request of (FEMA), shall provide a full range of
administrative services and materials in order to support the disaster
field operation. These services ordinarily shall include:
E. Procurement support. This will be provided in accordance with
GSA procurement regulations * * * which provide for appropriate waivers
from 'sole source' restrictions in emergency or disaster situations. It
is understood that GSA Contracting Officers will perform this function
and frequently the services will be required at the disaster field
location.
In return for GSA's assistance, Part V of the agreement provides:
C. Reimbursement. Expenses incurred by GSA in providing the
requested assistance * * * shall be reimbursed (by FEMA) and shall be
applicable to both emergencies and major disasters.
According to the submissions, pursuant to the interagency agreement,
GSA entered into a contract with a private contractor named Wholesale
Distribution. Apparently due to administrative error on the part of
GSA, the contractor was not paid in a timely fashion and filed a claim
for interest penalties under the Prompt Payment Act. GSA billed FEMA
for the interest penalties incurred in this case. FEMA, citing 63 Comp.
Gen. 338 (1984) as support, has disputed its liability, arguing that the
penalties were incurred due to administrative error on the part of GSA,
a matter over which it has no control.
When we received these requests, we requested comments from the
Office of Management and Budget (OMB). OMB advised us that in its
opinion, FEMA must accept responsibility for the payment of interest
penalties resulting from contracts executed by GSA under the interagency
agreement. Nevertheless, OMB added that GSA should take whatever
actions are necessary to "eliminate inefficient and ineffective
procedures" that may have caused the late payments and interest penalty
charges in this case.
The Prompt Payment Act, 31 U.S.C. ch. 39 (1982), generally requires a
Government agency to pay "interest penalties" when it fails to make
timely payment for goods or services. Interest penalties are to be paid
"out of amounts made available to carry out the program for which the
penalty was incurred." 31 U.S.C. Section 3902(d). GSA and OMB construe
this language to mean that FEMA, as the agency whose programs were being
implemented (with the assistance of GSA), must be liable for the
interest penalties incurred in this case. There is, however, as FEMA
points out, no "privity" between FEMA and the GSA contractor. In other
words, the contractor lacks any basis on which to press a claim against
FEMA because it has no contractual relationship with FEMA. Cf. 63 Comp.
Gen. at 340. Moreover, as FEMA argues, the agreement did not call upon
GSA to deal with contractors in an untimely fashion. Therefore, since
late payments occurred through the fault of GSA, FEMA argues GSA must
bear the costs.
Nevertheless, we agree with GSA and OMB that FEMA must bear the
ultimate liability for the interest penalties incurred in this
situation. As quoted above, the agreement provides that FEMA will
reimburse GSA for "(e)xpenses incurred by GSA in providing the requested
assistance * * *." This langauge should be construed, according to its
plain, ordinary meaning, to contemplate ordinary business expenses that
might be incurred in performing the obligations described in the
agreement. Interest on a late payment is in the nature of an ordinary
business expense. As such, we think it falls within the scope of the
reimbursement provision of the agreement.
FEMA's reliance on our decision in 63 Comp. Gen. 338 is misplaced.
In that decision we noted that even though the Department of Treasury
was "at fault" in failing to issue a check to a contractor within the
contractually stipulated discount period, the contracting agency would
have to bear the cost of the lost discount because Treasury did not have
a contractual relationship with the contractor. The decision noted
parenthetically that most of the services there at issue were acquired
before passage of the Prompt Payment Act and therefore did not discuss
the Act's provisions. In this case, as in 63 Comp. Gen. 338, the
contracting agency is obligated to pay additional amounts to the
contractor for untimely payments. However, the difference between the
two cases is that FEMA agreed to reimburse GSA for its expenses. There
was no such agreement in the earlier case and therefore no obligation on
the part of Treasury to reimburse the contracting agency.
In view of the foregoing, we conclude that FEMA, under the agreement,
must reimburse GSA for the interest penalties incurred in this case.
B-219140, 65 Comp. Gen. 790
Matter of: Request for Advance Decision Concerning Loss or Damage to
Personally-Owned Tooling, August 13, 1986
Watervliet Arsenal, Department of the Army, may not under 31 U.S.C.
3721 assume risk of loss or damage to employee-owned tools or tool boxes
used on the Arsenal's premises in the performance of Government work by
charging losses to the Arsenal's industrial fund overhead account since
claims made pursuant to 31 U.S.C. 3721 are properly chargeable to the
appropriation for "Claims, Defense" and may not be charged to some other
fund or appropriation. Charging them to industrial fund's overhead
account would result in their payment from another appropriation.
Watervliet Arsenal, Department of the Army, may not under 31 U.S.C.
3721 purchase insurance to pay claims for loss or damage to
employee-owned tools or tool boxes used on the Arsenal's premises in the
performance of Government work and charge the cost of premiums to the
industrial fund as an operating expense since claims for loss of
employee-owned property incident to service in the absence of any other
law is for consideration under 31 U.S.C. 3721 and payment warranted must
be charged to the "Claims, Defense" appropriation.
We recommend Watervliet Arsenal, Department of the Army, seek a
reconsideration of the determination by the U.S. Army Claims Service
that losses of employee-owned tools may not be paid under authority of
31 U.S.C. 3721 since it involves the refusal of the Army to hear an
entire class of claims based upon a policy determination that has as far
as we can determine never been officially adopted or endorsed by the
Department of the Army.
This advance decision is in response to a request from Earl T. Hilts,
Counsel, Watervliet Arsenal, Department of the Army (submitted on behalf
of the Comptroller) asking:
-- Whether the Army may assume the risk of loss or damage to
employee-owned tools or tool boxes used on the Arsenal's premises
in the performance of Government work, by charging losses to the
Arsenal's industrial fund overhead account.
-- Whether the Arsenal may purchase private insurance and
charge the cost as an operating expense to the Arsenal's
industrial fund.
For the reasons given below, we answer both questions in the
negative. However, we also recommend that the Arsenal seek a review of
the position of the U.S. Army Claims Service on the compensability of
this class of claims.
The submission indicates that the Watervliet Arsenal has for decades
required some production shop employees to provide a small complement of
employee-owned hand tools to perform their required duties. /1/ In the
past, claims for lost, stolen, or damaged employee-owned property were
processed under 31 U.S.C. Section 3721 (1982), popularly referred to as
the Military Personnel and Civilian Employees Claims Act of 1964.
However, by letter of February 27, 1985, Colonel James McCune, Command
Staff Judge Advocate/Deputy Command Counsel, U.S. Army Materiel Command,
Department of the Army, notified all Army Materiel Command Legal Offices
that payments of claims for lost or stolen employee-owned tools and
equipment used in the performance of official duties and stored in Army
facilities would be improper, based on a decision rendered by the U.S.
Army Claims Service. The Colonel's letter points out that the basis of
the Army Claims Service's opinion is:
The Government is responsible to provide its employees with the tools
necessary to perform their duties. Employees should not be required or
encouraged to bring their personal tools to work. The payment of claims
for lost personal tools would constitute improper use of the DOD Claims
Appropriation to fund operational requirements.
The Colonel's letter then goes on to advise claims officers to ensure
that these claims not be adjudicated as proper for payment and also
advises that:
Just as important is the necessity to ensure that the tool owner is
apprised of the fact that a potential claim for loss or damage to his
privately owned tools used in the course of official duties may be
denied. It is suggested that a notice be published periodically in the
installation, unit, or command bulletin or other locally generated
information media.
We have been informally advised by two officials of the Arsenal that
its agreement with the employee's union contains a "past practice"
provision to the effect that nothing in the agreement should be
considered as superseding existing management-employee practices and
relationships at the Arsenal except as specifically provided in the
agreement. These officials also advised us that nothing in the
agreement addresses the matter of whether employees are required to
furnish their own tools or, if they do, whether the Army would hear
employee claims for losses submitted under 31 U.S.C. Section 3721.
However, it was indicated that this has been the practice for quite some
time on both these matters. We have also been informally advised that
the Arsenal has not provided the employees the tools in question and
employees continue to use their own tools.
The Arsenal's Counsel point out that the estimated cost to the
Arsenal to purchase the tools and tool boxes now provided by the
employees would be in excess of $315,000 and that this figure does not
include any costs for the development of the administrative system to
issue, record and control the tool sets, or the costs of the personnel
dedicated to managing this responsibility. /2/ On the other hand, the
Arsenal's Counsel points out that claims for lost, stolen or damaged
employee-owned tooling processed under 31 U.S.C. Section 3721 totaled
only $4,100 in the previous 5 1/2 years. Thus the Arsenal would like to
find some way to continue to permit employees to use their own tools and
to pay claims for theft or damage to employee-owned tools when
appropriate.
The submission indicates that claims for employee-owned tools and
tool boxes previously have been processed under 31 U.S.C. Section 3721,
which provides that:
(b) The head of an agency may settle and pay not more than $25,000
for a claim against the Government made by a member of the uniformed
services under the jurisdiction of the agency or by an officer or
employee of the agency for damage to, or loss of, personal property
incident to service. A claim allowed under this subsection may be paid
in money or the personal property replaced in kind.
Usually claims presented under authority of 31 U.S.C. Section 3721
are paid from the operating appropriations available to the agency whose
activities gave rise to the claim since, as a general rule, the Congress
does not establish a specific fund for payment of these types of claims
by agencies. See B-174762, January 24, 1972. However, in the present
case, all noncontractual claims against the Department of Defense, as
authorized by law (other than claims relating to civil functions), are
to be paid out of annual appropriations to the Department of Defense for
"Claims, Defense." This account represents the consolidated requirements
of the Secretary of Defense and the Departments of the Army, the Navy,
and the Air Force. See S. Rep. No. 99-176, 99th Cong., 1st Sess. 83
(1985), accompanying H.R. 3629, the Department of Defense Appropriation
Bill, 1986, which was enacted into Public Law No. 99-190, December 19,
1985, 99 Stat. 1985.
As a general rule of appropriation construction, when an
appropriation has been made for a specific purpose (among others), no
other appropriation which might otherwise be considered available for
the same purpose may be used instead, even if the proper appropriation
is exhausted or unavailable in a particular case for some other reason.
See, for example, 31 Comp. Gen. 491 (1952).
Although the Arsenal's industrial fund is charged with paying most of
the costs incurred in operating the Arsenal, which are then reimbursed
pursuant to an agreement by industrial fund customers from their own
appropriations, /3/ claims by employees for lost or damaged tooling
presented pursuant to 31 U.S.C. Section 3721 are noncontractual in
nature. Payment, if authorized, is properly chargeable only to the
appropriation for "Claims, Defense". Consequently, the Arsenal is not
authorized to make payment of these claims from the industrial fund and
charge them as overhead. Thus the first question is answered in the
negative. /4/
Regarding the purchase of insurance, we note that the Government
generally assumes the risk of loss for actions of its employees
resulting in damage or loss of property. This is known as the rule on
self-insurance, a rule founded on the policy:
* * * that it does not make economic sense to expend appropriated
funds for the purchase of insurance to cover loss or damage to
Government-owned property or for the liability of Government employees
for damage to someone else's property. The extent of the Government's
resources is generally sufficient to absorb such a loss or liability
should the contingency actually occur. See B-158766, February 3, 1977;
19 Comp. Gen. 798, 800 (1940) * * *. 63 Comp. Gen. 110, 113 (1983).
Under the self-insurance concept, claims settled under 31 U.S.C.
Section 3721 are to be paid from the appropriation available for that
purpose and the agency is precluded from purchasing insurance to cover
such claims. Where the agency has decided not to hear the claim or that
the claim does not merit payment under 31 U.S.C. Section 3721, then it
has decided that either there should be no risk to the Government or
even where there is a risk, the claim is meritless. In either case, the
agency cannot purchase insurance to cover these types of claims since it
would be doing indirectly through insurance what it has determined it
would not do directly through settling the claim under 31 U.S.C. Section
3721.
Therefore, the Arsenal may not purchase insurance to cover risks of
loss to employee-owned property occurring incident to service and charge
it to the industrial fund operating expense account since any payments
under 31 U.S.C. Section 3721 must be paid out of the appropriation
available for this purpose, in this case "Claims, Defense". The second
question is therefore answered in the negative.
We recommend that the Arsenal seek a reconsideration of the position
expressed by the U.S. Army Claims Service as to the compensability of
this class of claims. Generally, whether a particular claim is payable
under this provision of law is within the administrative discretion of
the agency concerned and not reviewable by this Office. However, we
have also held that the concept of administrative discretion does not
permit an agency to refuse to hear all claims filed by its employees
under the act. While we will not tell an agency how to exercise its
discretion, in our opinion, it does have a duty to exercise its
discretion. See 62 Comp. Gen. 641 (1983). While the present situation
does not involve the Army's refusal to hear all claims under the law, it
does involve the refusal of the Army to hear an entire class of claims
based on a policy determination that has as far as we can determine from
the submission, never been officially adopted or endorsed by the
Department of the Army.
While employees could not be required to provide their own tools for
Army's work, there is no question that the Army could, if it chooses,
either permit or prohibit the voluntary use of personally-owned tools by
employees. Similarly, Army could have prohibited its component
organizations from agreeing to the use of employee-owned tools pursuant
to a union agreement or otherwise. To permit such use is tantamount to
agreeing that the Army considers the tools to be used for the Army's
benefit ("incident to service") and that, especially in view of the
apparent past practices, it will consider any losses incurred for
payment under 31 U.S.C. Section 3721. Consequently, any change in Army
policy on this issue should be prospectively applied from the date that
the Army notifies its employees by regulation or other written document,
that they are prohibited from further use of their own tools in
performing Government work.
As indicated earlier, it is our understanding that at Watervliet
employees have for many years been required or permitted to use their
hand tools, and claims for loss or damage to these tools have been
considered and paid under 31 U.S.C. Section 3721 at least for the past 5
1/2 years. This raises another question about the application of the
Claims Service opinion to currently pending claims. If this is in fact
the "past practice" at Watervliet, there is a question as to whether the
"past practice" provision in the applicable labor-management agreement
has effectively limited the discretion that Army might otherwise have
had. /5/
Should the Claims Service affirm its prior position, the Army must
determine (a) precisely what the "past practice" at Watervliet was, and
(b) whether a refusal to consider claims during the life of the current
labor-management agreement would violate that agreement. If it is
determined that the "past practice" provision applies, then the Claims
Service's decision with respect to Watervliet (and similarly situated
installations) should be deferred until expiration of the present union
agreement, and an appropriate provision disavowing the past practice
should be included in future agreements.
(1) The Arsenal produces large artillery and tank cannon components
and maintains a vast inventory of special tooling, gauges and measuring
instruments. The employees are required to provide basic items such as
rulers, wrenches, pliers, measuring tools and tool boxes.
(2) Such costs would be absorbed in the overhead account and passed
on to its customers. See 10 U.S.C. Section 2208.
(3) See Department of Defense Regulation entitled "Industrial Fund
Operations", DOD 741.4-R., chapter 4, Section H (April 1982).
(4) We note that the arsenal has not suggested that it may settle the
claims in question under 31 U.S.C. Section 3721 and charge the payment
against the "Claims, Defense" appropriation account itself. Whether the
Arsenal has this authority is doubtful. Army Regulation (AR) 27-20,
chapter 11 sets forth criteria for settling claims under 31 U.S.C.
Section 3721 and delegates authority to various specific officials of
the Department of the Army to settle these claims. We do not think that
an official of the Arsenal is included. See for example, AR 27-20
paragraphs 11-4 and 11-45. See also AR 27-2 paragraph 1-3. For these
reasons we are not advancing this as an option for resolving the
Arsenal's dilemma.
(5) It is settled that an agency can limit its discretion by
regulation. Service v. Dulles, 354 U.S. 363 (1957); Accardi v.
Shaughnessy, 347 U.S. 209 (1954); California Human Development Corp. v.
Brock, 762 F.2d 1044, 1049 (D.C. Cir. 1985); Criffin v. United States,
215 Ct. Cl. 710 (1978); B-202039, May 7, 1982. It should follow that
it can do the same by contract.
B-222616, 65 Comp. Gen. 784
Matter of: Tierra Engineering Consultants, Inc., August 12, 1986
Since the Brooks Act requires contracts with architect-engineer firms
of demonstrated competence, and implementing regulations require
agencies to consider past performance in terms of cost, quality of work,
and compliance with performance schedules, protest based on failure of
Commerce Business Daily request for expressions of interest to state
that past performance will be evaluated is without merit.
When protesting architect-engineer firm proposes five individuals as
key personnel, specialists, or consultants for a particular project,
while awardee plans to do 100 percent of the work himself, agency's
evaluation of top three individuals proposed by protester, rather than
only one as for awardee, is not improper.
When selection criterion involving equitable distribution of
architect-engineer contracts among small and minority business firms
that have not previously had government contracts is no longer included
in applicable regulations, consideration of this factor is not legally
required.
Tierra Engineering Consultants, Inc. protests the award of a contract
for architect-engineer services to Claude A. Fetzer. The Bureau of
Reclamation, Department of the Interior, selected Mr. Fetzer to analyze
and assess the performance of existing embankment dams under
solicitation No. 6-CA-81-08510, a small business set-aside.
Tierra, which initially protested to the agency, makes three broad
allegations, all based on its debriefing. First, the protester alleges
that the Bureau of Reclamation improperly evaluated responses to a
Commerce Business Daily (CBD) request for expressions of interest in the
procurement. Second, the protester alleges that the selection process
favored current and previous contractors and did not attempt to
distribute work equitably among small, minority business concerns such
as itself. Third, the protester argues that the Bureau of Reclamation
should have rejected Mr. Fetzer because he did not submit a required
standard form 255, detailing his qualifications for this procurement.
We deny the protest.
Procurements for architect-engineer services are conducted pursuant
to the Brooks Act, 40 U.S.C. Sections 541-544 (1982), and the
implementing Federal Acquisition Regulation (FAR), 48 C.F.R. subpart
36.6 (1985). After publicly announcing a requirement, the contracting
agency convenes an evaluation board that reviews performance data and
statements of qualifications submitted in response to the announcement,
as well as data already filed by firms that wish to be considered for
architect-engineer contracts. The board must hold discussions with no
less than three firms (known as the "short list"), then rank and submit
their qualifications to a selection official, who determines the most
highly qualified offeror. If the agency is not able to negotiate a
satisfactory contract at a fair and reasonable price with the preferred
offeror, it is required by statute to enter into negotiations with the
second-ranked firm, and so on until an agreement is reached. See
Oceanprobe, Inc., B-221222, Feb. 26, 1986, 86-1 CPD Paragraph 197.
In this case, the CBD request for expressions of interest, published
October 18, 1985, stated that the Bureau of Reclamation would award an
indefinite quantity contract for an initial and 2 option years. Under
the contract, the agency will issue delivery orders directing the
successful architect-engineer firm to assess instrumentation data and
programs for specific dams and to present conclusions regarding their
performance.
The request for expressions of interest listed selection criteria as
including, in descending order of importance, (1) qualifications of
personnel and (2) past experience involving embankment dams. It
referenced CBD Note 63, which states that architect-engineer firms that
meet the requirements in a particular announcement are "invited to
submit" standard form 254 (Architect-Engineer and Related Services
Questionnaire) and standard form 255 (Architect-Engineer and Related
Services Questionnaire for Specific Project), and any requested
supplemental data. The note further states that selection of a firm for
negotiation shall be based on "demonstrated competence and
qualifications necessary for the satisfactory performance of the type of
professional services required, including any special qualifications
required by the procuring agency."
In debriefing Tierra, the Bureau of Reclamation provided the firm
with a blank copy of the evaluation sheet that it had used to select a
short list of 5 firms (out of 26 expressing interest) with whom to
conduct discussions. This form provided for assessment of technical
qualifications and past performance of the engineers that each offeror
proposed for the project.
Individuals were rated on scale of 100, as follows:
A. Technical Qualifications
1. Experience in analysis of embankment dam performance based
on instrumentation data . . . . . . . . . .25
2. Experience with embankment dam instrumentation systems and
equipment . . . . . . . . . . . .20
3. Experience in the design, analysis, modification,
inspection, and/or rehabilitation of embankment dams . . . . . . .
. . . . . . . . . . . . . . . .20
4. Educational and professional background . . . . . . .10
B. Past Performance on Contracts
1. Contracting experience . . . . . . . . . . . . . . . .10
2. Qualify of performance . . . . . . . . . . . . . . . .15
Evaluators then multiplied each engineer's total point score by the
percentage of work to be performed by that individual. Except for the
awardee, as discussed below, or other individuals whom offerors
indicated would perform a specific portion of the work under the
contract, evaluators selected the top three proposed by the offeror,
assumed that each would perform one-third of the work, and averaged
their scores to obtain a numerical rating. Under this scheme, Mr.
Fetzer was found most highly qualified; he received almost twice as
many points as Tierra, which ranked 14th among offerors.
Tierra contends that the evaluation was improper because past
performance was not listed as a criterion in the CBD request for
expressions of interest. According to Tierra, the agency awarded points
for quality of performance only if the offeror had previously performed
Bureau of Reclamation contracts or included in its expression of
interest testimonials from other previous employers. The fifth-ranked
firm received 4 points because it did provide such a testimonial; this
firm would not otherwise have been included on the short list.
The Bureau of Reclamation responds that it encountered considerable
difficulty in evaluating quality of past performance without relying on
the personal knowledge of evaluators or considering information other
than that submitted by offerors. It therefore gave 0 points, indicating
satisfactory past performance, to all but the one offeror that provided
a laudatory letter from another federal agency.
We do not find the evaluation improper in this regard. The Brooks
Act requires contracts with architect-engineer firms of demonstrated
competence. 40 U.S.C. Section 542. Note 63 of the CBD also refers to
demonstrated competence. In addition, the FAR requires agencies, in
selecting architect-engineer firms, to consider past performance on
contracts with government agencies and private industry in terms of
"cost control, quality work, and compliance with performance schedules."
48 C.F.R. Section 36.602-1(a)(4). Offerors therefore are charged with
at least constructive knowledge of this criterion, and Tierra cannot
argue that it was unaware of it or that the Bureau of Reclamation may
not consider past performance. See Tri-State Laundry Services, Inc.,
B-218042, Feb. 1, 1985, 85-1 CPD Paragraph 127, aff'd on
reconsideration, Mar. 11, 1985, 85-1 CPD Paragraph 295.
In addition, we believe that past performance is reasonably related
to the evaluation criterion announced in the CBD, i.e., past experience
on embankment dams. An unstated criterion may be applied if it is
reasonably related to or encompassed by a stated criterion. See
Oceanprobe, Inc., supra.
While it might have been preferable for the Bureau of Reclamation to
advise offerors specifically that it wished them to demonstrate the
quality of performance on past contracts, the agency was not required to
go outside offerors' submissions for this information. FACE Associates,
Inc., 63 Comp. Gen. 86 (1983), 83-2 CPD Paragraph 643. Since the Bureau
of Reclamation received 26 expressions of interest, we believe it
reasonably concluded that it would be too much of a burden to contact
agencies or private industries for whom offerors had previously
performed.
Tierra alleges that evaluators' personal knowledge of the awardee's
performance may be reflected in their selection. There is no support
for this allegation in the record; Mr. Fetzer and all but one firm on
the short list also received 0 points for quality of past performance.
Tierra has the burden of proving bias on the part of evaluators. Power
Line Models, Inc., B-220381, Feb. 28, 1986, 86-1 CPD Paragraph 208, and
it has not done so here.
Tierra further contends that the agency improperly evaluated the
qualifications of a different number of engineers for different
offerors. Tierra apparently was told during its debriefing that while
the embankment dam experience of two of the engineers whom it proposed
for the project was highly regarded, that of the third was considered
weak.
The Bureau of Reclamation responds that the awardee, a consulting
geotechnical engineer, will perform 100 percent of the work himself;
therefore he was evaluated on that basis. The agency defends its
evaluation of the top three individuals proposed by Tierra and other
firms as the only way it could treat offerors equally.
We do not find this aspect of the evaluation unreasonable. Again, it
might have been preferable for the Bureau of Reclamation to ask offerors
themselves to estimate the percent of work to be done by proposed
engineers, rather than make assumptions. However, the record shows that
Tierra submitted information on five different individuals in that
section of its standard form 255 where it was asked to list "key
personnel, specialists, and individual consultants anticipated for the
project." Tierra identified the two engineers whose experience was
favorably evaluated as its proposed project manager and assistant
project manager. The third individual, who was evaluated as having no
experience with embankment dams, was specifically identified by Tierra
as a geologist who would be working on the project.
The Bureau of Reclamation states that if Tierra and other offerors
had been rated only on the experience of their two top engineers, Tierra
would still not have been included on the short list. Rather, the
protester would have tied with two other offerors for sixth place in the
evaluation. Thus, Tierra was not prejudiced by the allegedly deficient
evaluation. See Y.T. Huang & Association, Inc., B-217122 et al., Feb.
21, 1985, 85-1 CPD Paragraph 220, aff'd on reconsideration, B-218310 et
al., Apr. 4, 1985, 85-1 CPD Paragraph 392.
Tierra contends that the selection process favored current and prior
contractors. It supports this allegation by pointing out the number and
dollar volume of Bureau of Reclamation Contacts awarded to one firm
under section 8(a) of the Small Business Act, 15 U.S.C. Section
637(a)(1) (1982). This particular procurement, while set aside for
small business, was not conducted pursuant to section 8(a). Tierra is
therefore not entitled to any preference as a minority firm, Y.T. Huang
& Assoc., supra, and the evidence concerning contracts awarded to one
8(a) firm is not relevant here.
Tierra apparently believes there should be an equitable distribution
of architect-engineer contracts among small and minority business firms
that have not previously had government contracts. There is no current
regulatory policy on this matter. The Defense Acquisition Regulation,
Section 18-402.1(v) (DAC 76-31, Oct. 30, 1981), formerly included such a
policy, but the superseding FAR section, 48 C.F.R. Section 36.601, does
not include this consideration. Compare Dhillion Engineers, B-209678,
Mar. 16, 1983, 83-1 CPD Paragraph 268; R. Christopher Goodwin & Assoc.,
et al., B-206520, Nov. 5, 1982, 82-2 CPD Paragraph 410 (both involving
an equitable distribution criterion). Thus, the basis for selection now
is strictly which architect-engineer firm is most highly qualified. 40
U.S.C. Section 543; 48 C.F.R. Sections 36.602-1, 36.602-4.
Finally, Tierra urges that the Bureau of Reclamation should have
rejected the awardee for failure to submit information as to his
qualifications for this procurement on standard form 255. The agency
responds that the FAR, 48 C.F.R. Section 36.702(b), limits the
requirement for standard forms to architect-engineer services for the
"construction, alteration, or repair of real property." The agency
argues that the awardee here will analyze and assess the performance of
embankment dams, based on instrumentation data, rather than construct,
alter, or repair the dams. The agency adds that it is its policy not to
reject expressions of interest for failure to submit the standard forms,
but rather to accept any response that provides the necessary
information concerning an offeror's qualifications.
We do not find the failure to submit a standard form 255 fatal to the
awardee. This was a negotiated procurement, so the concept of immediate
rejection of an offeror as nonresponsive is not applicable. See, e.g.,
Fort Wainwright Developers, Inc., et al., B-221374, et al., May 14,
1986, 65 Comp. Gen. 573, 86-1 CPD Paragraph 459. We also note that Note
63 of the CBD states that offerors are invited to submit the standard
forms, not that they are required to do so.
We have reviewed Mr. Fetzer's expression of interest, provided as
part of the protest record, and find that it contains information
concerning his experience in evaluation of instrumentation data on
embankment dams, including copies of the articles from professional
journals and papers presented at international conferences. So long as
the Bureau of Reclamation had sufficient information on which to make a
reasonable determination as to which offeror was most highly qualified,
we do not believe that the agency was required to reject the awardee for
failure to complete a standard form 255.
Our review of the selection of architect-engineer contractors is
limited to an examination of whether the agency's determination was
reasonable; we will question the selection only if the protester shows
that it was arbitrary. Mounts Engineering, B-218489.4, Apr. 14, 1986,
65 Comp. Gen. 476, 86-1 CPD Paragraph 358. We conclude that the Bureau
of Reclamation's selection here was reasonable; Tierra has not shown it
to be arbitrary.
The protest is denied.
B-223214, 65 Comp. Gen. 783
Matter of: Heritage Medical Products, Inc., August 5, 1986
Where a solicitation for surgical evacuators required bid samples to
conform to the specifications listed in the solicitation, the agency
properly rejected as nonresponsive a bid that was accompanied by a
sample that did not meet those specifications. Moreover, the bid cannot
be corrected after bid opening to make it responsive.
Heritage Medical Products, Inc. (Heritage), protests the Veteran
Administration's (VA) decision to reject Heritage's bid under
solicitation No. M1-83-86 for surgical wound evacuators. We deny the
protest.
The solicitation provided that bid samples were required and would be
evaluated to determine compliance with the characteristics listed in the
bidding schedule. The solicitation also provided that failure of these
bid samples to conform to the required characteristics would result in
rejection of the bid. Included in the schedule description for the
surgical wound evacuators was a requirement for a patient attachment
clip. Although Heritage submitted the lowest bid, its bid sample did
not contain the patient attachment clip and the VA, therefore, rejected
Heritage's bid as nonresponsive.
Heritage challenges the VA's rejection of its product based on the
potential savings to the government if the VA were to award the contract
to the firm and has offered to supply a patient attachment clip at no
charge. Heritage also believes that it should be awarded the contract
because its product had been approved in previous dealings with the VA.
Where a solicitation lists definitive specifications and requires
that bid samples strictly comply with those specifications, a sample
that does not so comply renders a bid nonresponsive. Cherokee
Leathergoods, Inc., B-205960, Aug. 13, 1982, 82-2 C.P.D. Paragraph 129.
The failure of a bid with bid samples to meet salient characteristics is
therefore a proper ground for bid rejection. Easton Box Co., B-213423,
Apr. 10, 1984, 84-1 C.P.D. Paragraph 406. Here, the specifications
required that the surgical evacuators include a patient attachment clip;
Heritage's bid sample did not conform to the VA's specifications, and
thus was nonresponsive.
It is not relevant that the VA could save money by accepting
Heritage's bid and offer to furnish the clip. First, to permit a bidder
the opportunity to change, correct or explain a nonresponsive bid after
bid opening would allow the firm to accept or reject the contract after
bids have been exposed by correcting or refusing to correct the bid.
Sullair Corp., B-214121, Apr. 17, 1984, 84-1 C.P.D. Paragraph 436.
Thus, it is well-settled that a nonresponsive bid may not be corrected
to make it responsive. Id. Jewel Associates, B-213456, Mar. 20, 1984,
84-1 C.P.D. Paragraph 335. Heritage therefore cannot cure its bidding
deficiency through its post-bid-opening offer. Second, the possibility
that the government might realize monetary savings if a material
deficiency is allowed to be corrected or waived is outweighed by the
importance of maintaining the integrity of the competitive bidding
system. See Lane Blueprint Co., B-216520, Oct. 23, 1984, 84-2 C.P.D.
Paragraph 454; Union Metal Mfg. Co., Electroline Division, B-209161,
Nov. 2, 1982, 82-2 C.P.D. Paragraph 402.
Heritage also asserts that its product had been approved in previous
dealings with the VA. That Heritage's product may have been approved or
purchased by the VA previously is irrelevant, however, since a bid has
to be responsive to the particular solicitation to which it responds in
order to be considered for award. Federal Acquisition Regulation, 48
C.F.R. Sections 14.301, 14.404-2 (1984).
The protest is denied.
B-220809.2 et al., 65 Comp. Gen. 778
Matter of: Baurenovierungsgesellschaft, m.b.H., August 5, 1986
Protester is not entitled to recover the costs of filing and pursuing
its successful protest even though the General Accounting Office (GAO)
recommended that the protested contracts be awarded to the protester and
the protester did not receive the awards. The protester entered into a
voluntary agreement with the agency whereby it waived its right to the
contract awards in exchange for an alternative, mutually agreeable
remedy, and under these circumstances, GAO finds that the protester has
obtained a sufficient remedy and is entitled to no further recovery.
Baurenovierungsgesellschaft, m.b.H. (BRG) requests recovery of the
costs of filing and pursuing its successful protest against the
Department of the Army's negative responsibility determinations under
request for proposals (RFP) Nos. DAJA76-85-R-0411, DAJA76-85-R-0444, and
DAJA76-85-R-0596. See Decker and Co.; Baurenovierungsgesellschaft,
m.b.H., B-220807 et al., Jan. 28, 1986, 86-1 CPD Paragraph 100. We deny
BRG's request.
In our prior decision, we found that the negative responsibility
determinations were based on inaccurate and misleading information.
Specifically, the negative preaward survey report relied on by the
contracting officers did not disclose that the unsatisfactory
performance cited in the report was that of Decker, an affiliated firm,
rather than BRG's. We rejected the agency's assertion that it was
reasonable to attribute Decker's performance to BRG because the two
firms had common management and therefore were affiliates. We noted
that the Federal Acquisition Regulation (FAR), 48 C.F.R. Section
9.104-3(d) (1984), provides that affiliated concerns normally are
considered separate entities for purposes of responsibility, and we
concluded that even if the firms were affiliates, affiliation per se did
not provide a proper basis for a nonresponsibility determination. We
also noted that the contracting officers clearly had never considered
BRG's own record of performance in making their responsibility
determinations for the protested contracts, but that when the agency
later investigated BRG's record in connection with four other contracts,
the firm was found responsible. Therefore, we sustained the protest.
We recommended that the Army reconsider the nonresponsibility
determinations based on accurate information. We also recommended that
if BRG was found responsible, the protested contracts should be
terminated and reawarded to BRG.
Generally, we will allow the recovery of the costs of filing and
pursuing a protest, including attorney's fees, where the protester
unreasonably is excluded from the procurement, except where we recommend
that the contract be awarded to the protester and the protester receives
the award. 4 C.F.R. Section 21.6(e) (1986). BRG bases its request for
recovery of its protest costs on two theories. The first of these is
that our Office did not recommend that BRG receive the contract awards,
but instead recommended that the nonresponsibility determinations be
reconsidered. The second theory is that even though BRG was found
responsible upon reconsideration by the agency, BRG in fact did not
receive the contract awards.
We find no merit to BRG's contention that our recommendation was not
a recommendation that BRG receive the contract awards. Although we did
recommend that the agency first reconsider BRG's responsibility based on
accurate information, as we specifically stated in a footnote to our
recommendation, an affirmative responsibility determination is a
prerequisite to any contract award. Accordingly, if a firm is
reasonably found nonresponsible, it is not entitled to contract award in
any event. /1/ In other words, even in cases where the basic protest
does not concern responsibility and we simply recommend that a protester
receive the award, it must be understood that the recommendation is
contingent upon the protester's first being found responsible. We
therefore consider BRG's argument, that our recommendation was something
other than that the BRG receive the contract award, to be clearly
unreasonable.
BRG's second theory supporting its request for recovery of protest
costs is that even though the agency did reconsider the firm's
responsibility and reach an affirmative determination, BRG did not in
fact receive the contract awards. While this theory appears on its face
to be reasonable, the circumstances surrounding BRG's failure to receive
the award are somewhat unusual. When these circumstances are taken into
account, we conclude that the theory lacks merit.
After BRG filed its original protests with our Office, it also filed
suit in the United States District Court for the District of Columbia
seeking declaratory and injunctive relief (Baurenovierungsgesellschaft,
m.b.H. v. United States Department of the Army, Civil Action No.
85-3835). /2/ This action, which was still pending at the time of our
decision on BRG's protest, was subsequently dismissed with prejudice
pursuant to a settlement agreement between the parties. As part of the
settlement, BRG agreed "to waive its rights to the (protested)
contracts." In exchange, the Army agreed to award contracts to Decker
under RFP Nos. DAJA76-85-R-0445 and DAJA76-85-R-0593. Decker previously
had been found nonresponsible under these solicitations and had
protested these determinations. We denied those protests in the same
decision in which we sustained BRG's protests. See Decker and Co. et
al., B-220807 et al., supra. It appears that, nevertheless, the Army
changed its mind and reconsidered the nonresponsibility determinations
regarding Decker, finding the firm responsible. In other words, in
exchange for the award to Decker of the two contracts that Decker was
not entitled to under our original decision, BRG agreed to waive its
rights to the award of the contracts we recommended in that same
decision.
As part of the settlement agreement, the Army also agreed to pay
BRG's attorneys' fees and expenses incurred in bringing the civil suit.
In addition, the parties agreed "that this settlement and dismissal . .
. shall not, in any way, prejudice BRG's right to apply for, and obtain
from the Department of the Army, pursuant to the Competition in
Contracting Act and 4 C.F.R. Section 21.6, payment of the attorneys'
fees it incurred regarding its bid protests filed with the General
Accounting Office (GAO). . . ."
The Army argues that BRG's waiver of its rights to the contract
awards under the protested procurements in return for the awards to
Decker should preclude BRG's recovery of its protest costs. The Army
notes that its contention that BRG and Decker are under common
management apparently is correct and asserts that BRG is a beneficiary
of the contract awards to Decker. In addition, the agency states that
the language in the settlement agreement concerning BRG's right to
pursue a claim for its protest costs was not intended to acknowledge any
actual entitlement to such costs. Rather, it simply was recognition
that the rules governing recovery of attorneys' fees in the District
Court and before the GAO are different and that each proceeding should
be treated as a separate matter.
BRG characterizes the agency's comment about the apparent correctness
of its contention that BRG and Decker are under common management as
"unjustified editorializing." BRG states that it entered into
"arms-length negotiations with Decker, an independent company" only
after the Army complained about the substantial costs it would have to
pay in order to terminate the protested contracts and reaward them to
BRG. /3/ BRG also contends that the Army's position is a breach of its
agreement that BRG was free to apply for and obtain payment of its
attorneys' fees for the bid protest at GAO.
To the extent BRG is arguing that the Army is precluded from opposing
the firm's request for recovery of its protest costs because of the
language in the settlement agreement that there would be no prejudice to
BRG's right to apply for and obtain such costs, we disagree. We think
the agency's position concerning its intent is reasonable and we find
that the language in question simply does not preclude the Army's
opposition to BRG's request. Rather, we think the language merely
indicates that the settlement agreement is not a bar to BRG's right to
request a ruling concerning its entitlement to recovery of its protest
costs. /4/
Concerning the effect of BRG's waiver of its right to the contract
awards in exchange for the award to Decker, we note that neither the
agency nor BRG has provided anything more than a cursory explanation of
how this agreement came about. We do consider it significant, however,
that there is no evidence that the Army either refused to follow our
recommendation that the awards be made to BRG, or that BRG was in any
way coerced into waiving its rights to the awards. In fact, the
evidence in the record suggests that BRG was amendable to the
arrangements and in fact did benefit from it.
Specifically, the agency has submitted a copy of an affidavit of the
Army contracting officer who was given responsibility over the contracts
challenged by BRG. The affidavit originally was taken in connection
with BRG's civil suit. In the affidavit, the contracting officer states
that he met with Mr. Liedtke and Ms. Martinez of BRG to discuss the
settlement of their protest to GAO and the actions to be taken in
response to the GAO decision. The contracting officer also states that
he informed the BRG representatives that he had found BRG responsible
for the contested contracts. He states that after some further general
discussion, he informed the BRG representatives that the terminations
would cost the Army $800,000 in fiscal year 1985 funds, and that funds
for the award to BRG would come from "scarce" fiscal year 1986 funds.
At some point, according to the contracting officer, the conversation
drifted into a "what if" mode:
The question came up as to whether there were any other satisfactory
resolutions to the situation other than terminating and reawarding the
contracts. I do not recall who first posed this question. BRG
expressed regret that the process was going to be so costly to the
Government. I requested Mr. Liedtke to tell me if he couldn't perform
and didn't want these contracts before we terminated them. He said he
wished he had won on the Decker cases and then he would be in a better
position to deal with the BRG cases. In this phase of the discussion
the question of solutions other than terminating and awarding to BRG
surfaced clearly. They were clearly interested in knowing what my
latitude of action was and wanted to know if they could still be
considered for the two Decker cases or if we could reach some settlement
for costs on the BRG cases. I told them I didn't think I had much room
to maneuver at this point but I said I would discuss it with my legal
advisers.
Based on the information in the record, we think it is reasonably
clear that the agreement between the Army and BRG was one that was
viewed by the parties as mutually beneficial and that BRG's
participation in it was arrived at freely. Further, we also think it is
reasonably apparent that whatever the legal relationship between Decker
and BRG may or may not be, at the very least, there is some mutuality of
interest between the firms. This is supported by Mr. Liedtke's
statement that he wished he had won on the Decker cases as he would then
be in a better position to deal with the BRG cases, as well as his
question concerning whether "they could still be considered for the two
Decker cases." In addition, we note that it is Mr. Liedtke who the
agency has alleged is the common management link between BRG and Decker,
and BRG has admitted that Mr. Liedtke is the managing director and a
shareholder of BRG, as well as the owner of Decker.
Under these circumstances, we do not consider BRG to be entitled to
recovery of the costs of filing and pursuing its protest. The thrust of
our regulation providing for the recovery of protest costs where the
protester is unreasonably excluded from the procurement, except where we
recommend that the contract be awarded to the protester and the
protester receives the award, is that in cases where the protester
obtains an award, the award is a sufficient remedy in itself. See
Federal Properties of R.I., Inc., B-218192.2, May 7, 1985, 85-1 CPD
Paragraph 508. In that same vein, although BRG did not actually receive
the contract awards here, we think its interests have been sufficiently
protected by the awards to Decker, in exchange for which BRG voluntarily
agreed to waive its rights to the contract awards recommended in our
decision. Cf. The Hamilton Tool Co., B-218260.4, Aug. 6, 1985, 85-2 CPD
Paragraph 132 (where we recommended recompetition of a procurement under
which the protester's proposal was improperly rejected, but denied
recovery of protest costs even though other potential contractors
benefited from the resolicitation, because we concluded that the
protester's interest was sufficiently protected by our recommendation,
so that there was no need to allow protest costs). While the extent to
which BRG will derive any direct benefit from this arrangement is not
clear, the record at least supports a conclusion that BRG considered the
agreement to be in its own interest. We therefore find that BRG has
obtained a sufficient remedy as a result of the settlement agreement and
that the additional recovery of its protest costs is inappropriate.
Furthermore, we do not agree with BRG's implicit assertion that our
Bid Protest Regulations should be interpreted to provide for the
recovery of protest costs where a protester, such as itself, does not
receive the contract award we recommended because it freely enters into
an alternative agreement with the contracting agency. In effect, BRG
struck a bargain with the Army for a remedy different from the one
recommended in our decision. Having done so, we are not persuaded that
it has any basis for obtaining any further remedy from our Office.
We deny BRG's request for recovery of the costs of filing its
protest, including attorneys' fees.
(1) Of course, a firm in that position could not then reasonably
claim that it was entitled to recover its protest costs because it did
not receive the recommended contract award.
(2) The lawsuit involved essentially the same issues as those raised
in BRG's protest. We continued our consideration of the case because,
in a stipulation approved by the court, the court indicated that it
wanted our opinion. See 4 C.F.R. Section 21.9(a).
(3) The contracts protested by Decker apparently were still unawarded
and thus not subject to the same basis for complaint.
(4) BRG also argues that the agency cannot rely on the settlement
agreement at all in opposing the firm's application for protest costs,
and that we should render our decision without regard to the agreement.
We find this position totally without merit since BRG's own argument,
that it is entitled to recover its costs because it did not receive the
contract awards, necessarily requires our consideration of the effect of
the agreement. We can hardly overlook the fact that it is because of
the agreement that BRG did not receive the awards.
B-222860, 65 Comp. Gen. 774
Matter of: Rear Admiral Grace M. Hopper, USNR (Retired) (Recalled),
August 4, 1986
A statute authorizing military and naval reservists who are
"qualified" for retirement to be "retained" in an active status and to
receive credit "for all purposes" for their subsequent service does not
apply to reservists who have in fact been retired, since retirement
orders are not subject to cancellation, and while retirees may be
recalled to active service from retirement they cannot be retired and
"retained" on active duty simultaneously. Hence, that statute provides
no authority to permit a retired Navy Reserve officer who was recalled
to duty and who then performed 19 years' active service to be
"re-retired" anew on the basis of that additional service. 10 U.S.C.
676.
The Congress has enacted legislation to delete a statutory directive
which previously prohibited retired military and naval reservists from
receiving additional retirement benefits for active service performed
upon a recall to duty, so that a retired Navy Reserve officer who was
recalled to active duty for an extended period may now elect to have her
retired pay recomputed, with credit for the added service she performed,
under the same statutory retired pay recomputation formulas generally
applicable to all retired service members who perform periods of active
duty following their retirement. 10 U.S.C. 1402.
The question presented in this matter is whether Rear Admiral Grace
M. Hopper, USNR (Retired) (Recalled), is entitled to have her Navy
Reserve retired pay recomputed on the basis of the 19 years she has
served on active duty with the Navy since the time of her retirement and
subsequent recall to active service in 1976. /1/ We conclude that she
is entitled to a recomputation of her retired pay under the same
statutory retired pay recomputation formulas generally applicable to all
service members who perform periods of active duty following their
retirement.
On July 31, 1967, Admiral Hopper (then Commander Hooper) was recalled
from retirement to active duty in the Navy, and she has been in active
service continuously since then. Six months prior to her recall to duty
she had been retired as a member of the Navy Reserve, and she had been
receiving retired pay for non-regular service under the provisions of 10
U.S.C. Sections 1331-1337.
The concerned Navy officials indicate that Admiral Hopper plans to
leave active duty in the near future, and that uncertainty has arisen
concerning the recomputation of her retired pay. The officials note
that 10 U.S.C. Section 676 authorizes reservists who are "retained" on
active duty after becoming qualified for retired pay under 10 U.S.C.
Sections 1331-1337 to be "credited with that service for all purposes."
They also note that 10 U.S.C. Section 1402(a) generally authorizes the
recomputation of the retired pay of service members who are retired and
are then recalled to active duty (other than for training) for a period
of 6 months or more. The officials further note that in decisions
rendered in 1958 and 1961 we nevertheless expressed the view that
reservists who had been placed in a retired status under the provisions
of 10 U.S.C. Sections 1331-1337 were not eligible on the basis of either
10 U.S.C. Section 676 or 10 U.S.C. Section 1402(a) for a recomputation
of their retired pay to account for any subsequent active duty they
performed. /2/
The officials point out that there have been several amendments to
the applicable statutes governing the retirement of reservists since the
time those decisions were issued, however, and they question whether
those amendments will operate to allow Admiral Hopper to receive retired
pay credit for the active service she has performed since July 31, 1967.
As indicated, 10 U.S.C. Section 676 authorizes reservists who have
"qualified" for retired pay for non-regular service under 10 U.S.C.
Sections 1331-1337 to be "retained" on active duty or in service in a
reserve component, and provides that a reservist "so retained shall be
credited with that service for all purposes."
We have held that this provision applies only to reservists who have
met the qualifications for retirement under 10 U.S.C. Sections 1331-1337
but have not actually been retired, since a reservist following
retirement cannot be "retained" on duty but can only be recalled to
duty. /3/ This is consistent with the fundamental rule that a fully
executed military retirement order, if regular and valid, is final and
can be reopened only upon a showing of fraud, mistake of law,
mathematical miscalculation, or substantial new evidence of error. /4/
Service members recalled to an active duty status following retirement
cannot, for the purpose of obtaining retirement benefits for the
additional active duty, have their original retirement orders superseded
or cancelled by new "re-retirement" orders. Rather, if they are
recalled to active duty following retirement they simply become eligible
to elect recomputation of their retired pay under the appropriate
formula prescribed by 10 U.S.C. Section 1402. /5/
In the present case, there is no suggestion of irregularity in
Admiral Hopper's original retirement, and there consequently appears no
proper basis for canceling her original retirement orders on account of
her subsequent recall to active duty or for any other reason. Also, she
cannot properly be considered to have been "retained" in an active
status during her retirement and the period when she was receiving
retired pay, so that she may not be allowed retirement credit for her
later active duty under the provisions of 10 U.S.C. Section 676 as a
reservist "retained" in active service. It is therefore our view that
any retired pay benefits due to her based on that later active duty
would be available to her, if at all, only through a recomputation of
her retired pay under 10 U.S.C. Section 1402.
Provisions of law governing the recomputation of retired pay to
reflect active duty performed after retirement are contained in 10
U.S.C. Section 1402. /6/ Subsection 1402(a) prescribe a recomputation
formula applicable to service members who retire and who thereafter
serve on active duty (other than for training) for 6 months or more
without incurring a physical disability during the later period of
active duty. That formula provides for the recomputation of the service
member's retired pay based on the monthly basic pay of the grade in
which the member would be eligible to retire if he or she were retiring
upon release from the later period of active duty. In the recomputation
of their retired pay, that amount is multiplied by 2 1/2 percent of the
member's years of creditable service performed prior to retirement, plus
the years of active service after retirement. /7/
The terms of 10 U.S.C. Section 1402(a) do not exclude retired
reservists from coverage, and the formula it contains is amenable for
use in recomputing a reservist's years of service under the method
prescribed by 10 U.S.C. Section 1333. Nevertheless, in the decisions
rendered in 1961 to which the Navy officials refer, we expressed the
view that reservists could accrue no retired pay benefits based on
active service they performed following their retirement. /8/ This
conclusion was not predicated on the terms of 10 U.S.C. Section 1402(a),
however, but was instead required by the language of 10 U.S.C. Section
1334(b) then in effect which specifically directed that time spent after
retirement or transfer to the retired reserve may not be credited in any
computation of years of service under 10 U.S.C. Sections 1331-1337.
In 1962 the Congress deleted the prohibition contained in 10 U.S.C.
Section 1334(b) against reservists receiving retirement benefits for
active service performed upon a recall to duty after their retirement.
/9/ The legislative history of the 1962 amendment reflects that it was
"designed to compensate for the failure in the original military
codification act to conform section 1334(b) of title 10 to its source
law. This has resulted in the denial to members of the reserve
components of credit in computing retired pay * * * for time spent on
active duty after they have been granted retired pay * * *." /10/
The Congress thus amended 10 U.S.C. Section 1334(b) in 1962 for the
specific purpose of making reservists eligible for a recomputation of
their retired pay if they are recalled to active service after being
retired. The amending legislation removed the statutory basis for the
conclusion reached in our 1961 decisions that reservists could receive
no retired pay credits for active duty performed subsequent to their
retirement. It follows that Admiral Hopper will be entitled to have her
retired pay recomputed under the provisions of 10 U.S.C. Section 1402(a)
when she leaves active duty, and in the recomputation she will be
eligible to receive credit for the years of service she performed and
the promotions she received following her retirement.
The questions presented is answered accordingly.
(1) This action is in response to a request for an advance decision
received from the Comptroller of the Department of the Navy.
(2) The officials refer specifically to 38 Comp. Gen. 159 (1958); 41
Comp. Gen. 118 (1961); and B-147232, October 6, 1961.
(3) See B-147232, October 6, 1961.
(4) See, e.g., 44 Comp. Gen. 258, 260 (1964); and 31 Comp. Gen. 296
(1952).
(5) See, e.g., 48 Comp. Gen. 99 and 398 (1968); 43 Comp. Gen. 442
(1963); B-204055, May 17, 1982.
(6) 10 U.S.C. Section 1402 applies to individuals who first became
members of the uniformed services before September 8, 1980. Alternate
computation formulas applicable to those who have become service members
since that date are contained in 10 U.S.C. Section 1402a.
(7) Navy officials indicate that Admiral Hopper plans to apply for a
recomputation of her retired pay under subsection 1402(a), if she is
eligible to do so, rather than under any of the alternative formulas
provided by section 1402.
(8) See 41 Comp. Gen. 118, supra; and B-147232, supra.
(9) Public Law 87-651, Section 108, September 7, 1962, 76 Stat. 506,
509.
(10) See S. Rep. No. 1876, 87th Cong., 2d Sess. 6, reprinted in part
in 1962 U.S. Code Cong. & Ad. News 2456 (quoted material not included).
B-222343, 65 Comp. Gen. 772
Matter of: Dr. L. Friedman, August 4, 1986
Entitlement to overtime compensation by Federal employees while in a
travel status under 5 U.S.C. 5542(b)(2)(B)(iv) requires that travel
result from an event which could not be scheduled or controlled
administratively and that there be an immediate official necessity
requiring travel in connection with the event. Thus, travel performed
by an employee to attend a scheduled event conducted by a licensee of
the employee's agency does not quality as travel to or from an event
over which the Government had a total lack of control, and the employee
may not be paid overtime compensation for that travel.
This action is in response to a request for an advance decision from
the Nuclear Regulatory Commission regarding the claim of an employee for
overtime compensation while in travel status. /1/ It is our view that
the employee may not be paid overtime under the circumstances presented.
Dr. L. Friedman, an employee of the Nuclear Regulatory Commission,
traveled from his duty station to observe a procedure conducted by a
licensee of the agency on Friday, June 7, 1985. The agency states that
the event was scheduled by the licensee with advance notice, so that the
agency was able to schedule Dr. Friedman's travel during his regular
work hours on Thursday, June 6, 1985.
The procedure apparently extended beyond Dr. Friedman's regularly
scheduled work hours on Friday, and he was paid overtime compensation
for the overtime hours during which he was actually observing the event.
That evening after the procedure was completed, Dr. Friedman returned
to his duty station. He now claims additional overtime compensation for
the time during which he performed the return travel to his duty
station.
The agency notes that pursuant to 5 U.S.C. Section 5542(b)(2)(B)(iv),
an employee may be paid overtime for travel to an event which cannot be
scheduled or controlled administratively, and that a 1984 amendment to
that provision expressly provides that both the travel to and the return
travel from such an event are to be considered hours of employment for
purposes of overtime pay. The agency asks whether Dr. Friedman's return
travel qualifies as hours of employment for purposes of overtime pay
under the amended statute.
The general rule regarding overtime pay is that employees may not be
compensated for time spent on official travel outside their scheduled
duty hours when they do not actually perform work during the period of
travel. See 55 Comp. Gen. 629, 632 (1976). As an exception, however,
employees of the Federal Government are entitled to overtime
compensation pursuant to 5 U.S.C. Section 5542(b)(2)(B)(iv), which
provides that:
(2) time spent in a travel status away from the official-duty station
of an employee is not hours of employment unless --
(B) the travel * * * (iv) results from an event which could not be
scheduled or controlled administratively, including travel by an
employee to such an event and the return of such employee from such
event to his or her official-duty station.
For an event to qualify as administratively uncontrollable there must
be a "total lack of Government control." Barth v. United States, 568
F.2d 1329 (Ct. Cl. 1978). In that case, the plaintiff contended that
since a weapons test he was sent to observe was an event scheduled by a
contractor of the agency, the event was not administratively
controllable. The court found that since the test was performed under
contract and the agency was advised in advance of the test dates, there
was not a total lack of governmental control. Similarly, in conformity
with the court's reasoning in that case we have held that where an
employee was required to attend a meeting scheduled with foreign
representatives, although the meeting was a matter of accommodation with
the foreign governments, overtime compensation was not payable for the
traveltime involved since there was not a total lack of control on the
part of the United States Government. James M. Ray, B-202694, January
4, 1982.
The 1984 amendment to 5 U.S.C. Section 5542 was added to provide
overtime pay for all return travel from administratively uncontrollable
events. The legislative history of the amendment shows that the
provision was in response to our decision B-169419, August 26, 1970, in
which we held that although travel by a firefighter to a forest fire for
duty associated with its suppression was administratively
uncontrollable, travel returning from a fire to the firefighter's duty
station was administratively controllable unless lodging facilities at
the site of the fire were unavailable. The amendment was designed to
authorize overtime compensation for the return travel of firefighters
from a forest fire regardless of the availability of lodgings at the
site of the fire. See 130 Cong. Rec. S12681 (daily ed. October 2, 1984)
(statement of Senator Melcher).
The present case does not involve a forest fire or similar situation.
Instead Dr. Friedman attended and observed an event which was scheduled
and conducted by an organization operating under a license issued by his
agency and the agency was provided with advance notice of this scheduled
event. In our view, this precludes a finding of "total lack of
Government control" as required under the standard established in Barth
v. United States, supra, and thus the travel does not fall within the
exceptions authorized by 5 U.S.C. Section 5542(b)(2)(B)(iv).
Accordingly, Dr. L. Friedman may not be allowed overtime pay for his
return travel.
(1) The request was submitted by Graham D. Johnson, Director,
Division of Accounting and Finance, Office of Resource Management, U.S.
Nuclear Regulatory Commission, Washington, D.C.
B-221945, 65 Comp. Gen. 767
Matter of: Department of Defense Military Pay and Allowance
Committee Action Number 561, August 4, 1986
Eligible beneficiaries under the Survivor Benefit Plan, an income
maintenance program for the surviving dependents of deceased service
members, include Plan participants' children between 18 and 22 years old
who are full-time students. Children over 18 years old who are not
attending school may become eligible for an annuity at any time until
they reach the age of 22 by undertaking a full-time course of study,
since the Congress in establishing the Plan indicated that children aged
anywhere between 18 and 22 years old who are students should be regarded
as eligible dependents for purposes of annuity coverage.
If a Survivor Benefit Plan participant's child who is between 18 and
22 years old becomes a full-time student and thus becomes eligible for
an annuity under the Plan, any resulting adjustment that may be
necessary in the participant's cost for beneficiary coverage should be
made effective on the first day of the month after the child has resumed
school attendance, as costs for benefit coverage generally are assessed
on a monthly basis and should be predicated on the beneficiary status in
being on the first day of a month, for that month.
As a general rule, a valid marriage entered into by a Survivor
Benefit Plan participant's child terminates the child's annuity
eligibility for all time, because a valid marriage operates to end a
child's dependence upon its parents, and the relationship of dependency
cannot be renewed by a subsequent divorce. Nevertheless, if the
marriage is ended not by an ordinary divorce but rather by an annulment,
or there is otherwise a judicial decree rendered by a court of competent
jurisdiction declaring the marriage void, then there would be a proper
basis for concluding the marriage was invalid, and the child's annuity
coverage could be reinstated.
The Department of Defense Military Pay and Allowance Committee
presents several questions concerning the reinstatement of annuity
eligibility under the Survivor Benefit Plan in situations involving
child beneficiaries who have lost their eligibility for an annuity
either because of school nonattendance or because of marriage. /1/ In
response to those questions we conclude, generally, that a Plan
participant's children who are over 18 years old may become eligible for
an annuity at any time until they reach the age of 22 by undertaking a
full-time course of study, since the Congress in establishing the Plan
indicated that children anywhere between 18 and 22 years old who are
"bona fide" students should be regarded as dependent upon their parents
for purposes of annuity coverage. We also conclude that, as a general
rule, a valid marriage entered into by a Plan participant's child
terminates the child's annuity eligibility for all time, because a valid
marriage operates to end a child's dependence upon its parents and the
relationship of dependency cannot be renewed by a subsequent divorce.
In 1972 the Congress established the Survivor Benefit Plan, 10 U.S.C.
Sections 1447-1455, as an income maintenance program for the families of
deceased service members. /2/ It was designed to provide a more
comprehensive system of survivor protection, and eventually to replace,
the then current military survivor annuity program contained in the
Retired Serviceman's Family Protection Plan, 10 U.S.C. Sections
1431-1446. Eligible beneficiaries under these military annuity programs
established under statute include the "dependent child" of a program
participant. Under the Survivor Benefit Plan this term is defined as
follows:
(5) "Dependent child" means a person who is --
(A) unmarried;
(B)(i) under 18 years of age; (ii) at least 18, but under 22 years
of age and pursuing a full-time course of study or training in a high
school, trade school, technical or vocational institute, junior college,
college, university, or comparable recognized educational institution;
or (iii) incapable of supporting himself because of a mental or physical
incapacity existing before his eighteenth birthday or incurred on or
after that birthday, but before his twenty-second birthday, while
pursuing such a full-time course of study or training; * * * 10 U.S.C.
Section 1447(5).
This is similar to the definition of a "dependent child" contained in
the Retired Serviceman's Family Protection Plan. /3/
In 1983 we expressed the view that, with respect to dependent
children receiving annuities on the basis of a mental or physical
incapacity, in situations where eligibility for an annuity has been
suspended under the military survivor annuity programs because the
beneficiary has become capable of self-support, the annuity may properly
be reinstated at a later date if the beneficiary again becomes incapable
of self-support due to the original disabling condition. /4/ The
Department of Defense Military Pay and Allowance Committee indicates
that other questions have now arisen under the Survivor Benefit Plan
concerning the reinstatement of benefit coverage or an annuity in
situations involving child beneficiaries who have lost eligibility under
the Plan either because of nonattendance at school, or because of
marriage.
The first 3 questions presented are:
When Survivor Benefit Plan (SBP) coverage is terminated for a
dependent child, age 18-22, for school nonattendance, may that coverage
be reinstated if the child resumes school attendance?
Would the child have to resume school attendance before the member
participant died to be eligible for the annuity?
Would an annuity to a dependent child which had been suspended
because of school nonattendance be reinstated if a child resumed school
attendance?
The Survivor Benefit Plan does not preclude an otherwise qualified
dependent child between 18 and 22 years of age from seeking
reinstatement of either benefit coverage (if the sponsoring Plan
participant is alive) or a survivor's annuity (if the Plan participant
has died), following a period of suspension of eligibility due to school
nonattendance. Moreover, in view of the express observation of the
Congress contained in the legislative history of the Survivor Benefit
Plan that participants' children anywhere between the ages of 18 and 22
years who are "bona fide" students should be regarded as dependent upon
their parents for purposes of annuity coverage, we have no basis to
object to the reinstatement of benefit coverage or an annuity in the
case of a child under the age of 22 whose eligibility was suspended
because of school nonattendance but who subsequently became a full-time
student. /5/ Further, we are unaware of any basis for disallowing
payment of an annuity because the sponsoring Plan participant died
before the dependent child aged 18-22 resumed a full-time course of
study. /6/ Hence, the first 3 questions are answered "yes," "no," and
"yes," respectively.
The next question is:
Which effective date presented in the DISCUSSION below should be used
to adjust cost if coverage is reinstated?
When service members elect to participate in the Survivor Benefit
Plan, they thereby choose to receive retired pay at a reduced rate in
order to provide an annuity for their surviving dependents, and this
represents the "cost" of coverage. See 10 U.S.C. Section 1452. The
reduction in retired pay must be adjusted or discontinued, however,
during any month in which there is no eligible beneficiary in the
classes or a particular class of dependents for which coverage has been
elected. 10 U.S.C. Section 1452. The question here evidently relates
to the situation in which the Plan participant is alive, and the
reduction in retired pay is adjusted or discontinued for a time due to
the school nonattendance of an otherwise eligible child beneficiary
between the age of 18 and 22. The discussion in the Committee Action
contains the following comments concerning that situation:
If coverage may be reinstated and cost had previously been adjusted
or discontinued based on the child's school status, the Committee
recommends three possibilities for adjusting cost:
a. Collect cost retroactive to the effective date that cost was
originally suspended.
b. Collect cost retroactive to the first day of the month after
child resumed school attendance.
c. Collect cost retroactive for any periods during cost suspension
where the child attended school full-time.
In our view the proper method for adjusting cost in the situation
described would be under alternative "b," to "(c)ollect cost retroactive
to the first day of the month after child resumed school attendance,"
consistent with the general principles applicable when there is a
reinstatement of an eligible beneficiary. See 57 Comp. Gen. 847 (1978),
as modified by 59 Comp. Gen. 569 (1980).
The fourth question is so answered.
The next question presented by the Committee is:
May a child who loses SBP eligibility for annuity due to marriage
regain eligibility upon termination of that marriage through divorce,
annulment or death of the spouse?
Under the Survivor Benefit Plan and the Retired Serviceman's Family
Protection Plan, as indicated, only the "unmarried" children of service
members are defined as eligible child beneficiaries. This limitation
was patterned after a provision of the civil service retirement laws
which also restricts eligibility for a child's survivor annuity to the
"unmarried" child of a deceased federal employee. /7/
We have examined the legislative history of the military and civil
service survivor annuity programs and have found no explanation in the
congressional reports, hearings, or debates specifically detailing the
reasons why only "unmarried" children were defined as eligible child
beneficiaries. It appears, however, that the restriction is consistent
with both common-law and statutory rules generally adopted and followed
by our states concerning the relationship between parent and child.
Under those rules, parents' responsibility to support their children
ordinarily ceases when the children reach the age of majority, unless a
child remains incapable of self-support because of physical or mental
infirmity. A valid marriage contracted at any time by a child
terminates the parents' responsibility to support the child, however,
since the marriage creates relations inconsistent with that
responsibility. The courts have generally held also that this
"emancipated" status of a child who marries is unaffected by a
subsequent divorce, so that the parents' responsibility of support is
not renewed upon the child's divorce. /8/ Hence, we conclude that as a
general rule a child who lost Survivor Benefit Plan annuity eligibility
due to marriage could not regain eligibility upon the termination of
that marriage through divorce.
As to annulment of a marriage, while state laws vary somewhat, the
general rule is that an annulment decree renders a purported marriage
void, rather than merely terminating it as does a divorce. /9/ Thus, in
such a case, it appears there generally would be a proper basis for
concluding that the marriage was void or invalid, and annuity
eligibility therefore could be reinstated prospectively from the date of
the judicial decree.
Consistent with the foregoing, it is our further view that if the
marriage was valid on its face and was terminated by the spouse's death
there generally would be no basis for reinstatement of annuity
eligibility, in the absence of a decree of a court of competent
jurisdiction declaring the marriage void or invalid.
The question is so answered.
The next question is:
Is the answer the same regardless of whether the marriage occurs
before or after the member's retirement or member's death?
As indicated, the Survivor Benefit Plan is an income maintenance
program for the surviving dependents of deceased service members, and
the Plan legislation thus recognizes dependency relationships that may
continue after the Plan participant's retirement or death. Our view is,
however, that a valid marriage entered into by a Plan participant's
child at any time would terminate the dependency relationship of parent
and child, regardless of whether the marriage occurred before or after
the Plan participant's retirement or death. Hence, this question is
answered "yes."
The last 2 questions are:
Would a child who is eligible for an SBP annuity by virtue of 10
U.S.C. Section 1447(5)(B)(iii) lose that eligibility if the
incapacitated child marries an individual who is also mentally or
physically incapacitated?
If eligibility was terminated by marriage of the incapacitated child,
would the termination of such marriage allow eligibility for coverage or
annuity to be reinstated?
We are unaware of any responsibility imposed by law upon parents to
provide financial support for their married children, even if the
children or the individuals they have married might be considered
handicapped or disabled. Hence, our view is that if an incapacitated
Survivor Benefit Plan child beneficiary entered into a valid marriage,
regardless of whether the child's spouse might also be categorized as
incapacitated, the child could no longer be regarded as the dependent of
the Plan participant and would no longer be eligible for an annuity.
Consistent with our answers to the previous questions, it is also our
view that the termination of such marriage, absent an annulment or other
judicial decree declaring the marriage void, generally could not serve
as a basis for reinstatement of either benefit coverage or a survivor's
annuity.
The questions presented in this matter are answered accordingly.
(1) This action is in response to a request for a decision received
from the Principal Deputy Assistant Secretary of Defense (Comptroller).
The questions are contained in Department of Defense Military Pay and
Allowance Committee Action Number 561, which was forwarded with the
request for a decision.
(2) Public Law 92-425, September 21, 1972, 86 Stat. 706.
(3) See 10 U.S.C. Section 1435(2).
(4) See 62 Comp. Gen. 302, 305-306 (1983). Among the factors
supporting that conclusion was the established national policy
concerning employment of handicapped persons, under which the
incapacitated dependent children of Plan participants cannot properly be
dissuaded from seeking gainful employment, with the goal of becoming
self-sufficient, through the threat of a permanent termination of their
annuity coverage if they attempt to work, as discussed in 62 Comp. Gen.
193 (1983).
(5) Compare 62 Comp. Gen., supra, at page 305; and see also S. Rep.
No. 1089, 92 Cong., 2d Sess. 50, reprinted in 1972 U.S. Code Cong. & Ad.
News 3288, 3313. We also note that under the Retired Serviceman's
Family Protection Plan, an "eligible child * * * might become ineligible
at age 18 and again become eligible by furnishing proof of pursuit of a
full time course of study * * *." See 32 C.F.R. Section 48.504(b)(3).
(6) Compare also 32 C.F.R. Section 48.504(b)(3), quoted above
(footnote 5).
(7) See 5 U.S.C. Section 8341(a)(3); No. 1089, supra (footnote 5),
at page 50; and H.R. Rep. No. 481, 92d Cong. 1st Sess. 7 (1971). Civil
service retirement and survivor annuity claims are not within our
jurisdiction. See 5 U.S.C. Section 8347; 41 Comp. Gen. 460 (1962);
and 30 Comp. Gen. 51 (1950).
(8) See, generally, 67A C.J.S. Parent and Child Sections 8, 51, 62
(1978).
(9) See, generally, 54 Comp. Gen. 600, 601 (1975), and authorities
there . . .
B-219121, 65 Comp. Gen. 763
Matter of: Kelly G. Nobles -- Travel by Privately-Owned Vehicle --
Expenses for Traveltime Charged to Annual Leave, August 4, 1986
An employee who elected to travel by privately-owned vehicle rather
than common carrier and was charged annual leave for his excess
traveltime claims subsistence expenses for that traveltime. The
employee's claim may not be allowed, since we have held and the Federal
Travel Regulations provide that subsistence expenses may not be paid
during traveltime charged to annual leave. In view of the prohibition
against paying subsistence expenses during a period of annual leave, it
is not material that the employee's actual costs of travel, including
the claimed subsistence expenses, were less than the constructive cost
of travel by common carrier.
Mr. E. M. Keeling, Director of Accounting of the Federal Aviation
Administration (FAA), has requested our decision concerning Mr. Kelly G.
Nobles' claim for subsistence expenses associated with his use of a
privately-owned vehicle (POV) rather than common carrier for temporary
duty travel. Specifically, the FAA questions whether Mr. Nobles is
entitled to receive subsistence expenses for traveltime which exceeded
that which would have been required for common-carrier travel and has
been charged to annual leave. For the reasons stated below, we hold
that Mr. Nobles may not be paid subsistence expenses for his excess
traveltime charged to annual leave.
Mr. Nobles, an FAA employee stationed in Terre Haute, Indiana, was
scheduled to attend a training course at the FAA Academy in Oklahoma
City, Oklahoma, during the period June 6 to June 20, 1984. His travel
orders authorized him to use a POV as a matter of personal preference,
and indicated that air travel would have been more advantageous to the
government. Had Mr. Nobles traveled by air, he would have departed for
Oklahoma City on June 5, 1984, and his allowable transportation and
subsistence costs would have totaled $1,326.04.
Mr. Nobles left his residence in Terre Haute on June 4, 1984,
charging annual leave for his travel that day, and he arrived in
Oklahoma City on the afternoon of June 5. He completed his course at
the FAA Academy on June 20, and, during the following day, he traveled
home. Mr. Nobles submitted a claim for mileage expenses and subsistence
costs in the amount of $1,014.26, including $72.97 for the subsistence
expenses he incurred during his first day of travel on June 4. The FAA
disallowed Mr. Nobles' claim for subsistence expenses on that day since
he was in an annual leave status, citing our decision in B-171420, March
3, 1971. In B-171420, discussed below, we held that an employee who
travels by POV rather than common carrier may not receive per diem for
the excess traveltime involved if that traveltime is charged to annual
leave.
The FAA now questions whether it was proper to deny Mr. Nobles'
subsistence expenses for the extra day's travel based on our decision in
B-171420, cited above. Specifically, the agency suggests that our
decision in B-171420 may have been superseded by our subsequent decision
in 55 Comp. Gen. 192 (1975), interpreting para. 1-4.3 of the Federal
Travel Regulations, incorp. by ref., 41 C.F.R. Section 101-7.003 (1985)
(FTR). In 55 Comp. Gen. 192, discussed below, we applied FTR para.
1-4.3 to hold that an employee who travels by POV as a matter of
personal preference may be reimbursed for such travel on the basis of
his total actual costs limited to the total constructive cost of travel
by common carrier. As the FAA interprets our decision in 55 Comp. Gen.
192 and the provisions of FTR para. 1-4.3, an employee who elects to
travel by POV would be entitled to reimbursement for subsistence costs
incurred during excess traveltime as long as those costs, when combined
with mileage expenses, do not exceed the constructive cost of
common-carrier travel. Under the agency's interpretation of 55 Comp.
Gen. 192 and FTR para. 1-4.3, Mr. Nobles would be entitled to
reimbursement for his subsistence expenses on June 4, 1984, even though
he was charged annual leave for that day, because his total actual costs
of $1,014.26 were less than the $1,326.04 he would have been allowed had
he traveled by air.
Against this background, the question for our determination is
whether an employee whose actual costs of traveling by POV are less than
the constructive cost of common-carrier travel may, on that basis, be
reimbursed for subsistence expenses incurred during excess traveltime
which has been charged to annual leave. In order to answer this
question, we must decide whether the principles stated in B-171420,
cited above, have been superseded by our subsequent decision in 55 Comp.
Gen. 192 and the provisions of FTR para. 1-4.3.
In B-171420, cited above, we held that an agency may, in its
discretion, charge an employee annual leave for excess traveltime
attributable to his use of a POV rather than common carrier. We then
determined that, under section 6.3 of the Standardized Government Travel
Regulations (the predecessor to FTR paras. 1-7.5a and 1-8.4a), an
employee may not be paid per diem while he is in an annual leave status.
Based on the prohibition contained in the travel regulations, we
concluded that an employee traveling by POV may not receive per diem for
the excess traveltime involved if that traveltime is charged to annual
leave.
In our subsequent decision in 55 Comp. Gen. 192, cited above, we did
not address the charging of annual leave for excess traveltime or the
regulatory prohibition against paying per diem during traveltime charged
to leave. Rather, in 55 Comp. Gen. 192, we evaluated and decided to
change our prior rules for computing the "actual versus constructive"
costs payable to an employee who travels by POV rather than common
carrier. First, we noted that, in our prior decisions in 45 Comp. Gen.
592 (1966) and 47 Comp. Gen. 686 (1968), we interpreted regulations
issued by the Bureau of the Budget (now Office of Management and Budget
(OMB) as imposing separate restrictions on the payment of actual per
diem and mileage expenses, limiting an employee's reimbursement to the
following:
(1) the lesser of actual per diem or the constructive per diem
allowable for travel by common carrier; plus
(2) the lesser of actual mileage expenses or the constructive cost of
common carrier transportation. We then noted that, subsequent to our
decisions in 45 Comp. Gen. 592 and 47 Comp. Gen. 686, OMB issued
superseding regulations which prescribed a different method for
computing reimbursable costs. These regulations, which eventually
became codified in FTR para. 1-4.3, are quoted in 55 Comp. Gen. 192 at
194 as follows:
* * * Whenever a privately owned conveyance is used for official
purposes as a matter of personal preference in lieu of common carrier
transportation under 2.2d payment for such travel shall be made on the
basis of the actual travel performed * * * plus the per diem allowable
for the actual travel but the total allowable will be limited to the
total constructive cost of appropriate common carrier transportation
including constructive per diem by that method of transportation. * * *
(Italic supplied in 55 Comp. Gen. 192.)
Because the above-quoted regulations refer to the "total allowable"
and the "total constructive cost," we concluded in 55 Comp. Gen. 192
that an employee electing to travel by POV may be reimbursed for such
travel on the basis of his total actual travel costs (transportation and
per diem), limited to the total constructive travel costs
(transportation and per diem). Accordingly, we overruled our prior
decisions in 45 Comp. Gen. 592 and 47 Comp. Gen. 686.
We do not agree with the FAA that our decision in 55 Comp. Gen. 192
and the provisions of FTR para. 1-4.3 have superseded the principles we
expressed in B-171420, above. Rather, an examination of our decisions
and the applicable travel regulations discloses that, over the years,
the principles underlying our determination in B-171420 have been
reinforced. Thus, subsequent to our decision in 55 Comp. Gen. 192, we
have held that an agency should charge an employee annual leave for
excess traveltime occasioned by his use of a POV. See 56 Comp. Gen. 865
(1977); Department of Energy and International Brotherhood of
Electrical Workers, B-197336, January 28, 1981; and Timothy W. Joseph,
62 Comp. Gen. 393 (1983). Furthermore, although the specific travel
regulations cited in B-171420 are no longer in effect, the superseding
provisions in FTR paras. 1-7.5a and 1-8.4a are substantially the same,
prohibiting the payment of per diem or actual subsistence expenses
during periods for which a traveler is charged annual leave.
Consequently, based on FTR paras. 1-7.5a and 1-8.4a, and in line with
our determination in B-171420, we continue to believe that an employee
who is charged annual leave for excess traveltime may not be reimbursed
for subsistence costs incurred during such traveltime.
Furthermore, we do not agree that FTR para. 1-4.3 or our decision in
55 Comp. Gen. 192 can be read as automatically entitling an employee to
full reimbursement for subsistence costs simply because those costs,
when combined with mileage expenses, do not exceed the total
constructive cost of travel by common carrier. The purpose of the cost
comparison required by FTR para 1-4.3 is to set an upper limit on the
government's liability for an employee's travel expenses, rather than to
vest employees with an absolute entitlement to those expenses which do
not exceed constructive costs. See generally Frederick Benedict,
B-195908, January 22, 1981; and James C. Meyers, B-181573, February 27,
1975. Furthermore, under the specific terms of FTR para. 1-4.3, quoted
previously, the actual costs of a traveler's subsistence are
reimbursable only to the extent that those costs are otherwise
"allowable." Whether subsistence costs are allowable depends upon the
various restrictions imposed by the FTR, one of which is the prohibition
against paying per diem or actual subsistence expenses during traveltime
charged to annual leave.
Based on the foregoing considerations, we hold that an employee who
elects to travel by POV and is charged annual leave for the excess
traveltime involved may not be reimbursed subsistence expenses for that
traveltime, even if his total actual travel costs are less than the
total constructive costs of travel by common carrier. Therefore, since
Mr. Nobles was charged annual leave for his traveltime on June 4, 1984,
he is not entitled to reimbursement for the subsistence expenses he
incurred on that day.
Accordingly, Mr. Nobles' claim for subsistence expenses may not be
paid.
B-222554, 65 Comp. Gen. 761
Matter of: Spectrum Analysis & Frequency Engineering, Inc., August
1, 1986
Protest that awardee should not have been awarded a contract because
of an organizational conflict of interest is denied where the facts do
not demonstrate the existence of circumstances that would preclude the
awardee from being objective in performing the contract.
Spectrum Analysis & Frequency Engineering, Inc. (SAFE), protests the
award of a contract to the Associated Public Safety Communications
Officers, Inc. (APCO), under Federal Emergency Management Agency (FEMA)
request for proposals (RFP) No. EMW-86-R-2273.
We deny the protest.
Section "J" of the National Plan of Action on Emergency Mobilization
Preparedness (the Plan) requires the development of a national
telecommunications system and plan for use during a national disaster.
Under section J-10 of the Plan, FEMA is responsible for preparing a plan
for the integrated use of the telecommunications resources of federal,
state and local governments. FEMA issued the current RFP in connection
with this responsibility. This protest is concerned with task "A" of
the RFP, which requires the successful contractor to review the Federal
Communications Commission (FCC) nongovernment master file database.
This database contains information on the radio licenses of all
government and commercial licensees other than the federal government.
The information includes the licensee's name, location, frequency
number, call sign, power output and method of transmission.
The RFP was issued on January 9, 1986. After reviewing the proposals
it received, FEMA requested SAFE and APCO to submit best and final
offers. FEMA subsequently eliminated SAFE from the competitive range
because the firm's final price was 47 percent higher than the government
estimate.
FEMA continued to negotiate with APCO and subsequently awarded the
contract to the firm.
SAFE filed its protest with this Office on May 7. SAFE alleged that
the award to APCO was improper because (1) APCO was a nonprofit
organization and, thus, had an unfair cost advantage; (2) APCO had an
organizational conflict of interest because it assisted FEMA in
developing the RFP's statement of work; and (3) APCO had an
organizational conflict of interest because it is an FCC frequency
coordinator and, in performing the present contract, it will be
reviewing its own performance as a frequency coordinator. FEMA
responded to SAFE's protest in a report to our Office denying all three
allegations. In reply, SAFE did not rebut FEMA's denial of the first
two bases of protest. We therefore consider these issues abandoned and
we will not consider them on the merits. See Hamilton Sorter Co., Inc.,
B-220253, Nov. 22, 1985, 85-2 C.P.D. Paragraph 592.
Concerning the remaining issue, SAFE points out that as an FCC
frequency coordinator, APCO is responsible for filing with the FCC radio
license applications for members of the public-safety sector. SAFE
contends that in this role, APCO is required to review license
applications for accuracy and completeness before it submits them to the
FCC and notes that once the applicant is granted a license, the
information on the application is put into the FCC's database. SAFE
also points out that APCO has been an FCC frequency coordinator for many
years, and that under new rules promulgated by the FCC, APCO is now the
exclusive frequency coordinator for certain segments of the
public-safety sector. SAFE reasons that under task "A" of the present
contract, the information APCO will be reviewing for accuracy is
information which APCO contributed to the FCC database as a frequency
coordinator. SAFE concludes that the contract award to APCO therefore
was improper.
In response, FEMA disputes that APCO has a conflict of interest that
would preclude a contract award to the firm. FEMA refers to a database
that APCO created from the FCC nongovernment master file for its own use
and asserts that this database is independent of the database that will
be validated in performing the contract. As noted by SAFE, however, the
protest does not concern APCO's private database, but instead involves
the database that APCO has contributed to as a frequency coordinator and
which APCO allegedly will be required to validate under the present RFP.
We have reviewed the entire record, including the current RFP and
APCO's role as a frequency coordinator. Based on our review, we cannot
conclude that APCO has a conflict of interest that would preclude a
contract award to the firm.
The federal government's policy is to allow all interested qualified
firms an opportunity to participate in its procurements. Therefore,
unless there is a clearly supportable reason for excluding a prospective
contractor, this Office has held that a firm cannot be precluded from
receiving a contract award on the basis of a potential or theoretical
organizational conflict of interest. John J. McMullen Associates, Inc.,
B-188703, Oct. 5, 1977, 77-2 C.P.D. Paragraph 270. Further, neither a
prior or current contractual relationship, nor the fact that a firm will
review some of its own completed work, automatically results in a
conclusion that a firm has an organizational conflict of interest that
precludes the firm from receiving a contract award. See Power Line
Models, Inc., B-220381, Feb. 28, 1986, 86-1 C.P.D. Paragraph 208.
Rather, to find the existence of an organizational conflict of interest,
there must be facts demonstrating that the firm is incapable of
objectively performing the contract. See Battelle Memorial Institute,
B-218538, June 26, 1985, 85-1 C.P.D. Paragraph 726; Federal Acquisition
Regulation (FAR), 48 C.F.R. Section 19.501 (1985).
In the present case, the record does not support a finding that FEMA
has acted improperly in awarding a contract to APCO. SAFE argues that
because under the new FCC rules APCO is the exclusive frequency
coordinator for certain frequencies in the public-safety sector, the
database to be reviewed largely would consist of APCO's own input.
These rules, however, were released on April 15, 1986, and do not become
effective until 6 months after they are published in the Federal
Register. Under the protested RFP, task "A" is to be completed within 4
months after June 16, the date the contract was awarded. Since task "A"
thus is to be completed before or at about the same time that APCO
becomes the exclusive frequency coordinator, this role, in our view,
does not provide a basis to find the existence of conflict of interest
that would preclude APCO from performing the contract objectively.
Nor do we believe that APCO's role as a frequency coordinator under
the old FCC rules precluded APCO from receiving the contract award. The
purpose of the present contract is to establish what frequencies are
being used and by whom, not to evaluate APCO's or any other contractor's
prior performance as a frequency coordinator. Further, under the prior
FCC rules, there often was more than one frequency coordinator per
service, and individuals desiring licenses could even submit their
applications directly to the FCC instead of through a frequency
coordinator. When an application was submitted to a frequency
coordinator, the coordinator's role was only to recommend the most
efficient frequency -- the coordinator was not responsible for reviewing
the accuracy of the data on the application. Thus, APCO will not be
reviewing only its contributions to the database and is not responsible
for validating data that it was required to review in its role as
frequency coordinator. Finally, we note that in explaining why its new
rules were necessary, the FCC itself recognized that much of the data in
its database was inaccurate and out of date.
Given these factors, there does not appear to be any advantage that
APCO would gain by not providing an accurate and objective analysis of
the FCC database. Consequently, we cannot conclude that APCO has a
conflict of interest that required the firm to be excluded from the
competition. The protest is denied.
B-221559.2, 65 Comp. Gen. 757
Matter of: Treadway Inn -- Request for Reconsideration, July 31,
1986
Prior decision is affirmed where new information relied on in request
for reconsideration provides no valid basis for modifying or overruling
the prior decision.
The fact that only one responsive bid was received from a firm within
the area covered by a solicitation's geographic restriction does not
demonstrate that the agency was not justified in imposing the
restriction to begin with, as the reasonableness of the decision to
impose the restriction must be determined on the basis of the
information available at the time the decision was made. Further, the
procurement was not a sole source acquisition since the agency solicited
nine firms within the geographically restricted area that could
potentially meet its needs, and although only one responsive bid was
received, it is clear that other facilities within the restricted area
could meet the agency's requirements.
Treadway Inn requests reconsideration of our decision denying its
protest under invitation for bids (IFB) No. DAKF27-86-B-1000 issued by
the Department of the Army. The IFB solicited bids to provide lodging
and meals to military applicants being processed at the Military
Entrance Processing Station (MEPS) in Wilkes-Barre, Pennsylvania.
Treadway, the incumbent contractor, protested an IFB provision
restricting the competition to bidders having facilities within five
miles of the MEPS. We denied that protest after concluding that the
geographic restriction did not unduly restrict competition since the
agency reasonably believed that it would improve efficiency and that
adequate competition was available within the restricted area. Treadway
Inn, B-221559, Mar. 10, 1986, 86-1 CPD Paragraph 236.
We affirm our prior decision.
Treadway states that after we issued our original decision on its
protest, it learned that the government's lease on the facilities
occupied by the MEPS in Wilkes-Barre will expire on October 31, 1986, at
which time the MEPS will be moved to a federal building in Scranton.
Treadway notes that any contract awarded to a bidder within the
restricted area will expire on April 30, 1987 or, if the 1-year option
is exercised, on April 30, 1988. Therefore, Treadway argues, bidders
with facilities within the Scranton area (which includes Treadway)
should be permitted to participate in the competition since, for a
minimum of one half of the 1-year base period, the MEPS will be located
in Scranton.
The Army states that the MEPS in Wilkes-Barre in fact will not be
moved until fiscal year 1988, at the earliest. This statement is
supported by a letter from the General Services Administration advising
the contracting officer that if any such move takes place, it will be no
earlier than March 1988. Furthermore, the agency states that before
exercising the option to extend the contract, it will verify the status
of the proposed move. Thus, Treadway's new information appears to have
no basis in fact, and provides no valid reason for reconsidering our
prior decision.
After Treadway filed its request for reconsideration with our Office,
bids in response to the IFB were received and opened as scheduled.
Three facilities submitted bids, including Treadway and two facilities
within the geographically restricted area. One of the latter was found
nonresponsive because it bid on the option year only. Treadway
submitted the low bid.
Treadway now argues that since the agency actually received only one
responsive bid from a bidder within the restricted area, adequate
competition within the area in fact was not available, and the Army was
not justified in imposing the geographic restriction. The
reasonableness of a contracting officer's decision must be determined on
the basis of the information available when the decision was made. See
Freund Precision, Inc., B-207426, Dec. 7, 1982, 82-2 CPD Paragraph 509.
Our initial decision found that the agency reasonably believed that
adequate competition would be obtained, and the fact that only one
responsive bid was received does not signify that the belief was
unreasonable at the time.
In addition, Treadway argues that as only one responsive bid was
received, this procurement amounts to a sole source acquisition which
required that the Army comply with the procedures set out in the Federal
Acquisition Regulation (FAR) for such procurements. We disagree. This
is not a case where the Army determined that only one source could meet
its minimum needs; rather it is a case where the Army determined that
those needs potentially could be met by any one of the nine facilities
it knew were located within five miles of the MEPS, and solicited all
nine of those facilities. See FAR, 48 C.F.R. Section 6.003 (1985).
Furthermore, we have found that a competitive IFB is not converted
into a sole source procurement when only one bid is received if it can
be demonstrated that firms other than the sole responsive bidder could
have met the requirements. Champion Road Machinery International Corp.
et al., B-211587 et al., Dec. 13, 1983, 83-2 CPD Paragraph 674. The
record indicates that the one responsive bidder within the restricted
area was not the only facility in the area that could have met the
agency's requirements. In fact, the agency states that it received
another bid from a facility within the restricted area, although the bid
is non-responsive because it provided prices for the option period only.
In addition, two other bidders within the area expressed an interest in
bidding on future lodging requirements. Accordingly, we think it is
apparent that more than one facility can meet the agency's requirements
here, and therefore that the solicitation in actuality was not a sole
source procurement. Id.
We affirm our prior decision.
B-217050, 65 Comp. Gen. 753
Matter of: Sylvia J. Eastman and Ann H. Meadows -- Severance Pay --
Temporary Agencies, July 30, 1986
Severance pay statute, 5 U.S.C. 5595, is intended to provide a
cushion for federal employees who are unexpectedly terminated from their
positions, but not for those employees who had an expectation of
separation at the time of their appointments. Consistent with this
intent, a regulation, 5 C.F.R. 550.704(b)(4)(iii), which denies
severance pay to employees of agencies scheduled to expire within 5
years of the employee's date of appointment is valid as applied to
agencies which perform an inherently temporary mission and have not been
extended. However, the regulation cannot properly be applied to the
United States Commission on Civil Rights, which, while literally covered
by the regulation, had been in continuous existence for over 20 years at
the time the employees seeking severance pay were appointed. Such
employees are within the zone of protection intended by the statute
since they cannot reasonably be viewed as having an expectation of
separation at the time they were appointed. Frances (Goldberg) Zucker,
B-188819, February 8, 1978, distinguished.
This decision is in response to claims for severance pay submitted to
our Claims Group by two former employees of the United States Commission
on Civil Rights, Ms. Sylvia J. Eastman and Ms. Anne H. Meadows. For the
reasons stated hereafter, we conclude that the claimants are eligible
for severance pay.
On November 16, 1983, Ms. Eastman and Ms. Meadows resigned from their
position with the Civil Rights Commission, "in lieu of other involuntary
action," incident to the projected expiration and shut-down of the
Commission on November 30, 1983. At the time of their resignations, Ms.
Eastman had served with the Commission for 4 years and 9 months and Ms.
Meadows has served for 4 years and 1 month.
Shortly before their resignations they had been informally advised of
their entitlement to severance pay. On November 23, 1983, however, they
were officially informed that they were ineligible for severance pay
because of 5 C.F.R. Section 550.704(b)(4)(iii). This regulation
precludes severance pay for employees of agencies which are scheduled to
terminate within 5 years of the date of the employee's appointment and
which have not been extended beyond 5 years of such date by the time of
the employee's separation.
Among their other contentions, the claimants assert that the
regulation is illegal because it imposes a condition upon eligibility
for severance pay beyond those set forth in or contemplated by the
severance pay statute. In the alternative, they maintain that the
regulation is inapplicable to the Civil Rights Commission, which had
been in continuous existence for well over 20 years at the time of their
resignations, by virtue of series of congressional reauthorizations.
Their argument on this point is that the regulation was designed to make
employees of certain temporary agencies ineligible for severance pay but
that the Civil Rights Commission cannot reasonably be considered a
temporary agency for this purpose.
Consistent with a prior decision of our Office, we believe that the
severance pay statute affords sufficient administrative discretion to
support a regulation which excludes from severance pay coverage
employees of clearly temporary agencies. Nevertheless, we agree with
the claimants that the Civil Rights Commission is not such an agency
and, therefore, the regulation cannot properly be applied to the
Commission.
The statute governing severance pay is 5 U.S.C. Section 5595 (1982).
Subsection 5595(b) provides:
Under regulations prescribed by the President or such office or
agency as he may designate, an employee who --
(1) has been employed currently for a continuous period of at
least 12 months; and
(2) is involuntarily separated from the service, not by removal
for cause on charges of misconduct, delinquency, or inefficiency;
is entitled to be paid severance pay in regular pay periods by the
agency from which separated.
While the term "employee" is defined generally in subsection
5595(a)(2) to mean an individual who is employed in or under an agency,
this subsection goes on to qualify the definition of "employee" by
excluding a number of classes of individuals from coverage. One of
these exclusions is 5 U.S.C. Section 5595(a)(2)(ii), which provides that
the definition of "employee" does not include:
* * * an employee serving under an appointment with a definite time
limitation, except one so appointed for full-time employment without a
break in service of more than 3 days following service under an
appointment without time limitation * * *.
The President delegated to the Civil Service Commission, now the
Office of Personnel Management (OPM), authority to prescribe regulations
implementing 5 U.S.C. Section 5595. One provision of these implementing
regulations, and the provision at issue here, is 5 C.F.R. Section
550.704(b)(4)(iii) (1986), /1/ which states:
An employee is considered to be serving under an appointment with a
definite time limitation for purposes of section 5595(a)(2)(ii) of
(title 5) when (a) he accepts an appointment without time limitation in
an agency which is scheduled by law or Executive order to be terminated
within 5 years of the date of his appointment, and (b) the scheduled
date of termination for the agency has not been extended beyond 5 years
of the date of appointment at the time of the employee's separation.
As noted previously, the claimants in the present case first contend
that the above-quoted regulation is illegal because it imposes an
unauthorized condition on eligibility for severance pay. They maintain
that while 5 U.S.C. Section 5595(a)(2)(ii) limits severance pay coverage
for temporary employees, it affords no basis to exclude permanent
employees of temporary agencies.
We considered this issue in our decision Frances (Goldberg) Zucker,
B-188819, February 8, 1978, and sustained the legality of 5 C.F.R.
Section 550.704(b)(4)(iii). The Zucker decision addressed a claim for
severance pay by an employee of the American Revolution Bicentennial
Administration. Our decision quoted from and relied heavily upon a
justification for the regulation provided by the Director of the then
Civil Service Commission as follows:
Severance pay is viewed as a cushion for employees unexpectedly
terminated from their positions because of changing program demands or
increases in efficiency resulting in reduced need for the employees'
services. When Congress passed PL 89-201 authorizing severance pay,
they provided that certain employees, among them employees serving in
appointments with a definite time limitation, would not be eligible for
severance pay because at the time of appointment there was an
expectation of separation. Under its delegated authority, and in line
with the intent of the law, the Commission expanded this concept to
exclude from eligibility for severance pay those employees who accepted
appointment in an agency which was scheduled to terminate within five
years from the date of the employee's appointment (5 C.F.R. Section
550.704(b)(4)(iii)). In approving this change in the severance pay
regulation it was noted at the time that in substance there is no
difference between an employee accepting an appointment under such
circumstances in an agency with a definite termination date and an
employee accepting an appointment with a definite time limitation --
both employees know when they accept their appointment that they will be
separated by a certain date. (Emphasis in original.)
In Zucker we found no reason to disagree with the justification for 5
C.F.R. Section 550.704(b)(4)(iii) advanced by the Civil Service
Commission. We pointed out in the context of the facts of that case:
At the time the employee accepted an appointment with ARBA (the
American Revolution Bicentennial Administration) April 21, 1975, the
activity had a termination date established by statute of less than 5
years, June 30, 1977. The very nature of the ARBA connoted an activity
with a limited function and life span. Since the employee was aware at
the time of her appointment of the temporary nature of the activity,
separation should not be unexpected. The fact that separation may occur
sooner than anticipated or that the employee may not have been informed
of her ineligibility for severance pay, does not change the requirements
of the law and regulation. * * *
* * * To authorize severance pay in such a case would violate the
spirit of the law and the regulation that severance pay be provided only
for employees who are terminated unexpectedly, and would negate the
intent of Congress in excepting employees with appointments of limited
duration from the provisions of the law. (Italic supplied.)
The Civil Service Commission's justification for 5 C.F.R. Section
550.704(b)(4)(iii) and our acceptance of that justification in Zucker
thus are based on the rationale that employees of certain temporary
agencies, as defined in the regulation, have an "expectation of
separation." Therefore, their status is analogous to temporary employees
who were excluded by 5 U.S.C. Section 5595(a)(2)(ii) from coverage based
on a congressional intent to provide severance pay as a cushion only for
employees suffering unexpected termination.
As we held in Zucker, this rationale is reasonable in the case of an
agency such as the American Revolution Bicentennial Administration which
had an inherently temporary mission, performed that mission, and then
ceased to exist. But can it be sustained in the case of the Civil
Rights Commission, which does not have an inherently temporary mission
and which has been extended by Congress many times?
The Commission was originally established by Part I of the Civil
Rights Act of 1957, Pub. L. No. 85-315 (September 9, 1957), 71 Stat.
634. Section 104 of the Act, 71 Stat. 635, charged the Commission with
(1) investigating allegations that United States citizens were being
denied the right to vote by reason of their color, race, religion or
national origin; (2) studying and collecting information concerning
legal developments constituting a denial of equal protection; and (3)
appraising federal laws and policies with respect to equal protection.
Section 104 of the 1957 Act required the Commission to submit a final
report not later than 2 years from the date of enactment of that Act,
and further provided that the Commission "shall cease to exist" 60 days
after the submission of its final report.
Congress amended the Commission's statutory charter a number of times
after 1957. These amendments not only consistently extended the
Commission's life but also expanded its functions on several occasions."
When the claimants in this case were hired by the Commission, it had
been in continuous existence for about 22 years, having been extended by
Congress 7 times (1959, 1961, 1963, 1964, 1967, 1972 and 1978). Section
104 of the Act, as amended in 1978, required the Commission to submit
its final report by the last day of the fiscal year ending on September
30, 1983, and provided that the Commission would cease to exist 60 days
after that date. See 42 U.S.C. Section 1975c(c) and (d) (1982). /3/
The claimants in this case are covered by the literal terms of 5
C.F.R. Section 550.704(b)(4)(iii) since, at the time they accepted their
appointments, the Civil Rights Commission was scheduled to terminate
within 5 years and since the Commission was not extended beyond 5 years
of that date at the time the claimants left. Given the background of
the Commission as discussed above, however, the real issue is whether
this regulation may be applied to the Commission consistent with the
purpose and intent of the severance pay statute. As the Claims Court
observed in a recent decision addressing the severance pay statute:
* * * the long-standing consistent interpretation of a statute
manifested by regulations promulgated by the agency charged with
implementing it is due significant deference. * * * But this axiom is
tempered by the admonition that a regulation which is clearly
incompatible with the statute under which it was ostensibly promulgated
must give way. * * * Sullivan v. United States, 4 Ct. Cl. 70, 73
(1983), aff'd, 742 F.2d 628 (Fed. Cir. 1984).
We sought the views of OPM on this issue, but we were unable to
obtain a response. Given the absence of any elaboration by OPM, we must
decide the issue based on the rationale for the regulation provided to
us in connection with the Zucker decision. In this regard, we do not
think it is plausible to treat the claimants in this case as having an
expectation of separation at the time they joined the Civil Rights
Commission. Instead, the background and evolution of the Commission
require a conclusion that the claimants reasonably could have expected
the Commission's authorization to be extended beyond its termination
date at the time of their appointments. Thus, we believe that they are
within the category of employees which Congress intended to protect
under the severance pay statute.
Absent a response from OPM to our inquiry, we do not know whether OPM
would apply 5 C.F.R. Section 550.704(b)(4)(iii) to the Civil Rights
Commission and, if so, how it would justify that result in terms of its
stated rationale for the regulation or the intent of the severance pay
statute. In any event, without a compelling justification by OPM, we
must hold that 5 C.F.R. Section 550.704(b)(4)(iii) cannot be applied to
divest the claimants here a severance pay. Accordingly, their claims
should be granted if otherwise correct.
(1) The language of this provision has remained unchanged at all
times relevant to the present case.
(2) See generally 42 U.S.C. Section 1975c (1982) and the notes of
amendments following it for a summary of the evolution of section 104 of
the 1957 Act.
(3) On November 30, 1983, the "United States Commission on Civil
Rights Act of 1983" was enacted. Pub. L. No. 98-183 (November 30,
1983), 97 Stat. 1301, 42 U.S.C. Sections 1975-1975f (Supp. II, 1984).
This Act reconstituted the Commission with a 6-year life span. Section
6 of the Act, U.S.C. Section 1975d(a)(2) (Supp. II, 1984), preserved the
status and continuity of service of Commission employees, with the
exception of the former staff director and former Commission members.
B-222053, 65 Comp. Gen. 749
Matter of: Katherine I. Tang, July 29, 1986
Subject to the statutory limitation on reimbursement, an employee who
transported her double-wide mobile home to her new duty station is
entitled to a miscellaneous expense allowance to cover costs of
disassembling the mobile home in preparation for shipment and of
reassembling and blocking the mobile home at the new residence site.
The allowance also covers reimbursable deposits for propane gas service
and fees for connecting that and other utilities. While the allowance
covers state-imposed charges for titling and registration at the new
duty station, it does not cover the cost of parts and labor to install
wheels and axles necessary to prepare the mobile home for shipment since
these were newly acquired items.
Ms. Katherine I. Tang, an employee of the Federal Bureau of
Investigation (FBI), has filed a reclaim voucher seeking reimbursement
for expenses she incurred in relocating her mobile home incident to her
transfer from Jacksonville, Florida, to Columbus, Ohio. /1/ Subject to
the statutory limitation on reimbursement of miscellaneous expenses, we
hold that Ms. Tang is entitled to reimbursement for all but the expenses
claimed for installing wheels and axles necessary to transport the
mobile home to her new duty station.
Upon being notified of her impending transfer, Ms. Tang indicates she
contacted an official within the transportation unit of the FBI who told
her she could move her double-wide mobile home at Government expense.
After reporting to her new duty station on January 22, 1984, Ms. Tang
submitted a travel voucher claiming the expenses she incurred in
relocating her mobile home. Although the cost of transporting the
mobile home was approved, the FBI disapproved most of the costs
associated with disassembly and preparation of the mobile home for
shipment and with reassembly and hookup at the new residence site. The
FBI disallowed these expenses on the basis that para. 2-7.3 of the
Federal Travel Regulations (Supp. 1, Sept. 28, 1981), incorp. by ref.,
41 C.F.R. Section 101-7.003 (1983), specifies that the allowance for
transportation of a mobile home does not include "costs of preparing
mobile homes for movement, maintenance, repairs * * *." The FBI allowed
reimbursement for an anchor and tie-down fee of $80 and a charge of
$220.48 to reconnect the mobile home's heating and air conditioning
units, as well as shipment and freight charges.
Following the initial denial of her claim Ms. Tang submitted a
reclaim voucher in which she sought reimbursement of the expenses which
had been disallowed by the agency. It is that reclaim voucher which has
been submitted for our determination.
Ms. Tang claims that she should be reimbursed all the expenses she
incurred in preparing, shipping, and reassembling her mobile home
because she was advised by an agency transportation official that the
costs associated with relocating her mobile home from Jacksonville to
Columbus would be borne by the Government. She claims that she was
never informed that this would not include costs of preparing the home
for shipment and reassembling it after delivery. Also, Ms. Tang argues
that the Federal Travel Regulations discriminate against mobile home
owners who must bear most of the expenses associated with taking apart
and setting up a mobile home whereas employees who move between
conventional homes are entitled to reimbursement for real estate sale
and purchase expenses that may be substantially greater.
A transferred employee who chooses to relocate his mobile home to his
new duty station, in fact, may be reimbursed for all or part of the cost
of preparing his mobile home for shipment and of reassembling the mobile
home at the new location. Reimbursement is not allowed as a cost of
transportation but as an item of miscellaneous expense under the
conditions and limitations prescribed in Chapter 2, Part 3 of the
Federal Travel Regulations (Supp. 4, August 23, 1982), incorp. by ref.,
41 C.F.R. Section 101-7.003 (1983). Wanda J. Campbell, B-208991,
February 8, 1983. Consistent with the statutory limitation imposed by 5
U.S.C. Section 5724a(b)(2), FTR, para. 2-3.3 provides that an employee
without immediate family who submits receipts or other acceptable
documentation may be reimbursed for miscellaneous expenses in an amount
not to exceed 1 week's basic pay up to the maximum for a grade GS-13.
Subparagraph 2-3.1b(2) specifically lists as a cost covered by the
miscellaneous expenses allowance "fees for unblocking and blocking and
related expenses in connection with relocating a mobile home."
The items for which Ms. Tang has claimed reimbursement are as
follows:
1. Fee for new drivers license .............................$6.50
2. Telephone installation ................................. 81.39
3. Parts and labor to install a propane gas tank ......... 111.60
4. Parts and labor for new wheels and axles to
transport mobile home ................................. 659.40
5. Materials and labor to separate double-wide trailer.. 1,153.14
6. Concrete blocks to set up home ......................... 81.99
7. Reassembling home including utility hookups ........... 775.00
8. Transfer tax .......................................... 149.00
Total .................................................. $3,318.50
For each claimed expense, except the last, Ms. Tang has provided a
receipt.
The agency has not specifically questioned the $6.50 driver's license
fee or the $81.39 telephone installation charge. Both are reimbursable
as items of miscellaneous expense under FTR, para. 2-3.1 which lists
costs of driver's licenses and utility connection fees as allowable
items of expense. George M. Lightner, B-184908, May 26, 1976, and
Prescott A. Berry, 60 Comp. Gen. 285 (1981).
The third item of expense claimed by Ms. Tang is a $111.60 charge by
the Ohio Gas and Appliance Company which includes a nonrefundable
deposit of $79.95 for a 250 gallon propane gas tank and a fee of $31.65
for materials and labor to connect the tank. Under FTR, para. 2-3.1,
utility fees and deposits not offset by eventual refund as well as fees
for connecting utilities may be reimbursed as items of miscellaneous
expense. The nonrefundable deposit incurred by Ms. Tang for the propane
tank serves a purpose similar to the deposit charged for electric or gas
utility service and, therefore, may be reimbursed. See Woodrow W.
Williams, Jr., B-190209, July 13, 1978. In Duane C. Hollan, B-206426,
May 24, 1982, we held that expenses, including parts, necessary to
connect a mobile home to available utilities may be reimbursed as items
of miscellaneous expense. In accordance with this decision, the charge
of $31.60 for labor and materials to connect the propane tank to the
heating system in Ms. Tang's mobile home also may be reimbursed.
The fourth item claimed by Ms. Tang is a charge of $659.40 for parts
and labor to install axles and wheels necessary to transport the two
halves of her double-wide mobile home from Florida to Ohio. We have
held that the cost of tires necessary to prepare a mobile home for
transportation to the new duty station may not be reimbursed as a
miscellaneous expense in view of the language of FTR, para. 2-3.1(c)
which specifically excludes costs for newly acquired items. Fred T.
Larsen, B-186711, January 21, 1978. Because this holding would apply,
as well, to costs incurred in equipping the mobile home with axles, the
charge of $659.40 is disallowed in its entirety.
The fifth, sixth and seventh items claimed are costs incurred for the
purpose of separating Ms. Tang's double-wide mobile home into two
sections for shipment and for reassembling those halves, affixing them
to the new residence site and connecting the utilities. Under FTR,
para. 2-3.1a, costs of unblocking and blocking and related expenses
incurred in relocating a mobile home are listed as items which are
covered by the miscellaneous expenses allowance. Under this authority,
we have allowed reimbursement for the cost of blocks purchased for the
purpose of blocking the mobile home at the new residence site. Edelmiro
Amaya, B-201645, December 4, 1981. As a cost related to unblocking a
double-wide mobile home, we have held that the cost of separating an
oversized mobile home into two sections for shipment may be reimbursed
as a miscellaneous expense. B-168109, November 14, 1969. For the same
reason, the cost of reassembling the two halves at the new residence
site would be reimbursable as a cost related to blocking the residence
at the new site. B-166247, March 13, 1969. And, as indicated
previously, costs incurred in connecting utilities are specifically
covered by the miscellaneous expense allowance. Thus, items 5, 6 and 7
are all allowable costs. Fred T. Larsen, B-186711, supra, and Edelmiro
Amaya, B-201645, supra.
The last item claimed by Ms. Tang is a $149 fee described on her
voucher as a fee to transfer title and register her mobile home in Ohio.
Ms. Tang has not submitted a receipt or otherwise documented her
payment or the nature of this fee. Subject to the requirement for
appropriate documentation, a state-imposed fee of this type would appear
to be reimbursable as an item of miscellaneous expense. 47 Comp. Gen.
687 (1968).
If Ms. Tang furnishes documentation to support allowance of the $149
title and registration fee, she will have established that she incurred
miscellaneous expenses totaling $2,659.10. This total includes the
allowable items discussed above together with expenses of $300.48
already reimbursed by the FBI. As noted above, the amount Ms. Tang may
be reimbursed under the miscellaneous expenses allowance is limited by
law to 1 week's basic pay, up to the maximum for GS-13. We have not
been furnished information concerning Ms. Tang's rate of pay and,
therefore, leave the application of this limitation to her agency.
We cannot agree with Ms. Tang's contention that she should be
reimbursed for all the costs she incurred in relocating her mobile home
because she was given erroneous advice. Employees may receive only
those relocation benefits or entitlements that are authorized by law and
implementing regulations and an agency's erroneous information may not
serve as a basis for establishing an entitlement not authorized by law.
See, e.g., James A. Schultz, 59 Comp. Ben. 28, 30-31 (1979); Eugene B.
Roche, B-205041, May 28, 1982.
Lastly, as to Ms. Tang's contention that the Federal Travel
Regulations discriminate against mobile home owners, the Federal Travel
Regulations are statutory regulations implementing the basic statutory
entitlements for transferred employees. While the expenses associated
with the sale and purchase of a residence by a transferred employee are
made reimbursable by the specific language of 5 U.S.C. Section
5724a(a)(4) (Supp. 1, 1983), there is no specific statutory provision
allowing for the reimbursement of the expenses associated with preparing
a mobile home for shipment and the subsequent reassembling of the home.
Consequently, the expenses of preparing and reassembling may only be
made under the statutory provision for reimbursement of miscellaneous
expenses which is limited to a maximum reimbursement of 1 week's pay for
an employee without immediate family. See 5 U.S.C. Section 5724a(b).
Moreover, an employee who sells a mobile home at his old duty station
and purchases a mobile home at his new duty station is entitled to real
estate sale and purchase expenses to the same extent as if he had bought
and sold any other type of residence. See FTR, para. 2-6.1b.
Accordingly, within the limitations discussed, Ms. Tang may be
reimbursed for all of the miscellaneous expenses claimed, with the
exception of the charge of $659.40 for tires and axles.
(1) The matter was presented for an advance decision by Mr. John H.
Skaggs, Authorized Certifying Officer, of the FBI.
B-222440, 65 Comp. Gen. 745
Matter of: SMIT Transformatoren B.V., July 28, 1986
Tennessee Valley Authority (TVA) is subject to the bid protest
jurisdiction of the General Accounting Office under the Competition in
Contracting Act of 1984 (CICA) since TVA comes within the statutory
definition of a federal agency subject to CICA.
For purposes of applying a statutorily-prescribed differential in the
evaluation of bids offering foreign-manufactured "extra high voltage
power equipment," Tennessee Valley Authority erred in adopting a
definition of that term recited in the statement of the conference
managers accompanying the conference committee report on the legislation
where the managers' statement indicates they intended to repeat the
definition used by the Department of Commerce but erroneously understood
it.
SMIT Transformatoren B.V. (SMIT) protests invitation for bids (IFB)
No. HA-458028 issued by the Tennessee Valley Authority (TVA) for the
procurement of power transformers and certain other accompanying
equipment, with an option for an additional procurement of the same type
and quantity of items. SMIT protests TVA's cancellation of the IFB
initially issued for this procurement and the inclusion of a Buy
American differential in the IFB readvertising the subject procurement.
We sustain the protest.
On December 13, 1985, TVA issued the IFB for two 161-kV (kilovolts)
main power transformers with the option to purchase certain additional
units. SMIT states that it was the low responsive bidder at the time of
bid opening on February 4, 1986. On February 21, 1986, TVA issued a
notice of its rejection of all bids and cancellation of the
solicitation. The notice stated that the requirement would be:
. . . readvertised using a 25-percent Buy American differential
provided by section 506 of Public Law 99-141 in lieu of the
differentials provided in this invitation to bid.
The solicitation was reissued on March 12, 1986, with a bid opening
scheduled for April 2, 1986. As reissued, the solicitation contained
the following clause:
Public Law No. 99-141 requires that TVA award any contract for EHV
(extra high voltage) power equipment to a domestic manufacturer if TVA
determines that such domestic EHV power equipment meets TVA's technical
requirements at a price not exceeding 125 percent of the bid or offering
price of the most competitive bidder. In addition to any other
evaluation factor specified in this invitation, the following evaluation
factor applies to bids of bidders offering foreign-manufactured extra
high voltage (EHV) power equipment.
a. If domestic and foreign manufacturers of EHV power equipment meet
TVA's technical requirements, then, for evaluation purposes only, the
bid price of foreign bidders will be increased by 25 percent (adjusted
foreign evaluation price).
b. As provided in Conference Report No. 99-307 o(f) Public Law
99-141, this provision applies to transformers rated above 10,000 kVA;
. . .
SMIT timely protested the solicitation as reissued, stating that as a
result of the inclusion of this requirement in the solicitation an
additional 25-percent evaluation factor -- more than double the foreign
product differential in the solicitation as initially issued -- is added
to its bid and it is no longer the low bidder. The protester maintains
that TVA's inclusion of the differential required by Public Law 99-141
in the solicitation was improper because the Buy American provision does
not apply with respect to the transformers and other equipment here
being procured, which SMIT contends is not EHV equipment. The protester
thus maintains that the solicitation should be reinstated as it was
initially issued and that the contract should be awarded to SMIT as the
low, responsive bidder.
In response to SMIT's protest, TVA initially challenges our
jurisdiction to decide this protest under the authority of the
Competition in Contracting Act of 1984 (CICA), 31 U.S.C. Section 3551,
et seq. (Supp. II 1984).
In previous post-CICA decisions, we have considered and rejected
TVA's challenges to our jurisdiction under CICA to decide bid protests
of its procurement activities. In those cases, we concluded that since,
under the provisions of 31 U.S.C. Section 3551(3), our bid protest
authority extends to "federal agencies" as that term is defined in the
section 3 of the Federal Property and Administrative Services Act of
1949 (40 U.S.C. Section 472 (1982)), and TVA, as a wholly owned
government corporation, is a federal agency within that definition, it
is subject to our bid protest jurisdiction. Monarch Water Systems,
Inc., 64 Comp. Gen. 756 (1985), 85-2 C.P.D. Paragraph 146; Newport News
Industrials Corp.; Simulation Associates, Inc., B-220364, Dec. 23, 1985,
85-2 C.P.D. Paragraph 705.
The statutory provision which is the subject of this protest is
section 506 of Pub. L. No. 99-141, 99 Stat. 579 (1985), the
Appropriations Act for energy and water development for fiscal year
1986, which states:
No funds appropriated in this Act may be used to pay the salary of
the Administrator of a Power Marketing Administration or the Board of
Directors of the Tennessee Valley Authority unless they award contracts
for the procurement of extra high voltage power equipment manufactured
in the United States when such agency determines that there are one or
more domestic manufacturers offering a product which meets the technical
requirements of such agency at a price not exceeding 125 per centum of
the bid or offering price of the most competitive foreign bidder. . . .
This section shall not apply to any procurement initiated before its
effective date or to the acquisition of spare parts.
The term "extra high voltage power equipment" is not defined in the
statute or in the report of the House Committee on Appropriations on
H.R. 2959 (H.R. Rep. No. 99-195, 99th Cong., 1st Sess. (1985)) or in the
report on the bill the Senate Committee on Appropriations (S. Rep. No.
99-110, 99th Cong. 1st Sess. (1985)). The term is discussed in the
statement of the conference managers accompanying the conference
committee report on H.R. 2959, which states in relevant part:
Language has been included regarding the procurement of extra high
voltage (EHV) power equipment by . . . the Tennessee Valley Authority.
As defined by the Department of Commerce, the EHV power equipment
industry includes, but is not limited to, transformers rated above
10,000 kVA . . . /1/ H.R. Rep. No. 99-307, 99th Cong., 1st Sess. 63
(1985). (Italic supplied.)
SMIT contends that TVA should not have included this increased Buy
American differential in a solicitation for 161 kilovolt main power
transformers on the grounds that the definition recited in the
conference report is inconsistent with industry standards which define
EHV power equipment as having a minimum voltage of 242 kilovolts and
that it has been informed by the Commerce Department that the conference
committee mistakenly used statistical information provided by the
Commerce Department to arrive at an erroneous definition of EHV power
equipment and, therefore, that the definition accompanying the
conference report is incorrect. The protester further notes that the
conference report definition is inconsistent with the following
statement concerning section 506 made by the chairman of the Senate
Committee on Appropriations during the Senate's consideration of the
conference report:
* * * the conference managers included as report language what they
believed was a Commerce Department definition for EHV power equipment in
order to clarify the scope of equipment to be covered by this amendment.
The Department of Commerce now indicates that this is not its
definition of EHV power equipment. To eliminate potential confusion, I
believe it is prudent to limit the scope of the amendment to the type of
EHV power equipment referred to in House Report 99-195. Based on the
House report and the American National Standards Institute definition of
EHV (extra high voltage) power equipment is alternating current (AC) and
direct current (DC) electrical equipment rated and operating above 242
kilovolts and less than 1,000 kilovolts. 131 Cong. Rec. 13448 (daily
ed. Oct. 17, 1985) (statement of Senator Hatfield). /2/
In its initial protest, SMIT contended that the definition of EHV
power equipment applied by TVA to this procurement is contrary to the
accepted understanding of the industry, as evidenced by the fact that
the three leading trade groups in the field -- the American National
Standards Institute (ANSI), the Institute of Electrical and Electronics
Engineers (IEEE), and the National Electrical Manufacturers Association
-- all adopt a minimum voltage of 242 kV, above that of the equipment
purchased here. In addition, the protester asserted that it had been
informed by the Department of Commerce employee who provided the
statistical information to the conference committee that the conference
mistakenly used that information to arrive at an erroneous definition of
EHV power equipment; that (as indicated by Senator Hatfield's
statement) the Department of Commerce in fact employs the ANSI
definition which encompasses equipment having a rating greater than 242
kV; and that the Senate conferees were notified of the error appearing
in the statement of the conference committee managers accompanying the
conference report.
None of this was addressed, much less disputed, in TVA's report
submitted to our Office in response to the protest. Rather, TVA defends
its position solely on the basis of the definition contained in the
conference managers' statement which, it maintains, as a matter of
statutory construction must take precedence over the statement of the
Senate committee chairman made on the floor of one House.
We understand the argument TVA has made but think its approach is too
narrow. The purpose of the statute was to protect domestic industry by
prescribing the application of a price differential in the evaluation of
bids offering foreign "extra high voltage power equipment," a term the
drafters evidently thought did not require definition within the statute
itself. A definition does appear in the conference managers' statement
accompanying the conference committee report but, as we read that
statement, the conference managers did not attempt to define what the
conferees meant by EHV power equipment but to recite their understanding
of that term "(a)s defined by the Department of Commerce."
The protester asserts that the conference managers misunderstood
statistical information provided to them by the Department of Commerce
and as a result erroneously recited a definition which was at odds with
that accepted in the industry and employed by the Department of Commerce
itself. We have no reason to believe that the conference managers set
out to do any more than to convey a correct, established, definition of
EHV equipment. In the absence of any rebuttal by TVA of the protester's
assertion that the equipment here being purchased falls below the
industry's definition of EHV power equipment, a position corroborated by
the IEEE Standard Dictionary of Electrical and Electronics Terms (Second
Edition), we do not think the conference managers' erroneous perception
should be controlling.
We therefore sustain the protest. It follows that TVA's cancellation
of the original solicitation and readvertisement under a more stringent
evaluation criterion was in error. The second solicitation should be
canceled and the first reinstated and award made consistent with its
terms on the basis of the bids received as of February 4, 1986. /3/
(1) The parties do not dispute that the 161-kV transformers here
being purchased are rated above 10,000 kVA; they do disagree as to
whether this is the proper definition of EHV power equipment to be
applied.
(2) Senator Johnson concurred in Senator Hatfield's comments.
(3) TVA apparently disagrees with SMIT as to whether that firm is the
low bidder on both lots of equipment under the original solicitation.
No final determination of the awardee, or awardees, was made in view of
the subsequent cancellation of that solicitation and the present record,
therefore, is not sufficiently complete for us to resolve the issue.
B-219829, 65 Comp. Gen. 741
Matter of: Proper Fiscal Year Appropriation to Charge for Contract
and Contract Increase, July 22, 1986
The entire amount of the original cost reimbursement contract between
the Veterans Administration and the contractor for a needs assessment
study of Vietnam-era veterans was properly charged to fiscal year 1984
appropriations, the appropriations available when the contract was
executed, since the study was a bona fide need of fiscal year 1984.
Modification of a cost reimbursement contract occurring in fiscal
year 1985, which increased the amount of the original contract ceiling
price and which did not represent an antecedent liability enforceable by
the contractor is properly chargeable to appropriations available when
the modification was approved by the contracting officer; that is,
fiscal year 1985 appropriations.
A Veterans Administration (VA) certifying officer asks about the
proper fiscal year to charge for a cost reimbursement fixed fee contract
between the VA and Research Triangle Institute entered on September 12,
1984, for a national needs assessment study of Vietnam-era veterans. He
also asks about the proper fiscal year to charge for a contract
modification issued on May 20, 1985 providing for an increase of
$218,952 in the contract's cost. For the reasons given below, we find
that the full original contract price should have been charged to
appropriations for fiscal year 1984, the year in which the contract was
executed. We also conclude, however, that the contract modification is
properly chargeable to the appropriation available when the modification
was approved; that is, to fiscal year 1985 appropriations, since the
amount involved exceeds the original contract ceiling price.
Public Law 98-160, 97 Stat. 993, 994-95 (1983), directed the VA
Administrator to "provide for the conduct of a comprehensive study of
the prevalence and incidence in the population of Vietnam veterans of
post-traumatic stress disorder and other psychological problems in
readjusting to civilian life * * *." The Act also directed the
Administrator to submit to the Senate and House Committees on Veterans'
Affairs a report on the results of the study no later than October 1,
1986. Although the legislative history of Public Law 98-160 contains a
fairly detailed discussion of the substance of the study, there is no
commentary about how it was intended to be funded.
The VA cost reimbursement contract with the Research Triangle
Institute, entered on September 12, 1984, provides that the VA will pay
the contractor up to a ceiling contract price of $3,620,024 for a
national needs assessment of Vietnam-era veterans. The contract
contained a "Limitation of Funds" clause which by reference established
an estimated cost ceiling of $3,620,024 and provided that once the
ceiling was reached, the contractor would be under no obligation to
continue performance unless additional funds were allocated to the
contract.
The "Statement of Work" describing what is to be done under the
contract is quite detailed. Among other things, it establishes a time
schedule for the 42 weeks necessary to complete the final report. The
Statement provides for progress and other preliminary and interim
reports at one month intervals during the first 6 months, and
subsequently at 3-month intervals. The Statement makes it clear that
the study must meet the requirements of the cited legislation.
After the contract award, the contracting officer issued a series of
change orders for additional work under the "changes" clause of the
contract. Modification numbers three and five each required obligation
of additional funds. Modification number five, the modification
mentioned specifically by the certifying officer, modifies the contract
to include expanded requirements for the "Pretest" phase. The Statement
of Work describes the Pretest in some detail and schedules it for the
10th month of work. This modification increased the contract ceiling
amount by $218,952.
Although neither the VA appropriations acts nor their legislative
histories mention the study, we have been informed that, thus far, the
contract has been financed from the lump-sum appropriation for "Medical
Care" in the fiscal year 1984 appropriations act covering the VA.
Department of Housing and Urban Development Independent Agencies
Appropriation Act, 1984, Pub. L. No. 98-45, 97 Stat. 219, 233. This is
a 1-year appropriation.
The record suggests that there is a conflict between the VA
certifying officer requesting this decision and the VA's Office of
General Counsel. The certifying officer maintains that as the contract
will take several years to complete, it resembles a continuous service
or multi-year contract. In this sense he says it is severable, and
application of the bona fide need rule would prohibit use of fiscal year
1984 monies to fund the entire contract. Thus, he concludes, the
contract should be obligated over the period 1984 through 1988, the
period of time described in the "Statement of Work" during which the
contract work will be performed. On the other hand, the Office of
General Counsel has concluded that the contract is not severable and its
entire cost should be funded from fiscal year 1984 funds. The Office of
General Counsel also has concluded that the contract modification in
question was within the scope of the original contract and therefore the
increase in costs should be charged to fiscal year 1984 funds.
It is well settled that without express statutory authority, no
agency may obligate an appropriation made for the needs of a limited
period of time, such as a fiscal year, for the needs of subsequent
years. 64 Comp. Gen. 359, 362 (1985). This is a paraphrase of the bona
fide need rule, which makes appropriations available only to fill a bona
fide need which exists at the time a contract is executed. See 31
U.S.C. Section 1502(a).
Consistent with this rule, we have held that delivery of goods or
performance of services in a fiscal year subsequent to the year in which
a contract is executed does not preclude charging of earlier fiscal year
appropriations with the full cost of the goods or services. The test is
whether the goods or services are intended to meet an immediate need of
the agency, regardless of when the work under the contract is completed.
60 Comp. Gen. 219, 220 (1981). On the other hand, continuing and
recurring services, to the extent the need for a specific portion of
them arises in a subsequent fiscal year, do not meet the test. The
portion of the services needed in the subsequent fiscal year would be
considered "severable" and chargeable to appropriations available in the
subsequent year pursuant to a contractual commitment made in that year.
Id. at 221.
Applying these principles here, we conclude that the entire contract
was a bona fide need of fiscal year 1984. The service to be provided --
that is, preparation of a study on the adjustment needs of Vietnam-era
veterans -- is to meet an immediate agency need mandated by statute.
The fact that the study will not be completed until fiscal year 1988
does not alter this conclusion. This situation is somewhat analogous to
contracts for construction of buildings, or other long lead-time items,
which are begun in one year, but which may take several years to
complete. These contracts usually are considered bona fide needs of the
year in which the contract is executed, not the year in which the work
is completed, see id. at 220-21.
We do not think the service contracted for here is severable. The
service is to complete the study and to provide a final report to the
Congress, nothing less. Although the "Statement of Work" obligates the
contractor to provide various interim reports on how the work is
progressing, these reports are merely informational and cannot be
considered work products that are independent of the study.
Furthermore, unlike the National Institutes of Health research grants
considered in 64 Comp. Gen. 359, 362-65 (1985), which we suggested were
severable since they did not contemplate a required outcome or product,
the work here is for a particular product; that is, the study mandated
by Congress. Accordingly, we conclude that the entire original contract
amount was properly charged to fiscal year 1984 monies.
Consistent with the bona fide need rule, in the past we generally
have held that where fulfillment of a contract made in an earlier fiscal
year required increases in cost in later years, the increased costs were
to be charged to the appropriation funding the original contract. This
was so because the Government's obligation under the subsequent price
adjustment was to fulfill a bona fide need of the original fiscal year.
/1/ See 59 Comp. Gen. 518, 521-22 (1980); 44 Comp. Gen. 399, 401-02
(1965). In 61 Comp. Gen. 609 (1982), however, we modified this position
somewhat, concluding that amounts for increases in cost reimbursement
contracts that exceed the original contract ceiling price, and which are
not based on an antecedent liability enforceable by the contractor, may
be charged to funds available when a contract price increase is granted
by the contracting officer. 61 Comp. Gen. at 612. We reasoned that
although an agency must reserve funds up to the contract's ceiling to
comply with the Antideficiency Act's prohibition against incurring
obligations exceeding available appropriations, 31 U.S.C. Section
1341(a)(1), it is neither required to reserve amounts for cost increases
beyond the estimated ceiling nor, in most cases, is it practical to
predict the amount of such increases at the time the contract is
executed.
In this instance, modification number five was approved in May 1985.
The modification increased the original contract amount by $218,952.
Although the modification was based on the original contract --
expanding the "Pretest" described in the contract's "Statement of Work"
-- the increases did not involve an antecedent liability enforceable by
the contractor. Since this increase is above the contract ceiling
price, we find that it is properly chargeable to appropriations
available when the increase was granted by the contracting officer;
that is, the 1985 fiscal year appropriation. Similar modifications may
be treated accordingly.
(1) We had differentiated, however, new contract liabilities from
those which were based on the original contract, holding that the former
should be paid from the appropriation available when the new liability
was incurred rather than when the original contract was executed. See
55 Comp. Gen. 768 (1976).
B-223319, 65 Comp. Gen. 738
Matter of: Refreshments at Awards Ceremony, July 21, 1986
If an agency determines that a reception with refreshments, as
provided in the Federal Personnel Manual, would materially enhance the
effectiveness of an awards ceremony conducted under authority of the
Government Employees' Incentive Awards Act, the cost of those
refreshments may be considered a "necessary expense" for purposes of 5
U.S.C. 4503. As such, the cost may be charged to operating
appropriations without regard to "reception and representation" limits.
B-114827, Oct. 2, 1974, modified.
The Director, Division of Finance, Social Security Administration
(SSA), Department of Health and Human Services, has asked whether the
cost of refreshments at SSA's annual awards ceremony may be paid from
operating appropriations, or "whether it is subject to the statutory
ceiling on SSA's "official reception and representation" account.
Restated, the question is whether there is any legal objection to the
Office of Personnel Management's (OPM) statement in the Federal
Personnel Manual that "light refreshments" may be provided under the
authority of the Government Employees' Incentive Awards Act. /1/ We
hold that OPM is correct and that the expense may be charged to
operating appropriations without regard to the "reception and
representation" ceiling. In so holding, we welcome the opportunity to
clarify an apparent inconsistency in our decisions.
It is explained that each October, SSA holds an awards ceremony at
its headquarters in Woodlawn, Maryland, at which various awards are
presented to SSA employees from around the nation. The ceremony
includes refreshments in the form of a "buffet luncheon." SSA receives
its operating appropriations in the form of an annual lump-sum
"Limitation on Administrative Expenses" (LAE), SSA's equivalent of a
"Salaries and Expenses" appropriation. Typically, a small sum ($5,000
for fiscal year 1986) out of the LAE is made available for "official
reception and representation."
It has been established through numerous decisions of this office
that, with limited exceptions not relevant here, appropriated funds may
not be used to provide free food to Government employees. E.g., 65
Comp. Gen. 16 (1985); 47 Comp. Gen. 657 (1968). The rationale behind
these decisions is quite simple. Feeding oneself is a personal expense
which a Government employee is expected to bear from his or her salary.
Thus, free food, classified in some of the decisions under the umbrella
term "entertainment," normally cannot be justified as a "necessary
expense" under an appropriation. This rule, like most, is premised on
the absence of statutory authority to the contrary. The issue here is
whether the Incentive Awards Act provides this authority.
The Government Employees' Incentive Awards Act is found at 5 U.S.C.
Sections 4501-06. Of relevance here, 5 U.S.C. Section 4503 authorizes
an agency head to "pay a cash award to, and incur necessary expense for
the honorary recognition of" employees who meet general criteria
specified in the statute. /2/ We have found no legislative history to
guide us as to the intended scope of the term "necessary expense" in 5
U.S.C. Section 4503. A 1967 congressional review of the implementation
of the statute said:
There is very little legislative history concerning the Government
Employees' Incentive Awards Act and there was apparently little, if any,
controversy over passage of the act in 1954. Since the act was passed,
the Congress has given very little guidance for implementation of the
legislation except that which is included in the specific language of
the act itself. /3/
In B-167835, Nov. 18, 1969, we concluded that the Incentive Awards
Act authorized the National Aeronautics and Space Administration to pay
for part of the cost of a banquet honoring the Apollo 11 astronauts, at
which the President was to present the Medal of Freedom to the
astronauts. However, a 1974 decision (B-114827, Oct. 2, 1974) held that
the cost of refreshments at a Federal Home Loan Bank Board awards
ceremony was payable from the Board's reception and representation
account. While the decision, apart from the first digest, did not
explicitly state that the "R&R" account was the only legally available
funding source, this seems to have been the clear implication. The 1974
decision did not mention the 1969 case, nor did it address the
"necessary expense" language of 5 U.S.C. Section 4503.
We have dealt with the concept of "necessary expenses" in a vast
number of decisions over the decades. If one lesson emerges, it is that
the concept is a relative one: It is measured not by reference to an
expenditure in vacuum, but by assessing the relationship of the
expenditure to the specific appropriation to be charged or, in the case
of several programs funded by a lump-sum appropriation, to the specific
program to be served. It should thus be apparent that an item that can
be justified under one program or appropriation might be entirely
inappropriate under another, depending on the circumstances and
statutory authorities involved.
The Incentive Awards Act authorizes each agency to develop an awards
program (see 5 U.S.C. Section 4506). An awards ceremony is a proper if
not integral element of such a program. Clearly the statutory
objectives will be better met by presenting an award along with a
measure of public recognition, rather than anonymously depositing it in
the recipient's in-box. Once we have said this, it becomes apparent
that an awards ceremony is different from an agency's typical day-to-day
conduct of official business. It is, by its very nature and purpose,
for lack of a better term, "ceremonial." It should therefore not stretch
the imagination to conclude that certain things -- such as refreshments
-- which would be inappropriate in other contexts, might be appropriate
as part of a ceremonial function.
In view of the foregoing, should an agency determine that a reception
with refreshments, in accordance with OPM regulations, would materially
enhance the effectiveness of its awards ceremony, the cost of those
refreshments may be considered a "necessary expense" for purposes of 5
U.S.C. Section 4503. As a "necessary expense," the cost may be borne by
operating appropriations and need not be charged to a reception and
representation account. See 5 U.S.C. Section 4502(d).
Our 1974 decision (B-114827, supra) was incorrect in two respects.
First, it did not consider the 1969 Apollo 11 case, but followed 43
Comp. Gen. 305 (1963), which dealt with persons who were not Federal
employees. /4/ Second, it failed to give proper weight to the
"necessary expense" language of 5 U.S.C. Section 4503. To the extent it
is inconsistent with this decision, B-114827, Oct. 2, 1974, is hereby
modified. /5/
(1) Federal Personnel Manual, chapter 451, subchapter 2, para. 2-2c
(Inst. 265, Aug. 14, 1981), ("(I)t would be appropriate to provide light
refreshment at nominal cost under authority of (the Incentive Awards
Act).)
(2) Although the Incentive Awards Act does not apply to the uniformed
services, somewhat similar authority exists, including the identical
"necessary expense" language, in 10 U.S.C. Section 1124 with respect to
members of the armed forces. Accordingly, this decision applies equally
to 10 U.S.C. Section 1124.
(3) Report Covering the Effectiveness of Implementation of the
Government Employees' Incentive Awards Act, Subcom. on Manpower and
Civil Service, House Comm. on Post Office and Civil Service, H.R. Rep.
No. 885, 90th Cong., 1st Sess. 7 (1967).
(4) OPM has correctly interpreted 43 Comp. Gen. 305. See article
entitled "Payment for Award Receptions" appearing on page 4 of an OPM
bulletin entitled "Incentive Award Notes," vol. 32, no. 3 (Jan.-Feb.
1986).
(5) We do not "overrule" B-114827 because what we are saying here
does not preclude an agency from charging the cost to an applicable
"R&R" account if it is so chooses. This decision says merely that
charging an "R&R" account is not required.
B-222912, 65 Comp. Gen. 735
Matter of: NRC Data Systems, July 18, 1986
Protest that agency failed to obtain full and open competition
because the incumbent contractor did not receive a solicitation package
and was not otherwise informed by the agency that a new solicitation had
been issued is denied where the agency complied with the statutory and
regulatory requirements regarding publicizing the procurement and the
incumbent had reason to know that its address on the agency's mailing
list for the solicitation was incorrect.
NRC Data Systems protests any award of a contract under request for
proposals (RFP) No. 86-34(N), issued for data conversion services by the
Department of Health and Human Services' Centers for Disease Control,
Atlanta, Georgia. NRC complains that even though it was the incumbent
contractor performing the agency's current requirement for these
services, the agency failed to provide it with a copy of the
solicitation prior to the closing date for receipt of proposals. We
deny the protest.
The agency announced in the Commerce Business Daily (CBD) on October
2, 1985, its intention to issue a competitive solicitation for the
required services. There was also notice concerning this procurement in
the CBD on November 22. The announced, anticipated issuance date was
November 1, but the agency did not actually issue the solicitation until
January 30, 1986. The closing date was March 3. The agency reports
that it mailed solicitations to 77 firms on its list of potential
offerors and that NRC was included on the mailing list. The list shows
NRC's address as: 1935 Cliff Valley Way, Suite 118, Atlanta, Georgia
30229. That address is correct except for the zip code. The correct
zip code is 30329. The agency received three timely proposals.
NRC contends that it has never received a copy of the RFP by mail.
/1/ The protester adds that it had experienced other problems with mail
misaddressed by the agency, although there is no allegation that other
misaddressed mail was not ultimately received. NRC says that it fully
expected to be solicited since it was performing satisfactorily as the
incumbent. Moreover, says the protester, its representative inquired of
the agency several times prior to January 30 as to when the solicitation
would be issued, but the person to whom the representative spoke said
she did not know. In addition, when the protester signed an extension
of its current contract on January 28, no one in the agency's
procurement office informed the firm that the solicitation would be
issued only 2 days hence. Even after the solicitation was issued, says
the protester, it had additional contacts with the procurement office
concerning payments under its current contract, but was not informed
that the new solicitation had been issued. The firm says it first
learned that the agency had issued the solicitation the day after the
closing date when it telephoned the agency on a matter involving its
current contract. The protester adds that just prior to the closing
date, several of its telephone calls to a specific agency official were
not returned.
The protester contends that the agency should either accept its late
proposal or resolicit the requirement because the agency failed to
obtain full and open competition as required by the Competition in
Contracting Act of 1984 (CICA), 41 U.S.C. Section 253(a)(1)(A) (Supp. II
1984). In support of this contention, the protester relies heavily on
The Thorson Co., GSBCA No. 8185-P, Oct. 30, 1985, 85-3 BCA Paragraph
18,516. In that case, the General Services Board of Contract Appeals
required a resolicitation where the incumbent contractor did not receive
a copy of the solicitation. Although the agency established that it had
the incumbent's correct address and that it mailed the solicitation to
the incumbent, it failed specifically to allege or prove that it had
mailed the solicitation to the correct address. The Board noted a
history of the agency's sending mail to the incumbent at an old address
that now is used by a competitor. The Board concluded that since only
the incumbent's competitor submitted an offer, full and open competition
was not obtained. NRC contends that its case is more compelling than
Thorsen's because, here, the facts show that the agency mailed the
solicitation to the wrong address.
The agency's position is, first, that the protester had adequate
notice of the new solicitation. The agency refers to the two CBD
notices and also says that it posted a notice of the issuance of the
solicitation on the bid board at the contracting office. The agency
says it took all reasonable steps to ensure that NRC was notified of the
procurement and did not discover until after the closing date that the
firm may not have received its copy of the RFP. But, in any event, says
the agency, adequate competition and reasonable prices were obtained,
and there is no indication that NRC was deliberately excluded from the
competition. The agency cites a number of our prior cases holding that,
under such circumstances, a potential offeror bears the risk of
nonreceipt of solicitation materials. See, e.g., CompuServe, B-192905,
Jan. 30, 1979, 79-1 CPD Paragraph 63.
Under CICA, agencies are required when procuring property or services
to obtain full and open competition through the use of competitive
procedures. 41 U.S.C. Section 253(a)(1)(A) (Supp. II 1984). "Full and
open competition" is obtained when "all responsible sources are
permitted to submit sealed bids or competitive proposals." Id. Sections
259(c); and 403(7). We have said that in view of the clear intent of
Congress to make full and open competition the standard for conducting
government procurements, we will give careful scrutiny to an allegation
that a particular firm was not provided an opportunity to compete for a
particular contract. Trans World Maintenance, Inc., B-220947, Mar. 11,
1986, 65 Comp. Gen. 401, 86-1 CPD Paragraph 239. In so doing, we will
take into account all of the circumstances surrounding a firm's
nonreceipt of solicitation materials, as well as the agency's
explanation. Id. Using this approach, we have sustained protests and
recommended resolicitation where we found that a firm's failure to
receive a solicitation was the result of significant deficiencies on the
part of the agency. See Trans World Maintenance, Inc., B-220947, supra;
Dan's Moving & Storage, Inc., B-222431, May 28, 1986, 86-1 CPD
Paragraph 496.
On the other hand, the government cannot guarantee that mistakes will
never occur, even when proper procedures are followed. Thus, in other
cases decided following the effective date of CICA, we have declined to
disturb procurements in which an agency contributed to a contractor's
nonreceipt of solicitation materials where it did not appear that the
agency's contribution was anything more than mere inadvertence. See,
e.g., Leavenworth Office Equipment, B-220905, Nov. 12, 1985, 85-2 CPD
Paragraph 543 (agency mistakenly misaddressed solicitation package
intended for the incumbent contractor); James L. Clark, Jr., Plumbing
and Heating Co., Inc., B-220673, Oct. 29, 1985, 85-2 CPD Paragraph 484
(agency's failure to send amendment to the protester was apparently an
isolated oversight).
Although the CICA standard of full and open competition requires an
agency to take reasonable steps to ensure that a procurement is open to
all responsible sources, that requirement should not be read so broadly
as to require an agency either to accept a late submission or to
resolicit whenever the agency contributes to a prospective contractor's
failing to receive solicitation materials in a timely manner. Not only
would this be inefficient from the government's perspective, but the
integrity of the system would be undermined if the other bidders or
offerors could not rely on the finality of bid or proposal closing
dates. Rather, we think an agency has satisfied CICA's full and open
competition requirement when it makes a diligent, good-faith effort to
comply with the statutory and regulatory requirements regarding notice
of the procurement and distribution of solicitation materials, and it
obtains a reasonable price. The fact that inadvertent mistakes occur in
this process should not in all cases be grounds for disturbing the
procurement.
In this case, we think the agency satisfied CICA's full and open
competition requirement. The agency published two notices in the CBD
concerning this procurement and mailed solicitations to 77 bidders on
its mailing list. Although this list contained an incorrect zip code
for NRC, there is no indication that the agency was aware of this fact.
Moreover, we note that two modifications to NRC's current contract,
which NRC signed on December 23, 1985, and either January 27 or 28,
1986, respectively, each contained the incorrect zip code: 30229.
Significantly, one of the express purposes of the first of these
modifications was to correct NRC's address, since the firm recently had
moved. Having signed the modification with the incorrect zip code, NRC
should have known that the agency's contracts office probably did not
have the firm's correct address on the bidders list. Yet, there is no
indication that NRC ever attempted to assure itself that the address on
the list was correct. In view of the numerous misaddressed items the
protester received from both the agency's finance office and its
contracts office, we think such an inquiry would have been prudent.
Further, although agency personnel apparently did not advise NRC that
the new solicitation had been issued, even though NRC had a number of
contacts with the agency following the issuance date, NRC does not
allege that after the issuance date, it ever expressly asked whether the
solicitation had been issued.
Finally, with respect to NRC's contention that the holding in The
Thorson Co., GSBCA No. 8185-P, supra, controls here, we have considered
that case previously in G & L Oxygen and Medical Supply Services,
B-220368, Jan. 23, 1986, 86-1 CPD Paragraph 78, but found it to be
distinguishable. We said the decision in Thorson appeared to be based
on the fact that only one offer had been received, and that offer was
from a competitor to whom the protester's solicitation package may have
been sent. In this case, however, the agency received three offers,
which we find sufficient to satisfy the full and open competition
requirement. See Metro Medical Downtown, B-220399, Dec. 5, 1985, 85-2
CPD Paragraph 631.
The protest is denied.
(1) The agency reports that no solicitations were returned by the
Postal Service as undeliverable and that each solicitation package
contained a return address.
B-222200.3, 65 Comp. Gen. 729
Matter of: Exquisito Services, Inc., July 17, 1986
Determination to set aside procurement for full food services at
military base under section 8(a) of the Small Business Act may be made
after bid opening where agency reasonably determined that cancellation
of total small business set-aside procurement and subsequent 8(a) award
were clearly in the government's interest due to urgency of the
requirement and the necessity of maintaining continuous food services
after expiration of incumbent's contract which did not allow sufficient
time to complete small business set-aside procurement.
Exquisito Services, Inc. (ESI), protests the post-bid-opening
cancellation of invitation for bids (IFB) No. F41800-86-B-A059, issued
as a total small business set-aside by the Department of the Air Force
for full food services at Lackland Air Force Base, Texas. ESI also
protests the subsequent sole-source award by the Air Force of a contract
for this same requirement to Aleman Food Services, Inc. (Aleman),
pursuant to the Small Business Administration's (SBA) section 8(a)
program. /1/ ESI, which is itself an eligible minority owned small
business under SBA's section 8(a) program, /2/ contends that the Air
Force illegally canceled the competitive solicitation under which ESI
was potentially in line for award. ESI requests that the section 8(a)
contract be terminated, that the canceled solicitation be reinstated,
and that the Air Force proceed to select the low, responsive and
responsible bidder under the competitive solicitation.
ESI also filed suit in the United States District Court for the
Eastern District of Louisiana, Exquisito Services, Inc. v. United States
of America, Civil Action No. 86-1847, seeking injunctive and declaratory
relief. The court has expressed an interest in our decision and
performance of the contract has been stayed pending our ruling.
We deny this protest.
The solicitation was issued on January 17, 1986, and, as amended,
established March 18, 1986, as the bid opening date. Seven bids were
received as follows:
TABLE OMITTED
The low bidder withdrew its bid because of a mistake in its bid and
the second low bidder was found to have submitted a nonresponsive bid,
leaving ESI and Aleman as the low bidder and the second low bidder,
respectively. In early April, the Air Force requested ESI to verify its
bid. ESI did so, but concurrently alleged that certain clerical errors
existed in its bid. /3/ Also, on April 17, the contracting officer
informed ESI that the individual sureties listed in its bid bond did not
have sufficient net worth; this deficiency was corrected by ESI on
April 21. At about this time, an Air Force procurement official was
informed by officials at Barksdale Air Force Base, Louisiana, where ESI
was performing a $1.2 million mess attendant contract, that ESI was
experiencing financial problems meeting employee payrolls, that its
company checks were "bouncing," that the Department of Labor was
considering an investigation, and that ESI had recently filed for
bankruptcy.
The Air Force, on April 8, issued a "preliminary notice" to the
incumbent, Falcon Management, Inc., that the Air Force "may" exercise an
option to extend the food services being performed under the existing
contract, which otherwise was to expire on April 30. However, because
of oversight, the Air Force failed to exercise the option until April
17, even though the contract specifically required that such an
extension "be effected by written notice mailed . . . to the contractor
not less than 15 calendar days prior to expiration of the contract."
Falcon refused to honor the late exercise of the option and, instead,
submitted what the Air Force considered to be an unreasonable
"counter-offer" on April 21, 1986. /4/ Faced with time constraints and
the necessity of maintaining continuous food services for military
personnel, the contracting officer considered canceling the solicitation
and performing the services in-house or canceling the solicitation and
awarding a contract to the SBA under the 8(a) program. The contracting
officer chose not to negotiate a contract or a modification of the
existing contract on a sole-source basis with the incumbent for an
interim period pending completion of the competitive procurement because
he believed that unspecified provisions of the Competition in
Contracting Act of 1984, Pub. L. No. 98-369, 98 Stat. 1175, prohibited
him from doing so. The contracting officer also did not attempt to
competitively negotiate an interim contract pending completion of the
competitive procurement because he believed there was insufficient time.
Rather, the contracting officer awarded the contract to the SBA which
had submitted an 8(a) subcontract proposal on behalf of Aleman even
though an Air Force official had previously proposed to the SBA that the
8(a) subcontract award be split between ESI and Aleman. /5/ The protest
by ESI followed.
The thrust of ESI's complaint is that the Air Force did not have a
"compelling reason" to cancel the solicitation after bid opening. ESI
argues that the Air Force's requirement to provide for interim food
services during the short period of time necessary to complete the
competitive procurement did not provide a valid basis for canceling the
competitive solicitation and awarding a sole-source 8(a) contract. ESI
maintains that the Air Force had a variety of possible alternative
contract actions available to it in order to provide for any short-term
need for continuous food services. According to ESI, the cancellation
therefore was arbitrary and capricious. ESI also challenges the
validity of the 8(a) award, alleging that the award was tainted by bad
faith and by violation of various regulations and SBA's standard
operating procedures.
ESI is correct as to the general rule that governs the cancellation
of a solicitation after bid opening: award should be made to the
responsible bidder which submitted the lowest responsive bid, unless
there is a compelling reason to reject all bids and cancel the
solicitation. See Federal Acquisition Regulation (FAR), 48 C.F.R.
Section 14.404-1(a)(1) (1985). However, this does not mean that a
decision to invoke the section 8(a) process may not be made after bid
opening has occurred. The FAR specifically permits cancellation,
consistent with the compelling reason standard, where cancellation is
clearly in the government's interest. 48 C.F.R. Section 14.404-1(c)(9)
(1985). Moreover, our Office has specifically upheld the propriety of
canceling a solicitation after bid opening for the purpose of setting
aside a procurement under the section 8(a) program. See A.R.&S.
Enterprises, Inc., B-194622, June 18, 1979, 79-1 CPD Paragraph 433;
American Dredging Co., B-201687, May 5, 1981, 81-1 CPD Paragraph 344.
The "compelling reason" standard, relied upon by the protester, is based
in part upon the obvious detrimental effect on the competitive bid
system of a cancellation and resolicitation after exposure of bid
prices. See, e.g., Gill Marketing Co., Inc., B-194414.3, Mar. 24, 1980,
80-1 CPD Paragraph 213 at 2. Here, however, because of the 8(a) award,
there will be no resolicitation and there will be no future auction
situation resulting from exposure of bid prices.
The Air Force experienced a number of delays in the present
procurement, including: issuing five amendments changing or clarifying
the requirements; resolving a potential contracting agency-level
protest and a protest filed with our Office; resolving a mistake in bid
claimed by Mid-East, the apparent low bidder, and allowing withdrawal of
its bid; and determining that the second low bidder, Dragon, was
nonresponsive. Also, in view of the information the contracting officer
had received from various sources reporting ESI's possible financial
difficulties and payroll problems at Barksdale Air Force Base, the
contracting officer foresaw that a preaward survey and potentially a
certificate of competency proceeding might be required before the matter
of ESI's responsibility could be determined. Since this and resolution
of the alleged mistakes in ESI's bid might further delay a possible
award, the contracting officer attempted unsuccessfully to exercise the
Air Force's option to extend the incumbent's contract for 2 months.
When the incumbent refused to accept the Air Force's late exercise of
the option and the Air Force received what it considered to be an
exorbitant counteroffer from the incumbent on April 21, the Air Force
was faced with an urgent and difficult situation since only a little
more than 1 week remained before expiration of the incumbent's contract.
The contracting officer considered it imperative that Air Force
maintain continuous food services for personnel at the base since lack
of such services would have an adverse impact on the base's mission and
would be detrimental to the health morale and welfare of Air Force
personnel. The contracting officer considered several alternative ways
to avoid a lapse in food services. Ultimately, the contracting officer
determined that the SBA's 8(a) program was a prompt and viable solution
to the problem. The Air Force referred the requirement to the SBA,
identified both Aleman and ESI as candidates for an 8(a) subcontract,
and recommended that the requirement be split equally between the two
firms. The SBA selected Aleman for the 8(a) award and, on April 23, the
original set-aside procurement was canceled and the 8(a) contract was
awarded to the SBA and Aleman.
We think it is clear that the contracting officer was faced with an
urgent need to maintain continuous food services. In view of the
extremely short time period within which it was necessary to award the
follow-on contract, the probable adverse effects on the health, welfare
and morale of Air Force personnel, and the broad discretion conferred
upon the SBA and the contracting agency to decide when and to whom to
award an 8(a) contract, we find the contracting officer's determination
that cancellation of the original procurement was clearly in the
public's interest to have been reasonable under the circumstances.
Marine Industries Northwest, Inc.; Marine Power and Equipment Co., 62
Comp. Gen. at 208, 83-1 CPD Paragraph 159 at 4; FAR, 48 C.F.R. Section
14.401-1(c)(9) (1985). In this regard, the protester argues that
several reasonable alternatives, other than an 8(a) award, existed which
could have satisfied the Air Force's interim need for food services and,
at the same time, permitted completion of the procurement. Even if we
assume this to be true, we cannot say that the contracting officer,
faced with urgent circumstances, acted unreasonably in opting for
another viable alternative clearly available to the Air Force: an 8(a)
award to the SBA. Accordingly, we conclude that all of the above
circumstances taken together did in fact provide the contracting officer
with a compelling reason to cancel the initial procurement and to award
to Aleman under the auspices of the SBA's 8(a) program.
ESI also argues that SBA, in selecting Aleman, violated certain
internal standard operating procedures (SOP) which, according to ESI,
evidences bad faith. A protester alleging bad faith by government
officials bears a very heavy burden of proof. To establish bad faith,
the courts and our Office require virtually irrefutable proof that
either Air Force or SBA officials had a specific and malicious intent to
injure ESI. See Kalvar Corporation, Inc. v. United States, 543 F.2d
1298 (Ct. Cl. 1976); Bradford National Corporation, B-194789, Mar. 10,
1980, 80-1 CPD Paragraph 183. ESI asks that we infer bad faith from the
alleged SOP violations. However, contracting officials are presumed to
act in good faith, Arlandria Construction Co., Inc. -- Reconsideration,
B-195044 et al., July 9, 1980, 80-2 CPD Paragraph 21, and inference and
supposition are not sufficient to meet this burden. Janke and Company,
Inc. -- Request for Reconsideration, 64 Comp. Gen. 63 (1984), 84-2 CPD
Paragraph 522. /6/
ESI also argues that the Air Force failed to comply with 48 C.F.R.
Section 19.506(a) (1985), which requires notification to the small and
disadvantaged business utilization specialist and the assigned SBA
representative of the withdrawal of the small business set-aside. While
the Air Force may not have notified the SBA officials identified in this
section of the FAR, it is abundantly clear that appropriate officials of
the SBA were consulted by the contracting officer regarding withdrawal
of the solicitation and especially regarding the feasibility of awarding
an 8(a) contract to either ESI or Aleman, or both. Thus, we think that
even though the exact notification procedure may not have been followed,
the Air Force complied with this requirement in substance.
Finally, ESI also objects to the award of the 8(a) contract at a
price higher than its own. However, the fact that an 8(a) firm's price
under the set-aside may be higher than the protester's in the canceled
procurement is not legally objectionable. Under the 8(a) program, it is
not unusual for contracts to be funded in amounts exceeding prices that
would be obtained through unrestricted competition. See e.g., Kings
Point Manufacturing Co., Inc., 54 Comp. Gen. 913 (1975), 75-1 CPD
Paragraph 264. Such 8(a) set-aside contracts are made in order to
assist small business concerns owned and controlled by socially and
economically disadvantaged persons to achieve a competitive position in
the marketplace. The government, by increasing the participation of
such firms in federal procurements, anticipates that these firms
eventually may become self-sufficient, viable businesses capable of
competing effectively in unrestricted procurements. Whatever additional
price the government may pay when it uses 8(a) set-asides is merely the
cost of furthering this socioeconomic goal. Thus, a higher priced
contract may be awarded under the 8(a) set-aside.
The protest is denied.
(1) Section 8(a) of the Small Business Act, 15 U.S.C. Section 637(a)
(1982), authorizes the SBA to enter into contracts with any government
agency with procuring authority and to arrange for the performance of
such contracts by letting subcontracts to socially and economically
disadvantaged small business concerns. The contracting officer is
authorized "in his discretion" to let a contract to the SBA upon such
terms and conditions as may be agreed upon by the procuring agency and
the SBA. Marine Industries Northwest, Inc.; Marine Power and Equipment
Co., 62 Comp. Gen. 205, 208 (1983), 83-1 CPD Paragraph 159.
(2) We have been advised by the Air Force that on June 6, 1986, the
Dallas Regional Office of the SBA made a determination that ESI is no
longer a small business for the purposes of food services requirements
and that ESI is currently appealing this determination.
(3) In response to the Air Force request, ESI submitted
"verification" letters, which included the alleged clerical errors, on
three separate occasions to the Air Force -- April 2, 10, and 22, 1986.
The clerical errors amounted to approximately $3,000 out of a total bid
price of approximately $27 million and would have had no effect on the
relative standing of bidders.
(4) The "counter-offer" by Falcon was in the amount of $853,950.75
per month for 2 months. This represented an increase of $154,440.98 per
month compared with the previous contract. The Air Force rejected the
"counter-offer" and did not attempt to negotiate a more reasonable
price.
(5) The section 8(a) award to Aleman was made at a price of
$27,580,462, computed for the three year performance period (basic year
and 2 option years) contained in the competitive solicitation. This
figure is $322,161 less than Aleman's previous bid price but is $341,359
more than ESI's bid price (without correcting for any alleged mistakes)
under the competitive solicitation. The record does not contain an
explanation of how the specific final price was arrived at by the
parties.
(6) It is not clear from the record why SBA decided to select Aleman
for the section 8(a) award rather than ESI. Nevertheless, in view of
the broad discretion conferred upon the SBA and the contracting agency
to decide when and to whom to award an 8(a) contract, our Office will
not question the selection of an 8(a) contractor unless the protester
demonstrates fraud or bad faith on the part of government officials or
that applicable regulations have not been followed. Arawak Consulting
Corp., 59 Comp. Gen. 522 (1980), 80-1 CPD Paragraph 404. An allegation
that SBA's SOP's were violated does not satisfy this requirement, Janke
and Company, Inc., B-216152, Aug. 30, 1984, 84-2 CPD Paragraph 242,
since the SOP's are primarily for the internal guidance of agency
employees and may be waived or revoked by the SBA. Jets Services, Inc.,
65 Comp. Gen. 311, B-199721, Mar. 11, 1981, 81-2 CPD Paragraph 300.
B-95136, 65 Comp. Gen. 722
Matter of: The Honorable Robert T. Stafford, Chairman, Committee on
Environment and Public Works, July 16, 1986
The General Services Administration is authorized to make repairs and
alterations to leased buildings without regard to the limitation set
forth in Sec. 322 of the Economy Act of 1932, as amended (40 U.S.C. 278a
(1982)) upon proper determination since section 210(a)(8) of the Federal
Property and Administrative Services Act of 1949, as amended (40 U.S.C.
490(a)(8)), authorizes repairs and alterations to leased premises
without regard to limitations when Administrator is otherwise authorized
to maintain, operate and protect any building property or grounds inside
or outside the District of Columbia and the Administrator of General
Services is so authorized both as a result of transfer of authority
effected by section 103 of the 1949 Act (40 U.S.C. 753) and by language
contained in annual appropriation to GSA which makes funds available to
operate, maintain and protect federally-leased buildings.
General Services Administration (GSA) is not required to obtain
prospectus approval for repairs and alterations to leased buildings by
section 7(a) of the Public Buildings Act of 1959, as amended (40 U.S.C.
606(a)) since leased buildings are not "public buildings" for purpose of
that act and leases are not within meaning of "acquisition" for purpose
of the 1959 Act.
This letter is in response to the request dated September 16, 1985,
signed by you and Senator Lloyd Bentsen, Ranking Minority Member,
seeking clarification of the authority of the General Services
Administration (GSA) to repair and alter leased premises in light of the
Public Buildings Act of 1959 (1959 Act), as amended, 40 U.S.C. Sections
601-616 (1982) (the source of GSA's authority to repair and alter public
buildings) as well as other provisions of law. During a meeting held
prior to receipt of your formal submission, members of the committee
staff indicated to representatives of this Office concern over the
position taken by GSA that repairs and alterations to leased premises
were not covered by the prospectus approval procedure contained in the
1959 Act. As explained by the staff, it was GSA's opinion that leased
buildings were not public buildings within the scope of the 1959 Act.
The committee staff members also expressed concern with the position
taken by GSA that based upon section 322 of the Economy Act of 1932, as
amended, 40 U.S.C. Section 278a, it has authority independent of the
1959 Act to make repairs and alterations to leased premises. GSA's
position is based upon the decision of this Office appearing at 29 Comp.
Gen. 279 (1949). The committee staff expressed the view that 40 U.S.C.
Section 278a imposed a limitation on spending funds for repairs and
alterations to leased premises but that it did not constitute an
authorization to repair and alter leased premises. Consequently, we
were asked to review these specific issues (including reconsideration of
our decision in 29 Comp. Gen. 279, supra) as part of our response to
your inquiry.
As agreed to by members of the committee staff and in order to fully
respond to the issues raised, we requested and received a report on this
matter from the Administrator of General Services. His views were
considered during preparation of our response. For the reasons
explained in detail in the enclosed Appendix, we find that GSA does have
authority independent of the 1959 Act to alter and repair leased
premises. We therefore affirm our 1949 decision to that effect. As a
result GSA is not required to obtain prospectus approval for
appropriations in excess of $500,000 for alterations to leased premises
pursuant to section 7(a) of the 1959 Act.
Unless you publicly announce its contents earlier, we will not
distribute copies of this opinion until 30 days from its date.
The following discussion provides a historical review of the various
aspects of holdings by the Comptroller General (and his predecessor, the
Comptroller of the Treasury) concerning the authority of Government
officers to expend public funds for repairs and alterations to privately
owned property.
Generally, prior to 1932 it had been the position of the accounting
officers of the Government that permanent improvements to private
property (including leased premises) could not be made using public
funds /1/ unless made pursuant to stipulations in lease agreements that
the alterations, repairs or improvements were part of the consideration
under the lease. /2/ The reasoning was that to permit the improvements
would constitute a gratuity to the owner which Government officials are
not authorized to make in the absence of statutory authority. /3/ While
this would be the case in situations where the Government derived no
benefit from paying for the improvements in question, it was also
realized that in many instances there was a benefit to the Government as
a result of making permanent improvements to private property. It was
therefore recognized that the prohibition was one of public policy, not
statutory prohibition, so that in appropriate circumstances, alterations
to leased premises would be proper. /4/ Consequently, if agencies had
authority to lease property, they were considered to have authority to
make repairs or improvements thereto as part of the bargained-for
consideration under the lease.
Against this background, the Congress enacted section 322 of the
Economy Act of 1932, /5/ which provided in pertinent part that:
After June 30, 1932, no appropriation shall be obligated or expended
for the rent of any building or part of a building to be occupied for
Government purposes at a rental in excess of the per annum rate of 15
per centum of the fair market value of the rented premises at the date
of the lease under which the premises are to be occupied by the
Government nor for alterations, improvements, and repairs of the rented
premises in excess of 25 per centum of the amount of the rent for the
first year of the rental term, or for the rental term if less than one
year: * * * /6/
While admittedly the purpose of this provision was to limit the
amount the Government expended in repairs, alterations or improvements
to leased premises, it otherwise left unchanged the basic authority of
Government agencies to make permanent improvements to privately owned
property. It was identified in later decisions as being both a
limitation on agency authority to repair and improve leased premises and
an authorization to act up to the stated percentage limitations when
making repairs and improvements to leased premises. /7/ These decisions
did not conclude that the inherent authority of Government officers to
make permanent improvements to private property as part of the
bargained-for consideration of a lease was affected by the provisions.
/8/
Thereafter, when considering the scope of the Economy Act of 1932, we
held that the limitation on repairs, alterations and improvements
applied only to permanent improvements and not to temporary, removable
tenant's fixtures; /9/ that it did not apply to unimproved land; /10/
and that it applied only to alterations and repairs paid for directly by
the Government. /11/
Additionally, immediately following creation of GSA by section 103 of
the Federal Property and Administrative Services Act of 1949 (1949 Act),
as amended, 40 U.S.C. Section 753 (1982), the 1949 Act was amended by
addition of a new section 210, which provides as follows:
Sec. 210. (a) Whenever and to the extent that the Administrator has
been or hereafter may be authorized by any provision of law other than
this subsection to maintain, operate, and protect any building,
property, or grounds situated in or outside the District of Columbia,
including the construction, repair, preservation, demolition,
furnishing, and equipment thereof, he is authorized in the discharge of
the duties so conferred upon him --
(8) to repair, alter, and improve rented premises, without regard to
the 25 per centum limitation of section 322 of the Act of June 30, 1932
(47 Stat. 412), as amended, upon a determination by the Administrator
that by reason of circumstances set forth by the Administrator in such
determination the execution of such work, without reference to such
limitation, is advantageous to the Government in terms of economy,
efficiency, or national security. * * * (Italic supplied.) 40 U.S.C.
Section 490(a)(8) (1982).
We note that prior to June 30, 1949, the authority to acquire space
for use of Federal agencies (by construction, purchase or leasing) and
the responsibility for custody, control and management of
Government-owned or Government-leased space (with certain exceptions)
was vested in the Federal Works Agency (including its constituent
element, the Public Buildings Administration). /12/ Section 103 of the
1949 Act, as amended, 40 U.S.C. Section 753 (1982), transferred to the
Administrator of General Services all functions of the Federal Works
Agency and all agencies thereof (including the Public Buildings
Administration) and all functions of the Public Works Administrator and
the Commissioner of Public Buildings.
We note that section 210(f) of the 1949 Act, as amended, 40 U.S.C.
Section 490(f) (1982), established the Federal Buildings Fund from which
the Congress annually appropriates funds for real property management.
These appropriations are made "available for necessary expenses of real
property management and related activities not otherwise provided for *
* * including operation, maintenance, and protection of federally-owned
and leased buildings." /13/
Thus, there is ample authority for the Administrator of General
Services to make alterations, repairs and improvements to private
property, including leased premises without regard to the limitations
contained in section 322 of the Economy Act of 1932. /14/
Members of the Committee staff have suggested that repairs and
alterations to leased premises are subject to prospectus approval under
section 7(a) of the 1959 Act on the grounds that alterations to all
public buildings are covered by section 7(a) and that leased premises
are public buildings under the 1959 Act. We have reviewed the 1959 Act
and relevant amendments to the 1959 Act as well as the legislative
histories of these laws but do not find support for this position. Our
review persuades us that repairs and alterations to leased premises are
not subject to prospectus approval under section 7(a) of the 1959 Act.
Section 7(a) of the 1959 Act, as initially enacted provided:
In order to insure the equitable distribution of public buildings
throughout the United States with due regard for the comparative urgency
of need for such buildings, except as provided in section 4, no
appropriation shall be made to construct any public building or to
acquire any building to be used as a public building involving an
expenditure in excess of $100,000, and no appropriation shall be made to
alter any public building involving an expenditure in excess of
$200,000, if such construction, alteration, or acquisition has not been
approved by resolutions adopted by the Committee on Public Works of the
Senate and House of Representatives, respectively. /15/ (Italic
supplied.)
Meaning of Acquisition
Section 13 of the 1959 Act, which provides definitions for many of
the words or terms used in that Act, does not include a definition for
the word "acquire." Section 3 of the 1959 Act, provides that:
The Administrator is authorized to acquire, by purchase,
condemnation, donation, exchange, or otherwise, any building and its
site which he determines to be necessary to carry out his duties under
this Act. /16/
The report of the House Committee on Public Works explains the
purpose of this provision as follows:
The third section authorizes the Administrator to acquire any
building and its site which he determines to be necessary to carry out
his duties under the bill. The Administrator is authorized to acquire
any such building by purchase, condemnation, donation, exchange or any
other fashion which would result in the United States becoming the owner
of the property. H.R. Rep. No. 557, 86th Cong., 1st Sess., 7 (1959).
(Italic supplied.)
A statement in the Senate Committee on Public Works report
accompanying the bill which ultimately became the 1959 Act also suggests
the finding that building acquisitions under section 3 of the 1959 Act
did not include acquisition through leasing. It follows that prospectus
approvals under section 7 of the 1959 Act, required in connection with
the acquisition of public buildings, likewise did not include proposed
acquisitions by leasing since the same terms or words used in different
sections of the same act should be construed consistently unless there
is clear legislative intent to the contrary.
Meaning of Public Building
On the question of whether the term "public building" as used in the
1959 Act should be interpreted as including leased space, we note that
there is no rule governing whether a leased building should be
considered to be a "public building" in construing that term in any
given statute. It is not a word of art.
While section 13(1) of the 1959 Act, 40 U.S.C. Section 612 (1982)
defines the term "public building," /17/ it does not mention whether
leased buildings are included within its scope. However, the
legislative history suggests that leased space was not intended to be
included. For example, the Senate report on the bill which ultimately
became the 1959 Act stated as follows concerning section 13:
This section defines seven terms which are used throughout the bill
in order to insure that they will have the same meaning throughout the
bill. One of the most important of the defined terms is that of "public
buildings." The definition of this term is substantially that which the
Congress has established in the Public Buildings Act of 1926 and in the
various acts which amend it and which supplement it. The definition is
explicit in stating those buildings which are included within the scope
of the bill, as well as those which are excluded. It is limited to
those types and classes of buildings which historically have been the
responsibility of the Administrator and his predecessors in function.
Further, flexibility in coverage is allowed by permitting the President
to include or exclude buildings or construction projects which he deems
to be justified in the public interest except that he may not bring a
specifically excluded type of building under the law." S. Rep. No. 694,
86th Cong., 1st Sess., 8 (1959).
Since the Public Buildings Act of 1926, as amended, was concerned
with the construction or purchases, as opposed to the leasing, of
buildings by the Government, the Senate report supports an
interpretation of the term "public buildings" which would not include
those acquired by lease. In addition, the reports of the House and
Senate Public Works Committees accompanying the 1959 Act focus their
attention upon a historical analysis of laws relating to acquisition of
ownership interest by the Government when speaking of public buildings.
See S. Rep. No. 694, 86th Cong., 1st Sess., 1-3 (1959) and H.R. Rep. No.
557, 86th Cong., 1st Sess., 3-7 (1959). Furthermore, a reading of the
law as passed in 1959 shows the term "public building" is generally used
in conjunction with the words construction or acquisition, but not
leasing. As we have already indicated, the term "acquire" when used in
the 1959 Act does not include acquiring buildings by leasing.
Finally, section 16 of the 1959 Act, as amended, 40 U.S.C. Section
615, provides:
Nothing in this Act shall be construed to limit or repeal --
(1) existing authorizations for the leasing of buildings by and for
the use of the General Services Administration * * *.
This provision further demonstrates that the prospectus approval
provision of the 1959 Act, when enacted, did not apply to leased
buildings.
Effect of 1972 Amendment to section 7(a) of 1959 Act
The Public Buildings Amendments of 1972 amended the prospectus
approval requirement of section 7(a) of the 1959 Act to read as follows:
In order to insure the equitable distribution of public buildings
throughout the United States with due regard for the comparative urgency
of need for such buildings, except as provided in section 4, no
appropriation shall be made to construct, alter, purchase, or to acquire
any building to be used as a public building which involves a total
expenditure in excess of $500,000 if such construction, alteration,
purchase, or acquisition has not been approved by resolutions adopted by
the Committee on Public Works of the Senate and House of
Representatives, respectively. No appropriation shall be made to lease
any space at an average annual rental in excess of $500,000 for use for
public purposes if such lease has not been approved by resolutions
adopted by the Committee on Public Works of the Senate and House of
Representatives, respectfully. 40 U.S.C. Section 606(a) (1982).
While section 7(a) was thus changed, no change was made to section 3
to include leasing within the ambit of acquisitions authorized by that
section or to section 13 to specifically include it within the
definition of public buildings.
The amendment quoted above expressly added a separate requirement for
prospectus approval for appropriations made to "lease any space at an
average annual rental in excess of $500,000 for use for public purposes"
rather than including leasing within the first prohibition even though
the first prohibition also was amended to require prospectus approval
prior to appropriations made to "construct, alter, purchase, or to
acquire any building to be used as a public building." In our view, this
demonstrates an intent to distinguish between the use of the term
"public buildings" and the use of the phrase "space for use for public
purposes" in the two prospectus approval requirements. In summary, we
have found that the term, "public buildings", did not include leased
property prior to the 1972 amendments for purposes of the 1959 Act, and
the 1972 amendment to section 7 of the 1959 Act did nothing to change
this. Consequently, since the requirement for prospectus approval for
alterations in excess of $500,000 applies only to alterations to public
buildings, we agree with GSA that it is not required to obtain
prospectus approval of alterations to leased premises.
(1) 5 Comp. Gen. 696 (1926); 5 Comp. Gen. 366 (1925); 2 Comp. Gen.
606 (1923); 6 Comp. Dec. 142 (1899); and, 5 Comp. Dec. 478 (1899).
(2) A-33513, Oct. 10, 1930; 5 Comp. Gen. 696 (1926); 5 Comp. Gen.
366 (1925); 2 Comp. Gen. 606 (1923); 6 Comp. Dec. 943 (1900); 6 Comp.
Dec. 142, 146 (1899); 6 Comp. Dec. 135 (1899); and 3 Comp. Dec. 196
(1896). See 18 Comp. Dec. 70 (1911) holding that the Government would
not be liable for the expenses of permanent improvements or repairs and
alterations to rented buildings unless provided for in the lease.
(3) 6 Comp. Dec. 943, 944 (1900) and 6 Comp. Dec. 135, 141 (1899).
Decisions by the Comptroller General supporting this proposition were
all found to be made since 1932. See, for example, 53 Comp. Gen. 351,
352 (1973); 42 Comp. Gen. 480 (1963); 39 Comp. Gen. 304, 306 (1959);
38 Comp. Gen. 143 (1958); and 35 Comp. Gen. 715 (1956).
(4) B-198629, July 28, 1980; B-187482, Feb. 17, 1977; 55 Comp. Gen.
872 (1976); 53 Comp. Gen. 351 (1973); 47 Comp. Gen. 61 (1967); 46
Comp. Gen. 25 (1966); and 42 Comp. Gen. 480 (1963).
(5) Act of June 30, 1932, ch. 314, 47 Stat. 412, 40 U.S.C. Section
278a (1940).
(6) This provision was intended to address the problem caused by
agencies requesting and receiving extensive repairs to quarters that
were intended for agency occupation only temporarily, pending
construction of public buildings. S. Rep. No. 756, 72d Cong., 1st
Sess., accompanying the Legislative Branch Appropriation Bill, 1933
(Economy Act), 15 (1932).
(7) 53 Comp. Gen. 317 (1973); 42 Comp. Gen. 480 (1963); 29 Comp.
Gen. 279 (1949); 21 Comp. Gen. 906 (1942); and B-198629, July 28,
1980.
(8) See 27 Comp. Gen. 389 (1948) explaining that this provision was
intended to serve as a limitation on prior authority.
(9) 30 Comp. Gen. 76 (1950); 29 Comp. Gen. 279 (1949); 20 Comp.
Gen. 105 (1940); 18 Comp. Gen. 144 (1938); B-71640, Dec. 30, 1947;
and B-50694, Aug. 2, 1945.
(10) 38 Comp. Gen. 143 (1958) and B-126950, March 12, 1956.
(11) 59 Comp. Gen. 658 (1980).
(12) 40 U.S.C. Sections 1, 8-13, 14, 15-19, 36, 37a, 285, 304a-304e,
341-348 (1946 and Supp. III 1949).
(13) See for example, 1986 Treasury, Postal Service and General
Government Appropriation Act for 1986 (H.R. 3036) as adopted by section
101(h) of the Joint Resolution making further continuing appropriations
for the fiscal year 1986, Pub. L. No. 99-109, December 19, 1985, 99
Stat. 1291 and the 1985 Treasury, Postal Service and General Government
Appropriation Act for 1985 (H.R. 5798) as adopted by section 101(j) of
the Joint Resolution making continuing appropriations for the fiscal
year 1985, Public Law 99-473, October 12, 1984, 98 Stat. 1963.
(14) The limitation on annual rental not exceeding 15 per centum of
the fair market value of the premises at the time of the lease was
permanently suspended in 1983. See our decision to the Federal Aviation
Administration -- Limits on Rent Payments, B-217884, Feb. 18, 1986, 65
Comp. Gen. 302.
(15) Pub. L. No. 86-249, Section 7(a), September 9, 1959, 73 Stat.
480, 40 U.S.C. Section 606(a) (1964).
(16) 40 U.S.C. Section 602 (1982).
(17) 40 U.S.C. Section 612(1) provides:
As used in this chapter --
(1) The term "public building" means any building, whether for
single or multitenant occupancy, its grounds, approaches, and
appurtenances, which is generally suitable for office or storage
space or both for the use of one or more Federal agencies or mixed
ownership corporations, and shall include: (i) Federal office
buildings, (ii) post office, (iii) customhouses, (iv) courthouses,
(v) appraisers stores, (vi) border inspection facilities, (vii)
warehouses, (viii) record centers, (ix) relocation facilities, and
(x) similar Federal facilities, and (xi) any other buildings or
construction projects the inclusion of which the President may
deem, from time to time hereafter, to be justified in the public
interest; * * *.
B-221506, 65 Comp. Gen. 719
Matter of: Entitlement to Contract Payment -- Department of the Air
Force, July 14, 1986
A surety called upon to answer for its principal's default is
subrogated to any funds due or to become due under the contract and this
subrogation right relates back to the date of the bond. Therefore, a
performance bond surety which completed contract performance after the
contractor's default, has priority to proceeds of Armed Services Board
of Contract Appeals award over the prime contractor and the contractor's
assignee bank.
On September 15, 1985, the Armed Services Board of Contract Appeals
(ASBCA) ruled that Western Mechanical Contractors, Inc., and Ben Matto
(joint venture) (Western Mechanical or contractor) was entitled to
payments totaling $15,915, plus interest, under contract number
F38601-79-C-0010 with the Department of the Air Force. The contracting
officer at Shaw Air Force Base requested our decision on whether the
award should be paid to the contractor, to the contractor's surety, or
to an assignee bank. In our opinion, the surety should receive the
payment.
Western Mechanical was awarded the above-referenced contract in June
1977 for housing renovation at Shaw Air Force Base. On May 8, 1981, its
rights to proceed were terminated under the authority of General
Provision Number 5 of the contract entitled "Termination for
Default-Damages for Delay-Time Extension." Nearly a year after its
default and termination, on May 2, 1982, Western Mechanical executed an
assignment of the monies due it under the contract to the Allied
Lakewood Bank of Dallas.
Following termination, the surety on the contractor's performance
bond, the Aetna Insurance Company, completed the project. However, for
reasons not clear from the record, Aetna would not enter into the
customary "takeover" agreement with the Air Force. /1/ For this reason,
the Air Force decided to make no payments to Aetna during the time the
contract work was being completed, although Aetna had sent in several
invoices during that time. The Air Force accepted the last unit of work
in September 1982. The contracting officer, uncertain as to who was
entitled to the contract funds, refused to release the final contract
payment until Western Mechanical, Aetna, and the Allied Lakewood Bank
came to an agreement as to its disbursement.
Eventually, the Air Force paid most of the remaining contract funds
to Aetna pursuant to a joint letter to the Air Force Contracting
Division at Shaw AFB, dated January 12, 1984. The amount of this
payment was far less than the actual expenses Aetna's follow-on
contractor incurred in completing the project. The Air Force withheld
$5,515 from the payment because of defective lighting work which Western
Mechanical had performed prior to its termination. It also withheld an
amount assessed for liquidated damages because of late completion of
project units. The letter, which was signed by representatives of the
contractor, Aetna, and the assignee bank, stated:
Each of us does hereby request and direct that all remaining contract
funds * * * should be paid to Aetna Insurance Company * * *.
Each of the undersigned parties does concur in this request and
does assure you that it will make no claim against the Department
of the Air Force or any other government entity or representative
for misapplication or failure to pay these particular contract
funds.
After Aetna took over performance of the contract, Western Mechanical
appealed its default termination to the ASBCA. The Board denied Western
Mechanical's appeal of termination for default. The Board did rule,
however, that the contractor was entitled to recover $15,915, plus
interest as provided in section 12 of the Contract Disputes Act of 1978,
41 U.S.C. Section 611 (1982). A portion of the award, $5,515,
represented the amount which the Air Force had withheld from the final
contract payment because of the defective lighting work. The Government
conceded before the Board that the withheld amount was due because the
follow-on contractor had corrected the lighting defects when it took
over performance of the contract. The remaining $10,400 represented
liquidated damages which the contracting officer assessed and withheld
from the final contract payment but which exceeded the amount of
liquidated damages to which the Government was entitled under the
contract.
Apparently, all of the signatories of the joint letter of January 12,
1984, claim the ASBCA award. The contracting officer has attempted to
have them agree on the payment of the award, but has been unable to do
so. Consequently, he requested this decision on which of them -- the
contractor, the surety, or the assignee -- is entitled to payment.
Aetna is entitled to the proceeds of the Board's award because, as
performance surety, it has priority over the prime contractor and over
the assignee bank. Also, as explained below, the joint letter agreement
authorizes the Government to distribute the award proceeds to Aetna.
The courts have held consistently that a surety called upon to answer
for its principal's default is subrogated to any funds due or to become
due under the contract, and this subrogation right relates back to the
date of the bond. American Fidelity Co. v. National Bank of Evansville,
105 U.S. App. D.C. 312, 266 F.2d 910 (1959). The courts have
specifically applied this principle so as to allow a surety to collect
contract funds over a defaulted prime contractor. National Surety Corp.
v. United States, 319 F. Supp. 45 (N.D. Ala. 1970). Numerous court
decisions have held under this rule that the rights of a surety to
contract funds are also superior to those of the contractor's assignee.
E.g., Royal Indemnity Company v. United States and Jersey State Bank,
371 F.2d 462, 464 (Ct. Cl. 1967) and cases cited therein; National
Surety Corp. v. United States, 133 F. Supp. 381, 383; 132 Ct. Cl. 724,
727 (1955), cert. denied sub. nom. First National Bank in Houston v.
United States, 350 U.S. 902. This principle has been applied where,
similar to this case, the funds in dispute are derived from an award by
an agency board of contract appeals made to a prime contractor on its
claim for a rebate of liquidated damages assessed by the Government. In
re Cummins Const. Corp., 81 F. Supp. 193 (D. Md. 1948).
Furthermore, the decisions of this Office consistently apply the
rule, in accord with the court decisions cited above, that a surety
answering for a defaulted contractor has priority over the contractor
and assignee bank to retained contract funds. E.g., 64 Comp. Gen. 763
(1985); 58 Comp. Gen. 295 (1979). This rule clearly applies in this
case so as to entitle Aetna to recover the ASBCA award proceeds over
Western Mechanical and the Allied Lakewood Bank since as surety it was
called upon to perform under its performance bond in the manner
discussed above.
Moreover, this conclusion is reinforced by the jointly-signed January
1984 letter which provides that "all remaining contract funds * * *
should be paid to Aetna Insurance Company * * *." As discussed above,
both items which comprise the award -- excess liquidated damages
assessed and the Air Force's claim amount for corrections for defective
lighting -- would have been included in those "remaining contract funds"
if the Government had not erroneously withheld them at the time it made
the final contract payment. Accordingly, we see no reason why these
funds should not be viewed as encompassed by the January 1984 agreement.
(1) While the presence or absence of a formal takeover agreement may
be important in certain situations -- see, e.g., 65 Comp. Gen. 29 (1985)
-- it is not relevant to this decision.
B-222317, 65 Comp. Gen. 715
Matter of: Sperry Corporation, July 9, 1986
Agency issued a stop-work order and reopened negotiations for a
second round of best and final offers where, shortly after award, agency
discovered that it had incorrectly advised one offeror that its
alternate initial proposal was technically unacceptable, thereby
precluding a best and final offer submission, when, in fact, the
proposal had been found technically acceptable.
Where awardee's best and final offer price has been disclosed, to
eliminate unfair advantage under recompetition, agency may require other
offerors to agree to similar disclosure.
Disclosure of offerors' proposal information required by agency to
permit recompetition of improperly awarded contract must be
substantially similar, but need not be identical.
Sperry Corporation (Sperry) protests the reopening of negotiations
under request for proposals (RFP) No. 00244-85-R-0185 issued by the
Naval Supply Center, San Diego (Navy). The RFP is for an automated data
system to support the civilian personnel function on all Navy management
levels.
The Navy awarded the contract to Sperry on January 13, 1986, based on
best and final offers which had been received on January 3. However,
the Navy discovered that it had incorrectly advised another offeror,
System Development Corporation (SDC), that its alternate initial
proposal was technically unacceptable. Accordingly, the Navy determined
that the award was improper, issued a stop-work order to Sperry, and
invited a second round of best and final offers from all offerors.
Sperry asserts that the award was not improper and that the Navy's
action has created a prohibited auction. Sperry requests that the
stop-work order be rescinded and that performance commence under the
initial award.
We deny the protest as we find that the Navy took appropriate action
to remedy an improper award.
In response to the RFP, four companies submitted initial proposals,
three of which, including SDC, also submitted alternate proposals. The
SDC alternate proposal included, among other items, model CI-300 and
model CI-600TC Itoh Company, Inc., line printers. The Navy technical
evaluator found that both SDC proposals were technically acceptable.
The Sperry proposal, which offered the same line printers, was found
technically acceptable. The offerors were notified by letter dated
November 27, 1985, to submit best and final offers. However, due to an
administrative error, the letter sent to SDC incorrectly advised SDC
that its alternate proposal was not acceptable.
In preparation for SDC's requested debriefing, the error was
discovered. The Navy determined that since award has been made to
Sperry for the same equipment proposed by SDC, which the Navy had
erroneously advised SDC was technically unacceptable, a second round of
best and final offers was necessary. Since award had been made only 1
week previously, and performance had barely commenced, the Navy issued a
stop-work order pending the outcome of the recompetition. In addition,
because Sperry's total contract price and total option prices had been
disclosed, each other offeror agreed to disclosure of its total prices.
Requests for a second round of best and final offers were mailed on
March 4 with an April 7 closing date.
Sperry takes the position that while SDC may have been prejudiced by
the Navy's erroneous notification, it was incumbent on SDC to pursue the
matter at the time of the erroneous notice, and that the award to Sperry
was not improper because there was no showing that, absent the error,
SDC would have been awarded a contract. Accordingly, Sperry argues that
the appropriate remedy is to award proposal preparation costs to SDC and
allow the Sperry award to stand.
SDC states that upon being advised of the unacceptability of its
alternate proposal, it contacted the Navy to request the basis for this
determination, but was advised that this information could not be
provided until a debriefing. The Navy concurs in this sequence of
events and has provided a copy of a file memorandum dated December 2,
1985, summarizing the content of a telephone conversation between the
Navy contract negotiator and the SDC contract manager. This memo
indicates that in response to SDC's inquiry as to why its alternate
proposal was found unacceptable, the Navy advised that this information
was properly the subject of the postaward debriefing. Thus, Sperry's
allegation that SDC failed to pursue the matter is factually incorrect.
The Navy, citing United States Testing Co., Inc., B-205450, June 18,
1982, 82-1 C.P.D. Paragraph 604, argues that since the award to Sperry
was clearly improper, and the impropriety was ascertained almost
immediately after award, the deficiency was one which it was required to
correct. The Navy states that the action it took is in accord with our
Office's decisions such as Honeywell Information Systems, Inc., 56 Comp.
Gen. 505 (1977), 77-1 C.P.D. Paragraph 256 and Woodward Assocs., Inc.;
Monterey Technology, Inc., B-216714, B-216714.2, Mar. 5, 1985, 85-1
C.P.D. Paragraph 274. In these decisions, we held that where an
improper award has been made, termination and recompetition of a
negotiated contract is appropriate even where there has been price
disclosure regarding the awardee's offer. These cases also permit the
agency to require exposure of all prices when it is necessary, as here,
to take proper corrective action. Such disclosure was required by the
Navy in this case, and was agreed to by the offerors.
Sperry contends that since this approach creates a prohibited
auction, it is limited to situations in which award has been made to a
technically unacceptable or not the lowest-priced offeror, and it is
clear that the contract should otherwise have been awarded to the
protester. Sperry cites Delta Data Systems Corporation v. Webster, 744
F.2d 197, 205 (D.C. Cir. 1984), for the proposition that an essential
requirement of overturning any award is a clear showing that but for the
government noncompliance with regulations the protester would have
received the award. However, the Delta Data case deals with the
propriety of a court ordering an award to a protester under the original
solicitation. It does not address either the fact situation or remedy
at issue here, which concerns corrective action taken by the procuring
agency.
In our prior cases, we have considered the appropriateness of taking
remedial action in terms of our traditional consideration of a number of
factors, including the seriousness of the procurement deficiency, the
degree of prejudice to other offerors or the integrity of the
competitive procurement system, the good faith of the parties, the
extent of performance, the cost to the government, the urgency of the
procurement, and the impact on the user agency's mission. In our view,
where, as here, an offeror was prevented from competing because of
agency action on the basis of the equipment which was substantially the
same as the equipment for which award was made, this deficiency is
sufficiently serious and prejudicial to warrant the remedial action
taken by the Navy.
Sperry asserts that the auction techniques invoked here are
prohibited except for very exceptional situations. While the Federal
Acquisition Regulation, 48 C.F.R. Section 15.610(d)(3) (1984), does
proscribe the use of auction techniques, we interpret this to apply to
the negotiation tactic of indicating one offeror's price to another
offeror during negotiations. We have held that where reopening of
negotiations is properly required, notwithstanding the disclosure of an
offeror's proposal, this does not constitute either improper technical
leveling or an improper auction. Youth Development Assocs., B-216801,
Feb. 1, 1985, 85-1 C.P.D. Paragraph 126.
In addition, there is nothing inherently illegal in the conduct of an
auction in a negotiated procurement. Rather, the possibility that a
contract may not be awarded based on true competition on an equal basis
has a more harmful effect on the integrity of the competitive
procurement system than the fear of an auction. Honeywell Information
Systems, Inc., 56 Comp. Gen. at 512, supra; Harris Corp., B-204827,
Mar. 23, 1982, 82-1 C.P.D. Paragraph 274. The statutory requirements
for competition take primacy over the regulatory prohibitions of auction
techniques. PRC Information Sciences Co., 56 Comp. Gen. 768, 783
(1977), 77-2 C.P.D. Paragraph 11. Moreover, the Navy here made a
particular effort to equalize the competition by requiring price
disclosure by all offerors.
Sperry also argues that the approach taken here is unfair because the
information disclosed about its offer was greater than the information
about the SDC offer. Sperry points out that while its best and final
offer pricing was disclosed, there is no such disclosure provided for
SDC's best and final offer on its alternate proposal. Honeywell
Information Systems, Inc., 56 Comp. Gen. 505, supra, requires the
disclosure of substantially comparable information, not of identical
information. There was no best and final offer price for SDC's
alternate proposal that could be disclosed because SDC did not submit a
best and final offer on its alternate proposal when it was advised by
the Navy that the proposal was technically unacceptable. The Navy,
however, did disclose SDC's initial offer prices for its alternate
proposal. Under the circumstances, the Navy has made a substantially
comparable disclosure; it can not be expected to disclose information
that does not exist.
Sperry's final argument regarding the inequity of the remedy concerns
the possibility that information regarding the configuration of its
system may have become available to SDC, while Sperry was not provided
with similar information regarding SDC's proposal. This is based on the
fact that, after contract award, meetings occurred between Sperry
employees, government employees and representatives of certain
government contractors, none of which participated in the competition to
begin phasing in the Sperry equipment. These meetings, held with
Sperry's consent, included an oral and written explanation of the Sperry
system. According to the Navy, participants were cautioned against
unauthorized disclosures. The Navy has obtained affidavits from the 15
persons, other than Sperry representatives and government personnel,
which attest to their nondisclosure of the information provided at the
meetings. Sperry asserts that the meetings were open, that
nondisclosure was not required, and that no precautions were taken other
than use of a sign in sheet, which it believes may not have been signed
by late arrivals. We find that the Navy has provided reasonable
safeguards and assurance against the possibility of disclosure by having
obtained the affidavits of the recorded participants. There is also no
indication that any disclosure was other than incident to the conduct of
the implementation of the award, or that it was made available to SDC
personnel. Under the circumstances, we conclude that the disclosure the
Navy made was suitable, and that further disclosure of other offerors'
configuration based on the possibility that information regarding
Sperry's proposal may have been disseminated would be unwarranted.
Sperry has also requested that we review all the original proposals
and new best and final offers to determine whether they have been
affected by the release of Sperry's prices and the alleged release of
its configuration. We believe this exercise would be inappropriate.
The release of price information is required in this situation, and can
be expected to be taken into account by offerors. Regarding the alleged
configuration release, we note that award was made to the technically
acceptable offeror with the lowest evaluated price. Since SDC's initial
offer was found technically acceptable by the Navy, we do not believe
that SDC could have benefited by the type of technical leveling which
Sperry suggests may have been made possible as the result of the alleged
configuration disclosure.
The protest is denied.
B-221675, 65 Comp. Gen. 710
Matter of: Debra R. Hammond -- Relocation Expense Entitlements, July
7, 1986
An employee, transferred from Pullman, Washington, to Fairbanks,
Alaska, was authorized to ship a privately owned vehicle (POV). The
agency disallowed the POV claim based on the rationale that the employee
and her family used another POV as their approved mode of relocation
travel, and thus exhausted their rights under 5 U.S.C. 5727, which
precludes the shipment of more than one POV. On appeal, the claim is
allowed. Relocation travel and POV shipment entitlements are separate
and distinct statutory rights. The use of a POV as an approved mode of
travel, in lieu of other approved modes of travel, is reimbursable on a
mileage basis under authority of 5 U.S.C. 5724, and such use as a mode
of personal transportation does not diminish the employee's rights under
5 U.S.C. 5727 to ship a different POV when travel orders approve such
shipment. David J. Dossett, B-217691, July 31, 1985.
A transferred employee reclaims amount of disallowed portion of meals
and miscellaneous expenses incurred while occupying temporary quarters.
The agency denied the claim based on its own internal guidelines which
provide that such expenses up to 49 percent of the daily allowable
maximum rate of per diem are deemed reasonable, but any amount in excess
of that percentage was to be summarily disallowed regardless of unusual
circumstances. Further agency consideration of the claim is required,
since all evaluations of reasonableness must be made based on the facts
in each case. While an agency may establish as a guideline that a
percentage of such daily maximum is reasonable on a "less than" basis,
the use of that guideline to summarily bar reimbursement of any amount
in excess of that percentage without permitting the employee to supply
evidence of its reasonableness is arbitrary and not consistent with the
Federal Travel Regulations and decisions of this Office. The claim may
be allowed if evidence of unusual circumstances is presented.
This decision is in response to a request from the Office of the
Regional Director, Region X, Department of Health and Human Services.
It concerns the entitlement of an employee of the Social Security
Administration to be reimbursed certain travel and relocation expenses
incident to a permanent change-of-station transfer in 1984. We conclude
that the employee is entitled to additional reimbursement for the
following reasons.
The employee, Mrs. Debra R. Hammond, was transferred from Pullman,
Washington, to Fairbanks, Alaska, by travel orders issued July 5, 1984.
Those orders authorized travel, transportation and travel per diem for
her and her family (husband and 1 dependent child); transportation of
their household goods, including temporary storage; shipment of a
privately owned vehicle (POV); temporary quarters subsistence expense
(TQSE), not to exceed 60 days; real estate transaction expenses and
miscellaneous expense reimbursement. It was further provided that Mrs.
Hammond and her child would travel by air and her husband would travel
to her new duty station by POV.
The agency amended the travel orders on the same date, and approved a
change in the mode of travel to permit the employee and her child to
accompany the employee's husband by POV. The record shows that the
employee shipped one POV and used another POV as her mode of relocation
travel. Following completion of her transfer and submission of her
travel vouchers, Mrs. Hammond's TQSE claim as well as the expenses
claimed for travel, in combination with the cost of POV shipment, were
questioned.
By Voucher Adjustment Notice dated July 2, 1985, Mrs. Hammond's
official travel mileage was recalculated and reduced; reimbursement for
the POV shipment costs was suspended due to lack of a verifiable
receipt; the laundry and dry cleaning charges were suspended due to
lack of 2 receipts; and her TQSE claim was reduced.
Following reclaim, Mrs. Hammond's TQSE claim for additional amounts
was again denied, and her laundry and dry cleaning expense claim was
partially allowed. While the POV shipment claim had initially only been
suspended due to lack of a receipt, it was disallowed in its entirety on
reclaim. The basis for that disallowance was the assertion that since
Mrs. Hammond and her family had used a POV as their mode of relocation
travel, such POV use was viewed as having exhausted her statutory
entitlement under 5 U.S.C. Section 5727 (1982) to transport a POV to an
overseas duty station incident to relocation.
Mrs. Hammond has appealed the POV shipment and TQSE determinations.
She asserts that her TQSE entitlement was initially incorrectly computed
since the family lodging cost was not included in the reimbursement
calculation. Additionally, she claims that her POV shipment cost should
be allowed since she only shipped one vehicle.
Transportation of a POV
We do not agree with the agency determination of nonentitlement as to
this item.
The entitlement to ship a POV at government expense and an employee's
entitlement to be reimbursed for relocation travel are separate and
distinct statutory rights. The law and regulations governing
reimbursement for employee relocation expenses are contained in 5 U.S.C.
Sections 5724 and 5724a (1982), and Part 2 of Chapter 2, Federal Travel
Regulations, FPMR 101-7 (FTR), incorp. by ref., 41 C.F.R. Section
101-7.003 (1985). Among the expenses authorized therein is the cost of
personal travel of an employee and his immediate family to the new duty
station.
Paragraph 2-2.3 of the FTR provides that the use of a POV in
connection with a permanent change-of-station transfer may be
authorized, with the authorized use of one or more POV's to be in lieu
of other approved modes of personal transportation. We stated in
decision Gary E. Pike, B-209727, July 12, 1983, at 5:
The trust of these provisions is to permit the employee and the
members of his immediate family to travel at government expense from his
old to his new duty station by such means as is authorized by the
employing agency, with such allowable costs not to exceed the costs of
travel by the usually traveled route from old station to new station by
the mode of travel authorized.
While none of the above-cited provision discusses the shipment of a
motor vehicle, 5 U.S.C. Section 5727 (1982) authorizes employees who are
transferred to and from posts of duty outside the continental United
States to ship one POV in addition to and independent or the expense of
personal travel of the employee and his immediate family. In the
present situation, the travel orders issued to Mrs. Hammond specifically
authorized the shipment of a POV. Additionally, they provided that
while she and her child would use commercial air transportation, her
husband would use a POV as his mode of travel. Those orders went on to
state as a limitation on the expense reimbursement associated with these
two entitlements:
* * * Total cost not to exceed that of mileage for one POV from
Lewiston to Seattle, cost of GBL shipment of auto from Seattle to
Fairbanks, airfare for employee & dependents from Seattle to Fairbanks &
per diem for employee & dependents for travel time from Lewiston to
Fairbanks as if traveled as above. (Italic supplied.)
As noted, the travel orders were amended to authorize a change in the
employee's and dependent child's mode of travel, to wit: "they will now
travel via POV with spouse." The above statement regarding the
limitation on travel cost reimbursement was restated. In addition, the
travel order was amended to increase the total cost of the relocation
move due to an increase in the estimated cost of shipping a POV.
In decision David J. Dossett, B-217691, July 31, 1985; also
involving a transfer between Alaska and the continental United States,
we said at 3:
Although the use of a second POV as an authorized mode of personal
transportation effectively resulted in the transportation of that
vehicle as though it was an otherwise properly transportable item * * *
(s)o long as its use for personal travel purposes is approved in lieu of
other modes of travel and transportation, and so used, reimbursement for
a second POV is authorized on a mileage basis at the rates prescribed in
FTR, para. 2-2.3b.
See also Gary E. Pike, above.
It is our view that under these travel orders Mrs. Hammond was
entitled to ship a POV and use another POV as her personal mode of
transportation. Therefore, she may be reimbursed the cost of having a
private contractor transport her first POV to Fairbanks, not to exceed
the estimated shipping cost of $1,416 specified in the travel orders.
Temporary Quarters Subsistence Expense
According to the itemized expense record prepared by Mrs. Hammond to
accompany her initial travel voucher, her TQSE claim for 60 days totaled
$10,208.05. Of that amount, $3,626.80 represented the cost incurred for
her and her family's lodging and $6,581.25 represented the cost of
subsistence and miscellaneous expenses. The agency's audit of the
voucher determined that the lodgings portion of the cost was reasonable,
and no adjustment was required. However, a significant adjustment was
made for the subsistence and miscellaneous expense portion claimed. We
do not agree that the basis for reduced entitlement is supported by
governing law and regulation.
The submission states that the maximum calculated per diem authorized
Mrs. Hammond and her immediate family for TQSE purposes in the
Fairbanks, Alaska area was $216.66 a day, subject to reduction with
passage of time, on an incremental basis. FTR, para. 2-5.4. The
submission goes on to state that the policy and practice of the agency
is that "reimbursement for meals and miscellaneous expenses ordinarily
should not exceed 49 percent of the maximum per diem for the locality."
Even though the 49 percent factor was recognized as a guideline, the
submission goes on to state that the agency computed the maximum daily
amount payable for meals and miscellaneous expenses based strictly on
the 49 percent factor, thus permitting reimbursement in the amount of
$106.16 a day for the first 30 days, and for the second 30 days, $79.62
a day.
We inquired as to the basis upon which the agency established that 51
percent of the maximum per diem must be reserved for lodging costs, and
only 49 percent is available for meals and miscellaneous expenses. We
were informed that the Regional Supplement to chapter 5-30 of the
Department of Health and Human Services Travel Manual, relating to
reasonableness of meals and miscellaneous claims while on actual and
necessary subsistence travel, provides, in part, in section X5-30-20:
A. * * * that the daily cost of meals and miscellaneous expenses
will be considered reasonable if they do not exceed 45% of the
proscribed daily maximum. Claims in which the cost for meals and
miscellaneous exceeds 45% may be allowed providing that the necessity
for the additional cost is adequately justified. In no case, however,
shall meals and miscellaneous costs in excess of 49% be allowed.
It is also stated in that supplement that such policy is based on a
decision by this Office, without specification, which ruled that the
lodging portion of a daily subsistence rate must constitute the majority
of the expense. We are not aware of any decision by this Office in
which we ruled that the lodging portion of a travel expense claim, or a
temporary quarters subsistence expense claim, must constitute the
majority of the expense claimed, or that the cost of the actual
subsistence and miscellaneous expense portion of such a claim may never
exceed 49 percent, or any other specific percentage.
Under 5 U.S.C. Section 5724a(a)(3), as amended, and implementing
regulations contained in Chapter 2, Part 5 of the FTR's, as amended in
part by GSA Bulletin FPMR A-40 (Supp. 10, Nov. 14, 1983), a transferred
employee may be reimbursed subsistence expenses for himself and his
immediate family, generally, for a period of up to 60 days while
occupying temporary quarters. These regulations authorize reimbursement
only for the actual subsistence expenses incurred, provided they are
incident to the occupancy of temporary quarters and are reasonable as to
amount. FTR para. 2-5.4a. It is the responsibility of the employing
agency, in the first instance, to review the employee's claim in terms
of amount spent daily for needs (FTR para. 2-5.4b), to determine whether
the subsistence expense claim is reasonable. In decision 52 Comp. Gen.
78 (1972), we hold that such evaluation of reasonableness must be made
on the basis of the facts in each case. In Jesse A. Burks, 55 Comp.
Gen. 1107 (1976), affirmed and amplified on reconsideration, 56 Comp.
Gen. 604 (1977), we held that where the agency has exercised that
responsibility, this Office generally will not substitute its judgment
for that of the agency, in the absence of evidence that the agency's
determination was clearly erroneous, arbitrary, or capricious.
In decision Harvey P. Wiley, B-218988, March 12, 1986, 65 Comp. Gen.
409, citing to decision Harry G. Bayne, 61 Comp. Gen. 13 (1981), we
approved as a reasonable exercise of agency discretion the establishment
of a guideline alerting employees that a certain percentage (in that
case 45 percent) of the statutory maximum rate of per diem for TQSE,
meals and miscellaneous expenses may be considered as reasonable. We
went on to state, however, that such a guideline could not operate as an
absolute bar to payment of additional amounts in any case where the
employee could justify the expenditure on the basis of unusual
circumstances, with the burden of proof being on the employee to
establish that the meals and miscellaneous expenses incurred in excess
of the stated percentage were reasonable.
In the present case, the agency guideline of 49 percent was applied
to Mrs. Hammond's claim as an absolute bar, without consideration of the
possibility that any of the claimed expenses in excess of that amount
may have been reasonable. Nor was she given the opportunity to supply
evidence which might demonstrate that any part of the subsistence
expenses claimed, which were in excess of 49 percent, were reasonable.
In view of the fact that an initial high maximum per diem rate of
$216.66 was established for the Fairbanks, Alaska, locality for the
employee, her spouse, and her dependent, it is not unrealistic to
suppose that over a long period (60 days), subsistence expenses in
excess of 50 percent of maximum per diem might prove to be reasonable.
As indicated above, an agency regulation that absolutely limits
certain types of otherwise reimbursable expenses, such as meals and
miscellaneous, to a percentage of the approved per diem rate is
arbitrary and not consistent with the FTR's and the decisions of this
Office. Therefore, the agency's policy should be revised to reflect the
fact that while payment will normally be limited to 49 percent of the
statutory maximum, amounts in excess of that figure may be paid if
adequate justification based on unusual circumstances is submitted by
the employee.
Accordingly, Mrs. Hammond is entitled to present evidence for agency
consideration that the subsistence expenses incurred which were in
excess of 49 percent of the maximum locality per diem for Fairbanks,
Alaska, are reasonable because of unusual circumstances. If such
evidence is presented and accepted by the agency, the claim may be paid
to the extent authorized by FTR para. 2-5.4, as amended.
B-219644.4, 65 Comp. Gen. 705
Matter of: Department of the Army -- Request for Reconsideration,
July 7, 1986
Determination by agency personnel conducting the evaluation of
proposals that protester had submitted an alternate proposal supports
conclusion that protester's proposal, as viewed in its entirely and as
reasonably interpreted, included offer of alternate system. Since the
contracting officer did not make award on the basis of initial proposals
and the alternate proposal was within the competitive range, the
requirement for meaningful discussions extended to the alternate
proposal.
The Department of the Army requests reconsideration of our decision
in San/Bar Corporation, B-219644.3, Feb. 21, 1986, 86-1 C.P.D. Paragraph
183. In that decision, we sustained in part the protest of the San/Bar
Corporation (San/Bar) against the award of a contract to a consortium of
Siemens A.G./AT&T Technology Group (Siemens/AT&T) under request for
proposals No. DAJA37-84-R-0430, issued by the Army for the supply and
installation of key telephone systems in the Federal Republic of
Germany. We affirm our prior decision.
In August 1984, the Army solicited offers for meeting the Army's
requirements over a base year and 2 option years for the supply and
installation of standard key telephone systems (block "A" items),
electronic key telephone systems (block "B" items), line/trunk
conditioning equipment (block "C" items) and inside cable distribution
systems (block "D" items) in Germany. The solicitation provided that
award would be made by block to the responsible offeror submitting the
low, technically acceptable offer for each block.
With regard to block "B" for electronic key telephone systems,
San/Bar, in addition to offering the ITT Telecom Products Corporation
(ITT) 3100 electronic key telephone system which was the subject of
San/Bar's block "B" protest, also offered the AT&T Horizon 32A system
and two other systems. Siemens/AT&T offered AT&T's Horizon and three
other systems under block "B," while a consortium of ITT/Standard
Electrik Lorenz (ITT/SEL) offered ITT's 3100 system.
While contracting officials, based upon the evaluation of the initial
proposals, included the ITT 3100 system among the electronic key
telephone systems which, overall, were technically acceptable, it is
apparent that they did so only with reservations. Among the problems
which they identified was the extent to which the ITT 3100 system met
the requirement of specification 2.19 that the required touch-tone-type
telephones be able to receive and transmit both rotary (dial) and
touch-tone signaling from central district offices.
San/Bar stated in its initial proposal that if the central office is
rotary, then it would be necessary to "provide commercially available
Tel-Touch to Pulse Converters" between the touch-tone telephones and the
central office. The Army's technical evaluation of the ITT 3100 system
indicated that the system would accept either touch-tone or rotary
signals, but not both at the same time without the provision of
additional equipment.
Although the Army informed ITT/SEL in questions submitted to that
firm in March 1985 of the Army's concern as to whether the ITT 3100
system satisfied specification 2.19, neither in the questions directed
to San/Bar in March 1985 nor in the subsequent two rounds of best and
final offers (BAFO's) did the Army inform San/Bar that its offer of the
ITT 3100 system was technically deficient in regard to specification
2.19 or otherwise.
In their evaluation of the initial BAFO submitted by San/Bar,
contracting officials described San/Bar's offer of the ITT 3100 system
as "questionable." In particular, they noted that:
(T)he BOM (bill of material) submitted for these optional equipments
do not include the DTMF trunk converters i.e., refer to ITT/SEL answer
to question 3g, Block B, concerning Salient Feature, 2.19. San/Bar can
be considered technically non-responsive with the alternate offer of
system 3100, because the BCM is not complete, or you can add the
additional costs for DTMF trunk converters to their price quotation
equivalent to the price increases submitted by ITT/SEL in their "Best &
Final." Whatever choice is adopted, San/Bar is still technically
acceptable in Block B with their Horizon submission.
The contracting officer determined that Siemens/AT&T's second BAFO
for block "B" offered an evaluated cost to the government of
$18,117,480.64 for the base and 2 option years. He found that ITT/SEL's
proposal for block "B," offering the ITT 3100 electronic key telephone
system, offered an evaluated cost of $18,325,105.55. Although the
Army's preliminary calculations indicated that the ITT 3100 system
proposed by San/Bar would cost approximately only $15.95 million, the
contracting officer instead evaluated San/Bar's proposal based upon the
$22,115,403.16 evaluated cost of its proposed Horizon system. As
explained in the agency memorandum of July 23, San-Bar's alternate
proposal -- for the ITT 3100 system -- was "deemed technically
nonresponsive, because the BOM (bill of material) as submitted was
substantially incomplete." In particular, the memorandum referred to the
agency's previously quoted evaluation of San/Bar's initial BAFO wherein
the bill of material was faulted for not including the touch-tone trunk
converters necessary to meet specification 2.19. Award was made to
Siemens/AT&T as the low, technically acceptable offeror for block "B."
In its subsequent protest to our Office, San/Bar questioned the award
for block "B," denying that the ITT 3100 electronic key telephone system
which it offered was technically deficient and arguing that, in any
case, the Army's failure to mention the purported deficiency during
discussions rendered the discussions inadequate.
We concluded in our decision that there was no reason to question the
reasonableness of the Army's conclusion that the ITT 3100 system which
San/Bar offered to supply at the proposal price did not satisfy all of
the specification requirements. We agreed, however, with San/Bar that
its failure to offer the additional equipment required to meet the
specifications was not such a deficiency as would justify the
elimination of San/Bar's offer of the ITT 3100 system from the
competitive range without discussions. In particular, we noted that the
agency undertook discussions -- including at least one question directed
at compliance with specification 2.19 -- with ITT/SEL in regards to its
proposed ITT 3100 system even though the technical evaluation of the
system indicated that additional clarification, modification or
equipment would be required to satisfy the Army's concerns as to
compliance with a number of the solicitation specifications, including
specification 2.19. Moreover, the Army's evaluation of San/Bar's
initial BAFO, as previously quoted, suggested that the agency's concerns
regarding specification 2.19 were readily susceptible of alleviation by
the simple addition of touch-tone trunk converters, as apparently
offered by ITT/SEL and mentioned by San/Bar. See Phoenix Safety
Associates, Ltd., B-216504, Dec. 4, 1984, 84-2 C.P.D. Paragraph 621
(where the contracting officer does not make award on the basis of the
initial proposals, he should conduct meaningful written or oral
discussions with all responsible offerors who submit proposals within
the competitive range); cf. Ultra Publicaciones, S.A., B-200676, Mar.
11, 1981, 81-1 C.P.D. Paragraph 190; (requirement for meaningful
discussions extends to alternate, acceptable proposals within the
competitive range); Minority Media Syndicate Inc.; North American
Precis Syndicate, Inc., B-200823, B-200823.2, Feb. 12, 1981, 81-1 C.P.D.
Paragraph 96. Accordingly, we sustained the protest with regard to
block "B" on the ground that the Army's failure to conduct meaningful
discussions with San/Bar concerning its proposed ITT 3100 system
deprived the protester of the opportunity accorded ITT/SEL of revising
its proposal for the ITT 3100 system and, thus, deprived the protester
of the opportunity for award.
In our prior decision, we recognized that the Army maintained that
San/Bar did not offer the ITT 3100 system with its initial proposal, but
instead only offered it with its first BAFO. Although the Army
acknowledged that San/Bar provided technical literature and price quotes
for the ITT 3100 system with its initial proposal, it pointed out that
San/Bar had stated that:
For the purpose of simplifying the process of issuing Delivery Orders
against a Basic Contract, San/Bar Corporation has prepared an optional
proposal for review and consideration . . . . This proposal is
submitted only as an option for the reviewing authorities and is in no
way affiliated with the original solicitation to which San/Bar
Corporation has responded.
We rejected the Army's contention, however, holding that:
The record considered as a whole, however, indicates not only that
San/Bar indeed offered the ITT 3100 system in its initial proposal, but
also that contracting officials recognized this fact. In its initial
technical proposal, San/Bar clearly stated that:
"The minimum salient technical capabilities for the Electronic
Key Telephone System (EKTS) requirements are satisfied through the
implementation of the systems listed below.
"San/Bar Corporation -- VISION 2000
ATT Technologies -- HORIZON 32A
ITT -- 3100L
Ericsson -- PRODIGY"
San/Bar next described each of the four telephone systems --
including the ITT 3100 system -- and then discussed how each
specification would be met by the systems. Moreover, we note that the
Army's own evaluation of initial proposals stated that San/Bar had
proposed the ITT 3100 system as an "ALTERNATE" proposal under block "B."
In its request for reconsideration, the Army states that our decision
and recommended remedy "all depend on your finding that the Army's
'contracting officials' recognized the existence of San/Bar's alternate
proposal of the ITT 3100 system." The Army, however, maintains that the
Army personnel who evaluated San/Bar's proposal and found that San/Bar
had offered the ITT 3100 system as an alternate lacked the authority to
ascertain the existence of an alternate proposal. The Army contends
that the contracting officer, which it describes as the only contracting
official "empowered to decide what constitutes a proposal," has
consistently viewed San/Bar's proposal as not including the ITT 3100
system. Moreover, the Army renews its argument that San/Bar's initial
proposal in fact did not include the ITT 3100 system. In support of
this argument, it cites the quotation previously relied upon by the Army
in this regard and also claims that San/Bar "did not list the ITT 3100
on its BOM (bill of material)" submitted to the agency. Further, the
Army questions our use of the phrase "(t)he record considered as a
whole," contending that only the actual proposal can be considered in
determining what an offeror has proposed.
The fundamental question which we considered in our prior decision,
however, was not whether the Army was bound by the conclusions of the
Army personnel conducting the technical evaluation of San-Bar's
proposal. Rather, the question was whether San/Bar's proposal, as
reasonably interpreted, offered the ITT 3100 system as an alternate for
consideration for award, cf. Arthur D. Little, Inc., B-213686, Aug. 3,
1984, 84-2 C.P.D. Paragraph 149, and, if so, whether the offer was
within the competitive range (thereby giving rise to an obligation to
conduct meaningful discussions concerning the system).
While a portion of San/Bar's initial proposal, when viewed by itself,
could be interpreted as offering the ITT 3100 system only as an option
for future consideration, we concluded that the only reasonable
interpretation of San/Bar's overall proposal was that the firm was
offering the ITT 3100 system as an alternate for consideration for
initial award. In the context of the entire proposal, the reference to
an "optional proposal" could best be understood as meaning an alternate
proposal. At a minimum, the contracting officer should have requested
clarification from San/Bar during the ensuing discussions.
We see nothing in the Army's latest submission to change our
conclusion that San/Bar was offering the ITT 3100 system as an alternate
for consideration for award. As previously indicated, San/Bar provided
technical literature and price quotations for the ITT 3100 system; it
stated that the block "B" technical requirements for the electronic key
telephone systems were satisfied through "implementation" of the ITT
3100 system, as well as through the Horizon and other systems; and the
firm described the offered systems -- including the ITT 3100 system --
and how they would meet the specifications.
Moreover, the Army's position overlooks the fact that San/Bar
submitted bills of material -- including prices -- for the ITT 3100
system with both its first and second BAFO's. This was recognized in
the Army's evaluation of San/Bar's first BAFO, wherein it was noted that
the "BOM (bill of material) for these optional equipments" did not
include the trunk converters needed to meet the requirements of
specification 2.19. The Army does not explain why San/Bar offered
prices for the ITT 3100 system if it was not offering to supply the
system.
In our prior decision, we recommended that the Army refrain from
exercising its options under the contract with Seimens/AT&T as they
relate to the 2 option years for block "B." In addition, we found
San/Bar to be entitled to recover the costs of filing and pursuing its
protest at GAO and of proposal preparation.
San/Bar requests that we clarify our recommendations. In particular,
it notes that the goods and services under the contract are to be
provided pursuant to delivery orders. It indicates that it views us as
recommending "that the option to issue further orders under Block 'B'
not be exercised until the requirements of that block are recompeted."
We disagree. San/Bar's proposed interpretation would prevent the
Army from acquiring electronic key telephone systems needed during the
base year but not yet ordered. Accordingly, our recommendation instead
was that the Army refrain from exercising the options for block "B" and
from issuing delivery orders in the option years. In making this
recommendation, we assumed that the delivery orders issued during the
base year will not significantly exceed the Army's estimated
requirements as set forth in the solicitation in the absence of urgent
and compelling circumstances requiring additional orders.
We decline to change our recommendation.
Our prior decision is affirmed.
B-221526.3 & .4, 65 Comp. Gen. 699
Matter of: T.V. Travel, Inc.; World Travel Advisors, Inc., July 3,
1986
Protest of agency reevaluation of proposals in response to General
Accounting Office (GAO) decisions which sustained protests on grounds
that three areas of evaluation were improper is denied where agency
reevaluation has not been shown to be unreasonable.
T.V. Travel, Inc., and World Travel Advisors, Inc., protest the
reevaluation of proposals by the General Services Administration (GSA)
under solicitation No. AT/TC 19791 for civilian agency travel management
services for the Atlanta, Georgia, metropolitan area. We deny the
protests.
This procurement has been the subject of three previous decisions of
our Office. GSA awarded the contract to a Scheduled Airline Ticket
Office (SATO) under this solicitation on February 8, 1985. In T.V.
Travel, Inc., et al., B-218198 et al., June 25, 1985, 85-1 C.P.D.
Paragraph 720, we dismissed the protests because we concluded our Office
had no jurisdiction over the selection.
We reversed this decision in T.V. Travel, Inc., et al. -- Request for
Reconsideration, B-218198.6 et al., Dec. 10, 1985, 65 Comp. Gen. 109,
85-2 C.P.D. Paragraph 640, and sustained the protests of T.V. Travel and
World Travel Advisors. The results of GSA's initial evaluation of these
proposals were:
Discussions were then conducted and best and final offers submitted.
In its initial selection statement, GSA stated that SATO improved its
proposal such that its score was higher than T.V. Travel's score. GSA
was unable to state SATO's final score, except to indicate that it was
higher than T.V. Travel's score, which apparently was unchanged after
best and final offers.
We found that the SATO's proposal was not properly evaluated by GSA
in three areas, those being: (1) the number of travel agents proposed;
(2) reconciliation of agencies' Diners Club accounts and (3) the
electronic transmission of summary reports. We recommended that GSA
reevaluate the proposals in the competitive range in these three areas
and determine which offeror is the highest ranked.
GSA requested reconsideration of the portion of this decision
regarding the number of travel agents. GSA did not contest the
remainder of this decision. In T.V. Travel, Inc., et al. --
Reconsideration, B-221526.2, Feb. 18, 1986, 65 Comp. Gen. 323, 86-1
C.P.D. Paragraph 171, we affirmed our previous decision.
Before this last decision was issued, GSA had acted upon the
recommendation in our December 10 decision. Instead of just
reevaluating the three designated areas of the proposals in the
competitive range, GSA reevaluated all aspects of the five proposals in
the competitive range using the identical rating plan as was used in the
initial evaluation. The reevaluation resulted in the following scores:
SATO .............................. 207 points
Corporate Travel International .... 201 points
T.V. Travel ....................... 200 points
World Travel Advisors ............. 191 points
Universal Travel .................. 172 points
GSA further notes that, following the initial technical evaluation,
site evaluations were conducted for each offeror in the competitive
range to verify information in the proposals prior to the SATO selection
in early 1985. GSA contends that the contracting officer, following
these site evaluations, was more impressed with the SATO than T.V.
Travel and World Travel Advisors because of its superior knowledge of
federal travel regulations, the competence of its staff and superior
qualifications. GSA states that, therefore, it found that the SATO was
still the highest evaluated offeror even after the reevaluation so it
planned to maintain its contract with the SATO. These protests
followed.
GSA contends that the protests should be dismissed because the
protesters are no longer interested parties under our Bid Protest
Regulations to protest this selection, since their technical scores
after reevaluation are lower than the score of Corporate Travel
International, the second ranked offeror whose rating has not been
protested Corporate Travel International has expressed no interest in
this protest.
We will not dismiss the protests on this basis, however, since at
least one of the protesters was apparently the highest or second highest
rated offeror before GSA completely reevaluated the proposals in
response to our decision sustaining the protests and because the
protesters contest the reevaluation in its entirety.
The protesters contend that we should not consider GSA's report on
the protests because they did not receive a copy of the report within 25
days of filing of the protests. However, our Office did receive the
agency report within the 25 days provided in our Bid Protest
Regulations, 4 C.F.R. Section 21.3(c) (1986). Since the protesters were
provided 7 days from the date they received the report to submit their
comments, they were not prejudiced by the Navy's failure to provide them
with a copy of the report within 25 days. Under the circumstances, we
will consider GSA's report in reaching our decision. Delcor
International, B-221230, Feb. 13, 1986, 86-1 C.P.D. Paragraph 160.
The protests concern all aspects of the reevaluation. The standard
of our review of an agency's technical proposal evaluation is whether
proposals were evaluated reasonably and in accord with the solicitation
criteria. Moorman Travel Service Inc. -- Request for Reconsideration,
B-219728.2, Dec. 10, 1985, 85-2 C.P.D. Paragraph 643. If so, and if
there are no other violations of the procurement statutes and
regulations, an award is not legally objectionable. P-III Associates,
B-213856, B-213856.2, July 31, 1984, 84-2 C.P.D. Paragraph 136.
First, the protesters have made a number of allegations related to
the propriety of the reevaluation because the copies of the summary
score sheets of the reevaluation that they were supplied show that SATO
only received 201 points and Corporate Travel International 207 points.
GSA reports that this discrepancy was caused by a copying error in
preparing the report on the protests. Our review indicates that SATO
and Corporate Travel International were in fact awarded 207 and 201
points, respectively.
The protesters contend that the contracting officer was unduly
influenced in the reevaluation by her superior's opinion that the SATO
should not be replaced. GSA has supplied an affidavit of the
contracting officer, who denies that this official has ever talked to
her about this selection much less exercised any undue or improper
influence. Nothing in the record contradicts the contracting officer's
statement.
The protesters also contend that since the SATO will shortly change
its joint venture status to a corporate status, it is not eligible to
complete the contract. However, this is clearly a matter of contract
administration not for consideration by our Office. 4 C.F.R. Section
21.3(f)(1) (1986). In this regard, Federal Acquisition Regulation
(FAR), 48 C.F.R. subpart 42.12 (1984), provides that novations of
contracts for successor contractors are authorized in appropriate
circumstances.
The protesters have listed a number of specific areas where they
assert the SATO should have been downgraded and they should have
received full credit. The allegations concerning the evaluation of
SATO's proposal in the areas of the location of the offeror's
headquarters and the direct interface of the system elements were
considered and denied in a previous decision. Also, in the reevaluation
of the criterion concerning the transmission of summary reports
electronically, SATO received no points which is consistent with our
prior decision.
The protesters contend that the SATO should have lost points for the
two subcriteria of the rating plan concerning providing travelers with
advance boarding passes. SATO's test and final offer promises this
capability by the beginning of the contract. Although the protesters
questioned SATO's ability to fulfill its proposal promises, we
previously considered and dismissed this protest basis.
In our previous decision, we also concluded that the SATO's proposal
should be downgraded because its proposal did not demonstrate a
willingness and capability to perform automated reconciliation of
accounts for agencies participating in the GSA's Diners Club contract.
The solicitation did not acquire this capability, but indicated that
additional credit would be given if the offeror had this capability. On
the reevaluation, the evaluators gave the SATO three out of five
possible points for this subcriterion. GSA states that "during the
discussions between the SATO and contracting officer during presentation
of best and final offers," this matter was discussed and the SATO
promised to provide these services if required.
As GSA states, the SATO was granted partial points for this area
because its original proposal stated that a summary report of all sales,
"whether processed with a GTR (Government Travel Request), GSA credit
card (Diners Club) or GTS (Government Travel Service) account," would be
electronically generated each month. The proposal statement, together
with the SATO's clarifying statement during discussions that it would
provide reconciliation of Diners Club accounts as requested by GSA,
convinced GSA that the SATO should be awarded some points for this job.
We see no reason to object.
The protester contends that the SATO should have lost points for the
subcriterion "the firm is organized by function; i.e., there are
separate commercial and vacation sections." Since the SATO's proposal
states the unofficial travel services, will be segregated from official
travel, we believe that GSA had a reasonable basis for giving SATO full
credit for the subcriterion.
The protesters also contend that the SATO should not have received
credit for the rating plan criteria under which it would receive five
points if its commercial sales are at least 50 percent of total sales
volume or at least equal to the estimated government volume and 10
points if its commercial sales represent at least 70 percent of total
sales volume or at least four times the estimated government volume.
The protesters provided no elaboration on this protest basis. GSA
reports that when the capabilities of the major scheduled air carriers,
which are the partners in the SATO joint venture, e.g., Eastern
Airlines, United Airlines, /1/ are considered, the SATO is clearly
entitled to full credit for these criteria. As contended by GSA, each
of the separate qualifications of the joint venture partners can be
reviewed in determining the joint venture's qualifications in these
circumstances. See Parker-Kirlin, Joint Venture, B-213667, June 12,
1984, 84-1 C.P.D. Paragraph 621; DDL Omni Engineering, B-220075,
B-220075.2, Dec. 18, 1985, 85-2 C.P.D. Paragraph 684. We find that such
approach was reasonable and we deny this protest basis.
On the initial evaluation, T.V. Travel received 220.5 points and
World Travel Advisors 205 points while on the reevaluation. T.V. Travel
received 200 points and World Travel Advisors 191 points out of a
possible 224 points. The protesters allege that their proposals were
not properly evaluated and that World Travel should have only been
downgraded three points and T.V. Travel 10 points. GSA has not
communicated to the protesters the specific weaknesses/deficiencies
found in their proposals. Since the reevaluation, which found
additional weaknesses and deficiencies in these proposals, was performed
in response to our Office's recommendation that certain limited areas of
the proposals be reevaluated, the protesters' failure to request a
formal debriefing on why their proposals were downgraded on the
reevalution is understandable and excusable. Under the circumstances,
we have performed an in camera review of the technical evaluation of the
protesters' proposals to ascertain whether this reevaluation has a
reasonable basis. Professional Review of Florida Inc.; Florida Peer
Review Organization, Inc., B-215303.3, B-215303.4, Apr. 5, 1985, 85-1
C.P.D. Paragraph 394 at 9.
This review reveals that T.V. Travel lost points beyond those it has
conceded because it does not propose multiple well-distributed offices
in the Atlanta area; it did not indicate that its new staff will be
hired at least 3 weeks prior to contract commencement; some of its
proposed reservation agents did not have optimum additional relevant
experience; its estimated annual volume of government travel represents
more than 35 percent of T.V. Travel's total air sales; and T.V. Travel
only names five regional cities where it guarantees lower hotel rates
than GSA's government rates. World Travel Advisors lost points beyond
those that it has conceded because its proposal did not address whether
ticket printing or pulling is done by staff other than reservation
agents; it does not sufficiently address customer "feedback" and the
use of questionnaires in quality control; it did not demonstrate the
use of programming superior in flexibility to standard "back office"
software packages; its proposed manager does not have optimum
supervisory and project management experience; it did not list all the
reservation agents needed to perform the work; its quality control
manager has no additional special qualifications; its estimated annual
volume of government air travel is not less than 30 percent of its air
sales; it did not provide verifiable guaranteed hotel rates that are
lower than GSA's discounted rates; and it did provide adequate
verifiable car rates lower than GSA's rates. Based on our review, we
conclude that GSA had a reasonable basis to downgrade T.V. Travel's and
World Travel Advisors' proposals on the reevaluation.
Finally, GSA continues to disagree with our prior decisions regarding
the evaluation of the number of travel agents in the SATO proposal. We
held that the SATO should not have received the maximum score for these
subcriteria because it proposed fewer travel agents than the optimum
staffing preference indicated in the solicitation evaluation criteria
and the rating plan. However, since this rating plan criteria is worth
only four points, even if the SATO received no credit, it would still
receive the high score. Therefore, we need not consider GSA's
reevaluation in this area.
Accordingly, the protests are denied.
(1) See T.V. Travel, Inc., et al. -- Request for Reconsideration, 65
Comp. Gen. 323, supra, at pgs. 9-10 for description of SATO joint
venture arrangement.
B-221466, 65 Comp. Gen. 696
Matter of: Maureen S. Fearn, July 3, 1986
The widow of a deceased Coast Guard member erroneously received
retired pay amounting to $43,281.68 which should have ceased upon the
member's death. When the erroneous payments were discovered it appeared
the widow was not entitled to a survivor annuity and waiver of the
erroneous payment was granted. The service then determined that
although the member had elected not to participate in the Survivor
Benefit Plan, the service had failed to inform the spouse of that fact
and this entitled the widow to receive a full annuity under the Plan.
Although the annuity entitlement is retroactive to the date of the
member's death, the widow is not entitled to additional payment for the
period for which she received the erroneous retired pay which was
waived. Since the waiver action was based on incomplete facts, it is
modified to apply only to the excess she received over the amount due
for the annuity for that period, and the balance is considered as
satisfying her annuity entitlement.
This action is in response to a request for an advance decision from
the United States Coast Guard regarding whether payment of the full
amount of a Survivor Benefit Plan annuity should be made to Maureen S.
Fearn, for the same period she received her husband's retired pay which,
due to administrative error, continued to be paid into her bank account
after the death of her husband, a retired member of the Coast Guard.
/1/ Collection of the erroneous retired pay was waived by our Claims
Group prior to the determination that Mrs. Fearn was eligible to receive
Survivor Benefit Plan annuity payments for the same period. It is our
view that no additional amount should be paid to Mrs. Fearn for this
period.
Captain William R. Fearn, United States Coast Guard, retired in 1979
and was receiving retired pay when he died on June 4, 1981. The Retired
Pay Branch of the Coast Guard was notified of his death on June 8, 1981,
and again on October 21, 1981, when Mrs. Fearn submitted a "Claim for
Unpaid Compensation of Deceased Member of the Uniformed Service." Prior
to his death the monthly checks for his retired pay were being sent to
the Connecticut Bank and Trust Company where they were deposited in his
and Mrs. Fearn's joint account. Due to an administrative error no
action was taken to remove Captain Fearn from the retired rolls and
despite the fact that at the Bank's suggestion Mrs. Fearn removed
Captain Fearn's name from the account, the checks continued to be sent
to the bank and deposited in the account.
The Coast Guard discovered the erroneous payments in September 1982
at which time the payments were stopped. During the period from June
1981 through September 1982, Mrs. Fearn thus received payments totalling
$43,281.68. She requested waiver of the total amount of erroneous
payments stating that she had been told by her husband that she would be
receiving survivor benefits and that she believed in good faith that the
amounts she was receiving constituted those benefits. At the time the
service notified her of the overpayment, it informed her that Captain
Fearn had not elected participation in the Survivor Benefit Plan, so she
was not eligible for an annuity. The Coast Guard forwarded Mrs. Fearn's
request for waiver to this Office with the recommendation that waiver be
granted. By action of November 21, 1984, our Claims Group waived
collection of the overpayment.
Subsequent to the waiver action, the Coast Guard found that at the
time he retired Captain Fearn elected not to participate in the Survivor
Benefit Plan, and he did not inform his wife of his election. The Coast
Guard also found that it had no record of notifying Mrs. Fearn of
Captain Fearn's election not to participate, which was contrary to the
provisions of 10 U.S.C. Section 1448(a)(3) which require the service to
notify a member's spouse if the member does not elect coverage for the
spouse. Thus, after informing Mrs. Fearn that she had been erroneously
receiving retired pay and that she was not entitled to a Survivor
Benefit Plan annuity, the Coast Guard determined that Captain Fearn's
election not to participate was not valid and that Mrs. Fearn was
entitled to receive a full annuity under the Survivor Benefit Plan equal
to 55 percent of Captain Fearn's retired pay. /2/
The Coast Guard therefore determined that Mrs. Fearn was entitled to
an annuity beginning from the date of Captain Fearn's death and, in
August 1985, began current payments. It also determined that her net
retroactive annuity entitlement for the period from Captain Fearn's
death in June 1981 through July 1985 totaled $79,425.05, which included
the period during which she had received the $43,281.68 in erroneous
retired pay.
The issue of this case, then, is whether Mrs. Fearn may retain the
erroneous retired pay in addition to the Survivor Benefit Plan annuity
for the same time period thus allowing her an amount equal to 155
percent of the member's retired pay for that time period, or whether the
amount received in retired pay should be set off from the amount Mrs.
Fearn will receive under the Survivor Benefit Plan.
The statute authorizing our Office to waive claims arising out of
"erroneous payments" of retired pay provides discretionary authority to
grant such relief in whole or in part under certain conditions,
including when collection of the debt would be "against equity and good
conscience and not in the best interest of the United States. /3/
Usually, in a case where a spouse receives overpayments due to the
service's failure to stop payment of retired pay, the spouse is also
entitled to retroactive payment of an annuity in a lesser amount for the
same period. In such a case ordinarily the waiver would be granted only
for the net amount of the debt. See generally 55 Comp. Gen. 113, 117
(1975).
As is indicated above, at the time the waiver action was taken it
appeared that Mrs. Fearn was not entitled to a Survivor Benefit Plan
Annuity and, instead, that she had received erroneous payments from the
Coast Guard totaling $43,281.68. We now know, however, that as a matter
of fact she was due a survivor annuity in a lesser amount for the same
period for which she received the $43,281.68. Thus, the net debt she
owed the Coast Guard at the time the retired pay was stopped at the end
of August 1982, was $43,281.68 less the annuity she was due from the
Coast Guard for the same period. It was the net amount to which the
waiver action should have applied in this case. In keeping with the
language and spirit of the waiver statute, which provides discretion to
waive in whole or in part debts arising from erroneous payments the
collection of which would be against equity and good conscience and not
in the best interest of the United States, we therefore modify the
waiver action to conform to the facts and to render done that which
should have been done.
Accordingly, for the period June 5, 1981, through August 31, 1982,
Mrs. Fearn is considered to have received the full amount of her
entitlement under the Survivor Benefit Plan and is not required to
refund the excess she received. That is, she may retain the $43,281.68
she received for that period although further payments for that period
should not be made to her. She is also due full annuity payments for
the period beginning September 1, 1982, through July 1985, after which
her current annuity payments were begun.
(1) The request was made by Donald H. Senker, Authorized Certifying
Officer, United States Coast Guard, Pay and Personnel Center, Topeka,
Kansas, and has been assigned Department of Defense, Military Pay and
Allowance Committee control number ACO-CG-Control #1158.
(2) This determination apparently was based on court decisions
interpreting the provisions of 10 U.S.C. Section 1448(a)(3) in this
manner. See Barber by and Through Barber v. United States, 676 F.2d 651
(Ct. Cl. 1982), and Passaro v. United States, 4 Cl. Ct. 395 and 5 Cl.
Ct. 754 (1984).
(3) 10 U.S.C. Section 2774(a). See also 10 U.S.C. Section 1453
concerning waiver of recovery of erroneous Survivor Benefit Plan
annuities.
B-222035, 65 Comp. Gen. 692
Matter of: City of Ansonia, Connecticut -- Sewer Services Claim,
July 2, 1986
City of Ansonia may recover $33,187.50 for sewer services provided to
the Army's housing facilities at Fort Devens, Massachusetts. The City
may be paid on a quantum meruit basis, pursuant to the Comptroller
General's claims settlement authority, 31 U.S.C. 3702 (1982), because
the services constituted a permissible procurement, the Government
received and accepted the services after it was notified of the
connection, the City acted in good faith and the amount claimed
represents no more than the reasonable value of the benefit received.
City of Ansonia's quantum meruit claim is not barred by the 6-year
time limitation in 31 U.S.C. 3702(b)(1) (1982). All monetary claims
against the United States cognizable by this Office must be received
within 6 years of date that claim first accrues or be forever barred.
The City's claim first accrued no earlier than March 4, 1981, when the
Army accepted sewer services by failing to disconnect its facilities and
continuing its use of the City's sewer system with the knowledge that
the connection existed and that the city expected payment. Since the
City's claim reached this Office on August 26, 1985, the 6-year time
limitation in 31 U.S.C. 3702 (1982) was met.
By letter dated August 23, 1985, the U.S. Army Finance and Accounting
Center forwarded to our Office for settlement the claim of the City of
Ansonia, Connecticut (Ansonia) in the amount of $33,187.50. The claim
represents sanitary sewer services provided to family housing facilities
at Fort Devens, Massachusetts. Based on our review of the facts in this
situation, we conclude that this Office may authorize payment of
$33,187.50 to Ansonia on a quantum meruit basis for the services between
March 4, 1981 and June 5, 1984.
BACKGROUND
The record indicates that during 1975 there were discussions between
the Army's Director of Facilities Engineering at Fort Devens and
Ansonia's contractor in charge of a sewer construction project along the
boundaries of Fort Devens. The discussions concerned whether Ansonia
would be permitted to enter Fort Devens, as part of the construction
project, to connect the Army's housing facilities to the city's new
sewer line. The Army agreed to the entry but stated, in a letter dated
May 20, 1975, that, in exchange, the connection (including the plugging
and abandonment of the Army's existing sewer line at Fort Devens) was to
be made at no expense to the Government.
Ansonia subsequently revised its sewer construction plans so that no
entry into Fort Devens was required and no connection was to be made by
Ansonia between the city's new sewer line and the Army's housing
facilities. Ansonia, through its contractor, notified the Army of these
revised plans by letter dated May 30, 1975, stating that the Army would
be notified when construction was completed so that it could make its
own arrangements for connecting the Fort Devens housing facilities to
the city's new sewer line. By letter dated January 28, 1977, Ansonia
notified the Army that construction of the sewer line was complete and
that connection could now commence. The January 1977 letter also stated
that the necessary permits had to be secured from the city prior to
making the connection.
No requests for permits were ever made by the Army to connect its
housing facilities to the city's sewer system. Nevertheless, at some
point in time, the Army's housing facilities at Fort Devens were
connected to Ansonia's sewer system. The record does not indicate who
made the connection or exactly when it was accomplished. Subsequent dye
testing by Ansonia, in 1982, confirmed that the connection had, in fact,
been made. Ansonia, apparently, was not aware that this connection had
been made until some time in early 1981. On March 4, 1981, Ansonia sent
the Army, as a user of the sewer system, a sewer assessment bill for
$33,187.50, based on a flat rate per linear frontage foot representing
the Army's share of the cost of constructing the city's new sewer line.
The letter also stated that a separate user charge, representing
operation and maintenance costs, would be established later and billed
to the Army. Subsequent to this notification, the Army continued using
Ansonia's sewer system and made no attempt to have its facilities
disconnected from the Ansonia system.
On August 10, 1982, the Army refused to pay the sewer assessment on
the grounds that it was a tax levied against Federal property from which
the Government is constitutionally immune. The Army cited our decisions
in 49 Comp. Gen. 72 (1969), B-168287, Feb. 12, 1970 and B-168287, Nov.
9, 1970, as support for its conclusion. The Army indicated, however,
that these decisions do permit reimbursement on a quantum meruit basis
for the reasonable value of services accepted and received by the
Government.
As a result of the Army's refusal to pay the sewer assessment,
Ansonia requested payment of $44,797.48 on a quantum meruit basis,
representing its determination of the reasonable value of the services
rendered. Ansonia arrived at this figure by preparing and comparing
cost estimates for two alternative ways the Army could provide sewer
services to the Fort Devens housing facilities. The Army agreed that
the $44,797.48, as calculated, represented the reasonable value of the
services rendered.
Due to the uncertainty surrounding Ansonia's claim, however, further
discussions were held between the Army and Ansonia concerning the amount
of the claim. On June 5, 1984, a Memorandum of Understanding was signed
by the Fort Deven's contracting officer and representatives of Ansonia,
in which the Army agreed to pay and Ansonia agreed to accept $33,187.50
as final payment for sewer services provided to Fort Devens through June
5, 1984. The Memorandum also stated that the sewer connection between
the Fort Devens housing facilities and Ansonia's sewer system was made
without the knowledge or consent of either Fort Devens or Ansonia.
Accompanying the Memorandum was an invoice from Ansonia requesting
payment of the $33,187.50 on a quantum meruit basis. No other
documentation was included with the invoice.
On August 23, 1985, the Army forwarded Ansonia's claim for $33,187.50
to this Office as a doubtful claim, under section 5.1, title 4 of the
GAO Policy and Procedures Manual for Guidance of Federal Agencies. The
Army recommended that the claim be paid but noted two areas of doubt:
(1) Whether Ansonia's claim is time barred under 31 U.S.C. Section 3702
(1982), which requires that all claims be received in the General
Accounting Office within 6 years after the claim first accrues or be
forever barred, and (2) Whether there was any commitment, unauthorized
or otherwise, by Government representatives to obtain the sewer services
from Ansonia which can now be ratified by authorized contracting
officials, thereby providing a basis for payment.
Although the record establishes that the Fort Devens housing
facilities were connected to Ansonia's sewer system, no evidence is
available to establish when this connection was made and who made it.
In their Memorandum of Understanding, the Army and Ansonia agreed that
the sewer connection was made without the knowledge or consent of either
the Army or Ansonia. Thus, no initial commitment, unauthorized or
otherwise, was made by Government representatives to obtain the sewer
services from Ansonia.
Where a valid written contract for a procurement was never executed
and the claimant is unable to establish even an unauthorized commitment
by a Government representative to pay for the services provided, the
agency may not ratify the procurement retroactively. 64 Comp. Gen. 727
(1985). However, under this Office's claims settlement authority (31
U.S.C. Section 3702 (1982)), the Comptroller General may authorize
reimbursement to the claimant on a quantum meruit basis when certain
conditions are met. Id.
We must first make a threshold determination that the services would
have been a permissible procurement had the formal procedures been
followed. 64 Comp. Gen. at 728. We have held that service charges,
representing operation, maintenance, and construction costs, made to the
Government for the right to use a city's sewage disposal system may
properly be paid by the Government. See B-158832, May 2, 1966; 42
Comp. Gen. 246 (1962). In addition, we have stated that formalized
utility-type service agreements may properly be entered into by the
Government to cover such sewer services. See 49 Comp. Gen. 72, 77
(1969). Thus, the sewer services at issue here could have been procured
by formal agreement between Ansonia and the Army.
Next we must find that the Government received and accepted the
benefit, the persons seeking payment acted in good faith, and the amount
claimed represents the reasonable value of the benefit received. 64
Comp. Gen. at 728.
Since, according to the Memorandum of Understanding, the connection
to Ansonia's sewer system was made without the knowledge or consent of
the Army, there is no basis, prior to March 4, 1981, to establish that
the Army accepted the benefit of the sewer connection. However, since
the Army chose to continue using Ansonia's sewer system after March 4,
1981, when it was notified of the connection, we conclude that it
accepted the benefit of the sewer connection, as well as the sewer
services it received after that date. Without the connection, the Army
would be unable to use the sewer system. Thus, the value of the
connection must be included in the quantum meruit payment for services
provided since March 4, 1981.
Since Ansonia was similarly unaware of the connection until early
1981, it acted in good faith in attempting to bill the Army in March
1981 and in continuing to press its claim since then. Therefore, this
Office may authorize payment of Ansonia's claim for the reasonable value
of the sewer connection, and the services provided to the Army since
March 4, 1981.
It is difficult to make a precise determination of the benefit the
Government receives from a public improvement such as the one involved
here. However, in order to prevail on a quantum meruit basis, a
claimant must show exactly how it arrived at any amounts claimed. An
unsupported, blanket statement that a particular sum is the fair and
reasonable value of the services rendered will not suffice. No payment
may be made until it is clearly shown that the specified and outlined
method of computation is based purely upon the value of the particular
services rendered to the Government. See generally B-168287, Nov. 9,
1970.
Ansonia's claim does appear to set forth, with sufficient clarity,
the services actually rendered to the Government. In addition, Ansonia
did set forth in detail its method of computing the reasonable value of
the services rendered. Ansonia found, and the Army agreed, that this
figure was actually $44,797.48. However, due to the uncertainties
surrounding the connection, Ansonia reduced its claim to $33,187.50, as
payment for the reasonable value of both the sewer connection and use
services provided from March 4, 1981 through June 5, 1984. Considering
the difficulty of precisely determining the fair and reasonable value of
a service such as is involved here, we cannot say that payment of
$33,187.50 is unreasonable.
Under 31 U.S.C. Section 3702(b)(1), a monetary claim against the
United States cognizable by this Office must be received within 6 years
of the date that the claim first accrued or be forever barred. /1/ Our
Office has ruled that a claim first accrues, for the purposes of this
Act, when all events have occurred which fix the liability, if any, of
the United States and entitles the claimant to sue or file a claim. See
42 Comp. Gen. 337, 340 (1963); 29 Comp. Gen. 517, 519 (1950).
Ansonia's quantum meruit claim first accrued no earlier than March 4,
1981, when the Army accepted the sewer services by failing to disconnect
its facilities and continuing its use of the City's system with the
knowledge that the connection existed and that the City expected
payment. Since Ansonia's claim reached this Office on August 26, 1985,
it satisfied the 6-year time limitation in 31 U.S.C. Section 3702
(1982). Accordingly, Ansonia's claim is allowed.
(1) Ansonia's claim is subject to the 6-year time limitation imposed
by this statute since claims by political subdivisions of states, such
as the City of Ansonia, are not included in the law's exception for
claims by states. See B-199838, Oct. 20, 1981.
B-219742, 65 Comp. Gen. 689
Matter of: Veterans Administration Funding of Federal Executive
Boards, July 1, 1986
The General Accounting Office agrees with the Veterans
Administration's legal analysis that a general Government-wide
Appropriation Act fiscal year restriction (currently contained in
section 608 of the Treasury, Postal Service, and General Government
Appropriation Act for fiscal year 1986, H.R. 3086) on the use of
appropriated funds for interagency financing of boards or commissions
"which do not have prior and specific statutory approval to receive
financial support from more than one agency or instrumentality," applies
to the Federal Executive Boards since the Boards do not have statutory
approval for interagency financing. However, single agency financing of
the Boards is not prohibited by the restriction.
The Administrator of the Veterans Administration (VA) has requested
our opinion on the lawfulness of funding Federal Executive Boards
(Boards) using interagency fund transfers. Specifically, he asks
whether we agree with a VA Acting General Counsel's opinion that section
610 of the Treasury, Postal Service, and General Government
Appropriation Act for fiscal year 1985, H.R. 5798 (incorporated by
reference into the Continuing Appropriation Act for Fiscal Year 1985,
Pub. L. No. 98-473, 98 Stat. 1837 (October 12, 1984)), restricts
interagency funding of the Boards. As discussed below, we agree with
the VA that interagency funding of the Boards is prohibited by the
restriction contained in section 610 of H.R. 5798, supra. /1/ The
Boards do not have "prior and specific statutory approval." On the other
hand, we think that financial support of the Boards is lawful as long as
only one agency pays the costs involved.
In fiscal year 1984, the VA Medical Center at Dallas, Texas, had been
financially supporting the local Federal Executive Boards and had been
billing each participating Federal agency its pro-rata share of the
cost. The Small Business Administration (SBA) indicated that it would
not pay its share, since in its view, interagency financial support was
contrary to a GAO interpretation of a similar provision contained in
section 608 of the Treasury, Postal Service and General Government
Appropriation Act for Fiscal Year 1977, Pub. L. No. 94-363. The VA's
legal office concurred with the SBA's position that section 610 of H.R.
5798, supra, the successor to section 608 of Pub. L. No. 94-363,
prohibits interagency financing of the Boards. In addition, the VA's
legal office recommended that the VA discontinue contributing personnel,
property and financial support to all Federal Executive Boards. The
VA's Administrator asked that we review this opinion.
Federal Executive Boards are interagency coordinating groups created
to strengthen Federal management practices, improve intergovernmental
relations, and participate, as a unified Federal force, in local civic
affairs. The Boards were established by President Kennedy in November
1961. The Boards rely on voluntary participation by members to
accomplish their goals. They have no legislative charter and receive no
congressional appropriations.
When the Boards were first established, Congress had specifically
authorized the use of appropriated funds of member agencies to finance
interagency activities. Section 214 of the Independent Offices
Appropriation Act, 1946, 31 U.S.C. Section 691 (now substantially
recodified as 31 U.S.C. Section 1346(b)) provided:
Appropriations of the executive departments and independent
establishments of the Government shall be available for the expenses of
committees, boards or other interagency groups engaged in authorized
activities of common interest to such departments and establishments and
composed in whole or in part of representatives thereof who receive no
additional compensation by virtue of such membership: Provided, That
employees of such departments and establishments rendering service for
such committees, boards, or other groups, other than as representatives,
shall receive no additional compensation by virtue of such service.
However, in the late 1960's, Congress was growing concerned that
section 214 was being used to divert appropriated funds to interagency
programs not specifically authorized by Congress. To remedy this,
Congress provided a specific restriction on the authority of section 214
in section 508 of the Department of Agriculture and Related Agencies
Appropriation Act, 1969, Pub. L. No. 90-463, 82 Stat. 630 (1968), as
follows:
None of the funds in this Act shall be available to finance
interdepartmental boards, commissions, councils, committees, or similar
groups under section 214 of the Independent Offices Appropriation Act,
1946 * * * which do not have prior and specific congressional approval
of such method of financial support.
A similar restriction, appearing in section 307 of the Independent
Offices and Department of Housing and Urban Development Appropriation
Act, 1969, Pub. L. No. 90-550, 82 Stat. 937, was enacted October 4,
1968, over the objections of agency spokesmen that this legislation
would appear to outlaw the financing of any kind of interagency
operation. See Senate Hearings on Independent Offices and Department of
Housing and Urban Development Appropriation for Fiscal Year 1969, May
22, 1968, at pp. 1143-46, 1408.
In 1971, section 609 of the Treasury, Postal Service, and General
Government Appropriation Act, Pub. L. No. 92-49, 85 Stat. 108 (1978),
first made the restriction (which had been included in appropriation
acts since 1968) applicable to appropriations made in "this or any other
Act." (Italic supplied.) This restriction was included in Treasury's
Appropriation Acts for each successive year until 1982.
Since 1982, the language of the restriction has appeared in its
current form:
No part of any appropriation contained in this or any other Act,
shall be available for interagency financing of boards, commissions,
councils, committees, or similar groups (whether or not they are
interagency entities) which do not have prior and specific statutory
approval to receive financial support from more than one agency or
instrumentality. Id., Continuing Appropriation Act for fiscal year
1986.
We have in the past considered the pre-1982 restriction and concluded
that it prohibited the availability of executive agency appropriations,
otherwise available to interagency entities under 31 U.S.C. Section
1346(b), "* * * unless specific congressional authorization has been
given for such method of financing." 49 Comp. Gen. 305, 307 (1969); See
also, B-174571, Jan. 5, 1972.
In 1977, we advised the Office of Management and Budget (OMB) (the
agency then charged with the oversight responsibility for Federal
Executive Boards) /2/ that:
* * * absent prior and specific congressional approval, the financing
of interagency organizations, including FEBs * * *, with funds
appropriated to member agencies is contrary to the plain language of
section 608 of the Treasury, Postal Service, and General Government
Appropriation Act, supra. Standardized Federal Regions -- Little Effect
on Agency Management of Personnel. GAO/FPCD-77-39, August 17, 1977.
/3/
According to the Office of Personnel Management (OPM), which now has
oversight over the Federal Executive Boards, interagency contributions
to Federal Executive Board activities do not violate the restriction
because contributing agencies are merely carrying out the purposes of
their own appropriations. The Federal Executive Boards, according to
OPM, generate no extra expenses by their existence and operation. In
support of this view, OPM points out that both under the prior and the
current restriction Congress was clearly aware of agency contributions
to FEBs and has taken no steps to expressly prevent them from taking
place. In taking this position, OPM stands by the views on this subject
expressed in a 1977 memorandum from OMB.
The OPM position, which relies in part on the decisions of this
Office, does not address the fact that our 1977 report had already
rejected this OMB position. In our 1977 report we only noted that the
form of congressional approval was in doubt; i.e., whether approval
should come from the entire Congress or just from an appropriate
committee, and whether the approval should be demonstrated by statute or
through some less formal action. The 1982 change in the restriction
language appears to have answered this area of uncertainty; that is, it
makes it clear that statutory approval is required. We therefore agree
with the VA's legal analysis that section 608 of H.R. 3036, supra,
prohibits interagency financing of Federal Executive Boards. The
prohibition will continue as long as the restriction is contained, in
its current form, in successive appropriation acts.
The new statutory language also contains two other significant
changes. It provides that the restriction on funding boards,
committees, etc. applies even if such organizations cannot be
characterized properly as "interagency entities." Of primary importance,
however, is the specific reference in the restriction to entities
receiving "financial support from more than one agency or
instrumentality." (Italic supplied.) This language, appearing for the
first time in 1982 and repeated in each annual restriction since that
time, indicates plainly that the Congress disapproved of the practice of
supporting such entities by "passing the hat," as it were, unless
otherwise authorized by statute. While interagency funding is
prohibited, however, we see nothing to prevent a single entity with a
primary interest in the success of the interagency venture, from picking
up the entire costs. In this respect, then, we disagree with the VA
legal advice to "immediately discontinue" all VA financial support to
FEBs to the extent that it is based on the belief that such financial
support would be illegal. Of course, it is certainly not required to
bear the full operating costs of the FEBs alone. We only mean that it
would be proper if it sought to do so.
(1) For fiscal year 1986 the restriction is provided by section 608
of the Treasury, Postal Service, and General Government Appropriation
Act for Fiscal Year 1986, H.R. 3036 (incorporated by reference into the
Continuing Appropriation Act for Fiscal Year 1986, Pub. L. No. 99-190,
99 Stat. 1185, 1291 (December 19, 1985)).
(2) This responsibility was transferred to the Office of Personnel
Management in June 1982.
(3) We are enclosing a copy of this report with the decision.
B-222122, 65 Comp. Gen. 685
Matter of: Instruments & Controls Service Company, June 30, 1986
Where a request for quotations under small purchase procedures does
not contain a clause advising that quotations must be submitted by a
certain date to be considered, the contracting agency should have
considered the protester's low quotation received prior to award since
no substantial activity had transpired towards award and the other
offeror would not have been prejudiced.
Instruments & Controls Service Company (ICSC) protests that the
United States Mint, Philadelphia, Pennsylvania, failed to fairly
consider ICSC's quotation under request for quotations (RFQ) No.
NG-86-16, issued as a small business, small purchase set-aside to obtain
equipment maintenance services. The Mint awarded a contract to the only
other firm that submitted a quotation. The protester complains that the
Mint improperly rejected its quotation as late, because the RFP
contained no closing date for submitting quotations and ICSC submitted
its quotation before the award. The Mint maintains that ICSC was
informed of the closing date and that rejecting the quotation therefore
was proper.
We sustain the protest.
The RFQ was issued on October 25, 1985, to six potential sources that
included the protester and Accurate Instrument Company, Inc. (currently
Process Electronics Corp.), the incumbent contractor. Accurate
Instrument submitted a quotation of $8,930 on November 14, 1985, and
ICSC submitted its quotation of $8,688 on November 24. The Mint signed
the purchase order for Accurate Instrument on January 15, 1986.
The facts otherwise are in dispute. The protester contends that the
RFQ did not request the submission of quotations by a certain date, and
has provided a copy of the RFQ with a blank space for such a date. The
protester further alleges that it twice asked the procurement agent
(identified in the RFQ as the person to call for information) when
quotations were due, and was advised that the Mint would like to have
them within a couple of weeks. During a November 22 phone conversation,
the procurement agency allegedly asked ICSC to hand-deliver the
quotation instead of mailing it. The protester did so 2 days later.
The Mint maintains that the RFQ requested that quotes be submitted by
November 15, 1985, and has enclosed copies of the RFQ with that date
inserted in the appropriate space. The Mint does not allege that it
otherwise advised ICSC that a quotation had to be submitted by November
15 to be considered, and the RFQ contained no such advice. According to
the Mint, when the protester called on November 22, the procurement
agent advised that the closing date for receipt of quotations had passed
and that the award decision had been made.
Initially, there is a question whether the protest is timely. The
Mint contends ICSC's protest should be dismissed since it was not filed
within 10 working days after November 22, when the Mint allegedly
advised ICSC of the award decision. Our Bid Protest Regulations require
that protests of allegedly improper agency actions be filed within 10
working days after the basis for protest is known or should have been
known, whichever is earlier. 4 C.F.R. Section 21.2(a)(2) (1986). It is
our practice to resolve doubts about timeliness in favor of the
protester. Consol. Bell, Inc., B-220421, Feb. 6, 1986, 86-1 CPD
Paragraph 136. Since the protester denies that the Mint advised it of
the award decision on November 22, we resolve the doubt in the
protester's favor and consider the protest timely.
Regarding the merits, the Competition in Contracting Act of 1984
(CICA) authorizes simplified procedures for small purchases -- not
exceeding $25,000 -- of property and services to promote efficiency and
economy in contracting and to avoid unnecessary burdens for agencies and
contractors. 41 U.S.C. Section 253(g) (Supp. II 1984). To facilitate
these stated objectives, CICA only requires that purchasing agencies
obtain competition to the maximum extent practicable. Id.; S.C. Servs.,
Inc., B-221012, Mar. 18, 1986, 86-1 CPD Paragraph 266.
We have held that language requesting quotations by a certain date
cannot be construed as establishing a firm closing date for the receipt
of quotations absent a late quotation provision expressly providing that
quotations must be received by that date to be considered. See CMI
Corp., B-211426, Oct. 12, 1983, 83-2 CPD Paragraph 453. An agency
therefore should consider any quotations received prior to award if no
substantial activity has transpired in evaluating quotations and other
offerors would not be prejudiced. Id. The failure to do so would be
inconsistent with the statutory requirement for competition to the
maximum extent practicable.
In view of this standard, whether the RFP contained a closing date is
irrelevant since the RFQ contained no late quotations clause. Here, the
record does not indicate that when ICSC submitted its quotation, more
than 6 weeks prior to the execution of the purchase order, the Mint had
undertaken any actions that would have made considering ICSC's quotation
impracticable or burdensome. There also is no indication that ICSC
obtained any material advantage by being permitted to submit its
quotation on November 24. The rejection of ICSC's quotation therefore
was improper.
The protest is sustained.
We recommend that the Mint terminate the current contract for the
convenience of the government and award a contract for the remainder of
the contract term to ICSC based on its low quotation if that company is
otherwise qualified for award. 4 C.F.R. Section 21.6(a). Since the
contract is more than half completed, ICSC may be unwilling to perform
the remaining work at its quoted price. In such an event, the protester
should be reimbursed the costs of preparing and submitting its quotation
and protest. 4 C.F.R. Section 21.6(e).
B-221851.2, 65 Comp. Gen. 683
Matter of: Ocean Enterprises, Ltd. -- Reconsideration, June 26, 1986
The General Accounting Office affirms its dismissal of a protest on
the grounds that the prime contractor is not acting for the government
in awarding subcontracts where the protester has not shown that the
prime contractor is principally providing large-scale management
services at a government-owned facility.
Ocean Enterprises, Ltd. (OEL), requests reconsideration of our
decision, Ocean Enterprises, Ltd., B-221851, May 22, 1986, 65 Comp. Gen.
585, 86-1 C.P.D. 479. In that decision, we dismissed OEL's protest of
the award of a subcontract to Buccaneer Marine, Ltd. (Buccaneer), under
request for quotations (RFQ) No. 34-468-00 issued by Science
Applications International Corporation (SAIC), a prime contractor
performing services for the United States Department of the Navy at the
Santa Cruz, Acoustical Range Facility (SCARF), Santa Cruz Island,
California. We affirm our prior decision.
We dismissed the protest because we concluded that SAIC was not
awarding the subcontract "for" the government within the meaning of the
exception allowing for review of subcontract awards by our Office, see
Bid Protest Regulations, 4 C.F.R. Section 21.3(f)(10) (1986), because
the prime contractor is not operating a government-owned facility and is
not otherwise serving as a mere conduit between the government and the
subcontractor.
In requesting reconsideration, OEL first argues that our decision to
dismiss its protest is inconsistent with a previous GAO decision,
Holiday Homes of Georgia, Inc., B-210656, Aug. 4, 1983, 83-2 C.P.D.
Paragraph 169, which should control this case. In Holiday Homes, we
found that a Navy acoustical testing facility, the Atlantic Undersea
Test and Evaluation Center (AUTEC), Andros Islands, Bahamas, was a
government-owned facility being managed or operated by a prime
contractor and, consequently, that the subcontract was "for" the
government and would be reviewed by our Office. OEL maintains that
AUTEC performs functions identical to SCARF and argues that since we
reviewed the procurement involving AUTEC in Holiday Homes, we should
also review this procurement.
Initially, we note that in Holiday Homes we concluded that AUTEC was
a government-owned facility being managed or operated by a prime
contractor. Even assuming that the functions performed at AUTEC and
SCARF are identical, there is no indication in the record of this case
or Holiday Homes that these facilities are being managed in a similar
manner. There is no indication that the facilities are similar in
nature, that is, that AUTEC, like SCARF, is based on land leased by the
prime contractor from a private owner and does not have a permanent
facility or plant. Therefore, we have no basis for a finding that this
situation is similar to that in Holiday Homes and, consequently, should
be controlled by the decision.
OEL next argues that, in our prior decision, we erroneously based our
conclusion that SCARF is not a government-owned facility on the Navy's
failure to follow its internal procedures for the establishment and
maintenance of government-owned, contractor-operated (GOCO) facilities
and the fact that the Navy does not own the land on which SCARF is
based. The protester cites J. C. Yamas Company, B-211105, Dec. 7, 1983,
83-2 C.P.D. Paragraph 653, as standing for the proposition that
ownership of land by the government is immaterial as to whether our
Office will review a subcontract award.
We agree with OEL that the fact that the Navy has not made any
determination under its procedures for the establishment and maintenance
of GOCO's alone does not establish that SCARF is not a GOCO; however,
the fact that no determination had been made does indicate that the
Navy, contrary to OEL's assertions, did not regard SCARF as a GOCO. As
to the ownership of the land, we indicated in our prior decision that in
order for a facility to be a GOCO, the government must own the facility.
Generally, a facility refers to the land and any constructed buildings
and fixtures located on that land. Here, the Navy does not own the land
on which SCARF is based and there is no permanent building or plant on
the site and, while, as OEL points out, the government obviously owns
the government-furnished equipment (GFE) at SCARF, the equipment itself
does not constitute the facility. Further, our finding of jurisdiction
in J. C. Yamas Company, B-211105, supra, is inapplicable here because in
that case the land on which the government facility was based was owned
in part by a private company and in part by the government, whereas here
the government does not own any of the land at the site. Moreover,
jurisdiction in that case was based on grounds other than a finding that
the subcontract award was made by a firm operating or managing a
government-owned facility.
Finally, OEL argues that a review of SAIC's contract with the Navy
indicates that, contrary to our prior decision, SAIC provides
large-scale management services. OEL asserts that this is evidenced by
the fact that the contract indicates that SAIC reports to Navy personnel
located in Bremerton, Washington, and there is nothing in the record
showing that there is any Navy personnel based at SCARF or that the Navy
manages the project operations at the site. It also asserts that the
contract provision that only 10 percent of the man-hours necessary to
perform this contract are for managerial/operation functions does not
establish that SAIC does not provide management services since SCARF is
a research/technical facility and there can be only so many managers to
perform such a contract. OEL further argues that SAIC purchases or
leases all of the equipment at SCARF at the government's written
direction and cost and such equipment becomes GFE and, thus, SAIC has
ongoing purchasing responsibility resulting from its management
services.
We disagree with OEL's interpretation of the Navy's contract with
SAIC. Even assuming that Navy personnel are not present at SCARF,
management of project operations at SCARF easily could be performed by
Navy personnel from offsite locations and, as stated in our decision,
our review of the contract indicates that the Navy in fact manages the
project operations while SAIC provides maintenance and operational
assistance to the Navy. Specifically, the conducting of experiments and
tests at SCARF requires large-scale management services, but the fact
that management services constitute less than 10 percent of the services
under the contract indicates that the contract is not principally for
such services. Furthermore, SAIC's purchasing responsibilities are
incidental to performance of its support and maintenance tasks specified
under the contract and are not connected with operation of the facility.
We affirm our prior decision.
B-221496, 65 Comp. Gen. 679
Matter of: John H. Teele -- Manpower Shortage Travel and
Transportation -- Meritorious Claims Act, June 26, 1986
A new appointee to a manpower shortage position was issued travel
orders erroneously authorizing reimbursement for temporary quarters
subsistence expenses, real estate expenses and miscellaneous expenses as
though he were a transferred employee. After travel was completed, his
orders were corrected to show entitlement only to travel, travel per
diem and movement of household goods, as authorized for manpower
shortage position. The claimant asserts entitlement to full
reimbursement, arguing that the advice received when hired and the
travel orders issued are consistent with private sector practices. The
claim is denied. Under 5 U.S.C. 5723 (1982), the travel and
transportation rights of a manpower shortage appointee are strictly
prescribed. Regardless of whether the error was committed orally or in
writing, the government is not bound by any agent's or employee's acts
which are contrary to governing statute or regulations.
General Accounting Office (GAO) will no longer follow its general
policy of not referring erroneous advice cases to Congress under the
Meritorious Claims Act, 31 U.S.C. 3702(d). Instead, each such case will
be considered for submission based on its individual merits.
Accordingly, GAO submits to Congress claim of new appointee to a
manpower-shortage position who was erroneously issued travel orders
authorizing reimbursement for temporary quarters subsistence expenses,
real estate expenses, and miscellaneous expenses where the appointee
reasonably relied on this erroneous authorization and incurred
substantial costs.
This decision is in response to a letter from Mr. John H. Teele. He
requests that his relocation expense claim, which was disallowed
administratively, be allowed by this Office or submitted to Congress as
a meritorious claim under the provisions of 31 U.S.C. Section 3702(d).
We conclude that while his relocation expense claim may not be allowed,
it is appropriate to submit it to Congress as a meritorious claim.
Mr. Teele, who was employed in the private sector and resided in
Chelmsford, Massachusetts, applied for Federal employment with the
United States Missile Command, Department of the Army. By letter dated
April 26, 1985, he was informed that he was selected for the position of
Electronics Engineer, grade GS-14; that his first duty station would be
Redstone Arsenal, Alabama; and that his tentative reporting for duty
date (May 20, 1985) was dependent on preparation of travel orders which
were to follow. We understand that the position to which he was
appointed was designated a manpower shortage category position.
The travel orders issued on April 29, 1985, authorized him and his
immediate family (spouse and four dependent children) to travel from
Chelmsford, Massachusetts, to Huntsville, Alabama, by privately owned
vehicle. In addition to mileage reimbursement, travel per diem, and
shipment of household goods with up to 90 days temporary storage, Mr.
Teele incorrectly was authorized temporary quarters subsistence
expenses, not to exceed 60 days, real estate expenses, and miscellaneous
expenses. He was also given a travel advance of $3,600.
Following his reporting for duty at Redstone Arsenal, Alabama, and
submission of his travel voucher claim, it was administratively
determined that his travel orders had been improperly issued since he
was not an employee being transferred from one official duty station to
another for permanent duty. By amendment dated October 8, 1985, his
orders were corrected to show that the purpose for his travel was to
effect a first duty station move in a manpower shortage position and
that reimbursement for temporary quarters subsistence expenses, real
estate expenses, and miscellaneous expenses was not authorized.
The total amount of his claim is approximately $14,500. /1/ Because
Mr. Teele was a manpower shortage position employee, it was
administratively determined that his maximum entitlement, in addition to
the transportation of his household goods, was $357.33. In this
connection, because his travel orders had been erroneously issued, the
agency determined that, since he was only entitled to $357.33, he had to
repay $3,242.67, representing the balance of his $3,600 travel advance.
As the basis for his request that his claim be submitted as a
meritorious claim, Mr. Teele asserts that in the private sector when a
business firm hires an individual for a position which requires the
individual to move to another location, it is normal for that firm to
reimburse all of the individual's relocation expenses. He contends that
having received similar advice from the Missile Command's Civilian
Personnel Office, he had no reason to question the validity of that
advice, expecially when that advice was confirmed in the travel orders.
The employment relationship between the Federal government and its
employees is statutory, not a simple contractual relationship, nor one
which is established by informal custom and practices. Since Federal
employees are appointed and may serve only in accordance with applicable
statutes and regulations, the ordinary principles of contract law do not
apply. See Elder and Owen, 56 Comp. Gen. 85, at 88 (1976); Kania v.
United States, 227 Ct. Cl. 240, at 251, 640 F.2d 264, at 268, cert.
denied, 454 U.S. 895 (1981); and Shaw v. United States, 226 Ct. Cl.
240, at 251, 640 F.2d 1254, at 1260 (1981).
It is a rule of long standing that all public officers and employees
of the Federal government must bear the expense of travel and
transportation to their first permanent duty stations in the absence of
a provision of law or regulation providing otherwise. One such
provision of law is contained in 5 U.S.C. Section 5723 (1982). That
provision authorizes the travel and transportation expenses of a
manpower shortage position appointee and immediate family and includes
the movement of their household goods and other personal effects from
their place of residence at the time of selection to the first duty
station. However, it does not include temporary quarters subsistence
expenses, real estate expenses, or miscellaneous expenses. Those
expenses are authorized only for Federal employees who are being
transferred from one official station or agency to another for permanent
duty (5 U.S.C. Section 5724(a)(1)).
With regard to the erroneous advice given and the improperly issued
travel orders, it is a well settled rule of law that the government
cannot be bound beyond the actual authority conferred upon its agents
and employees by statute or by regulations. This is so even though the
agent or employee may not have been completely aware of the limitation
on his authority. See M. Reza Fassihi, 54 Comp. Gen. 747 (1975), and
court cases cited therein. Also, the government is not estopped from
repudiating unauthorized acts performed by one of its agents or
employees and any payments made on the basis of such erroneous
authorizations are recoverable. See Joseph Pradarits, 56 Comp. Gen. 131
(1976), and T. N. Beard, B-187173, October 4, 1976.
In the present case, Mr. Teele was a new appointee in a manpower
shortage position. His maximum statutory entitlement was reimbursement
for his and his immediate family's travel, travel per diem, and movement
of their household goods and personal effects. Since Mr. Teele's
household goods and effects were shipped by Government Bill of Lading
and he was reimbursed for his travel and his family's travel to
Huntsville, he has received all the reimbursement to which he is
entitled under 5 U.S.C. Section 5723, and the agency's action to require
him to repay the excessive travel advance received by him ($3,242.67),
is legally correct.
Having determined that the disallowance of Mr. Teele's claim was
legally correct, we turn to his request that the matter be submitted to
Congress as a meritorious claim under 31 U.S.C. Section 3702(d). For
the reasons stated below, we agree with Mr. Teele that a submission is
appropriate in this case.
Subsection 3702(d) of title 31, the so-called Meritorious Claims Act,
provides:
The Comptroller General shall report to Congress on a claim against
the Government that is timely presented under this section that may not
be adjusted by using an existing appropriation, and that the Comptroller
General believes Congress should consider for legal or equitable
reasons. The report shall include recommendations of the Comptroller
General.
It has been our general policy not to report to Congress under the
Meritorious Claim Act, claims which are based on erroneous official
advice furnished to Government employees, even where the employee acted
reasonably in reliance on the erroneous advice and incurred substantial
costs. /2/ We reasoned that since such cases are not unusual they fail
to present the extraordinary circumstances for which submissions under
the Meritorious Claims Act should be reserved. Also, we expressed the
view that to submit individual erroneous advice cases to Congress would
afford preferential treatment to the few claimants whose cases come
before us over many other similarly situated whose cases we never see.
We now conclude that a change in this policy is warranted. While
erroneous advice cases are not unusual, each such case deserves to be
considered on its own merits. The fact that we are unable to seek
relief in all cases should not prevent the submission of those worthy
cases that do come before us. Therefore, we now will submit to Congress
erroneous advice cases which, in our judgment, meet the standards for
relief under the Meritorious Claims Act.
We are satisfied that Mr. Teele's claim meets the Act's standards
based on substantial equitable considerations. As noted previously, the
erroneous authorization was set forth in his travel orders and thus had
every appearance of official sanction. It seems clear that he incurred
substantial costs in reliance on this authorization and that his
reliance was reasonable. Accordingly, we are forwarding a rerort to
Congress requesting that Mr. Teele be reimbursed normal relocation
expenses as though he had been an employee transferred in the interest
of the government. Collection action on the excessive travel advance
should be suspended pending congressional consideration of our request.
(1) A line item audit of his overall claim was never performed
administratively since it was determined that he was not entitled to
reimbursement for any expenses other than his actual mileage and travel
per diem.
(2) See, e.g., B-209292, February 1, 1983; B-202628, December 30,
1981; B-195242, August 29, 1979; B-191039, June 16, 1978.
B-220822, 65 Comp. Gen. 677
Matter of: Nancy Wittpenn, June 26, 1986
An individual not employed by the Government, but invited to
participate in an exercise with the Naval Ocean Research and Development
Activity, Department of the Navy, claimed the cost of a required
physical examination on her claim for travel expenses. The cost of a
physical examination necessary to participate in an exercise may not be
paid as travel expense; however, as in the case of an employee, when a
physical examination is undergone for the benefit of the Government, the
cost of the examination may be reimbursed to the invitee.
This action is in response to a request from the Department of the
Navy for an advance decision regarding reimbursement for the cost of a
physical examination to an individual not an employee of the Government.
/1/ We find that the individual may be reimbursed for such costs when
the physical examination is found to be for the benefit of the
Government.
The Navy asks whether Ms. Nancy Wittpenn, an individual associated
with the University of Miami, may be reimbursed for a physical
examination she underwent in connection with her participation in an
exercise with the Navy Ocean Research and Development Activity,
Department of the Navy. Since Ms. Wittpenn is not an employee of the
Government, she was issued invitational travel orders and was reimbursed
for all travel expenses to and from Montevideo, Uruguay, where the
exercise, Leg II of the South Atlantic Geocorridor Cruise, began and
ended.
In accordance with agency regulations, Ms. Wittpenn was required to
have a physical examination in order to participate in the exercise.
(See Department of the Navy regulations, COMSCINST 6000.1B, April 23,
1979.) Ms. Wittpenn included the cost of her physical examination on the
travel voucher she submitted for reimbursement of her travel expenses.
Since the applicable travel regulations do not authorize the expense of
a physical examination, the Navy withheld payment and requested an
advance decision regarding whether or not the expense may be paid.
Authority for paying travel expenses of individuals performing
service to the Government without pay is contained in 5 U.S.C. Section
5703. Implementing regulations pertaining to individuals such as Ms.
Wittpenn, who are serving the Government without pay, are contained in
the Federal Travel Regulations and Joint Travel Regulations. Although
under certain circumstances, individuals may be reimbursed for such
travel related costs as innoculations (e.g., Volume 2, Joint Travel
Regulations, paragraph C4709, Ch. 231, January 1, 1985), there is no
authority for allowing reimbursement for the examination involved here.
Thus, the examination may not be reimbursed as a travel expenses.
We have consistently allowed agencies to pay the costs of physical
examinations which are required in the interest of the Government and
are necessary in the performance of authorized programs. This rule
covers necessary fitness for duty examinations, 41 Comp. Gen. 531
(1962), examination required after exposure to toxic chemicals; 22
Comp. Gen. 32 (1942), medication required after exposure to contagious
disease, 23 Comp. Gen. 888 (1944), and a physical examination for an
individual who was injured in an automobile accident with a Government
vehicle and was making a claim under the Tort Claims Act, 29 Comp. Gen.
111 (1949). We have held that an applicant for employment is not
entitled to payment for a pre-employment physical examination. 22 Comp.
Gen. 243 (1942); 31 Comp. Gen. 465 (1952). Such examinations generally
are considered to be for the primary benefit of the prospective
employee. As they apply to Federal employees these rules are reflected
in Part 339 of Office of Personnel Management Regulations, 5 C.F.R.
Sections 339.101-304.
The rule prohibiting payment for a pre-employment physical
examination, however, is applied only to routine physicals needed to
determine the individual's eligibiilty and fitness for employment. A
Government agency may pay the costs of pre-employment or other medical
procedures, including physical examinations, which are primarily for the
Government's interest under the rule in 22 Comp. Gen. 243, supra.
B-108693, April 8, 1952; see also 23 Comp. Gen. 746 (1944). Thus, we
have approved the use of appropriated funds to pay for physical
examinations which are of a precautionary or preventative nature and
primarily for the benefit of the Government rather than the employee.
See 30 Comp. Gen. 387 (1951); 22 Comp. Gen. 32 (1942).
In the present case, Ms. Wittpenn was invited to participate in the
cruise at Government expense. A requirement of such participation is
that the individual undergo a physical examination. The physical
examination was required by the Government for the protection of the
Government due to the nature of the assignment. Specifically, the
applicable regulation describes such physical examinations as necessary
--
* * * in order to minimize the probability of having to divert the
ship from its mission and to ensure, insofar as possible, that
involve(d) personnel will remain able to perform their duties in a
satisfactory manner throughout the mission.
Therefore, the examination clearly is for the primary benefit of the
Government. It is not analogous to a routine pre-employment physical
examination.
Under the circumstances presented, the cost of the physical
examination Ms. Wittpenn was required to have in order to participate in
the cruise may be paid for from funds available for that program.
(1) The request was made by L. G. Cogsdil, Disbursing Officer, Naval
Oceanographic Office Department of the Navy, Bay St. Louis, NSTL,
Mississippi.
B-215842, 65 Comp. Gen. 666
Matter of: Job Corps Center Receipts, June 25, 1986
Job Corps Center receipts derived from sales of meals, clothing, tool
kits, and arts and crafts, and from fines and property damage
restitution, may be retained by the Job Corps program and need not be
deposited into the Treasury as miscellaneous receipts as normally
required by section 3302 of title 31. Section 1551(m) of title 29
allows retention of income generated under the Job Corps program, and
the appropriation covering the Job Corps program, for "Training and
Employment Services," as provided in the annual Department of Labor
appropriations acts, specifically allows reimbursements to be added to
it.
Monies received from fines for corpsmember misconduct and sales of
arts and crafts objects made by corpsmembers may be deposited in the
Corpsmember Welfare Association funds, as required by program
regulations. Such funds lose their Federal character and may be spent
for association activities.
Since Job Corps Welfare Association funds are not public funds
subject to the statutory restrictions applicable thereto, they need not
be maintained in the Treasury or in depositaries designated by the
Secretary of the Treasury, and may be kept in local banks.
Monies received from agreements between the Weber Basin Job Corps
Center, operated by the Department of the Interior, and Utah Davis
County School District and Utah State Department of Corrections, may be
returned to the Job Corps program rather than deposited into the
Treasury as miscellaneous receipts. The monies may be considered both
as income generated under the Job Corps program, 29 U.S.C. 1551(m), and
as reimbursements which the yearly appropriations acts covering the Job
Corps specifically allow to be added to appropriations. As section 1580
of title 29 allows acceptance of state services and facilities for
programs under the Job Training Partnership Act, Pub. L. No. 97-300, 96
Stat. 1322, 1370, including the Job Corps program, payments under the
agreements may also be made through in-kind services or property.
Consistent with interagency agreements between the Interior and Labor
Departments and Labor and the Department of Defense, Interior Department
imprest fund cashiers receiving monies from Army disbursing officers for
payments to Job Corps enrollees are responsible, accountable and liable
in the same manner as other imprest fund cashiers consistent with
Section 22 of title 7 of the General Accounting Office's Policy and
Procedures Manual, Volume I, 4-3000 of the Treasury Fiscal Requirements
Manual and the Labor Department's Job Corps Handbook No. 630.
The Department of the Interior has asked a number of questions about
its financial management of funds provided to it for operation of Job
Corps Civilian Conservation Centers (Centers). The Department's
authority to operate these Centers derives from an interagency agreement
between the Interior and Labor Departments, originally entered under
section 407 of the Comprehensive Employment and Training Act of 1973
(CETA), /1/ Pub. L. No. 93-203, 87 Stat. 839, 863. Pursuant to the
agreement, Labor transfers funds from its annual Job Corps appropriation
to Interior for Interior's operating expenses for the Centers.
Specifically Interior asks:
(1) whether it should credit Job Corps Center receipts derived from
meals, clothing, tool kits and arts and crafts sales, corpsmember fines,
and property damage restitution to (a) Job Corps appropriations, (b)
miscellaneous receipts of the Treasury, or (c) the Corpsmember Welfare
Associations;
(2) whether Corpsmember Welfare Association financial transactions
may be processed through local banks instead of being maintained in
trust funds in the Treasury;
(3)(a) whether collections received from agreements between the Weber
Basin Job Corps Center and the Utah Davis County School District, and
Utah State Department of Corrections, should be deposited to the Job
Corps appropriation, the miscellaneous receipts account in the Treasury,
or handled in some other way, and (b) if deposit of these collections in
the Job Corps appropriation would unlawfully augment that appropriation,
whether the receipt of in-kind services or property also would
constitute such an augmentation; and
(4)(a) whether the Interior Department's operation of the Department
of Defense imprest funds is proper, (b) the financial treatment the
imprest funds should be accorded in Interior's fiscal records, and (c)
the responsibility of the Interior Department and its cashiers for the
funds.
For the reasons indicated below, we conclude:
(1) Interior should credit the questioned receipts to the Job Corps
appropriation, with the exception of the fines and the arts and crafts
sales which, pursuant to program regulations, may be deposited to the
credit of the Corpsmember Welfare Associations;
(2) Corpsmember Welfare Association transactions may be processed
through local banks;
(3) monies received from the Utah agreements may be credited to the
Job Corps account, and in-kind services may also be accepted; and
(4) Interior employees who act as imprest fund cashiers using funds
provided by the Department of the Army should be held to the same
standards of accountability as any other civilian imprest fund cashier.
The purpose of the Job Corps program is to assist youth "who need and
can benefit from an unusually intensive program, operated in a group
setting, to become more responsible, employable, and productive citizens
* * *." 29 U.S.C. Section 1691. The program calls for establishing
residential and nonresidential Centers in which Corps enrollees
participate in intensive programs of education, vocational training,
work experience, counseling, planned recreational activities,
rehabilitation and development. Id. Sections 1691, 1698.
Section 407 of CETA, reenacted as section 427 of the Job Training
Partnership Act, 29 U.S.C. Section 1697, authorizes the Secretary of
Labor to make agreements with Federal, state or local agencies for
establishing and operating Job Corps Centers, including Civilian
Conservation Centers, located primarily in rural areas. Under the
authority in section 407, the Secretary of Labor entered into an
agreement with the Department of the Interior, effective July 1, 1974,
authorizing Interior to administer and operate Centers in accordance
with the Job Corps program legislation on lands under Interior
Department jurisdiction.
Funds for Interior's operation of the Centers are transferred from
the Labor Department appropriation for "Training and Employment
Services," the appropriation that funds the Job Corps program. (E.g.,
Pub. L. No. 98-139, 97 Stat. 871.) Since fiscal year 1975, the annual
appropriation supporting the Job Corps program has included language
allowing "reimbursements" to be added to the amounts appropriated.
Moreover, a provision applicable to all programs covered by the Job
Training Partnership Act provides that "income generated under any
program may be retained by the recipient to continue to carry out the
program * * *." 29 U.S.C. Section 1551(m).
Under normal circumstances, in addition to the transferred
appropriations, center operators also receive monies from sales of meals
to employees and outside visitors, took kits, clothing, and arts and
crafts objects (made by corpsmembers, with materials furnished by
Interior), from fines assessed against corpsmembers for disciplinary
infractions, and from restitution for damage to center property caused
by corpsmembers. Interior is authorized by regulations of the
Department of Labor published at 20 C.F.R. Section 684, to make all
these charges.
The regulations also authorize establishment of Corpsmember Welfare
Associations and Welfare Association funds. Id. Section 684.79. The
associations and funds are to be run by elected corpsmember association
councils. The regulations specifically prohibit expenditure of
appropriated funds on Welfare Association activities. Moreover,
Interior has informed us that the corpsmembers themselves provide the
start-up funds for the associations and that no Federal funds are used
even on a reimbursable basis. Instead, the associations receive
revenues from such sources as "snackbars, vending machines, disciplinary
fines, sale of arts and crafts objects made by corpsmembers, and pay
telephones." Id. Subsection 684.73(f) of the program regulations
authorizes the sale of arts and crafts made by corpsmembers in
accordance with an arts and crafts program approved by the Corpsmember
Welfare Associations, provided that the profits benefit the
associations. Disciplinary fines are also required by the program
regulations to be deposited in the Welfare Association funds.
1. Receipts from sales of meals, tool kits, clothing, and arts and
crafts objects.
Generally, absent statutory authority to the contrary, all funds
received for use of the United States, regardless of source, must be
deposited into the general fund of the Treasury as miscellaneous
receipts (31 U.S.C. Section 3302), on the theory that if receipts are
credited to specific appropriation instead, they would unlawfully
augment the appropriation. 62 Comp. Gen. 678, 679 (1983). In the
present case, however, we think the provisions in the Job Training
Partnership Act and annual appropriation acts providing funds for the
Job Corps program provide the necessary statutory authority to allow the
receipts described above to be retained for Job Corps program purposes,
with the exception of the receipts from arts and crafts sales which are
treated as non-appropriated funds, as explained below.
Section 1551(m) of title 29, which applies to all the programs set
forth in the Job Training Partnership Act, allows income generated under
the Job Corps program to be retained by the recipient to "continue to
carry out the program." In this case, the recipient is the Department of
the Interior. Although the legislative history of the Act does not
discuss the provision to any extent, we think the plain language would
include as "income generated," receipts from sales of meals, tool kits,
and clothing. Thus, these receipts can be retained by the Department of
the Interior for further use in the program.
In addition, the words "including reimbursements" in the annual
appropriations covering the Job Corps program, the appropriation to the
Labor Department for "Training and Employment Services," provide further
support for our conclusion. Although the term "reimbursement" is not
defined in the annual appropriations acts or in their respective
legislative histories, both the Department of the Treasury and this
Office have defined the term as sums collected by the Government in
payment for commodities sold or services furnished. See 7 GAO Policy
and Procedures Manual for the Guidance of Federal Agencies, Section
12.2. We think our definition would cover receipts from sales of meals,
tool kits, and clothing, as those items would qualify as commodities
sold.
As mentioned before, these sums would normally have to be deposited
into the Treasury's miscellaneous receipts account, but in this case the
annual appropriations acts specifically make these reimbursements
available for obligation, just as if they were part of the basic
appropriation.
While it appeared to us at first reading that receipts from the sales
of arts and crafts objects made by Corpsmembers with materials furnished
by the Centers should also be treated as reimbursements for commodities
sold, the program regulations (20 C.F.R. Section 684.73(f)) require
deposit of these receipts in the Corpsmembers Welfare funds. The
Department of Labor, whose views we sought on the various questions
raised by Interior, offers the following explanation of its regulatory
requirement:
These arts and crafts are considered corpsmember's (sic) property.
Thus, receipts from sales should not be deposited to a Federal account.
We are not inclined to quarrel with the Department's program judgment
on that question.
2. Receipts from fines.
Receipts from fines imposed on corpsmembers for disciplinary
infractions are not sums collected by the Government "for commodities
sold or services furnished." Therefore, they do not qualify as
"reimbursements" which, as discussed earlier, the annual appropriation
acts specifically make available to program recipients for program
obligations. In B-130515, Aug. 18, 1970, we held that monies received
by the Labor Department from fines for corpsmembers' misconduct were not
monies collected for the use of the United States at all. Instead, we
regarded the fines as a reduction in the amount of the personal
allowance that would otherwise have been paid to a corpsmember but for
his unsatisfactory behavior. See sections 109(a) and 110(b) of the
Economic Opportunity Act of 1964, as amended, 81 Stat. 676-77. As
substantially the same legislation is currently in force (29 U.S.C.
Section 1699, 1700), /2/ that decision would also apply to the present
Job Corps program.
Although the funds "freed up" by the reduction in the allowances
payable to the corpsmembers who were fined do not quality as
"reimbursements," they do constitute "program income" since they were
derived from a program activity. As discussed above, 29 U.S.C. Section
1551(m) permits program recipients to retain all income generated by the
program for further use in the program. As was the case with the funds
from the sales of arts and crafts objects, receipts from fines are also
required by the program regulations to be deposited in the Corpsmember
Welfare funds. The Department of Labor, in response to our inquiry
about the propriety of this disposition of the fines, stated:
Since this fine is paid by the corpsmember from personal funds, and
does not involve payment for goods or services, it would seem proper for
the money to be deposited to the Corpsmember Welfare Fund.
The Department of the Treasury also agreed that the above described
disposition of disciplinary fines was a "proper exercise of the
Secretary's (of Labor) statutory rulemaking authority."
We agree with both departments that the funds generated by imposition
of disciplinary fines, while "program income" because they resulted from
a program requirement, were not collected for use of the United States.
(Contrast the receipts derived from property damage reimbursements, as
discussed below, which are specifically collected to make restitution
for Government expenditures for repairs.) We think that the disposition
of these monies lies in the discretion of the officials responsible for
the management of the program. We have no objection to their
determination.
3. Receipts from property damage reimbursements.
Like other receipts, we have held that monies received from loss or
damage to Government property generally cannot be credited to the
appropriation available to repair or replace the property but must be
deposited and covered into the Treasury as miscellaneous receipts. 64
Comp. Gen. 431 (1985); 26 Comp., Gen. 618, 621 (1947). Nevertheless,
consistent with our views on the other receipts described above, monies
received by Interior for property damage restitution would be considered
to be reimbursements, retention of which the annual appropriation acts
permit.
Associations
All public monies must be deposited into the Treasury of the United
States or with a public depositary designated by the Secretary of the
Treasury. 31 U.S.C. Sections 3302, 3303; B-199722, Sept. 15, 1981.
The private origin of a fund does not necessarily mean that the monies
therein are not public monies. We have consistently regarded a statute
that authorizes collection and credit of fees to a particular fund, and
which makes the fund available for specified expenditures, as
constituting a continuing appropriation subject to the statutory
controls and restrictions applicable to appropriated funds. 63 Comp.
Gen. 285, 287 (1984); 35 Comp. Gen. 615, 618 (1956).
Nevertheless, we do not think the Corpsmember Welfare Association
funds are public funds. The funds are not created or governed by
statute, and the regulations authorizing their establishment
specifically state that appropriated funds are not to be used to support
welfare association activities. On the contrary, most of the funds used
in running the welfare associations, including start-up funds, come from
private sources. (To the extent that certain receipts, such as monies
from sales of arts and crafts objects or receipts from disciplinary
fines are required by regulation to be deposited in the Welfare
Association funds for their exclusive use, we think that they lose their
Federal character and become non-appropriated funds). Moreover, for the
most part, the persons managing and having access to the funds are
corpsmembers and not Federal employees. /3/ Accordingly, we do not
think the restrictions on public funds would apply to welfare
association funds, and, thus, the funds would not have to be maintained
in the Treasury or in particular depositaries designated by the
Secretary of the Treasury, /4/ but could not be kept in local banks.
We also think our conclusion is consistent with the statutory purpose
of providing enrollees with "education and work experience." 29 U.S.C.
Section 1697(a). The Corpsmember Welfare Association Handbook states
that participation of corpsmembers in operating and managing the
associations will serve as training devices for corpsmembers in
operating small businesses. United States Department of the Interior,
Corpsmember Welfare Association Handbook, Section 1.2 (1983).
Administering the financial transactions of the funds promotes this
purpose.
Although it is true that the funds will not be subject to the Federal
control that they would have were they maintained in the Treasury or,
perhaps, in a designated depositary, the regulations describing the
welfare associations do require (1) that a center staff member be
responsible for maintaining the corpsmember association accounting
system; (2) establishing a method to insure the security of welfare
association funds; and (3) that the accounting system be subject to
audit by the Department of the Interior. 20 C.F.R. Section
684.79(b)(3).
Pursuant to an agreement between Interior's Weber Basin Job Corps
Center, and the Utah State Office of Education and the Davis County
School District, for several years the Weber Basin Center has been
accepting a number of Utah students who receive the same programs and
services as regular Job Corps enrollees. A similar agreement has been
concluded between the Weber Basin Center and the Utah State Department
of Corrections. Under both agreements, the Weber Basin Center is
reimbursed for the training it provides. The Department of Labor
informs us that the number of regular enrollees that the Interior-run
Job Corps Centers can accept is limited by the amount of funds
transferred from Labor. Therefore, even if eligible, the individuals
covered by the agreements would probably not have been selected for
regular enrollment.
With respect to these agreements, Interior asks whether an illegal
augmentation would result if monies received from Utah are deposited
into the Job Corps appropriation, and, if so, whether such an
augmentation would also occur if Utah paid instead with in-kind services
or property. The services and property contemplated include instruction
and use of word processing and related computer equipment. Prior to
answering these questions, we first must determine whether Interior was
authorized to conclude the Weber Basin agreements.
Although the Job Training Partnership Act does not specifically
authorize reimbursable agreements with political subdivisions of states,
such as the ones in question, these agreements are consistent with the
purpose of the Job Corps program, and authority to enter them may be
inferred from other provisions covering the program. /5/ Thus, section
421 of the Act, 29 U.S.C. Section 1691, states the Job Corps program is
to assist young people to "become more responsible, employable, and
productive citizens * * * in a way that contributes * * * to the
development of national, State, and community resources * * *.";
section 427, id. Section 1697, authorizes the Secretary of Labor to make
agreements with state or local agencies for establishing and operating
residential or nonresidential Job Corps Centers, and authorizes Job
Corps Centers to offer reimbursable educational and vocational training
opportunities on a nonresidential basis to participants in other
programs under the Job Training Partnership Act; /6/ section 431, id.
Section 1701, authorizes the Secretary to encourage and cooperate in
activities to establish a mutually beneficial relationship between Job
Corps Centers and nearby communities; and section 435, id. Section
1705, autohrizes the Secretary to facilitate the effective participation
of states in the Job Corps program, and to enter into agreements with
states to assist in operating or administering state-operated programs
that carry out the purposes of the Job Corps program. As the Labor
Department, through the statutorily-authorized interagency agreement
with Interior, essentially has delegated to Interior its authority to
run Job Corps programs on lands under Interior jurisdiction, Interior
has the same authority that Labor would have to conclude agreements with
states and subdivisions of states.
As pointed out by the Labor Department, in at least one instance,
this Office has approved a similar training agreement. Thus, in 42
Comp. Gen. 673, 674 (1963), we found proper acceptance of a limited
number of private persons on a fee basis at courses of training given at
the United States Patent Office Academy, notwithstanding the absence of
a specific statutory basis authorizing training of non-Government
personnel. We said that attendance of private persons was merely
incidental to the necessary and authorized training of Government
employees, although we cautioned that private trainees could be accepted
only after adequate provision had been made for all Government trainees.
Id. at 674. Similarly, although we find the Weber Basin agreements
legally proper, we do not think they should serve to decrease the number
of regular Job Corps enrollees who normally would participate in the
program.
Consistent with our discussion in question 1, we think the monies
received by the Weber Basin Center from Utah for training the Utah
enrollees may be considered both "income generated under the Job Corps
program," and "reimbursements," as provided in the appropriation
covering the program. The monies received by Interior are in return for
the services it provides. Accordingly, they could be returned to the
program and need not be deposited into the Treasury as miscellaneous
receipts.
With regard to payment through in-kind goods or services instead of
reimbursements, the general provisions of the Job Training Partnership
Act provide that the Secretary of Labor may accept and use the services
and facilities of any state agencies or political subdivisions of a
state. 29 U.S.C. Section 1580. /7/ This authority, together with the
authorities described above, which permit reimbursable agreements with
stage agencies, allows the Labor Department to receive payments of
in-kind services or property. Pursuant to the interagency agreement
with Labor, the Interior Department has the same authority.
Accordingly, Interior could lawfully receive payment in property or
services from Utah for its training of the Utah enrollees.
In 1971 the Departments of Labor and Defense entered into a
reimbursable interagency agreement pursuant to the Economy Act, 31
U.S.C. Section 1535, under which the United States Army agreed to
provide financial service support, through the United States Army
Finance and Accounting Center, to the Department of Labor for the Job
Corps program. The financial service to be provided covers the payment,
certifying and disbursing functions for the Job Corps program, including
maintenance and reimbursement of imprest funds. The payment
responsibilities primarily cover payments to Job Corps enrollees for pay
and allowances. The agreement states that payments are to be made in
accordance with the procedures set forth in Job Corps Handbook No. 630.
Under the agreement, the Labor Department is authorized to maintain
and develop a system of accounting and internal control; to furnish all
authorizations and delegations to the Army as are necessary for making
payments; to make the necessary funds available to the Army for the
Army's financial service; and to arrange for periodic audits of the
financial accounts and operations of the financing center.
Interior informs us that there are two imprest fund cashiers at each
of the 12 Corps Centers it runs, all of whom are Interior Department
employees. One of the cashiers receives disbursements from the Army
under the interagency agreement between Labor and the Defense
Departments, and the other from the Treasury Department. The 12
cashiers who receive Army funds make disbursements for pay and
allowances of Job Corps enrollees. The 12 who receive funds from the
Treasury, among other things, make disbursements for small purchase
procurements needed at the Centers. Although its question is not
altogether clear, Interior appears to be concerned about the
responsibility and potential liability of the 12 Interior Department
imprest fund cashiers who receive disbursements from the Army as well as
the proper way to account for the imprest funds.
We have no legal objection to the interagency agreement between Labor
and the Defense Department which authorizes the Army to make
disbursements for the Job Corps program. In the past we have found
similar agreements proper. 44 Comp. Gen. 818, 820-21 (1965); 22 Comp.
Gen. 48, 51 (1942). The combined effect of the Labor-Defense and the
Labor-Interior agreements discussed above is to make Interior a
recipient of Labor Department monies, for pay and allowances of
corpsmembers, which are disbursed by the Army. We see no reason why the
Interior Department imprest fund cashiers receiving these monies should
not be responsible, liable, and accountable in the same manner as other
imprest fund cashiers.
The general provisions governing the responsibilities and duties of
imprest fund cashiers /8/ are set forth in section 22 of title 7 of the
General Accounting Office's Policy and Procedures Manual, and Volume 1,
Section 4-3000 of the Treasury Fiscal Requirements Manual. More
particular guidance for the Job Corps Handbook No. 630, at 4-6 (1981).
/9/
Consistent with this guidance, the Army disbursing officer ultimately
is accountable for the imprest funds disbursed. Specifically, that
officer is responsible for insuring execution of the prescribed
procedures and requirements for Job Corps Center accounting for imprest
funds, accountable for advances and transactions of the funds, and
responsible for auditing the funds.
Concurrently, the Job Corps center directors are required to annually
audit imprest funds, and should audit the fund with every change of
imprest fund cashier. Our procedures also require that the Interior
Department make unannounced verifications and audits of balances in the
funds. Any improprieties should be reported to the head of the
activity, in this instance presumably the Job Corps center director
involved, and to the Army disbursing officer who advanced the funds.
This is consistent with the Labor-Interior interagency agreement which
makes Interior responsible for financial management of its Job Corps
operations and for providing an accounting of the funds spent.
The Interior Department imprest fund cashiers are required to protect
the funds they receive by using appropriate safeguards, to document all
cash payments from the imprest funds, and to obtain reimbursement of
their funds from the Army disbursing officer under authorized signature.
Imprest fund cashiers are responsible to the disbursing officer for
their funds, and at all times should be able to account for the full
amount of the funds advanced to them. Although our procedures do not
require that imprest fund cashiers maintain formal records of their
transactions, the Job Corps Handbook suggests that cashiers document all
cash payments from their imprest funds on appropriate subvouchers signed
by payees.
Of course the Interior imprest fund cashiers, like other Government
imprest fund cashiers, are accountable officers of the United States.
As such they are held to a standard of strict liability for the funds
they have in physical custody, and are automatically liable at the
moment a physical loss occurs or an erroneous payment is made. 54 Comp.
Gen. 112, 114 (1974). Nevertheless, if a loss or deficiency occurs
without fault or nelgigence of an imprest fund cashier, the cashier may
be relieved of liability under 31 U.S.C. Section 3527.
(1) Most of CETA's provisions pertaining to the Job Corps were
repealed and reenacted as part of the Job Training Partnership Act.
Pub. L. No. 97-300, 96 Stat. 1322, 1370.
(2) Section 1700 of title 29 authorizes Job Corps Center directors to
take appropriate disciplinary measures against Job Corps enrollees, and
section 1699 permits reduction of allowances as a disciplinary measure.
(3) For most purposes, Job Corps enrollees are not considered Federal
employees. 29 U.S.C. Section 1706.
(4) As most of the Centers appear to be located in rural areas it
might also be impractical to maintain the funds at designated
depositaries.
(5) The Labor Department agrees that the agreements are valid and has
presented various arguments in support. The Treasury Department, in its
views on the issues raised by Interior, has questioned their validity,
essentially on the basis that they are not specifically authorized by
statute.
(6) Neither Interior nor Labor has suggested that the state-supported
enrollees are participants in other programs under the Act.
(7) The Act also authorizes the Secretary to accept, purchase or
lease in the name of the department, and employ or dispose of any money
or property -- real, personal, or mixed, tangible or intangible --
received by gift, devise, bequest, or otherwise, and to accept voluntary
and uncompensated services, notwithstanding the provisions of section
1342 of title 31. 29 U.S.C. Section 1579. Section 1342 generally
prohibits United States employees from accepting voluntary services.
(8) Army regulation 37-103 does mention imprest fund cashiers
generally but the discussion is not very detailed. The Army has
informed us that it has no particular regulation or guidance for its
disbursements to Job Corps imprest fund cashiers.
(9) As the Army appoints its own disbursing officers in contrast to
most other Federal agencies whose monies are disbursed by Treasury
disbursing officers or disbursing officers under Treasury delegation, 31
U.S.C. Section 3321, the relationship between the Army disbursing
officers and the Interior imprest fund cashiers may not be exactly the
same as that between Treasury Department disbursing officers, or
disbursing officers operating under Treasury delegations, and agency
imprest fund cashiers. Nevertheless, while the cited section of the
Treasury Fiscal Requirements Manual may not legally be binding on the
Army, it does provide guidance consistent with and similar to this
Office's standards and those in the Job Corps Handbook.
B-222481, 65 Comp. Gen. 663
Matter of: Ridge, Inc., June 24, 1986
Although the burden in a negotiated procurement is on the offeror to
submit with its proposal sufficient information for the agency to make
an intelligent evaluation, contracting agency's determination that
offeror's general offer of compliance and specific responses to the
specifications of "(n)oted and accepted" are sufficient is not
unreasonable where the solicitation merely required a statement
accepting all terms and conditions of the solicitation and provided for
simple statements of acknowledgment in response to the specifications.
General Accounting Office will not review an affirmative
determination of responsibility unless the possibility of fraud or bad
faith on the part of procuring officials is shown or the solicitation
contains definitive responsibility criteria which allegedly have not
been applied. Technical specifications which merely describe the items
offerors are to agree to supply in the event they receive the award are
not definitive responsibility criteria which instead establish standards
related to an offeror's ability to perform the contract.
Whether awardee will meet its contractual obligations to the
government is a matter of contract administration, which is the
responsibility of the procuring agency and is not encompassed by the
General Accounting Office's bid protest function.
Claims of possible patent infringement do not provide a basis for the
General Accounting Office (GAO) to object to an award since questions of
patent infringement are not encompassed by GAO's bid protest function.
Ridge, Inc. (Ridge), protests the award of a contract to TFI
Corporation (TFI) under request for proposals No. F09650-85-R-0461,
issued by the Department of the Air Force for the supply of a
micro-focus real time x-ray imaging system. Ridge challenges the Air
Force's determination that TFI's proposal is technically acceptable and
the agency's affirmative determination of TFI's responsibility. We deny
the protest in part and dismiss it in part.
The solicitation required offerors to include in their proposals a
"statement accepting all terms and conditions of the solicitation." In
addition, it provided that:
Technical proposals shall follow the Specifications format with
appropriate response to each paragraph, indicating how the requirement
contained therein will be satisfied. A simple statement of
acknowledgement is sufficient where implementing procedures or
organizations are not involved.
The solicitation indicated that award would be made on the basis of
the low technically acceptable offer.
In response to the solicitation, the Air Force received proposals
from TFI and Ridge. The agency found the best and final offers (BAFO's)
subsequently submitted by these firms to be technically acceptable. A
preaward survey on TFI, which included the demonstration of a
micro-focus x-ray imaging system, resulted in a favorable recommendation
as to that firm's responsibility. Accordingly, the agency made award on
the basis of TFI's low offer of $315,731, which was $159,924 less than
Ridge's offer of $475,655. Ridge, having expressed prior to award its
belief that the Scanray Micro-focus X-ray System Type MF-160/200 which
it believed TFI was offering did not conform to the specifications,
thereupon protested the award, first to the agency and then to our
Office.
Ridge claims that TFI "cannot" or "will not" meet the specifications
set forth in the solicitation, specifications which it considers to
constitute definitive responsibility criteria. Ridge has provided our
Office with a copy of the descriptive literature for the Scanray
Microfocus X-ray System Type MF-160/200 and has noted various
specifications which an unmodified Scanray Type MF-160/200 System
allegedly would not meet. In addition, Ridge claims that it holds a
patent on an automatic tube focusing mechanisms required by the
specifications and argues that since it has not licensed the use of this
feature by other firms, TFI will be unable to meet this requirement
without infringing on Ridge's patent.
We view Ridge's references to the differences between the Scanray
Microfocus X-ray System Type MF-160/200 and the specifications as a
challenge to the agency's affirmative determination of the technical
acceptability of TFI's proposal. In negotiated procurements, any
proposal that fails to conform to the material terms and conditions of
the solicitation should be considered unacceptable and not form the
basis for award. AT&T Information Systems, Inc., B-216386, Mar. 20,
1985, 85-1 C.P.D. Paragraph 326. Generally, however, we will not
disturb an agency's determination of the technical acceptability of a
proposal absent a clear showing that the determination was unreasonable
or in violation of procurement statutes and regulations. Moreover, the
protester bears the burden of affirmatively proving its case, and mere
disagreement with a technical evaluation does not satisfy this
requirement. Management Systems Designers, Inc., B-219601.2, Jan. 23,
1986, 86-1 C.P.D. Paragraph 75; see APEC Technology Limited, B-220644,
Jan. 23, 1986, 65 Comp. Gen. 230, 86-1 C.P.D. Paragraph 81.
The Air Force has provided our Office with a copy of the proposal --
both the initial and best and final offers -- submitted by TFI. In
response to a question from our Office as to whether TFI submitted
descriptive or commercial literature in support of its proposal, the Air
Force has advised us that the material provided our Office includes all
of the documentation concerning TFI's proposal and has indicated that
"the inclusion (in proposals) of product descriptive literature was not
necessary" because the x-ray imaging system to be supplied was "not an
off-the-shelf item." The Air Force reports that "(a)t no time did TFI
ever indicate they were furnishing a commercial piece of equipment."
Our examination of TFI's proposal reveals neither descriptive
literature on the Scanray Type Microfocus X-ray System MF-160/200 nor
any reference to that system. Instead, the proposal primarily consists
of a response -- often merely the statement of "(n)oted and accepted" --
to each paragraph of the specifications. TFI generally indicated that
the "(m)inimum needs of the Government as listed in specifications will
be complied with," with "(n)o exceptions * * * taken to the
specification." In addition, it responded with statements of "(n)oted
and accepted" to 11 of the 12 paragraphs in the technical
specifications, including the paragraph requiring automatic tube
focusing, that Ridge believes cannot be met by an unmodified Scanray
Type MF-160/200 System. As for the 12th paragraph, TFI promised in its
best and final offer (BAFO) to supply the oil-cooled high tension
generator required by the specifications.
The Air Force maintains that TFI has proposed meeting the
requirements of the specifications. Ridge's claims to the contrary,
based upon descriptive literature not included in TFI's proposal and
describing a system not referenced in that proposal, provide our Office
no basis upon which to question the agency's determination in this
regard.
We recognize that Ridge also questions whether the statements of
"(n)oted and accepted" are sufficient responses to the specifications.
We note in this regard that in a negotiated procurement the burden is on
the offeror to submit sufficient information with its proposal such that
the agency can make an intelligent evaluation of its proposal. See The
Communications Network, B-215902, Dec. 3, 1984, 84-2 C.P.D. Paragraph
609. Further, a blanket offer of compliance is not sufficient to comply
with a solicitation requirement for the submission of detailed technical
information which an agency deems necessary for evaluation purposes.
AEG Aktiengesellschaft, B-221079, Mar. 18, 1986, 65 Comp. Gen. 418, 86-1
C.P.D. Paragraph 267.
The solicitation here, however, did not require the submission of
descriptive literature or detailed technical information. On the
contrary, it required a "statement accepting all terms and conditions of
the solicitation." Although the solicitation also required technical
proposals to include "appropriate responses to each paragraph" of the
specifications, it provided that a "simple statement of acknowledgment
is sufficient where implementing procedures or organizations are not
involved." Moreover, when TFI failed to address in its initial proposal
several paragraphs of the solicitation, the agency, in its request for
BAFO's, merely indicated that "(a)cceptance or denial of these
paragraphs has been omitted." Accordingly, we see no basis upon which to
question the agency's determination that TFI's statements of "(n)oted
and accepted" were adequate responses to the specifications in these
circumstances.
As for Ridge's challenge to TFI's ability to meet the specifications,
we note that our Office will not review an affirmative determination of
responsibility unless the possibility of fraud or bad faith on the part
of procuring officials is shown or the solicitation contains definitive
responsibility criteria which allegedly have not been applied. ABC
Appliance Repair Service, B-221850, Feb. 28, 1986, 86-1 C.P.D. Paragraph
215. Ridge has not shown fraud or bad faith on the part of the
procuring officials. While it alleges that the technical specifications
constitute definitive responsibility criteria which have not been
applied, we have previously held that purchase descriptions and
specifications which merely describe the items offerors are to agree to
supply in the event they receive the award, as do the technical
specifications here, are not definitive responsibility criteria.
Definitive responsibility criteria instead establish standards related
to an offeror's ability to perform the contract, such as specific
experience in a particular area. See Victaulic Co. of America,
B-217129, May 6, 1985, 85-1 C.P.D. Paragraph 500; Vulcan Engineering
Co., B-214595, Oct. 12, 1984, 84-2 C.P.D. Paragraph 403.
Further, whether TFI actually will meet its contractual obligations
to the Air Force is a matter of contract administration, which is the
responsibility of the procuring agency and is not encompassed by our bid
protest function. Presto Lock, Inc., B-218766, Aug. 16, 1985, 85-2
C.P.D. Paragraph 183; BUR-TEL Security Protection Systems, B-218829,
May 16, 1985, 85-1 C.P.D. Paragraph 561; see 4 C.F.R. Section
21.3(f)(1) (1986).
Finally, we note that claims of possible patent infringement do not
provide a basis for us to object to an award since, like questions of
contract administration, questions of patent infringement are not
encompassed by our bid protest function. Presto Lock, Inc., B-218766,
supra, 85-2 C.P.D. Paragraph 183 at 3; Sewer Rodding Equipment Co.,
B-214952, June 5, 1984, 84-1 C.P.D. Paragraph 599.
The protest is denied in part and dismissed in part.
B-221634, 65 Comp. Gen. 660
Matter of: John D. Tree, Jr., June 24, 1986
Under the "30-minute rule" an employee who completes temporary duty
travel within 30 minutes after the beginning of a per diem quarter must
provide a statement on his travel voucher explaining the official
necessity for his arrival time in order to receive per diem for that
quarter. That statement should demonstrate that he departed from his
temporary duty station promptly following the completion of his
assignment and that he proceeded expeditiously thereafter. Where
statement furnished by employee fails to address promptness of
departure, agency properly denied claims for an additional quarter day
of per diem submitted by an employee who returned to his residence at
6:10 p.m.
In this case involving an employee who completed temporary duty
travel at 6:10 p.m. we find that the United States Army Corps of
Engineers properly applied the "30-minute rule" in denying his claim for
per diem for the fourth quarter of that day.
Mr. John D. Tree, Jr., was authorized travel expenses, including per
diem and transportation by Government vehicle to attend a hydroelectric
power supervisors conference at Vickburg, Mississippi, between October
25 and October 28, 1982. He drove from West Point, Georgia, his
permanent duty station, to Vicksburg, Mississippi, on October 25th and
commenced the return trip at 10:45 a.m., October 28, 1982, arriving at
his residence in West Point at 6:10 p.m. the same day.
Mr. Tree claims per diem for the fourth quarter of the day of October
28, 1982. The fourth quarter of the leave day is the 6-hour period
between 6 p.m. and 12 midnight. The disbursing officer denied Mr.
Tree's claim under the "30-minute rule" which provides:
* * * when the time of departure is within 30 minutes prior to the
end of a quarter day, or the time of return is within 30 minutes after
the beginning of a quarter day, per diem for either such quarter will
not be allowed unless a statement is included with the voucher
explaining the official necessity for the time of departure or return.
This limitation on the beginning and ending of per diem entitlement
is set forth in Joint Travel Regulations, vol. 2 (2 JTR) para. C4557
(Change 131, September 1, 1976).
Mr. Tree stated on his travel voucher that his return at 6:10 p.m.
was justified because of the time required to travel from the temporary
duty site to his residence. The disbursing officer advised Mr. Tree
that his justification for arrival at 6:10 p.m. was insufficient and
failed to meet the requirement set forth in 2 JTR para. C4557 for a
statement on the travel voucher "explaining the official necessity for
the time * * * of return." Responding to the memorandum, Mr. Tree
explained that the return trip covered a distance of 371 miles,
involving 6 hours and 25 minutes of travel time and spanned two normal
meal periods. He claims that the travel was performed prudently as
required by 2 JTR para. C4464 (Change 156, October 1, 1978).
Notwithstanding this explanation, the Army Corps of engineers recommends
disallowance of the claim for two reasons. It cites Mr. Tree's failure
to specify why the travel could not have been completed prior to 6 p.m.
and the travel approving official's failure to approve Mr. Tree's return
after the beginning of the fourth quarter as a matter of official
necessity.
Our Claims Group, by settlement certification Z-2847113, dated
November 6, 1985, disallowed Mr. Tree's claim because the Army Corps of
Engineers had not determined that his return within 30 minutes after the
beginning of the fourth per diem quarter was justified for reasons of
official necessity. It pointed out that it is the agency's
responsibility to make this determination and that the General
Accounting Office will not question its determination unless it is
clearly shown to be arbitrary and capricious. See Gustav W.
Muehlenhaupt, 55 Comp. Gen. 1186, 1188 (1976). The Claims Group
concluded that the agency's determination to disallow the fourth quarter
per diem was not arbitrary or capricious.
The purpose of the "30-minute rule" and the adequacy of the
justification required by the regulation are discussed in Gustaw W.
Muehlenhaupt, 55 Comp. Gen. at 1188. The rule is "intended to ensure
that an employee schedules departure in a prudent manner and completes
return travel expeditiously." This decision explains that an employee's
justification for return within 30 minutes after the beginning of a per
diem quarter should establish that he departed on the return trip at the
earliest possible time and traveled expeditiously, arriving home as soon
as practicable. The justification offered by the claimant in the
Muehlenhaupt case satisfied both requirements. It traced the employee's
acttivities showing that he performed official duty until noon and
departed from his temporary duty station promptly after lunch. In
addition, it provided information which established that after
departure, he proceeded expeditiously. He made connections with the
first scheduled airline serving his permanent duty station. He arrived
at his destination airport at 5 p.m. and, after collecting his luggage,
drove the 40-mile distance to his residence, arriving there by 6:15 p.m.
Mr. Tree's voucher contains only the following statement:
The arrival time is justified due to the time required to travel from
the TDY site to my residence. Statement to comply with SAMDR 55-1-5.
This statement merely expresses a conclusion. It does not provide
information which would justify a determination that there was an
official necessity for his return at 6:10 p.m. Mr. Tree has now
supplemented that statement with information that the distance between
his temporary duty site and his residence was 371 miles and that he
drove that distance in 6 hours and 25 minutes. This information,
indicating that he proceed at a rate slightly in excess of 55 miles per
hour, provides a sufficient basis for the travel approving official to
have determined that Mr. Tree proceeded expeditiously following his
departure. It does not, however, provide a basis for a determination
that he departed from his temporary duty station promptly following the
completion of his temporary duty assignment. To establish per diem
entitlement for arrival within 30 minutes after the beginning of a per
diem quarter, prompt departure as well as expeditious travel must be
shown to establish an official necessity for the time of return.
Because Mr. Tree did not provide a sufficient justification for
travel time we sustain the disallowances by the United States Army Corps
of Engineers and by our Claims Group.
B-219813, 65 Comp. Gen. 657
Matter of: Jack L. Henry -- Relocation Expenses -- Retirement After
Return to Former Duty Station, June 24, 1986
Employee who was transferred from Idaho Falls, Idaho, to Albany,
Oregon, failed to complete 12-month service requirement when he
voluntarily retired. The employee had requested retirement for health
reasons so that he could return to Albany, Oregon. However, this case
is distinguished from those cases where the employee transfers solely
for retirement purposes since, here, agency requested employee to remain
on duty for approximately 3 months and employee performed necessary and
substantial duty at Albany, his new official duty station, prior to his
retirement. Compare James D. Belknap, B-188597, June 17, 1977. Thus,
his transfer is considered to be in the interest of the Government, and
his voluntary retirement prior to completion of the 12-month service
period may be considered as a valid reason for separation, and his
travel and transportation expenses may be paid, subject to a
determination by the head of the agency that his separation was for
reasons beyond his control, and acceptable to the agency.
The issue in this decision is whether a transferred employee who did
not complete the required term of Government service at Albany, Oregon,
his new duty station, is entitled to travel and transportation expenses
incident to his transfer. The employee had requested retirement for
health reasons so that he could return to Albany, Oregon. Since the
agency requested the employee to remain with the agency for
approximately 3 months and he performed necessary and substantial duty
at Albany prior to his retirement, his transfer is considered to be in
the interest of the Government. Thus, he may be reimbursed upon a
determination by his agency that his separation was beyond his control
and acceptable to the agency.
This decision is in response to a request by Mr. Dennis A. sykes,
Chief, Division of Finance, Bureau of Mines, United States Department of
the Interior, for an advance decision as to the propriety of certifying
for payment a travel voucher submitted by Cr. Jack L. Henry, a former
employee of the agency. Dr. Henry's claim is for travel and
transportation expenses in the amount of $632.65 incurred in connection
with his transfer from Idaho Falls, Idaho, to Albany, Oregon, in June
1985.
The pertinent facts are as follows. In September 1984, Dr. Henry was
transferred from Albany to Idaho Falls to serve as a Technical Project
Officer in connection with the Bureau's Interagency Agreement with the
United States Department of Energy. The original intent of the Bureau
was to place Dr. Henry on long-term temporary duty travel at a reduced
per diem since the program was expected to continue until May 1985, but
the specific duration was not known. However, Dr. Henry agreed to move
to Idaho Falls provided the Bureau would pay his travel expenses, and
the rental cost of a small trailer to transport his personal belongings.
This arrangement was acceptable to the agency since the cost of the
stated travel and transportation expenses was considerably less than the
per diem estimated cost.
Dr. Henry suffered a severe heart attack in Idaho Falls and underwent
multiple bypass heart surgery. This condition made it extremely
difficult for him to continue living and working at the higher altitude
of Idaho Falls. Consequently, Dr. Henry requested that he be allowed to
retire from Government service, and return to Albany, Oregon. The
Bureau officials asked Dr. Henry to remain with the agency for about 3
months in a full-time, permanent capacity in Albany before he retired,
and to remain on the rolls as a reemployed annuitant for some months
after that date to assist in training a new Technical Project Officer.
Thus travel orders were issued authorizing his return to Albany in June
1985. Dr. Henry returned to Albany on June 29, 1985, and retired on
November 1, 1985. Thus, he completed only 4 months of the 12-month
service requirement.
The finance officer has expressed concern as to the propriety of the
claim since (1) Dr. Henry had already indicated an intent to retire at
the time his transfer to Albany was authorized; (2) there is no
evidence that Dr. Henry signed an employment agreement prior to his
return to Albany; and (3) the information provided indicates that the
re-transfer to Albany was at the request and primarily for the benefit
of the employee. In spite of these concerns, the finance officer agrees
that the total cost of Dr. Henry's two moves was less than the cost of
per diem at Idaho Falls for the time he actually spent there. In
addition, he points out that there was a benefit to the Government for
Dr. Henry to continue work on the program in Albany rather than losing
his services entirely.
The payment of travel, transportation, and relocation expenses of
Federal civilian employees who are transferred in a change of official
station is authorized by the provisions of 5 U.S.C. Sections 5724 et
seq., as implemented by the Federal Travel Regulations, FPMR 101-7
(September 1981) incorp by ref., 41 C.F.R. Section 101-7.003 (1985)
(FTR). Travel, transportation, and relocation allowances may be paid
only after the employee agrees in writing to remain in the Government
service for 12 months after his transfer, unless separated for reasons
beyond his control that are acceptable to the agency concerned. 5
U.S.C. Section 5724(i). See also FTR para. 2-1.5a(1)(a). Inasmuch as
the 12-month service requirement must be satisfied before relocation
expenses are reimbursable, we have held that an employee is bound by the
service obligation even if he does not execute a written agreement.
Orville H. Myers, 57 Comp. Gen. 447 (1978).
This Office has also held that voluntary retirement may be considered
as a reason for separation which is beyond the control of an employee,
and, therefore, that such retirement prior to completion of the required
12-month service period is not a bar to reimbursement of relocation
expenses. 46 Comp. Gen. 724 (1967). However, it is within the
discretion of the head of the agency concerned to determine whether,
under the particular circumstances, an employee's separation through
voluntary retirement is an acceptable reason for releasing him from his
service obligation. An agency's determination in this regard is not
subject to question by this Office unless there is no reasonable basis
for the determination. Federal Bureau of Investigation, 61 Comp. Gen.
361 (1982); Ralph W. Jeska, B-193456, December 28, 1978.
We have also determined that an employee who is transferred solely
for the purpose of voluntary retirement immediately after reporting to
his new duty station may not be reimbursed any amount of the relocation
expenses incurred where the purpose of the transfer was primarily for
the convenience or benefit of the employee, notwithstanding that the
ultimate return of the employee to his former duty station was
contemplated at the time of the original transfer by the employing
agency and the employee. 5 U.S.C. Section 5724(h) (1982); 29 Comp.
Gen. 255 (1949). Thus, the rule in 46 Comp. Gen. 724 -- voluntary
retirement prior to completion of the 12-month service period may be
considered as a valid and acceptable reason for separation -- applies
only where the employee is transferred in good faith to a location at
which he performs necessary and substantial duty prior to his voluntary
retirement. James D. Belknap, B-188597, June 17, 1977. Such is the
case here.
Dr. Henry was subject to the required 12-month service agreement,
though not formally executed; however, his transfer back to Albany was
not solely for the purpose of his voluntary retirement. His services
were needed by the Bureau of Mines at Albany to assist in the training
of a new Technical Project Officer, and to continue his work on the
interagency agreement. Thus, at the request of the agency, Dr. Henry
was transferred in good faith to Albany and he did, in fact, perform
necessary and substantial duty at Albany for 4 months prior to his
voluntary retirement. Therefore, we regard Dr. Henry's transfer as
being in the interest of the Government. Further, we have been informed
that Dr. Henry has been employed by the Bureau of Mines as a reemployed
annuitant.
Since Dr. Henry's transfer was in the interest of the Government, the
rule in 46 Comp. Gen. 424, supra, applies, and his voluntary retirement
prior to completion of the 12-month service period may be considered as
a valid reason for separation.
Accordingly, Dr. Henry's travel and transportation expenses may be
paid subject to a determination by the head of the agency that his
separation was for reasons beyond his control, and acceptable to the
agency.
B-222249, 65 Comp. Gen. 654
Matter of: Federal Services Group, June 19, 1986
Protest against Navy's issuance of a purchase order to nonmandatory
General Services Administration (GSA) schedule contractor for
maintenance of certain automated data processing equipment is sustained
where Commerce Business Daily (CBD) synopsis did not contain an accurate
description of Navy's minimum needs as required by GSA regulations and
it appears potential offerors could meet those needs at substantially
lower cost to the government.
Federal Services Group protests to the Department of the Navy's
issuance of a purchase order to International Business Machines
Corporation (IBM) for maintenance of certain automated dated processing
equipment under IBM's schedule contract No. GS00K86A6S5557 with the
General Services Administration (GSA). Federal Services Group contends
that the issuance of this purchase order against IBM's nonmandatory GSA
schedule contract was improper because Federal Services Group offered to
provide the same services to the Navy at a substantially lower proposed
price. We find that Federal Services Group's protest has merit and we
sustain the protest.
On November 12, 1985, the Naval Supply Center, San Diego, announced
in the Commerce Business Daily (CBD) its intention to purchase
maintenance services for certain automated data processing equipment
from IBM for a 1-year period. Firms, other than IBM, desiring to
compete were advised to submit proposals within 15 calendar days
identifying their interest in and capability to satisfy the requirement
and their proposed price to perform the work.
Two companies -- Federal Services Group and Sorbus -- submitted
proposals. The Navy determined that it could not properly evaluate the
proposals because neither proposal contained sufficient data, and,
therefore, Navy representatives contacted both firms to obtain
additional information. Among the questions asked of both firms was
what their response time would be to requests for service. Federal
Services Group and Sorbus both indicated that they would respond to
requests for service within 4 hours. The Navy decided that both firms'
proposals were inadequate, because the mission of the user activity
would be adversely affected if services were not rendered within 2
hours. In addition to the impact on the user activity's mission, the
Navy reports that lost time caused by inoperative IBM equipment would
result in a $900 to $1,000 per hour loss based upon salaries of
individuals who would be idle while waiting for necessary repairs to be
performed. In particular, concerning Federal Services Group's proposal,
the Navy determined that it was "inadequate and not cost effective" to
support the operations of the user activity. The Navy reports that the
equ-pment is used to produce tactical soft-ware tapes used in E-2
Hawkeye early warning radar aircraft and it is critical that response
time be kept to a minimum in order not to degrade squadron combat
readiness. Accordingly, the Navy determined that Federal Services
Group's proposal at a price of $39,172.80 was technically unacceptable
and, on February 26, 1986, placed an order against IBM's GSA contract in
the amount of $54,726.
The use of GSA nonmandatory schedules to acquire automated data
processing resources, including maintenance and support services, is
governed by the Federal Information Resources Management Regulation
(FIRMR), 41 C.F.R. ch. 201 (1985) (throughout the remainder of this
decision all citations to the FIRMR are to the section number within
chapter 201). The FIRMR permits an agency to place an order against GSA
nonmandatory automated data processing schedule contracts like IBM's
when certain conditions are met. One condition is that the agency
synopsize in the CBD its intent to place an order against a nonmandatory
schedule contract at least 15 calendar days before placing the order.
FIRMR, Section 32.206(f). The agency must then evaluate all written
responses to the notice from responsible non-schedule vendors to
determine whether ordering from the schedule contract or preparing a
solicitation document will result in the lowest overall cost
alternative. This procedure is not a formal competition; rather, it is
a device to test the market to determine whether there are non-schedule
vendors interested in competing for the requirement of responses
indicates that a competitive acquisition would be more advantageous to
the government, a formal solicitation normally would be issued, and all
vendors, including schedule vendors, invited to compete. See CMI Corp.,
B-210154, Sept. 23, 1983, 83-2 C.P.D. Paragraph 364 at 2; FIRMR,
Sections 32.206(f), (g).
We believe that the Navy did not properly test the market to
determine whether to issue a solicitation or order from IBM's schedule
contract for the required maintenance services. The CBD synopsis is
required to include sufficient information to permit the agency to
analyze responses from potential suppliers which do not have GSA
nonmandatory schedule contract. FIRMR, Sections 32.206(f), (g). The
FIRMR in section 32.206(f)(2) sets forth the minimum information which
must be contained in the CBD announcement. In particular, the CBD
notice must contain an accurate description of the equipment or services
to be ordered, including: "(D) The support requirement (e.g., hours of
maintenance coverage or response times) for the ordered items * * *."
FIRMR Section 32.206(f)(2)(v).
The Navy did not include an accurate description of its maintenance
services requirements in the CBD synopsis; rather, the CBD announcement
contained only a very general description of the type of work to be
performed. Most significantly, the CBD synopsis did not include any
indication of the hours of required coverage or the required response
times for these maintenance services. Ultimately, it was the 2-hour
response time which became the determining factor in the Navy's decision
ti issue a purchase order to IBM rather than soliciting for offers on a
competitive basis. At a minimum, the Navy should have indicated that
the user activity's needs were such that a 2-hour response time was
mandatory. While Navy representatives did ask both Sorbus and Federal
Services Group how long they would take to respond to requests for
services, the record shows that the Navy specifically did not tell
Federal Services Group that its 4-hour response time was not adequate or
that 2 hours was the maximum acceptable response time. Federal Services
Group states that "normally" it can respond to requests for services in
the same manner as is required of IBM under its schedule contract within
a 2-hour period and it would have so indicated had it been informed of
the Navy's needs in this regard; the Navy has provided no evidence to
show that Federal Services Group would not be able to meet the user
activity's actual, unstated, response-time needs.
Moreover, in this regard, we note that IBM's schedule contract states
that IBM maintenance personnel will "normally" arrive at the government
installation within 2 hours after repairs have been requested; the IBM
contract also specifically indicates that in some instances a
malfunction may not be diagnosed and repairs may not begin within 2
hours after a request therefor and states the procedures which will be
followed by IBM in such instances. It thus appears from the Navy's
acceptance of a response time fo more than 2 hours from IBM in certain
circumstances that the unstated, 2-hour response requirement may not be
a mandatory requirement at all, but rather, a desired service expected
of the contractor in most instances.
In these circumstances, we find that Navy's failure to describe
accurately its minimum needs -- in particular, the required response
time -- in either the CBD synopsis or during conversations with the
protester was inconsistent with the FIRMR synopsis requirement at
section 32.206(f) and left potential contractors with having to guess
which provisions of IBM's contract were crucial to the Navy.
Furthermore, in view of the fact that IBM's price is approximately
$15,553 more than Federal Services Group's proposed price, the Navy's
award to IBM may be inconsistent with the FIRMR mandate that agencies
procure automated data processing resources using the method which will
achieve the lowest cost alternative. FIRMR, Sections 32.206(a)(2) and
32.206(g). Compare Spectrum Leasing Corp., B-205367, Mar. 4, 1982, 82-1
C.P.D. 199, wherein we upheld the Marine Corps' decision to reject the
protester's response to the CBD synopsis as unacceptable and to purchase
from the non-mandatory schedule contractor, in part, because the CBD
synopsis adequately communicated the mandatory nature of the delivery
requirement which the protester's proposal failed to meet.
For the above reasons, we sustain Federal Services Group's protest.
We recommend that the Navy properly synopsize its actual maintenance
services needs for the remaining contract period (until September 30,
1986) as well as for any foreseeable follow-on contract period in accord
with the FIRMR synopsis requirements and this decision in order to
determine whether there are responsible firms which will compete with
IBM if a solicitation is ultimately issued. The Navy will then be able
to determine the lowest cost alternative for procuring its maintenance
services as required by the FIRMR. By letter of today, we are notifying
the Secretary of the Navy of our recommendation.
The protest is sustained.
B-222816, 65 Comp. Gen. 651
Matter of: Little Susitna Company, June 17, 1986
Protest contending that the award of an architectural and engineering
(A-E) contract for work to be performed in Alaska to a non-Alaskan firm
violates section 8078 of the Department of Defense (DOD) Appropriations
Act of 1986, which requires, under certain circumstances, that firms
which perform work in Alaska hire Alaskan residents, is denied. The act
does not preclude the award of A-E contracts for work to be performed in
Alaska to non-Alaskan firms, but, in effect, requires non-Alaskan firms
to hire Alaskan residents for work performed in Alaska under DOD
contracts.
Protester's new and independent ground of protest is dismissed where
the later-raised issue does not independently satisfy rules of General
Accounting Office (GAO's) Bid Protest Regulations.
Whether a contract requirement is met during performance of the
contract is a matter of contract administration which General Accounting
Office (GAO) will not consider.
Little Susitna Company (Susitna), located in Anchorage, Alaska,
protests the Department of the Navy's selection of Wesley Bull &
Associates, Inc. (Wesley), to perform architectural and engineering
(A-E) services in connection with the repair and restoration of a
communication cable plant at Adak, Alaska. The protester contends that
the award to Wesley, a non-Alaskan firm, is improper because it violates
section 8078 of the Department of Defense (DOD) Appropriations Act of
1986 (Act), Pub. L. No. 99-190, 99 Stat. 1214-1215 (1985), which
allegedly prohibits an award of a DOD contract for work in Alaska to a
non-Alaskan firm.
The protest is denied in part and dismissed in part.
On November 22, 1985, and January 3, 1986, the Navy published in the
Commerce Business Daily (CBD) a request for expression of interest from
A-E firms to perform the above-mentioned services. The procurement was
conducted under special procedures prescribed in the Brooks Act for the
acquisition of A-E services. See 40 U.S.C. Sections 541-544 (1982). In
accordance with the CBD announcement and Brooks Act procedures,
interested A-E firms were to submit a statement of qualifications, on
standard form (SF) 255, so that the Navy could determine the firms'
capabilities relative to the seven selection criteria stated in the CBD
announcement. Wesley was considered the most qualified firm to perform
the work and was selected for contract award in accordance with Brooks
Act procedures.
Susitna argues that the selection of Wesley violated section 8078 of
the Act because Wesley is not an Alaskan firm. Section 8078 of the Act
provides:
Notwithstanding any other provision of law, each contract awarded by
the Department of Defense in fiscal year 1986 for construction or
services to be performed in whole or in part in a State which is not
contiguous with another State (Alaska or Hawaii) and has an unemployment
rate in excess of the national average rate of unemployment as
determined by the Secretary of Labor shall include a provision requiring
the contractor to employ, for the puropse of performing that portion of
the contract in such State that is not contiguous with another State,
individuals who are residents of such State and who, in the case of any
craft or trade, possess or would be able to acquire promptly the
necessary skills: Provided, That the Secretary of Defense may waive the
requirements of this section in the interest of national security.
We disagree with Susitna's contention that section 8078 of the Act
prohibits the award of this contract to a non-Alaskan firm. In our
view, section 8078 of the Act merely requires that each contract awarded
by DOD in fiscal year 1986 for construction or services to be performed
in Alaska shall include a provision requiring the contractor to employ,
for the puropse of performing that portion of the contract in Alaska,
individuals who are residents of Alaska. Thus, where, as here, the Act
applies, the DOD contracting activity awarding the contract must include
a provision for hiring Alaskan residents for work to be performed in
Alaska.
In this connection, the Navy, in its report on the protest, has
indicated that it intends to comply with the requirements of section
8078 of the Act by inserting the following clauses into Wesley's
contract prior to award:
(a) The contractor shall employ, for the purpose of performing that
portion of the contract work in the State of Alaska, individuals who are
residents of the state, and who, in the case of any craft or trade,
possess or would be able to acquire promptly the necessary skills to
perform the contract.
(b) The Contractor agrees to insert the substance of this clause,
including this paragraph (b), in each subcontract.
Thus, the Navy is complying with the Act's requirement to include an
Alaskan resident hiring provision in the protested contract and,
therefore, the contract award does not violate section 8078 of the Act.
In its comments on the agency report, filed more than 5 weeks after
Susitna's initial protest was filed, Susitna raises for the first time,
the contention, based on conjecture, that the individuals listed in
Wesley's SF 255 qualifications statement all reside in the State of
Washington. Susitna argues, therefore, that if this contention is true,
Wesley would have to change its design team in order to comply with the
requirement for hiring Alaskan residents to perform the work in Alaska,
thereby making Wesley's SF 255 an inaccurate reflection of its
qualifications. In this case, Susitna asserts the selection of Wesley
based on the SF 255 improper.
Susitna's newly raised protest contention is untimely. Our Bid
Protest Regulations require that a protest be filed within 10 working
days after the basis of the protest is known or should have been known.
See 4 C.F.R. Section 21.2(a)(2) (1986). Where a protester initially
files a timely protest and later supplements it with new and independent
grounds for protest, the later-raised allegations must independently
satisfy these timeliness requirements. Siska Construction Company,
Inc., B-218428, June 11, 1985, 85-1 C.P.D. Paragraph 669. Our
Regulations do not contemplate the unwarranted piecemeal development of
protest issues. See Baker Company, Inc., B-216220, Mar. 1, 1985, 85-1
C.P.D. Paragraph 254. Since Susitna's newly raised contention is based
solely on Susitna's suspicions and could have been raised when Susitna
filed its protest, it is untimely and will not be considered. Baker
Company, Inc., B-216220, supra.
Finally, to the extent Susitna is claiming that Wesley will not meet
the contractual requirement to hire Alaskan residents for work to be
performed in Alaska, we dismiss this aspect of the protest. Once a
contract has been awarded, the question of whether a contractor actually
meets its contractual obligations is a matter of contract administration
which is the responsibility of the procuring agency and is not
encompassed by our bid protest function. 4 C.F.R. Section 21.3(f)(1)
(1986); Right Away Foods Corp. -- Reconsideration, B-219676.4, Mar. 24,
1986, 86-1 C.P.D. Paragraph 287.
We deny the protest in part and dismiss the remainder.
B-220941, 65 Comp. Gen. 647
Matter of: John L. Duffy, June 11, 1986
Employee who traveled by a longer route and did not travel 300 miles
per day in connection with a permanent change of station explains that
the route and delay resulted from his wife's illness. The agency may
reimburse the employee on the basis of the mileage and time claimed if
they determine that the employee has explained to their satisfaction the
reasons for the alternate route and delay.
An agency is responsible for determining the reasonableness and meal
and miscellaneous expenses claimed during a temporary quarters
subsistence expense period. The medical condition of a transferred
employee's wife should be taken into account to the extent restaurant
meals were required and criteria used to determine reasonableness of
expenses based on restaurant meals rather than meals taken in the
temporary lodging was appropriate.
Indications that a transferred employee's wife was ill prior to their
occupancy of temporary quarters does not preclude the possibility that
the subsequent extension of authority to stay in temporary quarters was
precipitated by circumstances occurring during the initial period as the
regulations require. An extension documented some time after the fact
based upon an assertion of timely verbal approval will support payment
for the additional temporary quarters subsistence allowance period.
The decision is in response to a request from the Department of
Health and Human Services /1/ for our decision concerning payment of
several claims contained in a reclaim voucher submitted by John L.
Duffy, an employee of the Public Health Service. Payment of the amounts
claimed is not precluded by our decisions but the agency must determine,
based on the facts and circumstances involved, whether and to what
extent reimbursement should be authorized.
On August 6, 1984, Mr. Duffy was issued a travel order incident to a
permanent change of station from San Francisco, California, to Seattle,
Washington. The travel order authorized mileage, per diem, and 60 days'
temporary quarters subsistence allowance for himself and his family.
Mr. Duffy and his family traveled by privately-owned automobile
August 13, through August 17, 1984. In Seattle, they occupied temporary
quarters from August 18 through October 29 -- a total of 73 days.
In April 1985, Mr. Duffy submitted his change-of-station travel
voucher and in May 1985, the responsible financial management office
disallowed various parts of the claims submitted. Mr. Duffy
subsequently submitted a reclaim voucher requesting payment of the
amounts previously denied. This voucher was forwarded to us for
consideration.
Mr. Duffy's claim for expenses incident to his trip from San
Francisco to Seattle is computed on the basis of 4 days per diem
allowance and mileage for a 900-mile trip. He states that his wife's
illness required them to take a longer-than-normal route, and also
caused them to travel less than an average of 300 miles per day.
The financial management official disallowed a part of his claim for
mileage, stating that the regularly traveled distance between San
Francisco and Seattle is 800 miles. Part of the claimed per diem
allowance was disallowed on the basis that a government traveler
performing change-of-station travel is required to travel an average of
300 miles per day.
Under Chapter 2, Part 2 of the Federal Travel Regulations (FTR), a
transferred employee is entitled to transportation between his old and
new duty stations in accordance with the provisions of FTR Chapter 1.
For authorized travel by privately-owned vehicle FTR, para. 1-4.1,
provides that the basis for a mileage payment shall be the distance
shown in standard highway mileage guides. Any substantial deviation
from distances shown in the standard highway mileage guides shall be
explained. In addition, FTR Chapter 1, Part 2, para. 1-2.5, provides
that all travel shall be by a usually traveled route unless it is
satisfactorily established that travel by a different route is a matter
of official necessity.
Concerning the number of days of per diem which may be authorized for
a given trip, FTR, para. 2-2.3(d)(2) provides the per diem allowances
will be paid on the basis of the actual time used to complete the trip,
but that the minimum driving distance per day of not less than 300 miles
shall be prescribed as reasonable. Exceptions to that requirement may
be authorized by an agency based on circumstances beyond the employee's
control and acceptable to the agency. As an example, an acceptable
reason is travel by a physically handicapped employee. See also Steve
Stone, 64 Comp. Gen. 310 (1985).
The employee explained that the use of the longer coastal route was
to avoid the heat over the shorter inland route which would have been
harmful to his wife for medical reasons. In a note on a copy of the
Travel Voucher Adjustment Notice he indicates further that his wife was
ill with a miscarriage possible.
Although we have not previously authorized deviations from the direct
route because of the medical condition of a member of the family in
permanent change-of-station cases, we have not precluded consideration
of this factor in determinations made under paragraphs 1-4.1 and
2.2-3d(2), FTR. Therefore, if the agency finds that the employee has
satisfactorily explained the excessive mileage and given an acceptable
explanation of his failure to travel an average of 300 miles a day, we
would not question payment on that basis.
In this case it appears that the agency has not approved the excess
mileage or time on the basis of the employee's explanation to date. If
this matter is reconsidered and a determination made that the excess
distance and time were justified, payment on that basis would not be
precluded by our decisions.
Mr. Duffy's claim for expenses incident to his first 60 days in
temporary quarters included $3,598.40 for meals; $199 spent in
coin-operated laundry facilities; and $1,720 for lodging expenses. He
explained that it was necessary for his family to take nearly all of
their meals in restaurants because of his wife's illness.
The agency limited the amount reimbursable for nonlodging (i.e. meals
and laundry) expenses to 49 percent of the maximum subsistence allowance
established in Chapter 2, Part 5 of the Federal Travel Regulations. The
reduced allowance was based on the principle that expenses for lodging
should constitute the major portion of the total expenses incurred. The
finance officer indicates that the impact Mrs. Duffy's physical
condition may have had on the expenses incurred was not considered.
We have repeatedly held that an employee is entitled to reimbursement
for only reasonable expenses incurred incident to a temporary duty
assignment since travelers are required by paragraph 1-1.3a of the FTR
to act prudently in incurring expenses. In applying this requirement to
claims for reimbursement for meals and miscellaneous expenses while
entitled to a temporary quarters subsistence allowance we have
consistently held that it is the responsibility of the employing agency
to make the initial determination as to the reasonableness of the
claimed expenses. /2/
In considering whether an agency has acted in a reasonable manner in
reducing the reimbursement for meals below the amount claimed in
connection with payment of temporary quarters subsistence allowance, we
have determined that the use of generally available statistical data on
the cost of meals is appropriate. These cases, however, have involved
claims for the cost of groceries for meals prepared at the temporary
quarters. In this case the employee has said that, due to his wife's
illness, they ate virtually all their meals in restaurants. Thus, the
situation is similar to that involved in the payment of actual
subsistence expenses for individuals on temporary duty because in those
circumstances employees would be required to take meals in restaurants,
generally costing more than groceries for meals consumed at temporary
quarters. Accordingly, it seems appropriate that criteria used by the
agency for determining reasonableness was derived from our decisions
relating to reasonable meal costs for employees on temporary duty in
high cost geographical areas. In those cases we have approved agency
use of the criterion, derived from the Federal Travel Regulations, that
lodgings should represent the major part of the subsistence allowance.
/3/ The claimant was limited to 49 percent of the allowable maximum
reimbursement for temporary quarters subsistence allowances for his
family.
We have also held that the determination of the reasonableness of
meal expenses should be made on a case-by-case basis taking into account
the particular circumstances involved. Under that rule the illness of
the spouse could be properly considered in determining reasonableness.
However, it appears that this condition was adequately addressed by the
agency since they applied a rule used in situations where meals are
taken in restaurants and not data regarding the normal cost of groceries
for meals taken in temporary quarters. Since the limitation on
reimbursement to the employee was predicated upon a reasonable
limitation as applied to the particular facts involved we will not
substitute our judgment for that of the agency with respect to maximum
allowable for meals and miscellaneous expenses during the occupancy of
temporary quarters.
Mr. Duffy's voucher also contains a claim for 13 days temporary
quarters allowance beyond the 60 days initially authorized. In support
of this claim, he has presented to the financial management office an
amendment to his travel order, signed by the same official who
authorized his original travel order. The amendment, dated July 11,
1985, states that the 13 additional days of temporary quarters "* * *
were verbally approved by approving official prior to expiration of
temporary quarters, however, due to administrative oversight the travel
order was not amended at that time."
The financial management office questions the validity of this
amendment on the basis of FTR, para. 2-5.2(a)(2) (Supp. 10, November 14,
1983), which states:
* * * Extensions of the temporary quarters may be authorized only in
situations where there is a demonstrated need for additional time in
temporary quarters due to circumstances which have occurred during the
initial 60-day period of temporary quarters occupancy * * *. (Italic
supplied.)
The agency refers to Mr. Duffy's memo of July 31, 1984, which
apparently indicated his wife's medical condition existed prior to the
time they occupied temporary quarters in Seattle. Officials in the
financial management office question whether the extension was valid
since FTR, para. 2-5.2 requires an extension to result from
circumstances occurring during the initial 60-day period.
The fact that Mrs. Duffy's medical condition existed when the
transfer orders were initially issued does not require the conclusion
that subsequent events did not require the extension. There could have
been a change in the spouse's condition or other outside factors which
caused the original 60-day allowance to be inadequate which occurred
during the initial 60-day period. We are reluctant to assume that an
otherwise valid amendment authorized by the appropriate official did not
comply with the regulations.
We have noted the delay in issuing the travel order amendment
authorizing the extension of the temporary quarters subsistence
allowance period. Such a delay would, in most circumstances, cause
questions to be raised as to whether the extension was validly given.
However, in the circumstances of this case there appears to be no
question that the authorizing official was aware of the facts involved
at the time the temoprary quarters were being occupied and approved the
additional 13 days. In that connection we have consistently held that
approval of extensions in temporary quarters subsistence allowance
period, within the maximum prescribed by law, may be approved on a
retroactive basis if the facts show that an extension was in fact
approved and in keeping with agency practice. /4/
For the reasons stated the Department of Health and Human Services
may authorize additional reimbursement to Mr. Duffy for mileage and per
diem en route to his new duty station if it is determined that the extra
travel time was required by his wife's condition. The record does not
support a conclusion that additional temporary quarters subsistence
allowance should be paid for the time he occupied temporary quarters,
but it does support an extension of the temporary quarters subsistence
allowance for a period of 13 days.
(1) The request, dated October 15, 1985, was sent by Robert A.
Carlisle, an authorized certifying officer in HHS' Region X, Seattle,
Washington.
(2) Jesse A. Burks, 55 Comp. Gen. 1107, 1110 (1976); Charles J.
Klee, B-189489, June 7, 1978; Gregory J. Abbott, B-193322, December 11,
1979; Thomas D. Voglesonger, B-196030, December 11, 1979; Eugene R.
Pori, B-198523, October 6, 1980.
(3) Normal J. Kephart, B-186078, October 12, 1976; Micheline Motter
and Linn Huskey, B-197621, B-197622, February 26, 1981; R. Edward
Palmer, 62 Comp. Gen. 88 (1982); Charles P. Boucher, B-213021, May 2,
1984.
(4) Gerald R. Adams, B-186549, March 7, 1977; see also, Gerald M.
Anderson, B-189556, December 15, 1977; Joseph D. Argyle, B-186317,
January 24, 1977.
B-218165.2 & .3, 65 Comp. Gen. 643
Matter of: United Food Services -- Reconsideration, June 10, 1986
Decision sustaining protest against agency's use of negotiated
cost-type contract for acquisition of mess services is modified to
recommend assessment of overall risks of procurement and determination
of propriety of use of cost-type contract. If agency reasonably
determines that uncertainty is so great or has such a direct impact on
pricing or costs that it directly affects an offeror or bidder's ability
to project its costs of performance so as to preclude use of a
fixed-price contract, agency may exercise options under current
cost-type contract in accordance with Federal Acquisition Regulation.
The Department of the Army and Rice Services, Inc. (Rice) request
reconsideration of our decision United Food Services, Inc., B-217211,
Sept. 24, 1985, 64 Comp. Gen. 880, 85-2 CPD Paragraph 326. In that
decision we found that the Army's decision to use a cost-type,
negotiated contract in lieu of a fixed-price, formally advertised
contract in procuring mess services at Fort Jackson, South Carolina, was
not justified. In sustaining United Food Services' protest, we noted
that although the Competition in Contracting Act (CICA), Title VII of
Pub. L. 98-369, eliminated the statutory preference for formally
advertised (now "sealed bid") procurements, CICA and the Federal
Acquisition Regulation (FAR) provide criteria for determining whether a
procurement should be conducted by the use of sealed bids or competitive
proposals. We recommended that the Army not exercise contract renewal
options with the awardee, Rice, and instead conduct a new procurement
under the applicable provisions of the FAR. We modify our prior
decision.
The Army states that its determination to use a cost-type negotiated
contract at Fort Jackson was based on the lack of reliable data on which
to predict the effort required and the population of trainees to be fed
with sufficient accuracy to permit offerors to bid on a fixed-price
basis. The Army contends that budgeted recruitment and training goals
did not provide a sufficiently accurate estimate of workload and that
actual experience under the contract thus far has shown monthly
attendance fluctuations above and below the scheduled number of trainees
by over 20 percent with only a few days notice. The Army states that
most food service contractors have stated that they could provide
fixed-price services if meal counts deviated no more than plus or minus
20 percent and has provided an analysis of meal count data from five
military installations which shows variations in monthly average meal
count ranging from -38 percent to +31 percent from the annual average.
The Army also states that all but one of the decisions relied upon in
our original decision concerned contracts for dining facility attendant
services (mess attendant services), whereas the work involved under this
contract is for full food services, which encompass a wider variety of
services, such as determining how much food to requisition, accounting
for food use and cash receipts, preparing and serving food, and cleaning
dining facilities. Mess attendant services are reportedly less than 20
percent of the total effort under this contract.
Rice, the awardee, states that our review of a contracting agency's
determination to negotiate is limited to ascertaining whether the
determination is reasonably based, and cites Government Sales
Consultants, Inc., B-211375, Nov. 9, 1983, 83-2 CPD Paragraph 546, and
W. B. Jolley, B-209933, June 6, 1983, 83-1 CPD Paragraph 609. Rice
asserts that the innovative approach that it has been required to adopt
at Fort Jackson, coupled with unforeseen problems, such as government
transportation shortages which caused delays in food deliveries,
inoperable and defective government-furnished equipment, and uncertain
meal schedules because of weather and the vagaries of basic training,
demonstrate that the Army's determination to use a cost-type contract at
Fort Jackson was reasonable. Rice further argues that implementation of
our recommendation that the Army not exercise any contract renewal
options is both disruptive and unnecessary under CICA.
In a more recent decision involving essentially the same parties,
United Food Services, Inc., B-220367, Feb. 20, 1986, 86-1 CPD Paragraph
177, concerning a procurement conducted under CICA, we found that the
Army's decision to use a cost-plus-award-fee contract to acquire full
food services at Fort Dix, New Jersey, was justified. (For clarity, we
will refer to this latter case as the "Fort Dix" decision and to the
present reconsideration as the "Fort Jackson" procurement.) Although
CICA eliminated the statutory preference for formally advertised (now
"sealed bid") procurements, the preference for fixed-price contracts was
preserved, and it was the Army's different treatment of this issue in
these two procurements which led us to reach different results.
In our decision on the Fort Jackson procurement, we pointed out that
we have generally rejected the argument that variations in meal
requirements and attendance justify the use of negotiated cost-type
contracts. We find support for this view in Army Regulation 30- (AR
30-1), September 30, 1985. This regulation, presumably drawing on Army
experience current at the time of the Fort Jackson procurement, states
that the normal bid unit for government-owned, contractor-operated
dining facility operations is per facility per day of operations
(paragraph 13-3a) and points out specifically that some factors, such as
the number of personnel subsisted, have no direct relationship to price
or cost (paragraph 13-3b(3)). The example contained in this regulation
is especially pertinent to the justification offered by the Army at Fort
Jackson:
For example, if the Government has estimated an average of 125 diners
per meal, the contractor is operating at minimum staffing. It has been
established that this minimum staffing would accommodate a range of 1 to
175 diners per meal, therefore, a new estimate of 165 diners per meal
would not trigger an increase in price. (AR 30-1, paragraph 13-3b(3)).
We think these two sentences aptly illustrate the basis for our
consistently held view, often expressed in the "dining facility
attendant" cases to which the Army now refers, that not every
uncertainty precludes the use of a fixed-price contract. In our
judgment, the issue is not whether there is uncertainty, but whether
that uncertainty is so great or has such a direct impact on pricing or
costs that it directly inhibits an offeror's or bidder's ability to
project its costs of performance.
In the Fort Dix procurement, the Army relied not only on variations
in head count in justifying the use of a cost-type contract, but also on
uncertainties associated with the initiation of a new recycling effort,
contractor access to disposal sites, and other factors which would have
a direct effect on an offeror's ability to project its costs of
performance. A vendor could not, for instance, predict whether it
needed a small number of trucks (and staff) for multiple daily trips to
a nearby disposal site or a large number of trucks to make single trips
daily to a distant site. We believed that the addition of those
uncertainties, particularly when viewed cumulatively, had the effect of
so impeding offerors' abilities to estimate their costs of performance
with reasonable certainty that the Army properly could view the use of a
cost-type contract as appropriate for the situation.
In contrast, in the Fort Jackson procurement, the Army merely relied
on its inability to accurately predict the trainee population as
justification for use of a cost-type contract, with no demonstration
that the accompanying uncertainty precluded reasonable estimation by
vendors of the cost of performance. The Army's present request for
reconsideration is little more than an expanded restatement of the
Army's original position -- that meal count variations alone are
adequate to justify a cost-type contract. We rejected this position in
our original decision and find it no more compelling now.
We are mindful, however, that this contract is, as the Army argued,
more complex than the traditional mess attendant contract and involves
more difficult cost and pricing issues, many of which have been
identified by Rice. These issues, however, appear not to have been
evaluated by the Army in its determination to use a cost-type contract,
unlike the situation in the Fort Dix procurement. The present record,
therefore, affords us no basis upon which to assess whether use of a
cost-type contract at Fort Jackson might not be justified in a manner
consistent with our decision on the Fort Dix procurement.
In view of the foregoing, we find it appropriate to modify our prior
decision to recommend that the Army assess the overall risks and
uncertainties associated with the Fort Jackson procurement to determine
the propriety of use of a cost-type contract. If, as a result of this
study, the Army reasonably determines that a cost-type contract is
appropriate, then in lieu of a new competition the Army may exercise the
options under the present contract in accordance with FAR Subpart 17.2.
Our prior decision is modified.
B-221846, 65 Comp. Gen. 640
Matter of: Temps & Co., June 9, 1986
An invitation for bids and the award of fixed-rate, labor-hour,
indefinite-quantity requirements contract for temporary clerical
services is defective where the method of evaluating bids only involved
the numerical averaging of hourly rates for each line item and not the
extension or "weighting" of the line item prices by the government's
best estimate of the quantities of hours required to determine the bid
that would result in the lowest ultimate cost to the government.
A solicitation which calls for bidders to submit option prices must
state whether the evaluation will include or exclude option prices to
allow for the submission of bids on an equal basis.
Temps & Co. (Temps) protests the award of a contract to Woodside
Temporaries, Inc. (Woodside), under invitation for bids (IFB) No.
C66025, issued by the Federal Home Loan Bank Board (FHLBB). The
procurement is for the acquisition of temporary clerical services.
Temps asserts that the agency's method for evaluating bids as provided
in the IFB was materially defective and, therefore, failed to assure
that an award to Woodside would result in the lowest ultimate cost to
the government. We sustain the protest.
The IFB contemplated the award of a fixed-rate, labor-hour,
indefinite quantity requirements contract for the following labor
categories: Secretary; Executive Secretary; Word Processor;
Accounting Clerk; File Clerk; Receptionist; and Para-Legal (line
items 001 through 007, respectively). The IFB described the type of
services and qualifications required in each category and incorporated a
current Department of Labor minimum wage rate determination. The IFB
also set forth the estimated number of personnel that would be required
in each labor category: Secretary (20); Executive Secretary (5); Word
Processor (12); Accounting Clerk (2); File Clerk (3); Receptionist
(2); and Para-Legal (3). Bidders were to bid hourly rates for each
category of personnel.
The IFB advised bidders that the contemplated contract would be
awarded for a 9-month base period (January 6, 1986, through September
30, 1986), with the right of the government to extend the contract for
up to three additional 1-year periods. Although the IFB's schedule
sought option prices, bidders were not advised as to whether the options
would be evaluated in determining the successful bid.
Bids were opened on December 30, 1985. Seventeen bids were received,
and upon the permitted withdrawal of the three lowest bids on the basis
of mistake, the contracting officer determined that Woodside was the
remaining low, responsive bidder. According to the FHLBB's
administrative report, bids were evaluated by numerically averaging the
hourly rates bid for the base period only. Woodside submitted the
following hourly rates for the base period:
001 Secretary ....................... $12.15
002 Executive Secretary .............. 12.83
003 Word Processor ................... 13.50
004 Accounting Clerk .................. 6.41
005 File Clerk ........................ 6.08
006 Receptionist ...................... 6.75
007 Para-legal ........................ 9.45
The numerical average of these rates was $9.59 (hourly rate total of
$67.17 divided by 7), the lowest average among the remaining bids.
(Temps' average hourly rate was $11.14). Accordingly, upon a
determination of Woodside's responsibility as a prospective contractor,
the firm was awarded the contract on January 15, 1986. However, after
examining the bid documents, Temps then protested the award to this
Office on January 30.
Temps raises numerous allegations with respect to the conduct of the
procurement, but the firm's essential ground of protest is that the
agency's method of evaluating bids as set forth in the IFB was so
defective that the FHLBB had no assurance that an award to Woodside
would result in the lowest ultimate cost to the government.
Specifically, Temps argues that the numerical averaging approach was
improper because a bid that proposed high hourly rates for the
high-volume labor categories (i.e., Secretary and Word Processor) and
low hourly rates for the low-volume categories would be more favorably
evaluated under that approach than a bid offering more balanced hourly
rates for all labor categories. In the firm's view, the proper approach
would have been to evaluate bids on the basis of "weighted" prices --
that is, hourly rates extended by the estimated number of personnel
required in each labor category.
Moreover, Temps notes that the IFB failed to advise bidders whether
the options would be evaluated in determining the successful bid, and,
consequently, that bidders may not have competed on a fair and equal
basis for this reason. The firm urges that it would have displaced
Woodside as the remaining low bidder if the agency had evaluated both
its base period and option prices under the "weighted" approach.
At the outset, we agree with the FHLBB that Temps' protest is
untimely. Our Bid Protest Regulations, 4 C.F.R. Section 21.2(a)(1)
(1985), specifically provide that protests based upon alleged
improprieties in an IFB which are apparent prior to bid opening must be
filed prior to bid opening in order to be considered. See DSG, Ltd.,
B-218948, July 29, 1985, 85-2 CPD Paragraph 105. In our view, the
issues now raised by Temps should have been apparent to the firm prior
to the December 30, 1985, bid opening, and, therefore, its protest,
filed one month later, was clearly untimely. Nevertheless, because we
believe that the solicitation was materially defective by not providing
for the proper evaluation of bids, we will consider the protest under
the "significant issues" exception to our basic requirement for the
timely submission of protests. 4 C.F.R. Section 21.2(c). Exercise of
this limited exception is appropriate in these circumstances where this
is the first instance when the FHLBB is the affected "federal agency" in
a bid protest matter, and where the agency's potential exercise of its
right to extend the contract for a significant period could result in
substantially increased costs to the federal government. Therefore, our
consideration of the protest will provide useful guidance to the agency,
and it will enable corrective action to be taken with minimal disruption
to the government.
An IFB must clearly state the basis on which bids will be evaluated
for award, and we have recognized that a properly constructed
solicitation for an indefinite-quantity requirements contract must state
that the evaluation will include estimated quantities as a factor. The
rationale is that any award in an advertised procurement must be made to
the responsive, responsible bidder whose submitted price is the lowest
based on a measure of the total work to be awarded. A to Z Typewriter
Co. et al., B-215830.2 et al., Feb. 14, 1985, 85-1 CPD Section 198;
aff'd on reconsideration, B-218281.2, Apr. 8, 1985, 85-1 CPD Paragraph
404. Where the method for evaluating bids provides no assurance that an
award will in fact result in the most favorable cost to the government,
the IFB is materially defective. See North-East Imaging, Inc.,
B-216734, Aug. 28, 1985, 85-2 CPD Paragraph 237.
Thus, we have held that an IFB which indicated that selection for
award would be made on the basis of the sum of the offered unit prices
was defective per se, since there was a failure to apply the estimated
amount of services against the item prices in determining the low bid.
Allied Container Manufacturing Corp., B-201140, Mar. 5, 1981, 81-1 CPD
Paragraph 175. Here, the agency not only failed to provide a meaningful
estimate of the quantity of services required, but also attempted to
determine the lowest bid through a numerical averaging of the hourly
rates bid. More importantly, we also question why the agency expressed
its estimates in terms of the number of personnel that would be needed.
Rather, since the IFB clearly contemplated a fixed-rate, labor-hour
contract, a properly constructed solicitation would have expressed the
agency's estimated requirements in terms of the total number of labor
hours or personnel days for each personnel category, rather than
providing only the numbers of personnel estimated to be required. See
Ross Aviation, Inc., B-219658, Dec. 11, 1985, 85-2 CPD Paragraph 648.
In this regard, there was nothing in the IFB to indicate to bidders that
these temporary employees would work on a full-time basis, since the
FHLBB has in fact stated that the services were to meet an urgent
requirement "during this particularly hectic period in the savings and
loan industry * * *." A proper solicitation would have provided for the
evaluation of bids by extending the bidders' hourly rates for each line
item by the estimated hours to determine the low bidder. /1/ Thus,
because Woodside's submitted hourly rates had no direct relationship
with the total amount of work to be performed, see KISS Engineering
Corp., B-221356, May 2, 1986, 86-1 CPD Paragraph 425, the agency simply
had no assurance that an award to the firm would result in the most
favorable cost to the government.
Moreover, we believe the IFB was also defective by failing to advise
bidders as to whether the submitted option period prices would be
evaluated in determining the successful bid. The Federal Acquisition
Regulation (FAR), Section 17.203(b) (FAC 84-5, Apr. 1, 1985), provides
that a solicitation which calls for bidders to submit option prices must
state whether the evaluation will include or exclude option prices. See
Browning-Ferris Industries of South Atlantic, Inc. et al., B-217073 et
al., Apr. 9, 1985, 85-1 CPD Paragraph 406. Thus, by not knowing whether
bids would be evaluated with regard to either aggregate prices or the
base period price alone, the bidders here may not have submitted bids on
an equal basis.
On the record before us, we conclude that the IFB was materially
defective. Accordingly, by separate letter of today, we are
recommending to the Chairman of the FHLBB that no options be exercised
under Woodside's present contract and that any remaining requirements be
resolicited under a properly constructed IFB.
The protest is sustained.
(1) The estimate used must be based on the best information available
to the agency. D.D.S Pac, B-216286, Apr. 12, 1985, 85-1 CPD Paragraph
418.
B-221585, 65 Comp. Gen. 635
Matter of: Nonreimbursable Transfer of Administrative Law Judges,
June 9, 1986
Proposed transfer of 15 to 20 National Labor Relations Board
administrative law judges to Department of Labor on nonreimbursable
basis under the authority in section 3344 of title 5, which provides for
transfers, but does not indicate whether the transferring or receiving
agency is to pay for the judges, is improper. Where a detail is
authorized by statute, but the statute does not specifically authorize
the detail to be carried out on a nonreimbursable basis, the detail
cannot be done on that basis. Nonreimbursable details contravene the
law that appropriations be spent only on the objects for which
appropriated, 31 U.S.C. 1301(a), and unlawfully augment the
appropriation of the receiving agency. 64 Comp. Gen. 370 (1985)
affirmed.
Proposed detail of 15 of 20 administrative law judges (ALJs) from the
National Labor Relations Board (Board) to the Department of Labor on a
nonreimbursable basis for the remainder of fiscal year 1986 does not
conform to either of the exceptions in Comp. Gen. 370 (1985) in which we
generally found nonreimbursable details to be improper. The exception
where the detail has a negligible fiscal impact is a de minimus
exception for administrative convenience where the detail is for a brief
period and the number of persons and costs involved are minimal. The
detail of 15 to 20 ALJs and the related amount of salary expenses far
exceeds the de minimus standard we intended to establish. Furthermore,
the detail is not particularly related to the purpose for which the
Board's appropriations are provided. Thus the proposed nonreimbursable
detail does not fall within the other exception set forth in 64 Comp.
Gen. 370.
The Department of Labor asks whether it may utilize on a
nonreimbursable basis the equivalent of 10 judge years from the
administrative law judge corps of the National Labor Relations Board
(Board) during the remainder of fiscal year 1986. At this point in
fiscal year 1986, the Department's request for the equivalent of 10
judge years means 15 to 20 judges. For the reasons given below, we find
that the proposed transfer of administrative law judges (ALJs) is
improper.
The Department informs us that it needs additional ALJs to assist in
adjudicating a backlog of some 20,000 black lung cases, /1/ see 30
U.S.C. Sections 901 et seq. However, it cannot reimburse the Board for
its judges since it already is using all available black lung program
funds. Funds for the black lung program cases are appropriated in the
yearly Department of Labor appropriations acts under the line item
"Black Lung Disability Trust Fund." E.g., Pub. L. No. 99-178, 99 Stat.
1102. Funds for the Board's ALJs come from the yearly lump-sum salaries
and expense appropriation to the Board. Id.
The legislative history of both the 1985 Supplemental Appropriations
Act, Pub. L. No. 99-88, 99 Stat. 293, 370, and the fiscal year 1986
Department of Labor Appropriations Act, supra, reflects congressional
concern about the backlog and provides suggestions about how to resolve
it. The Senate report accompanying the 1985 Supplemental directed the
Department, to the extent practical, to increase its efforts to
temporarily borrow ALJs from other agencies with less pressing
workloads. S. Rep. No. 82, 99th Cong., 1st Sess. 158 (1985). For
fiscal year 1986, aside from recommending an additional $4.4 million for
15 /2/ new ALJs, and a substantial number of attorneys and support
positions, the Senate again directed the Department to actively pursue
borrowing ALJs from other agencies. S. Rep. No. 151, 99th Cong., 1st
Sess. 18-19 (1985). Both congressional debate and hearings accompanying
the 1986 appropriations act contain similar comments. 131 Cong. Rec. S.
8586 (daily ed. June 20, 1985) (statement of Senator Byrd); 131 Cong.
Rec. H. 8033-34 (daily ed. Oct. 2, 1985) (statement of Representative
Rehall); Departments of Labor, Health and Human Services, Education and
Related Agencies Appropriations for Fiscal Year 1986: Hearings before a
Subcomm. of the House Appropriations Comm., 99th Cong., 1st Sess. at
54-55, 1257, 1318-19 (pt. 1, 1985) (statements of Department officials).
Although the Senate Report accompanying the 1985 Supplemental
suggested that the borrowing be done on a nonreimbursable basis, S. Rep.
No. 82, supra, at 158, the Senate Report accompanying the 1986
Department of Labor appropriations act was silent about how the
borrowing was to be funded. S. Rep. No. 151, supra, at 18-19. In
hearings on the fiscal year 1986 appropriations act, however, several
Department officials suggested that the borrowing could only be done on
a reimbursable basis. House hearings, supra, at 1318-19; Departments
of Labor, Health and Human Services, Education and Related Agencies
Appropriations for Fiscal Year 1986: Hearings on H.R. 3424 before a
Subcomm. of the Senate Comm. on Appropriations, 99th Cong., 1st Sess.
357 (pt. 2, 1985) (Comments of Chief ALJ Litt of the Labor Department).
The Department points out that section 3344 of title 5 of the United
States Code, which permits agencies occasionally or temporarily
insufficiently staffed with ALJs to use /3/ ALJs of other agencies, is
silent on the question of reimbursement. Thus a question is raised
about whether a nonreimbursable borrowing would conflict with our
decision in 64 Comp. Gen. 370 (1985) in which we held that, absent
specific statutory authority, nonreimbursable inter-agency and
intra-agency details were unlawful. This holding, which reversed
previous GAO decisions, found that such details violated the law that
appropriations be only spent on the objects for which they are
appropriated, 31 U.S.C. Section 1301(a), since the appropriation funding
the details neither provided for the details nor were so connected with
the work that was being done that the details also furthered a specific
purpose for which the appropriation was made. Correspondingly, we found
that such details augmented the appropriations of the receiving agency.
Our holding covered situations both in which the detail was not
authorized by statute, and in which the detail was so authorized, 5
U.S.C. Section 3341, but the statute said nothing about how the detail
was to be funded. /4/ 64 Comp. Gen. at 376-82.
In our decision, however, we did formulate two exceptions to the
prohibition: one where the detail involves a matter (1) related to the
loaning agency's appropriations and which would aid it in accomplishing
a purpose for which its appropriations are provided; and (2) where the
detail would have a negligible impact on the loaning agency's
appropriations and would conform to the time limits in Federal Personnel
Manual Chapter 300, subchapter 8. /5/ 64 Comp. Gen. at 380-81.
In response to our decision the Office of Personnel Management (OPM)
incorporated these exceptions into Federal Personnel Manual Letter
number 300-31, dated Aug. 27, 1985. The Department of Labor urges that
the described transfer would conform to the second exception. As only a
limited number of Board ALJs would be detailed, and all additional
expenses resulting from the detail, such as transportation and travel
allowances, would be paid for by the Department, it thinks that the
detail would have a negligible fiscal impact on Board appropriations.
Furthermore, since the time involved would be for less than a year and
would be coordinated through OPM's ALJ staffing group, the detail would
conform to OPM's time limitations. Informally, the Department also has
suggested that the transfer involves a labor matter related to the
Board's functions and will aid the Board in accomplishing a purpose for
which the Board's appropriations are provided. The Board does not agree
with this last assertion, according to a letter dated January 30, 1986,
which we received from its Assistant Director for Administrative Law
Judges Staffing Group. Neither the Board nor OPM object to the idea of
the proposed detail so long as it is legally proper.
Initially, we would point out that neither of the exceptions set
forth in 64 Comp. Gen. at 380-81 and adopted by OPM in FPM Letter 300-31
applies here. The Department misconstrues the exception where a detail
would have a negligible fiscal impact. This is a de minimus exception
for administrative convenience when a detail is for a brief period and
the number of persons and costs involved are minimal, notwithstanding
that 31 U.S.C. Section 1301(a) technically would be violated. The
detail proposed here, involving 15 to 20 ALJs and the related
substantial amount of salary expenses, far exceeds the de minimus
standard we intended to establish. Although we think it prudent not to
be overly restrictive and state what precise dollar amount or number of
people participating in a detail would be considered de minimus, the
Board indicates that the salary costs, exclusive of benefits, would come
to $674,250 for the balance of fiscal year 1986. In view of the modest
size of the NLRB's fiscal year 1986 appropriation for salaries and
expenses, it would be difficult to conclude that this amount, if not
reimbursed, would have a "negligible fiscal impact." e are also unable
to find that the transfer of Board ALJs to the Department to handle
Black Lung Program cases is so related to the purpose for which the
Board's appropriations are provided, that the detail falls within the
first exception. There is no particular connection between the Board's
appropriations and the resolution of Black Lung Program cases. By
statute, the Black Lung Program is a Department of Labor responsibility.
See 30 U.S.C. Sections 901 et seq. Moreover, as mentioned earlier, the
Board itself finds the first exception "clearly not applicable."
Consistent with this discussion, it is evident that the propriety of
the detail depends upon the authority provided by section 3344 of title
5. This section was enacted as part of section 11 of the Administrative
Procedure Act of 1946, Pub. L. 79-404, 60 Stat. 237, 244, the section
which described how ALJs (then called hearing examinaners) were to be
paid and used. Neither the legislative history of section 3344 of title
5 nor the regulations implementing the section, 5 C.F.R. Sections
930.201 et seq., provide any clarification about whether the loaning or
borrowing agency is to pay for the detailed ALJs.
Neither OPM, the agency responsible for administering the ALJ
program, nor the agencies involved have interpreted section 3344 one way
or the other. Nevertheless, OPM has told us that its policy is to allow
agencies to work out the issue of reimbursement between themselves. As
a practical matter, OPM indicates that the vast majority of the 150 to
200 ALJs who are temporarily transferred per year to hear one or a
number of cases in agencies other than the agency by whom they are
employed are paid by the agency to whom they are transferred. Moreover,
even though the transferring agency does occasionally pick up the costs,
this has been done when the transfer involves minimal costs and never,
to our knowledge, in a situation like the present one which involves a
large number of ALJs.
We see no reason why the basis for our holding in 64 Comp. Gen. 370
(1985) that section 3341 of title 5 does not authorize nonreimbursable
details should not apply here. As indicated, section 3344, like section
3341, is a statute that authorizes details but says nothing about
reimbursement.
Section 1301(a) of title 31 is one of a number of statutes expressing
Congress' constitutional control over the appropriations process, U.S.
Const. art. 1, Section 9, cl. 7. As pointed out in 64 Comp. Gen. at
382, when the Congress has found it desirable to do so it has enacted
legislation that specifically allows for nonreimbursable details. Thus,
for example, section 3343 of title 5 specifically authorizes such
details to international organizations.
It is true that the Senate reports referenced above clearly intended
the Department to borrow ALJs to help dispose of the black lung case
backlog. Moreover, at least in its report accompanying the 1985
Supplemental Appropriations Act, S. Rep. No. 82, supra, the Senate
indicated that the borrowing, to the extent practicable, be done on a
nonreimbursable basis. However, it is well settled that suggestions or
expressions of congressional intent in committee reports, floor debates
and hearings are not legally binding unless they are incorporated either
expressly or by reference in an appropriations act itself or in some
other statute. 64 Comp. Gen. 359, 361 (1985); 55 Comp. Gen. 307, 319
(1975). Moreover, in this instance, even the Senate's position is not
clear. The report accompanying the 1986 Labor Department appropriation
said nothing about how the directed details were to be paid for. This
was consistent with departmental suggestions in the hearings that
nonreimbursable transfers would be unlawful. We also point out that in
1978, congressional concern with nonreimbursable details was expressed
during the process of enacting amendments clarifying the authority for
employing personnel in the White House Office and the President's
authority to employ personnel to meet unanticipated needs, Pub. L. No.
95-570, 92 Stat. 2445, 2449-50. S. Rep. No. 868, 95th Cong., 2d Sess.
1, 4, 11 (1978); H.R. Rep. No. 979, 95th Cong., 2d Sess. 10-11 (1978).
For the reasons given above, we affirm the principles stated in 64
Comp. Gen. 370, and find that the proposed transfer in this case is
improper if made on a nonreimbursable basis.
(1) The number of black lung cases appealed to the Department's ALJ
corps increased from 484 at the end of fiscal year 1979 to 20,450 at the
end of fiscal year 1984. According to the Department, this increase
resulted primarily from the Black Lung Benefits Reform Act of 1977, Pub.
L. No. 95-239, 92 Stat. 95, 96-97, 103-04, which liberalized criteria
for determining coal miners' and dependents' eligibility for Black Lung
benefits and required review of previously denied and pending claims
using the new criteria. See General Accounting Office, Adjudication of
Black Lung Claims, app. I at 7 (B-216900, HRD-85-19, Oct. 26, 1984).
(2) A similar increase was supported by the House. S. Rep. 151, 99th
Cong., 1st Sess. 19 (1985).
(3) We regard the term "use" in the statute as synonymous with detail
or transfer.
(4) Reimbursable details generally are authorized by section 601 of
the Economy Act, 31 U.S.C. Section 1535.
(5) This section allows intra-agency details of up to 1 year under
certain conditions without OPM approval and extensions beyond that limit
with prior OPM approval.
B-220522, 65 Comp. Gen. 626
To The Honorable William Proxmire, United States Senate, June 9, 1986
Provisions of the Vacancies Act, 5 U.S.C. 3345-49 (1982), govern the
filling of vacancies in those offices which require Senate confirmation
in the Department of Health and Human Services, except where there is
specific statutory authority to fill such vacancies. The Vacancies Act
applies to the position of Under Secretary, and various Assistant
Secretary positions, and the positions of Deputy Inspector General,
Commissioner on Aging, Administrator of the Health Care Financing
Administration, and Commissioner of Social Security. The Vacancies Act
limits acting appointments to fill such positions to 30-days duration.
Actions by individuals occupying offices pursuant to the Vacancies
Act which are taken subsequent to expiration of 30-day time limitation
set forth in 5 U.S.C. 3348 are of uncertain validity. Accordingly, at
the end of the 30-day period, such individuals should refrain from
taking any further action in an acting capacity.
This is in partial response to your letter dated September 25, 1985,
in which you asked, among other things, to what extent the Vacancies Act
applies to various officers of the Department of Health and Human
Services serving in an acting capacity without Senate confirmation. As
shown below, we conclude that the Vacancies Act is applicable to all of
the positions in question and that those officers who serve more than 30
days in an acting status in such positions are in violation of the Act.
The following persons continue to serve in an acting status in
positions that require confirmation by the Senate:
TABLE OMITTED /1/
The following information has been provided our Office by the
Department of Health and Human Services concerning the officers
presently serving in acting capacities. All of the persons named above
were appointed by the Secretary to serve in their present "acting"
capacities.
Mr. Newman, the Acting Under Secretary, was nominated by the
President to serve as Under Secretary on February 12, 1986.
Additionally, Assistant Secretary for Human Development Services Dorcas
R. Hardy has been nominated by the President to serve as Commissioner of
Social Security and William R. Roper has been nominated to serve as
Administrator, Health Care Financing Administration. We understand that
the Senate Finance Committee has conducted hearings on these
nominations.
No other nominations have been made for the above positions. With
the exception of Dr. Donald I. Macdonald, who was confirmed as the
Administrator of the Alcohol, Drug Abuse, and Mental Health
Administration, none of the above named individuals has ever been
confirmed by the Senate in any capacity. In addition, the Department
has informed our Office that the position of Deputy Inspector General
has remained vacant since January 22, 1981.
The positions of Under Secretary and two Assistant Secretaries were
established by section 2 of the Reorganization Plan No. 1 of 1953,
effective April 11, 1953, 67 Stat. 631, 42 U.S.C. Section 3501 note
(1982). This section provides:
There shall be in the Department an Under Secretary of Health,
Education, and Welfare and two Assistant Secretaries of Health,
Education, and Welfare, each of whom shall be appointed by the President
by and with the advice and consent of the Senate, shall perform such
functions as the Secretary may prescribe, and shall receive compensation
at the rate now or hereafter provided by law for under secretaries and
assistant secretaries, respectively, of executive departments. The
Under Secretary (or, during the absence or disability of the Under
Secretary or in the event of a vacancy in the office of Under Secretary,
an Assistant Secretary determined according to such order as the
Secretary shall prescribe) shall act as Secretary during the absence or
disability of the Secretary or in the event of a vacancy in the office
of Secretary.
The position of Commissioner of Social Security was established
pursuant to section 4 of Reorganization Plan No. 1 of 1953, supra, which
provides as follows:
There shall be in the Department a Commissioner of Social Security
who shall be appointed by the President by and with the advice and
consent of the Senate, shall perform such functions concerning social
security and public welfare as the Secretary may prescribe, and shall
receive compensation at the rate now or hereafter fixed by law for grade
GS-18 of the general schedule * * *.
The other positions referred to above were established later. They
all require appointment by the President and confirmation by the Senate,
and the Congress has made no special provision for filling a vacancy in
any of them. /2/
The Appointments Clause of the Constitution, Article II, section 2,
clause 2, provides as follows with regard to the appointments of
offices:
(The President) shall nominate, and by and with the Advice and
Consent of the Senate, shall appoint Ambassadors, other public Ministers
and Consuls, Judges of the Supreme Court, and all other Officers of the
United States, whose Appointments are not herein otherwise provided for,
and which shall be established by Law: but the Congress may by Law vest
the Appointment of such inferior Officers, as they think proper, in the
President alone, in the Courts of Law, or in the Heads of Departments.
Thus, the Constitution provides that officers of the United States
must be appointed with the advice and consent of the Senate, except when
the Congress clearly vests the full appointment power for a particular
position or class of positions by law "in the President alone, in the
Courts of Law, or in the Heads of Departments." See Scully v. United
States, 193 F. 185, 187 (C.C.D. Nev. 1910).
The so-called Vacancies Act, 5 U.S.C. Sections 3345-3349 (1982),
provides methods for the temporary filling of vacancies created by the
death, resignation, sickness or absence of the head of an Executive
department or military department or the head of a bureau thereof whose
appointment is not vested in the head of the department or in the
President alone. Section 3345 provides that when the head of an
Executive department or military department dies, resigns, or is sick or
absent, unless otherwise directed by the President under section 3347,
his first assistant shall perform the duties of the office until a
successor is appointed or the absence or sickness stops. Section 3346
provides that when an officer of a bureau of an Executive department or
military department whose appointment is not vested in the head of the
department dies, resigns, or is sick or absent, unless otherwise
directed by the President under section 3347, his first assistant shall
perform the duties of the office until a successor is appointed or the
absence or sickness stops.
Section 3347 provides that, instead of a detail under section 3345 or
3346, the President may direct the head or another officer of an
Executive department or military department, whose appointment is vested
in the President, by and with the advice and consent of the Senate, to
perform the duties of the office until a successor is appointed or the
absence or sickness stops. Section 3349 makes the methods described in
the preceding sections the sole means for filling the vacancies
described therein, except in the case of a vacancy occurring during a
recess of the Senate.
Section 3348 of title 5, United States Code, provides that a vacancy
caused by death or resignation may be filled temporarily under sections
3345, 3346, and 3347 for not more than 30 days.
The current provisions of the Vacancies Act are derived from the Act
of July 23, 1868, ch. 227, 15 Stat. 168. The time limit now set forth
in section 3348 was originally 10 days and was increased to 30 days by
the Act of February 6, 1891, ch. 113, 26 Stat. 733.
The Department of Health and Human Services does not view the
Vacancies Act as being applicable to any of the appointments enumerated
and discussed above. The Department's position is that each of the
temporary appointments discussed above was made by the Secretary
pursuant to section 6 of Reorganization Plan No. 1 of 1953, supra, which
provides as follows:
The Secretary may from time to time make such provisions as the
Secretary deems appropriate authorizing the performance of any of the
functions of the Secretary by any other officer, or by any agency or
employee, of the Department.
Although recognizing that the vacancies discussed above are subject
to the Appointments Clause of the Constitution, it is the Department's
position that the authority granted by section 6 of Reorganization Plan
No. 1 of 1953, set forth above, allows for the Secretary's actions in
one of two ways as explained below:
First, the Secretary has promulgated a series of organizational plans
and position descriptions that normally provide that if a vacancy
occurs, the officer's first assistant (or other designated deputy) will
act for the principal until the vacancy is filled. Here * * * six of
the eight ad interim appointees are currently so-called first assistants
(e.g., Deputy Commissioner, Social Security Administration) and assumed
their ad interim status by virtue of the Department's organizational
plan, authority vested in such deputies by virtue of those deputies
position descriptions, or designation from among multiple deputies.
Second, in certain instances where it was not feasible for the first
assistant to assume the duties of the officer, the Secretary has made a
special delegation of authority to a particular individual to carry out
the functions of the vacant office. * * * (T)his method was used in two
instances: Acting Assistant Secretary for Health and Acting
Commissioner on Aging. In both cases, the ad interim appointee had
occupied a significant position within the programmatic unit prior to
the ad interim appointment. /3/
Additionally, it is HHS's position that the 30-day limitation on
tenure of temporary appointees found in 5 U.S.C. Section 3348 is not
applicable to any of the vacancies discussed above for the following
reasons:
* * * First, the proscriptive provisions of the (Vacancies) Act do
not restrict the authority of the Secretary to make ad interim
designations where, as here, the Secretary is vested with independent
statutory authority (section 6, Reorganization Plan No. 1 of 1953) to
fill vacancies on an ad interim basis. Second, the Vacancies Act
restrictions do not apply where, as here, each of the vacancies in
question occurred during a Senate recess. Finally, since the 30-day
restriction on interim appointments was not intended to apply to first
assistants, even if the Act were applicable it should not be read as
precluding the continued orderly functioning of the Department.
The congressional intent in passing the 1868 act is indicated by
debate recorded in the Congressional Globe of February 14, 1868:
Mr. Trumbull. The intention of the bill was to limit the time within
which the President might supply a vacancy temporarily in the case of
the death or resignation of the head of any of the Departments or of any
officer appointed by him by and with the advice and consent of the
Senate in any of the Departments. As the law now stands, he is
authorized to supply those vacancies for six months without submitting
the name of a person for that purpose to the Senate; and it was thought
by the committee to an unreasonable length of time, and hence they have
limited it by this bill to thirty days," (Changed by floor amendment to
10 days.) 39 Congressional Globe 1163, February 14, 1868 (Italic
supplied.)
It has long been held by the Attorney General that after a vacant
position has been temporarily filled under the Vacancies Act the power
conferred by the Act is exhausted and the President does not have the
authority to appoint either the same or another officer to temporarily
fill the Office for an additional period. 16 Op. Atty. Gen. 596 (1880);
18 Op. Atty. Gen. 50 (1884); Id. at 58; 20 Op. Atty. Gen. 8 (1891).
As the intent of the Vacancies Act is to preclude unreasonable delays
in submitting nominations for offices subject to Senate confirmation, we
have adopted the view that the 30-day limitation contained in 5 U.S.C.
Section 3348 runs only during the period that there is no name before
the Senate for confirmation by the body. See 56 Comp. Gen. 761 (1977).
Also see Williams v. Phillips, 482 F.2d 669 (D.C. Cir. 1973). But see
United States v. Lucido, 373 F. Supp. 1142 (E.D. Michigan, 1974),
wherein the court in effect stated that, notwithstanding that a name has
been submitted to the Senate for confirmation, an appointment under the
Vacancies Act would terminate at the end of the 30-day period set forth
in 5 U.S.C. Section 3348. Accord, 32 Op. Atty. Gen. 139 (1920).
The 30-day limitation placed on temporary appointments by 5 U.S.C.
Section 3348 applies by its express terms only to appointments or
designations made under the Vacancies Act. Accordingly, the limitation
contained in section 3348 is not applicable where vacancies are filled
pursuant to authority other than the Vacancies Act.
By its express terms the Vacancies Act is applicable to the Executive
departments and military departments. Section 101 of title 5, United
States Code (1982), sets forth the Executive departments. The Executive
departments include the Department of Health and Human Services, of
which the Administration on Aging, the Health Care Financing
Administration, and the Social Security Administration are a part.
The positions filled by the seven acting officials under
consideration here all require appointment by the President by and with
the advice and consent of the Senate, and are, in our opinion, subject
to the Vacancies Act. With the exception of Mr. Newman, none of the
seven officials has been nominated for the position in which they are
serving. Thus, the 30-day limitation set forth in 5 U.S.C. Section 3348
is applicable to all such appointments except Mr. Newman's.
In addition, we note that, from the list furnished us by the
Department of the persons acting in the various positions, several were
apparently neither "the first assistant" to the office in which they are
acting nor are they officers whose regular appointments were made by the
President "by and with the advice and consent of the Senate," as is
required by the Vacancies Act. 5 U.S.C. Section 3346, 3347. Therefore,
it does not appear that they were eligible for appointment to the acting
positions under the Vacancies Act.
The Department, however, argues that section 6 of the Reorganization
Plan provides the necessary authority for these temoprary appointments,
thereby making the Vacancies Act inapplicable. Under section 6,
Reorganization Plan No. 1 of 1953, the Secretary of Health and Human
Services may authorize any other officer or employee of the Department
of Health and Human Services to perform any function of the Secretary.
The provisions of section 6 of the Reorganization Plan are virtually
the same as those contained in 28 U.S.C. Section 510 under which the
Attorney General may authorize any other officer or employee of the
Department of Justice to perform any function of the Attorney General.
In our decision B-150136, February 19, 1976, we held that 28 U.S.C.
Section 510 does not supersede the provisions of the Vacancies Act. As
discussed below, we believe that the same conclusion should pertain with
regard to section 6 of the Reorganization Plan No. 1 of 1953.
It is clear that the primary intent of Reorganization Plan No. 1 of
1953 was to establish the Department of Health, Education, and Welfare
(now Health and Human Services); to provide clear and direct lines of
authority and responsibility for the management of the Department; and
to make the Secretary clearly responsible for the effectiveness and
economy of administration of the Department. The wording in
Reorganization Plan No. 1 is similar to the wording of other
reorganization plans approved in that time period. In fact, nearly all
executive agencies were reorganized under similarly worded
reorganization plans to effectuate the recommendations of the Hoover
Commission by establishing clear and direct lines of authority within
each agency. See B-150136, February 22, 1973. Therefore, the position
of the Department of Health and Human Services based on section 6 of
Reorganization Plan No. 1 would, in effect, virtually nullify the
statutory provisions contained in sections 3345-49 of title 5, United
States Code. It is clear that such result was not intended.
The Department argues that the proscriptive provisions of the
Vacancies Act, including the 30-day limitation imposed by 5 U.S.C.
Section 3348, do not apply where the vacancies in question arose while
the Senate was in recess. As indicated above, section 3349 makes the
methods described in the preceding sections the sole means for filling
the vacancies described therein, "except to fill a vacancy occurring
during a recess of the Senate." What the quoted language in section 3349
recognizes is that the Vacancies Act is not the exclusive authority
given to the President to make temporary appointments necessary "to fill
a vacancy occurring during a recess of the Senate," thereby
acknowledging the President's recess appointment found in Article II,
section 2, clause 3 of the Constitution as follows: "The President
shall have Power to fill up all Vacancies that may happen during the
Recess of the Senate, by granting Commissions which shall expire at the
End of their next Session." Clearly, when the President elects to
exercise his constitutional authority to make appointments during a
recess of the Senate, the 30-day limitation found in the Vacancies Act
does not apply. Instead, such an appointee would be eligible to serve
until the end of the Senate's next session.
This is clearly not the case with the Department's interim
appointments, however, as none was made by the President. We do not
agree with the Department's broad reading of section 3349 as enabling
the Secretary of Health and Human Services to fill all vacancies
occurring during a recess of the Senate without time limitation. We
believe that section 3349 provides a limited exception for only
temporary appointments made by the President.
The Department also argues that the legislative history of the
Vacancies Act can be read to support the notion that the time limitation
in the Vacancies Act "originally was not intended to apply to vacancies
filled in the natural course by the first assistants." The Department
suggests that the compilers of the "Revised Statutes," acting pursuant
to authority found in 19 Stat. 268 (1877), "erroneously broadened the
limitation to encompass all temporary office holders, even the first
assistants." However, as the Department acknowledged in its report to
our Office, the Revised Statutes, being an Act of Congress, had the full
force and effect of law. The Department also recognizes that the
Congress has enacted subsequent amendments to the Vacancies Act and has
enacted numerous recodifications of the United States Code without
changing the Vacancies Act from its current form. Therefore, we
conclude that the present wording of the Act represents the intent of
the Congress on this matter and, in any event, is legally effective.
Finally, we note that some of the enumerated positions have been
without a nominee for two years and longer. This appears to be
precisely the sort of "unreasonable" delay the Vacancies Act was enacted
to prevent. In the absence of any other statutory authority to fill the
positions on a temporary basis outside the Vacancies Act we conclude
that the 30-day limit is applicable.
The legal status of actions taken by temporary appointees under the
Vacancies Act who continue to serve in an acting capacity beyond the
30-day time limitation is uncertain.
Those actions may possibly be viewed as acts performed by a de facto
officer. A de facto officer or employee is one who performs the duties
of an office or position with apparent right and under color of
appointment and claim to title of such office or position. William A.
Keel, Jr., B-188424, March 22, 1977, and decisions cited. In general we
have held that acts performed while a person is serving in a de facto
status are valid and effectual insofar as concerns the public and the
rights of third persons. 42 Comp. Gen. 495 (1963); see also 63 Am.
Jur.2d Public Officers and Employees Section 518.
With regard to defective or invalid appointments, the general rule is
stated in 63 Am. Jur.2d Public Officers and Employees Section 504 (1972)
as follows:
* * * the general rule is that when an official person or body has
apparent authority to appoint to public office, and apparently exercises
such authority, and the person so appointed enters on such office, and
performs its duties he will be an officer de facto, notwithstanding that
there was want of power to appoint in the body or person who professed
to do so, or although the power was exercised in an irregular manner.
It is not clear, however, whether the Courts would apply the de facto
doctrine where a statute specifically precluded the continued occupancy
of the position. In 32 Op. Atty. Gen. 139 (1920), the Attorney General
advised the Undersecretary of State, who inquired as to what action he
and the officers of the Department of State should take upon the end of
his 30-day period of service as Acting Secretary of State pursuant to
the Vacancies Act:
It is probably safer to say that you should not take action in any
case out of which legal rights might arise which would be subject to
review by the courts.
In 56 Comp. Gen. 761 (1977), we considered the effect of actions
taken by the Acting Insurance Administrator, Department of Housing and
Urban Development, who had continued to serve beyond the 30-day time
limitation set forth at 5 U.S.C. Section 3348. We stated that when it
is too late to offer the advice set forth by the Attorney General in 32
Op. Atty. Gen. 139, the secretary of the department should consider
ratification of those actions and decisions already taken which she
agreed with to avoid any further confusion as to their binding effect.
Since your original request of June 21, 1972, to our Office
concerning the applicability of 5 U.S.C. Section 3348 to the temporary
appointment of Mr. L. Patrick Gray III as Acting Director of the Federal
Bureau of Investigation, we have been called upon by members of the
Congress to issue many decisions concerning other officials in the
various Executive Branch departments and agencies. Although our
decision holding that Mr. Gray's continued services as Acting Director
was prohibited by law /4/ resulted in the President's contemporaneous
action in nominating Mr. Gray to be the permanent Director, our more
recent decisions finding various Executive Branch officers serving in
violation of the Vacancies Act have had less than the desired salutory
effect. In fact, there now seems to be a discernible pattern for
Executive Branch agencies to take exception to our decisions on
Vacancies Act questions and, supported by the Department of Justice, to
ignore the holdings of these decisions. Our interpretation of the Act
has consistently recognized that its application can only be superseded
in the case of statutes that provide specifically for an alternate means
of filing a particular office. The Executive agencies take the view
that the Act can be overcome by the general authority of a cabinet
secretary to assign functions and delegate authority within a
department.
You have also asked what enforcement authority exists in the
Vacancies Act itself and what is the most appropriate remedy for
appointments in violation of the Act. The Vacancies Act does not
contain any specific enforcement authority or remedy for violations. In
other situations we have recognized that we have the authority to
disallow salary payments from appropriated funds for purposes that are
contrary to law. See 53 Comp. Gen. 600 (1974). However, the "acting"
official in Vacancies Act cases is usually one who is otherwise entitled
to the salary of his or her permanent position. Hence, we have not to
date exercised this authority in such cases.
We trust that the above information serves the purpose of your
inquiry concerning the applicability of the Vacancies Act to the
enumerated positions within the Department of Health and Human Services.
The other issues raised in your September 25 letter will be answered in
a separate report.
(1) C. McClain Haddow served as Acting Administrator of the Health
Care Financing Administration from August 12, 1985, to February 2, 1986,
before the designation of Dr. Desmarais.
(2) Under section 4(a) of Pub. L. 89-115, 79 Stat. 449 (1965), 42
U.S.C. Section 3501a (1982), Congress provided for three additional
Assistant Secretaries. The position of Commissioner on Aging was
established by section 201 of title II, Pub. L. 89-73 (1965), 42 U.S.C.
Section 3011 (1982). The position of Administrator of the Health Care
Financing Administration was made subject to Senate confirmation by
section 2332(a) of Pub. L. 98-369 (1984), 98 Stat. 1089, to be codified
at 42 U.S.C. Section 1317. The position of Deputy Inspector General was
established by section 202, title II, of Pub. L. 94-505 (1976), 42
U.S.C. Section 3522(b) (1982).
(3) The Department's position, as described here and elsewhere in
this letter, was provided in a memorandum dated November 27, 1985, Mr.
Robert E. Robertson, the Department's General Counsel.
(4) B-150136, February 22, 1973.
B-222345.2, 65 Comp. Gen. 625
Matter of: Chemray Coatings Corp. -- Reconsideration, June 3, 1986
General Accounting Office (GAO) will not reopen a protest file that
was closed because the protester failed to file comments or express
continued interest in the protest within 7 working days after receipt of
the agency report as required by the Bid Protest Regulations.
Protester's response to the contracting agency's decision on its prior
agency protest may not be considered as comments on the agency's protest
report to GAO because the response, submitted 24 days prior to the
agency report due date, does not address the agency's detailed response
to the GAO protest.
Chemray Coatings Corp. (Chemray) requests that we reopen its protest
concerning the rejection of its bid as nonresponsive for failure to
acknowledge a material amendment under solicitation No. 10PR-ZBS-5673
issued by the General Services Administration (GSA) for primer coatings.
We dismissed the protest on May 12, 1986 because Chemray had not filed
comments or a statement of continued interest in the protest within 7
working days after receipt of the agency report as required by our Bid
Protest Regulations, 4 C.F.R. Section 21.3(e) (1985). The regulations
provide that a protester's failure to file comments, a statement
requesting that the protest be decided on the existing record, or a
request for extension of the period for submitting comments will result
in the dismissal of the protest.
We affirm our prior dismissal.
Chemray requests that our Office consider its response to GSA's
decision on Chemray's prior agency protest as it comments on the agency
report. The comments were submitted to this Office on April 1, which
was 24 days before the due date for the agency's report.
Initially, we point out that our protest acknowledgment notice, sent
to Chemray on the day its GAO protest was filed, specifically advised
Chemray of the regulatory requirement to express continued interest in
the protest within 7 working days of receiving the agency report.
Absent such an expression of interest from the protester, there was
no basis for this Office to determine that Chemray retained interest in
the protest. Chemray's submission 24 days before the agency report
merely disagreed with GSA's conclusion that the amendment was material.
GSA's response to Chemray's initial protest had not explained in detail
why the amendment was material. In contrast, the GSA report contained
detailed legal and factual support for GSA's conclusion that Chemray's
bid was properly rejected as nonresponsive. In addition, the report
alleged a procedural deficiency for which the protest could be
dismissed. Thus, Chemray's response to GSA's decision clearly does not
take issue with GSA's position set forth in the report, and cannot be
considered comments on the agency report.
Because of this, and our notice to Chemray as to the consequences of
its failure to respond in some manner to the GSA report -- for example,
by advising us to consider its comments on the GSA decision as its
comments on the GSA protest report -- the prior dismissal is affirmed.
B-221545, 65 Comp. Gen. 621
Matter of: Survivor Benefit Plan -- Mentally Incapacitated
Annuitants, June 3, 1986
Survivor Benefit Plan annuity payments should not be made to a
mentally incapacitated annuitant's agent appointed under a power of
attorney, notwithstanding that the validity of the power of attorney may
have been preserved by operation of a state statute. The Survivor
Benefit Plan is an income maintenance program for the dependents of
deceased service members, entailing continuing periodic payments of
indefinite duration in substantial aggregate amounts. Accounting
officers have a duty to obtain acquittance when payments are made under
Federal law, and it is a matter of serious doubt that a good acquittance
could be assured through payment of Survivor Benefit Plan annuities due
mentally incapacitated annuitants to anyone other than court-appointed
representatives, since only such representatives are subject to
continuing independent supervision.
The question presented in this matter is whether an agent appointed
under a power of attorney by a Survivor Benefit Plan annuitant may
receive the annuity on the basis of the appointment after the annuitant
becomes mentally incapacitated, if an applicable state statute provides
that the authority conferred by the power of attorney shall be
exercisable notwithstanding the annuitant's incompetency. /1/ We
conclude that annuity payments should not be made to an agent acting
under a power of attorney in those circumstances.
This matter concerns the widow of a retired member of the United
States Marine Corps who elected to participate in the Survivor Benefit
Plan. The retired marine thus elected to receive military retired pay
at a reduced rate in order to provide a survivor's annuity for his wife
if she survived him. Following his death, the Marine Corps Finance
Center commenced making the annuity payments to his widow.
On August 17, 1982, the widow signed a document styled as a "durable
power of attorney" in which she appointed her daughter as her "true and
lawful attorney to * * * manage * * * my affairs." It specifically
authorized the daughter to "receive, endorse, and collect checks * * *
drawn on the Treasurer or other fiscal officer or depository of the
United States." The document also provided that the daughter's authority
to act "shall not be affected by disability, incompetency, or incapacity
of the principal."
In September 1985 the daughter sent a copy of this power of attorney
to the Marine Corps Finance Center. The daughter advised that her
mother was in a nursing home and had become mentally incapacitated, and
requested that the monthly annuity payments be remitted to her in the
full amount.
The Marine Corps Finance Center then suspended payment of the annuity
on the basis of decisions of our Office in which we expressed the view
that payments due mentally incapacitated annuitants under the Survivor
Benefit Plan and the Retired Serviceman's Family Protection Plan should
be reserved for remittance to a guardian, custodian, or other fiduciary
appointed by state court order.
The daughter disagreed with the position taken by the Marine Corps
Finance Center because her mother had provided her with a "durable"
power of attorney. The prevailing statutory law of the State of
Alabama, her mother's place of domicile, defines a durable power of
attorney as follows:
(a) A durable power of attorney is a power of attorney by which a
principal designates another his attorney in fact or agent in writing
and the writing contains * * * words showing the intent of the principal
that the authority conferred shall be exercisable notwithstanding the
principal's subsequent disability, incompetency or incapacity. Ala.
Code Section 26-1-2(a).
The Alabama statute further states that "all acts done by an attorney
during any period of disability, incompetency or incapacity of the
principal * * * bind the principal and his successors in interest as if
the principal were competent." Ala. Code Section 26-1-2(b). The
daughter has apparently suggested that on the basis of these provisions
of the Alabama Code, the Marine Corps Finance Center should be required
to remit her mother's annuity payments to her.
In requesting an advance decision on the question of whether
continued annuity payments should be made to the payee's personally
appointed agent in this case, the concerned Marine Corps officials
observe that while all 50 of the states have enacted statutes in one
form or another which allow powers of attorney to remain in effect under
certain conditions even if the principal becomes mentally incapacitated,
agents are without authority to compel third parties to transact
business on the basis of a power of attorney. The Marine Corps
officials also add these observations concerning the safeguards afforded
in making disbursements to a court-appointed fiduciary rather than to an
agent acting under a power of attorney:
There remain serious differences between a State fiduciary proceeding
based upon the incompetency or incapacity of an individual and durable
power of attorney which empowers the agent to act for the incapacitated
or incompetent principal. * * * (T)he Alabama Curators statute is
submitted as an example * * *. In the fiduciary proceeding, the
fiduciary's power emanates from the court in accordance with State law.
See Ala. Code Section 26-7A-2. The scope of the fiduciary's power is
governed by State statute. In the durable power of attorney, the source
of the agent's power is the voluntary delegation or assignment by the
principal. The scope of the agent's power is governed by the
instrument, the power of attorney itself. A State fiduciary is
judicially supervised. See Ala. Code Section 26-7A-9. The agent under
a durable power of attorney is not. A state fiduciary is required to
account for receipts and expenditures to the court. See Ala. Code
Section 26-7A-11. An agent under a durable power of attorney is not
required to account. State law normally requires that a State fiduciary
be bonded. See Ala. Code Section 26-7A-8. The agent under a durable
power of attorney is not required to be bonded. State fiduciary
statutes prescribe that moneys must be expended for the benefit of the
incompetent or incapacitated person. See Ala. Code Section 26-7A-9.
Statutes authorizing durable powers of attorney contain no such
requirement. * * *
The Marine Corps officials consequently indicate that because of the
relative lack of safeguards involved, they have reservations concerning
the propriety of disbursing annuity payments to annuitants' agents
acting under powers of attorney after the annuitants have become
mentally incapacitated.
In 1972 Congress established the Survivor Benefit Plan, 10 U.S.C.
Sections 1447-1455, as an income maintenance program for the dependents
of deceased service members. It was designed to provide better benefits
at less cost than were available under the then current military
survivor annuity program contained in the Retired Servicemen's Family
Protection Plan, 10 U.S.C. Sections 1431-1446. /2/
Neither the Survivor Benefit Plan nor the Retired Serviceman's Family
Protection Plan contains any provision prescribing procedures for making
annuity payments to persons incapable of handling their own financial
affairs. In the decisions referred to by the Marine Corps officials, we
expressed the view that in the absence of any express provision of
Federal statute or regulation on the subject, such payments should
generally be made only to a representative payee duly appointed by a
state court, since court-appointed representatives ordinarily act under
judicial supervision and have a requirement to provide financial
accounting statements periodically to the court. /3/ Hence, we
disapproved the making of such payments to agents or trustees acting
without court appointment or supervision.
These decisions were predicated on the fundamental principle that the
accounting officers of the uniformed services have a duty to obtain a
good acquittance when payments are made by their direction under Federal
law. /4/ In that connection, we note that the rules governing the use
of the durable power of attorney in Alabama, as applicable here,
recognize that such a power of attorney is subservient to the rights and
duties of a court-appointed "guardian, curator or other fiduciary." See
Ala. Code Section 26-1-2(c)(1). Thus, the durable power of attorney
provides an agent with limited powers over the assets of the principal
which may be superseded by a formal court appointment. In view of the
substantial amounts of money involved in payments under the military
survivor annuity programs, and the fact that the payments may continue
for years, it would seem appropriate for the accounting officers of the
uniformed services to insist on a court approved guardianship before
payment is made on behalf of an incompetent annuitant, to assure that a
good acquittance is obtained. /5/
Accordingly, we conclude that the Survivor Benefit Plan annuity at
issue here should not be paid on the basis of the power of attorney in
question.
(1) This action is in response to a request for an advance decision
submitted by the Disbursing Officer, Centralized Pay Division, Marine
Corps Finance Center. The request was cleared through the Department of
Defense Military Pay and Allowance Committee with submission number
DO-MC-1461, and forwarded here by the Fiscal Director of the Marine
Corps, Headquarters United States Marine Corps.
(2) See, generally, S. Rep. No. 1089, 92d Cong., 2d Sess., reprinted
in 1972 U.S. Code Cong. & Ad. News 3288; H.R. Rep. No. 481, 92d Cong.,
1st Sess. (1971).
(3) See, generally, 62 Comp. Gen. 302, 306-308 (1983); 51 Comp. Gen.
437, 438 (1972).
(4) See, e.g., 62 Comp. Gen., supra, at page 307.
(5) In a proper case, we might have no objection to the disbursement
of a nonperiodic payment to the personally appointed agent or trustee of
an incompetent payee, provided that the laws of the payee's state of
domicile authorized that procedure as a means of obtaining a good
acquittance, the expense of obtaining a court-appointed guardianship
would be disproportionate to the amount due from the United States, and
the matter was otherwise free from doubt. Compare 47 Comp. Gen. 209,
211 (1967).
B-220680.3, 65 Comp. Gen. 619
Matter of: Flight Resources Inc., June 3, 1986
A party that submits late Step 1 proposal is not an interested party
to protest the evaluation of proposals or any changes in the terms and
conditions of the solicitation that occur during or after proposal
evaluation when those issues only affect the parties to the competition.
Flight Resources Inc. protests solicitation No. DTFA15-85-R-10011,
issued by the Federal Aviation Administration (FAA), Department of
Transportation, to obtain proposals for the operation of a general
aviation service facility at Washington National Airport. The
procurement was conducted under two-step sealed bidding procedures. /1/
Flight Resources contends that the procurement was defective because the
Step 1 negotiations resulted in such substantial changes to the agency's
requirement that the procurement should have been resolicited with all
potential offerors, including Flight Resources, invited to compete.
We dismiss the protest.
This protest is Flight Resources' third attempt, after failing to
submit a timely Step 1 technical proposal, to compete for award under
this solicitation. The proposal due date was September 5, 1985; the
firm's proposal was not submitted until September 20, and it was
thereafter returned because it was late. Flight Resources' initial
protest to the agency, alleging that the agency should have extended the
closing date for receipt of proposals, was dismissed as untimely. Its
subsequent protest to this Office was also dismissed as untimely because
the protest to the agency did not comply with the time limits of our Bid
Protest Regulations, 4 C.F.R. Section 21.2(a)(3) (1985). Flight
Resources, Inc., B-220680, Oct. 25, 1985, 85-2 CPD Paragraph 467. A
request for reconsideration resulted in affirmance of the dismissal.
Flight Resources, Inc., B-220680.2, Nov. 12, 1985. Although this
current protest initially included several grounds of protest, Flight
Resources has withdrawn certain issues, leaving for resolution a
challenge to Flight Resources' status as an interested party, and the
protester's allegation that the Step 1 negotiations had so changed the
requirements that a new solicitation should have been issued.
Under our Bid Protest Regulations, 4 C.F.R. Section 21.1(e), only an
"interested party" may protest to our Office. Whether a party is
sufficiently interested depends on the party's status in relation to the
procurement and the issues involved and how these circumstances show the
existence of a direct or a substantial economic interest on the part of
the protester. NEFF Instrument Corp., B-216236, Dec. 11, 1984, 84-2 CPD
Paragraph 649. A party that would not be in line for award if its
protest is sustained is generally not an interested party. Zinger
Constr. Co., Inc., B-220203, Oct. 31, 1985, 85-2 CPD Paragraph 493. In
some cases, if the remedy sought is not award under the protested
solicitation, but cancellation and resolicitation of the requirement and
the protester is a potential competitor on the new solicitation, the
protester has the necessary direct interest to be an interested party.
Tracor Jitco, Inc., B-220139, Dec. 24, 1985, 85-2 CPD Paragraph 710.
However, a protester does not become "interested" merely by seeking
cancellation and resolicitation. Thus, a party that submits a late
proposal does not have standing to protest the evaluation of proposals
or any changes in the terms and conditions of the solicitation that
occurs after or during the course of proposal evaluation, since these
issues only affect the parties that remain in the competition and only
they have a direct economic interest in the outcome.
In this case, Flight Resources first asserts that the Step 1
solicitation required that each proposal provide a statement detailing
the amount of investment in fixed improvements and operating facilities
at the aviation service facility the offeror would make if awarded the
contract. Flight Resources contends that after the Step 1 discussions,
the FAA, for evaluation purposes, improperly limited to $2,200,000 the
amount of investment for fixed improvements that an offeror could have
added to the guaranteed minimum offered to the government for the
contract. Flight Resources insists that the Step 1 solicitation made no
reference to changes or putting caps on the investment and that this
change was substantial and prejudicial "to the economic interest(s) and
willingness to bid by the other potential offeror * * *" We fail to see
how a change occurring after Step 1 technical discussions could
conceivably keep any firm from entering the initial competition, nor do
we believe that any firms other than those that submitted timely
proposals have a legitimate stake in this issue. Since only those
offerors that submitted timely Step 1 proposals have a legitimate
interest in the evaluation. Flight Resources is not an interested party
to protest this issue because it has no direct economic interest in the
outcome. 4 C.F.R. 21.0(a) (1985).
Flight Resources also complains about a change to an obligation of
the contractor to amortize its required investment in a new fuel farm
over the 5-year period of the contract. This was changed after the Step
1 discussions to permit the contractor to amortize its investment over
10 years. Flight Resources contends that this is a substantial change
and that the initial 5-year period kept many qualified firms from
entering into the competition. We do not find Flight Resources to be a
party of sufficient interest to challenge this issue either. As noted
earlier, Flight Resources in fact attempted to submit its proposal under
Step 1 of the solicitation. Although the proposal was not considered
because it was late, there was no suggestion that the 5-year
amortization schedule limited the protester's ability to compete for the
award of the contract. By failing either to submit a timely proposal or
a timely protest of what it now alleges was an unduly restrictive
requirement, Flight Resources cannot be considered "an active or
prospective bidder or offeror whose direct economic interest would be
affected by the award of a contract * * *." 4 C.F.R. Section 21.0(a).
The protest is dismissed.
(1) The procedure used in the two-step sealed bidding are set forth
in the Federal Acquisition Regulation (FAR), subpart 14.5 (FAC 84-5,
April 1, 1985). Step 1 is similar to a negotiated procurement and
consists of a request for technical proposals without price to determine
the acceptability of the supplies or services offered. In Step 2,
sealed bids are invited from those who submitted acceptable technical
proposals in Step 1. After evaluation of the Step 2 bids, award is made
to the responsible bidder with the lowest responsive bid.
Hewlett-Packard Co., et al., B-216125.2, May 24, 1985, 85-1 CPD
Paragraph 597.
B-222328, 65 Comp. Gen. 615
Matter of: LNR Associates, June 2, 1986
Agency's decision to exclude an offeror from the competitive range is
proper where the offeror's technical proposal received an average score
of 27 points out of a possible 100 and where the agency reasonably
considered the offeror's technical proposal to be so deficient as to
require major revisions before it could be made acceptable.
LNR Associates protests its exclusion from the competitive range
under request for proposals (RFP) No. RS-NMS-86-001, issued by the
Nuclear Regulatory Commission (NRC), Washington, D.C., to provide
technical assistance to the NRC in its evaluation of environmental
assessment studies prepared by the Department of Energy (DOE).
We deny the protest.
The Nuclear Waste Policy Act, 42 U.S.C. Section 10101, et seq.
(1982), requires that DOE select a site for the location of a repository
for nuclear waste (high-level waste (HLW) repository). Consequently,
DOE prepared environmental assessments for nine candidate sites. The
act also requires that the NRC adopt for its own purposes, to the extent
practicable, Environmental Impact Statements (EIS) prepared by DOE for
any candidate site. Accordingly, the subject RFP was issued by NRC to
procure technical assistance in reviewing and evaluating DOE's technical
assessments.
The RFP provided that award would be made to the offeror (1) whose
proposal is technically acceptable and (2) whose technical/cost
relationship is most advantageous to the government. The RFP also
stated that while cost was a factor in the evaluation of proposals,
technical merit would be more significant in the selection of the
successful offeror. The RFP cautioned offerors that expertise in
numerous technical areas was required and included the following
technical evaluation criteria (ranked in descending order of
importance):
A. Related Past Experiences (total 50) . . . 30
1. Amount and type of the proposed review team's education and
experiences in planning and conducting Environmental Impact
Statement (EIS) preparation and NEPA reviews. Technical areas
included are water quality, land use planning, terrestrial
ecology, aquatic ecology, air quality, meteorology, noise,
aesthetic resources, archeological, cultural and historical
resources, radiological impact, non-radiological transportation
and socioeconomic impacts.
2. Amount and type of EIS experiences in completing EIS's on a
timely basis for nuclear plants, waste disposal facilities or
other similar facilities. 20 points
B. Management (total 35) . . . . . . . . . . 20
3. Offeror's proposed quality assurance program to support the
technical soundness of work . . . . . . 5
C. Technical Approach (total 15) . . . . . . 10
Total . . . . . . . . . . . . . . . . 100
Three proposals were received in response to the RFP and were
evaluated by a Source Evaluation Panel. LNR received an average score
of 27 points of a potential 100 points, while the scores of the other
two offerors were both above 75 points. LNR therefore was not included
in the competitive range and its proposal was rejected as technically
unacceptable.
Accordingly, the NRC notified LNR that its proposal had been
eliminated from further consideration for the following reasons:
(1) the level of education of proposed personnel and related
past experience were insufficient;
(2) the proposed management structure, quality assurance
program and cost control program were unacceptable; and
(3) the proposal indicated a lack of understanding of the
technical approach necessary to complete a timely EIS review and
failed to demonstrate capability to provide multidiscipline
assistance as required by the statement of work.
LNR disagrees with the NRC's evaluation in these areas and argues
that the rejection of its proposal was not justified. While our Office
has been furnished the evaluation reports and other relevant exhibits
concerning this protest, the agency, which still has not selected a
successful offeror, considers these documents to be privileged and has
not provided them to the protester. Although we therefore are unable to
reveal technical and cost details concerning the evaluation, our
decision is based on a review of all relevant reports and exhibits
submitted to our Office by NRC.
Our Office will not disturb an agency's decision to exclude a firm
from the competitive range on grounds that it had no reasonable chance
of being selected for award when, considering the relative superiority
of other proposals, this determination was reasonable. Ameriko
Maintenance Co., Inc., B-216406, Mar. 1, 1985, 85-1 CPD Paragraph 255.
A protester has the burden of proving that the agency's evaluation was
unreasonable. Robert Wehrli, B-216789, Jan. 16, 1985, 85-1 CPD
Paragraph 43. Moreover, an agency's decision to exclude an offeror from
the competitive range is proper where the offeror's technical proposal
is so deficient that it would require major revisions before it could be
made acceptable. Ameriko Maintenance Co., Inc., B-216406, supra.
LNR was found unacceptable in several areas under the experience
factor (factor A.1. and 2.). LNR argues that it did propose personnel
with the required qualifications since (1) its major participant in the
project has a Masters of Science degree in meteorology and 30 years of
experience as a staff member at NRC; and (2) its proposed program
manager also has a Masters of Science degree in meteorology, advanced
education equivalent to a Ph.D. in nuclear engineering, as well as 30
years of experience as a nuclear engineer, including 10 years as a
licensing program manager, which involved the supervision of
multidisciplinary groups in the review of nuclear plant licensing.
These two individuals, argues LNR, have previously participated in EIS
preparation, while others would be available if needed. Additionally,
LNR claims that a hydrologist and a civil engineer are also available.
NRC states that the experience demonstrated in LNR's proposal related
only to three of the 13 areas of experience listed as necessary in the
RFP. We have independently reviewed LNR's proposal and find that NRC
reasonably determined that LNR did not demonstrate experience in 10 of
the 13 required areas. LNR apparently argues that it does have
experience in these areas, but submitted its proposal with the
assumption that the evaluators would already know the operations of two
other offices within NRC, Nuclear Reactor Regulation and Nuclear
Regulatory Research, in which some of its proposed personnel have had
experience. In other words, LNR assumed that by simply listing the
title of these proposed personnel, the SEP would assume that these
persons had a full range of relevant experience. LNR also states that
it deliberately emphasized its experience in meteorology because the
solicitation contained, as an attachment, an illustrative
"Meteorological Monitoring Plan." Consequently, LNR's discussion about
its experience was set forth in about two pages of text, while the other
offers' discussions were extensive (approximately 100 pages).
It was incumbent on LNR, not the contracting agency, to affirmatively
demonstrate the acceptability of its proposal by showing its relevant
experience. See Electronic Communications, Inc., 55 Comp. Gen. 636
(1976), 76-1 CPD Paragraph 15; Consolidated Service, Inc. of
Charleston, B-183622, Feb. 18, 1976, 76-1 CPD Paragraph 107. The
solicitation clearly required that experience in numerous areas be
demonstrated and not only in meteorlogy. Since the record shows that
LNR failed to do so, NRC's very low evaluation of this aspect of LNR's
proposal and its finding that LNR's proposal was so deficient in this
major area (50 points) that it would require major revisions before it
could be made acceptable were reasonable. In this regard, we also note
that with respect to previous EIS experience (factor A.2), LNR failed to
indicate that it had any experience whatsoever in completing an EIS on a
timely basis or any experience in an HLW program.
Concerning management structure and quality assurance (factors B.1.,
2., and 3.), the solicitation required that the contractor ensure that
independent review and verification be made of all numerical
computations and mathematical equations, derivations and models. The
NRC found that LNR's proposal contained no discussion of how
computations and equations would be handled or how revisions would be
made. LNR argues that it could have corrected this deficiency during
discussions and that, therefore, the deficiency should not have been a
basis for excluding its proposal from the competitive range. In
response, NRC states that since LNR's proposal admittedly failed to
contain the required discussion of computations and equations, LNR's
assertion that it could have subsequently cured the deficiency does not
refute NRC's reasonable finding that this deficiency in fact existed in
LNR's proposal. We note that the solicitation cautioned all offerors
that award may be made without discussions and that, therefore,
proposals should be submitted initially on the most favorable terms from
a cost and technical standpoint. We also note that it is incumbent on
an offeror to demonstrate the acceptability of its proposal. See e.g.
Electronics Communications, Inc., 55 Comp. Gen. 636, supra. Here, we
find that LNR again simply failed to do so.
The NRC also found that LNR failed to separate the quality assurance
function from the project management function in its management
structure. LNR argues that a certain individual, separate from the
project manager, would be available for review of the reports for
quality. However, our review of LNR's proposal shows that only a
15-percent effort level (part-time) for this individual was proposed by
LNR for quality review. NRC found this unacceptable and we have no
basis to disagree. We therefore find NRC's evaluation to be reasonable
with respect to this aspect of its proposal.
Regarding the last major basis for NRC's rejection of LNR's proposal,
lack of understanding of the proper technical approach, we do not think
that we need to separately discuss this additional basis for rejection
because it is clear that NRC intended to award a contract to a very
experienced offeror and that its solicitation was accordingly so
structured to give weight to the experience factor (50 points out of
100). NRC found that LNR's proposal was so weak and so deficient in
demonstrating related past experience that it would require major
revisions before it could be made acceptable. The NRC also found that
the two other proposals demonstrated an acceptable level of related past
experience. Moreover, the record shows that even if LNR would have
received a perfect score in demonstrating a proper technical approach,
it could have received only nine additional points under this criterion.
Thus, there is no basis to conclude that any misevaluation under this
criterion could have prejudiced LNR by depriving the firm of the
opportunity to be included in the competitive range and by eventually
depriving the firm of an award to which it was otherwise entitled. See
Employment Perspective, B-218338, June 24, 1985, 85-1 CPD Paragraph 715;
Lingtec, Inc., B-208777, Aug. 30, 1983, 83-2 CPD Paragraph 279. Stated
differently, we think that LNR's demonstrated experience was so weak in
relevant past experience, the most important evaluation area, that NRC
could reasonably exclude the firm from the competitive range because
major revisions would have been required to make the proposal
acceptable.
Accordingly, the protest is denied.
B-221608, 65 Comp. Gen. 611
Matter of: ABF Freight System, Inc., June 2, 1986
Where the delivering/billing carrier had the appropriate authority to
serve the origin and destination points, offered the government direct
service between the points at single-line rates, and the Government
Bills of Lading were issued to that carrier, the General Services
Administration's determination that the higher joint-line rates charged
and collected by the carrier were inapplicable is sustained, even though
other carriers provided the pick-up service. The billing carrier's mere
denial of an agency relationship and the absence of a written agency
agreement do not rebut the presumption that the government followed its
usual practice, called the carrier shown on the bills of lading, and
looked to that carrier for performance of through single-line service.
ABF Freight System, Inc. (ABF), asks the Comptroller General to
review deduction actions taken by the General Services Administration
(GSA) asgainst the carrier to recover overcharges collected for the
transportation of various government shipments. /1/ The GSA's
overcharge claims were based on lower single-line rates which it deemed
applicable to the shipments rather than the higher joint-line rates
charged by ABF. We agree with GSA that the single-line rates are
applicable.
TABLE OMITTED
There is no dispute over the material facts. ABF held operating
authority to provide direct service between all the points involved and
offered the government direct service to these points at single-line
rates. Each Government Bill of Lading was issued to ABF. ABF (or its
agents) delivered the shipments at destination and was the billing
carrier. ABF, however, billed for and collected freight charges based
on higher joint-line rates (rather than single-line rates) on the basis
that the shipments were not picked up by its employees.
The GSA recovered overcharges from ABF based on the single-line rates
on the basis that the bills showed ABF as both the origin and
destination carrier. Thus, GSA concluded that the pick-up services, if
not actually performed by ABF, were performed by mere agents of ABF
rather than interline carriers. The GSA cites ABF Freight System, Inc.
(East Texas Motor Freight), B-218695, October 30, 1985, 65 Comp. Gen.
45, as support for its position.
ABF denies that the pick-up carriers were its agents and argues that
since the bills were not signed by its employees, the shipments were
picked up by interline carriers; therefore, the joint-line rates were
applicable.
The record in the October 30, 1985 ABF Freight System decision,
supra, which sustained GSA's action, contained bills showing that they
were not only issued to the billing carrier (ABF), but also that the
shipments were received by the pick-up carriers on behalf of the billing
carrier. The record in a related decision, ABF Freight System, Inc.
(East Texas Motor Freight), B-218696/B-218697, October 30, 1985, which
also sustained GSA's action, contained a letter from the billing carrier
to the shipping officer designating the other carriers as its pick-up
agents. See also ABF Freight System, Inc., B-221609, February 28, 1986,
sustaining GSA's action on other similar shipments. In these cases the
agency relationship between the pick-up carriers and the
delivering/billing carrier was shown by either a letter of agency
designation or bills showing that the initial carriers received the
shipments in an agency capacity. A similar clear showing of an agency
relationship is not present in the current case. The issue here is
whether GSA's determination of overcharges can be sustained in the
absence of such affirmative evidence establishing an agency relationship
between ABF and the pick-up carrier.
Our consideration of the issue leads to the conclusion that in the
absence of contrary evidence, GSA establishes the prima facie validity
of its audit determination by presenting three facts: (1) that ABF had
the appropriate operating authority to serve the points involved, (2)
ABF offered the government direct service from the origin to the
destination points, and (3) the bills of lading show that the shipments
were tendered, which was also the delivering/billing carrier. We also
understand that it is the general government practice to offer the
shipment to the carrier shown on the bill of lading. /2/ Thus, there is
a reasonable presumption that the government tendered the shipments to
ABF, and did so with the understanding that it would provide through
service at the lower single-line rates.
In these circumstances, as to the rates to be charged the government,
it is irrelevant whether the relationship between ABF and the pick-up
carrier was that of agency or interline carrier, for the operational
details and the financial arrangements between ABF and the pick-up
carriers have no legal effect on the agreement between the government
and ABF. The pick-up carriers are not in privity with that agreement.
The rationale for this rule rests on the inference from the facts that
the government looked to ABF for the performance of through service, and
on the recognition of the usual practice that government shipping
officers call the carrier listed on the bill of lading for service, or
call the pick-up carrier at the instruction of the carrier listed on the
bill of lading. See Navajo Freight Lines, Inc., B-189382, January 6,
1978.
While we would consider competent contrary evidence showing that the
usual practice was not followed by the government, the mere denial by
ABF of an agency relationship and the absence of a written agency
agreement are not sufficient to rebut GSA's determination here.
Accordingly, in the absence of any relevant contrary evidence from
the carrier here, GSA's audit actions are sustained.
(1) The requests for review covered by this decision were contained
in several letters dated December 17 and 18, 1985, and January 7, 1986,
involving the following 41 Government Bills of Lading:
(2) To verify our understanding of the usual practice we contacted
the Joint Personal Property Shipping Office, Cameron Station,
Alexandria, Virginia, where over 60 percent of the bills involved in
this case were issued. The government official there unequivocally
stated that it was the practice to instruct the warehouseman (the
shipper) to contact ABF for service, and they looked to ABF for through
service.
B-221265, 65 Comp. Gen. 608
Matter of: Virginia A. Gibson -- Retroactive Substitution of Sick
Leave for Annual Leave, June 2, 1986
An employee timely requested and had approved the use of 72 hours of
annual leave at the end of a leave year in order to avoid forfeiture.
Shortly thereafter, the employee was involved in a non-job related
accident and went on sick leave. Due to a lengthy recuperation period,
the employee requested that a portion of the absence be charged to the
annual leave subject to forfeiture, rather than sick leave. Such
request was granted. In June or July of the succeeding leave year, the
employee requested retroactive substitution of sick leave for the excess
annual leave used at the end of the preceding leave year. The request
is denied. After annual leave is granted in lieu of sick leave as a
matter of choice, thereby avoiding forfeiture of that leave at the end
of the leave year under 5 U.S.C. 6304, the employee may not thereafter
have sick leave retroactively substituted for such annual leave and have
that annual leave recredited solely for the purpose of enhancing the
lump-sum leave payment upon separation for retirement nearly a year
later.
This decision is in response to a request from the Director,
Headquarters Personnel Operations Division, Department of Energy. It
concerns the entitlement of Ms. Virginia A. Gibson to substitute sick
leave for annual leave which was used in the calendar year prior to the
year in which she retired. For the reasons set forth below, we hold
that the retroactive leave substitution requested may not be granted.
Ms. Gibson was an employee of the Energy Information Administration,
Department of Energy. On October 24, 1984, she requested and received
approval for the use of 72 hours of annual leave to be taken during the
period December 21, 1984, through January 4, 1985, the last Friday of
the leave year ending January 5, 1985. On November 19, 1984, she
suffered injuries as a result of a non-job related automobile accident
and was placed in a sick leave status. She did not return to duty until
Monday, January 7, 1985.
After the accident, when it became apparent that her injuries were
sufficiently incapacitating so as to preclude her use of the annual
leave for the purpose for which it was intended, she requested and was
granted permission to substitute the use of that approved annual leave
in lieu of the sick leave she could have otherwise taken. The
submission points out that Ms. Gibson took this action in order to avoid
possible forfeiture of the 72 hours of annual leave.
In June or July 1985, she submitted a further request regarding leave
substitution. She requested that she be permitted to retroactively
substitute 72 hours of sick leave for the 72 hours of annual leave
already approved to be used in lieu of sick leave in the first instance
and that the 72 hours of annual leave be restored and carried forward
into the 1985 leave year. Her apparent purpose was to enhance her
lump-sum leave payment, since we understand that Ms. Gibson retired from
Federal service on September 27, 1985.
Prior to submission here, the agency, based on their interpretation
of our decision Interstate Commerce Commission, 57 Comp. Gen. 535
(1978), has already proposed allowing retroactive substitution of 24
hours of sick leave for annual leave, which represented the leave taken
on January 2, 3, and 4, 1985, because it was in the calendar year of her
retirement. The question asked is whether similar retroactive
substitution and restoration may be made for the annual leave used in
the calendar year prior to that in which the employee retired.
Preliminarily, we do not agree with the agency's interpretation of
our decision Interstate Commerce Commission, supra. The facts in that
case showed that in November 1977, the employee took 2 weeks of approved
annual leave. He died on November 29, 1977, following return to duty.
Shortly thereafter, a member of his family informed the agency that the
period during which he had requested and was charged annual leave should
have been charged as sick leave, since the reason he was absent was due
to an illness and he needed hospital care, which he wanted to keep
secret. Based on those circumstances, the family requested that the
leave period be charged to sick leave and the annual leave charged be
recredited for the purpose of the lump-sum leave payment to the
employee's survivor.
We ruled in that case that we had no objection to the retroactive
charging of the absence to sick leave and recrediting the annual leave
used, if the agency determined that such action was appropriate. In so
ruling, we stated in part:
* * * in those cases where the employee retires or dies during the
same year in which the leave is taken, and a timely request is made, it
is appropriate to permit agencies to allow retroactive leave
substitution * * *. 57 Comp. Gen. at 536.
The year involved in that discussion was not a "calendar" year. Nor
did the case involve potential forfeiture of leave for non-use. Since
the focus of the discussion was the provisions governing annual and sick
leave under 5 U.S.C. Sections 6301 to 6312, the year to which we had
reference was a "leave" year. This distinction is important for several
reasons. First, while the last work day of a leave year may coincide
with the last day of a calendar year, it rarely does so because the
cycle of biweekly pay period is not equal to the exact number of weeks
and days in a calendar year. More often than not the last biweekly pay
period beginning in December of a particular year extends into January
of the succeeding calendar year, thus establishing those days in January
which are within that biweekly period as days within that leave year for
annual leave accrual and use. Second, unlike the accrual and
accumulation of sick leave (5 U.S.C. Section 6307), the accumulation of
sick leave is subject, generally, to a maximum carryover of 240 hours
from one leave year to the next with the excess annual leave subject to
statutory forfeiture under 5 U.S.C. Section 6304, if not used during the
leave year.
All of the annual leave for which recredit is sought in the present
case was subject to forfeiture under 5 U.S.C. Section 6304 if not used
by the end of the leave year. In view of the fact that Interstate
Commerce Commission, supra, did not involve the prospect of possible
forfeiture of any annual leave, the ruling therein would not control
disposition of this case.
The law governing restoration of forfeited annual leave is contained
in 5 U.S.C. Section 6304 (1982). Subsection 6304(d)(1)(C) provides, in
part:
(d)(1) Annual leave which is lost by operation of this section
because of --
(C) sickness of the employee when the annual leave was
scheduled in advance; shall be restored to the employee.
Clearly, if Ms. Gibson had not used the annual leave in question in
place of sick leave, it would have been forfeited and restored under the
above-quoted section.
In 31 Comp. Gen. 524 (1952), we recognized, in principle, that while
absences due to illnesses are normally charged to sick leave, such
absences may be charged to accrued annual leave if timely requested and
administratively approved, thereby preserving that sick leave for future
use. Thus, the above provisions and that decision, when considered in
combination, establish that an employee may elect which type of leave to
use to cover absences due to illness. If the illness occurs during an
approved period of annual leave which cannot be used for the purpose
intended and because it is not used it is forfeited at the conclusion of
the leave year, that forfeited annual leave may be restored to the
employee for use in the following year. If, on the other hand, the
employee chooses to use that otherwise forfeitable annual leave in lieu
of the leave year, to the extent that such excess annual leave is used,
the employee would have no excess annual leave to be forfeited.
In our decision 54 Comp. Gen. 1086 (1975), we considered a factual
situation parallel to that involved in Ms. Gibson's case. There the
employee chose to have his absence for illness charged to annual leave,
thereby reducing his annual leave balance to a level where he had no
excess annual leave at the conclusion of the leave year. We concluded
that since he had already exercised his option and there was no annual
leave forfeited by operation of law, there was no basis upon which a
retroactive substitution of sick leave for annual leave during that
preceding leave year could be premised.
In the present case, Ms. Gibson made a similar request before the
close of the leave year, which request was approved. As a result, since
she did not have any annual leave otherwise subject to forfeiture at the
end of the leave year immediately preceding the leave year in which she
retired, 54 Comp. Gen. 1086, above, controls her situation.
Accordingly, the agency may not retroactively substitute any sick
leave for annual leave in her case, and may not recredit any annual
leave for lump-sum payment purposes in the succeeding leave year.
B-218816, 65 Comp. Gen. 605
Matter of: Council on Environmental Quality and Office of
Environmental Quality -- Cooperative Agreement With National Academy of
Sciences, June 2, 1986
A proposed study has been developed and submitted by the National
Academy of Sciences to the Council on Environmental Quality for funding
at the request of the Environmental Protection Agency. The purpose of
the study is to provide information on risks and benefits of certain
pesticides to help Federal regulatory agencies, such as EPA, in
analyzing prospective regulations. The proper funding mechanism should
be a procurement contract, rather than a cooperative agreement, as
required by 31 U.S.C. 6303 (1982), since the primary purpose of the
study is to acquire information for the direct benefit or use of the
Federal Government.
The Council on Environmental Quality has no authority to use its
Management Fund to provide grants or analogous assistance and therefore
cannot enter into a cooperative agreement, which is a form of assistance
under 31 U.S.C. 6305.
The Executive Officer of the Council on Environmental Quality and the
Office of Environmental Quality /1/ has requested a decision on whether
the Council has authority to enter into a cooperative agreement with the
National Academy of Sciences. According to the submission, the Council
received a proposal from the National Academy of Sciences for funding,
in order for the Academy to conduct a study on "Analytic Methods for
Estimating Pesticide Benefit." The proposed study would be financed via
interagency agreements from the Council's Management Fund. Although
such a study clearly comes within the Council's program authority, the
Executive Officer was uncertain whether the Council has authority to use
a cooperative agreement as the mechanism to fund the proposed study.
See 42 U.S.C. Section 4372(d)(4). The Executive Officer also asked
whether the Management Fund can accept grant money from another Federal
agency and provide assistance with those funds under a cooperative
agreement.
As explained below, we find that the proper funding vehicle for the
proposed study is a "contract" rather than a "cooperative agreement."
There is no problem with the Council entering into a contractual
relationship with the National Academy of Sciences for the project as
described, as long as applicable Federal procurement regulations are
met. However, we find that the Council has no authority to enter into a
cooperative agreement with the National Academy of Sciences to carry out
the proposed study.
The Academy states that the purpose of the proposed project is --
* * * to assist regulatory agencies and researchers in developing
sound analyses of the economic impacts of prospective regulat(ions)
impacting pesticide use patterns. National Academy of Sciences,
National Research Council Board on Agriculture, "A Proposal for a Study
on Analytic Methods for Estimating Pesticide Benefits" (Proposal No.
85-224).
The proposed study was developed and submitted to the Council at the
request of the Environmental Protection Agency (EPA). EPA bases its
pesticide regulatory decisions on a balancing of risks and benefits of
particular pesticides and is concerned over existing limitations in
methodologies and data for the estimation of comparative benefits of
pesticide uses. The key focus of the study will be to develop methods
for calculating comparative benefits of chemical and non-chemical
pesticides.
As mentioned earlier, we have no question about the Council's
authority to sponsor this type of study. The scope of its program
authority is quite broad. See 42 U.S.C. Section 4372. The only
question is whether the Council is free to fund the project via a
cooperative agreement or whether it must enter into a contractual
relationship with the Academy instead. The Federal Grant and
Cooperative Agreement Act, 31 U.S.C. Sections 6301-08 (1982),
established the criteria which agencies must follow in deciding which
legal instrument to use when entering into a funding relationship with a
state, locality, or other recipient for an authorized purpose. Under
these criteria, a contract is the proper funding vehicle when the
services being acquired are for "the direct benefit or use of the United
States." 31 U.S.C. Section 6303.
Grants and cooperative agreements, /2/ on the other hand, reflect a
relationship between the United States Government and a State, a local
government, or other recipient when --
(1) the principal purpose of the relationship is to transfer a thing
of value to the state, local government, or other recipient to carry out
a public purpose of support or stimulation authorized by a law of the
United States instead of acquiring (by purchase, lease or barter)
property or services for the direct benefit or use of the United States
Government, 31 U.S.C. Sections 6304 and 6305.
The results of the proposed study are clearly intended primarily for
the direct benefit of the EPA as well as other regulatory agencies
concerned in the development of regulatory policy on pesticide use.
Therefore, under the directives of the Federal Grant and Cooperative
Agreement Act, discussed above the proper funding vehicle for the
proposed study is a contract and not a cooperative agreement, as
proposed. Providing applicable Federal procurement regulations are met,
we see no problem with the Council entering into a contractual
relationship with the Academy to perform the proposed study and
financing it through the Management Fund.
The Executive Officer's second question was whether the Council's
Management Fund can accept grant money from another agency and "provide
assistance with those funds under a cooperative agreement." We assume,
for purposes of this question, that the hypothetical study sought to be
funded, unlike the National Academy proposal, is one intended primarily
to support a public purpose rather than providing goods or services
which the Federal Government wishes to procure for its own purposes.
In general, every agency has inherent power to enter into contracts
to provide for its needs. However, we cannot assume that agencies have
the power to donate Government funds to assist non-Government entities
to accomplish their own purposes, however meritorious, without clear
evidence that the Congress intended to authorize such an assistance
relationship. B-210655, April 14, 1983. Therefore, in order to provide
assistance through a cooperative agreement, there must be some
affirmative legislative authorization. Id.
We have examined the Council's statutory authority but are unable to
find any specific authority for it to enter into a cooperative
agreement. The Management Fund of the Council was established by an
amendment to the Environmental Quality Improvement Act. Pub. L. No.
98-951, 98 Stat. 3093, Oct. 30, 1984, to be codified at 42 U.S.C.
Section 4375. By law, the Fund can only participate in: (1) study
contracts that are jointly sponsored by the Office and one or more other
Federal agencies; and (2) Federal interagency environmental projects
(including task forces) in which the Office participates."
With respect to the first authority, we find nothing in the Fund's
legislative history that would support a broader interpretation for the
words "study contract" than the plain meaning of the words would
suggest. Therefore, we think that paragraph (1) merely authorizes the
Council to enter into jointly sponsored contracts through the Management
Fund.
The second authority, "Federal interagency environmental projects",
does not involve the use of a "cooperative agreement" (as the term is
defined in the Federal Grant and Cooperative Agreement Act), since the
intended relationship is between Federal agencies, one or more of which
may itself conduct the study in question. Fund transfers between
Federal agencies are not accomplished by awarding grants or entering
into cooperative agreements. By statute, when an agency wishes to
acquire goods or services from another agency, the transaction would be
funded under the Economy Act (31 U.S.C. Section 1535) or some other
statute on a reimbursable basis. Since the Fund cannot be used to make
assistance awards, such as cooperative agreements, even if it receives
an order from another agency that has grant assistance authority, it
remains limited to act within the scope of its own authority.
(1) The Council on Environmental Quality, 42 U.S.C. Sections 4341-47,
was established by the National Environmental Policy Act of 1969, 42
U.S.C. Sections 4321 et seq., to oversee the Act's implementation. The
Office of Environmental Quality was established by the Environmental
Quality Improvement Act of 1970, 42 U.S.C. Sections 4371-74. This Act
made the Chairman of the Council on Environmental Quality the Director
of the Office of Environmental Quality and enunciated as one of the
Office's duties the provision of staff and support for the Council. 42
U.S.C. Section 4372(d)(1). Since its creation, the Council and the
Office of Environmental Quality have operated as a single entity under
both statutes. Hereinafter, we will refer to these two agencies as "the
Council."
(2) The quoted description in paragraph (1) is the same for both
grants and cooperative agreements. The principal difference is that a
grant does not usually involve substantial participation by the Federal
agency (31 U.S.C. Section 6304). "Substantial involvement" is expected
when cooperative agreements are used. 31 U.S.C. Section 6305(2). It is
customary to refer to both instruments as evidencing "assistance
relationships."
B-217913, 65 Comp. Gen. 601
Matter of: Rebates from Travel Management Center Contractors, May
30, 1986
Rebates from Travel Management Centers redistributed to paying
Federal agency may be retained by agency for credit to its own
appropriation and does not need to be deposited into the Treasury as
miscellaneous receipts. This does not constitute an illegal
augmentation of appropriations in that these rebates are adjustments of
previous amounts disbursed and therefore qualify as "refunds" under
regulations permitting such refunds to be retained by the agency.
This decision is in response to a request from the General Counsel of
the General Services Administration (GSA) asking whether Federal
agencies whose employee travel arrangements are handled by Travel
Management Centers (TMC) (travel agents operating under so-called no
cost contracts with GSA) might in the furture retain rebate payments
proposed to be received from TMCs. The agency would either deposit
these payments to the credit of appropriations against which employee
travel is charged or have amounts representing a portion of the
commission received by TMCs from third parties whose services are used
by TMCs when making employee travel arrangements credited against future
billings.
As explained in further detail below, payments or credits may be
credited to the appropriation against which the cost of employee travel
is charged or applied against future billings for employee travel
because they would constitute refunds which do not have to be depositied
to the general fund of the Treasury as miscellaneous receipts.
GSA currently has nearly 100 contracts with TMCs and is considering
further expansion of the program. GSA proposes to request rebates or
credits from TMCs in selected future solicitations. TMCs do not charge
the Government directly for the services they provide, but instead
receive commissions from transportation or lodging establishments with
whom they book reservations. Three methods are used to effect payment
to TMCs for Federal employee travel:
1. The TMC is paid by a contractor (Diners Club) which has
issued a credit card to a Government employee pursuant to a
contract with GSA;
2. The TMC is paid by a contractor (Diners Club) on behalf of
GSA under GSA's Government Travel Systems accounts (GTS); or
3. The TMC is paid directly pursuant to Government
Transportation Requests (GTR).
GSA proposes to recapture part of the TMC commissions in the form of
a rebate collected periodically and remitted by the TMCs to GSA or to
the particular agency making payment on a GTS or reimbursing the
employee who travels on a charge card. When GTRs are used, a credit
would be made by the TMC toward the particular agency account involved.
GSA views the rebate as a discount but is concerned that where a GTS or
credit card is used any rebate recovered might have to be deposited to
the credit of miscellaneous receipts of the Treasury pursuant to 31
U.S.C. Section 3302.
As a general proposition, absent specific statutory authority, all
funds received for the use of the United States must be deposited in the
general fund of the Treasury as miscellaneous receipts. 31 U.S.C.
Section 3302. Violation of this statute constitutes an illegal
"augmentation" of the agency's appropriation and funds must be returned
to the Treasury so they can be appropriated as the Congress sees fit.
One of the exceptions to the general rule is that an agency may
retain receipts which qualify as "refunds to appropriations." Refunds
are defined as "repayments for excess payments and are to be credited to
the appropriation or fund accounts from which the excess payments were
made. Refunds must be directly related to previously recorded
expenditures and are reductions of such expenditures." /1/ Refunds also
have been defined as representing "amounts collected from outside
sources for payments made in error, overpayments, or adjustments for
previous amounts disbursed." /2/ Since there is no statutory authority
which would in this instance permit agency retention of rebates, the
question is whether the rebate may be deemed a "refund" within the scope
of the regulations.
In determining whether the rebate or credit can be properly
characterized as a refund under these regulations we rely upon our line
of cases which permit the crediting of refunds to the appropriations
charged. It has been suggested that agency retention of the rebate in
this case follows from two of our decisions involving contracts which
contained clauses providing for some type of adjustment in the contract
price. In 34 Comp. Gen. 145 (1954) we held that the refund required
under a guarantee-waranty clause was properly creditable to the agency
appropriation because it could be considered an adjustment in the
contract price. Similarly in 33 Comp. Gen. 176 we held that a
contractor's refund made under a price redetermination clause may be
credited to the agency account in that the refund was the return of an
admitted overpayment.
A similar conclusion is reached in the situation where a breaching
contractor is required to pay the excess costs of reprocurement. In 62
Comp. Gen. 678 (1983) we determined that such funds need not be
deposited into the general fund of the Treasury. In this case and in
the prior cases cited the amounts received are not illegal augmentations
of agency appropriations because they are adjustments in previous
amounts disbursed which serve to provide the agency involved with that
which it bargained for under the original contract. Similarly, amounts
received from an insurer for damage to an employee's personal property
where the agency has paid a claim by the employee under 31 U.S.C.
Section 3721 may be credited to the appropriation of the agency. See 61
Comp. Gen. 5377 (1982). We concluded that the recovery is analogous to
the recovery of an overpayment or the return of an unused advance and
qualifies as a refund under the regulations. See also 62 Comp. Gen. 70
(1982).
In each of these three situations described by GSA in its submission,
the proposed payment or credit can similarly be characterized as a
refund within the scope of the decisions authorizing deposit to the
credit of the appropriation against which the employee travel was
initially charged. It is most clear in the third example since there
the billing is made by, and paid to, the TMC. However, the nature of
the payment or credit does not change simply because in the first
example the Government pays the employee for his authorized expenses and
in the second example it pays the Diners Club. This is because in both
of these situations the commission charged by the TMC is ultimately paid
by the Government.
Consequently, if the TMC agrees to discount its services to the
Government, we see no reason why the agency should not be authorized to
deposit this saving to the credit of the appropriation against which the
initial cost of the employee travel is charged. The fact that the party
making the payment of credit may not be the same one the Government paid
does not alter this conclusion. Thus, such payments or credits
representing a discount on commissions otherwise collected by TMCs in
connection with handling travel arrangements for Government employees on
official business, the cost of which is ultimately paid for by the
Government, may be refunded to the credit of the appropriation initially
charged the cost of employee travel. /3/
(1) GAO Policy and Procedures Manual for the Guidance of Federal
Agencies, Title VII, section 12.2
(2) Treasury Department-GAO Joint Regulation No. 1, reprinted as
Appendix B to Title VII of the Policy and Procedures Manual.
(3) See 31 U.S.C. Section 1552(b).
B-219841, 65 Comp. Gen. 598
Matter of: Claim of First Interstate Bank of California as Assignee
of Defense Logistics Agency Contract, May 28, 1986
The Defense Logistics Agency (DLA), which erroneously paid certain
contract proceeds to the contractor-assignor rather than to the
assignee, should now pay the claim of the assignee. The assignee
complied with all requirements of the Assignment of Claims Act, 31
U.S.C. 3727. DLA could not discharge its payment obligation under the
contract by paying the contractor. A letter from the assignee to the
contractor, after the erroneous payment, releasing the assignee's
interest in the contract does not revoke the assignment or otherwise
extinguish the assignee's right to payment in these circumstances.
The Defense Logistics Agency may not pay interest on a delayed
contract payment to the assignee of a Government contract. Interest is
not recoverable against the United States unless it is expressly
authorized in the relevant statute or contract.
This decision is in response to a request from Mr. Peter H. Tovar,
Chief of the Accounting and Finance Division of the Defense Logistics
Agency (DLA). Mr. Tovar asks us to decide whether a claim of the First
Interstate Bank of California for $26,655, plus interest, as assignee of
certain contract proceeds may be paid. For the reasons set forth below,
we conclude that the claim for $26,655 should be paid, but that no claim
for interest may be allowed in these circumstances.
At some point prior to 1983, DLA and The Sign Company, Inc., entered
into contract number DLA400-82-C-4764 for reflective tape. In December
of 1983, proceeds under the contract were assigned by The Sign Company
to First Interstate, apparently in accordance with the terms of a loan
of $26,655 by First Interstate to The Sign Company. Proper notice of
the assignment was sent to the DLA contracting officer and disbursing
officer as required by the Assignment of Claims Act. 31 U.S.C. Section
3727 (1982). Notification of the assignment was acknowledged by the
appropriate DLA officials.
Notwithstanding the assignment, the first and final payment on
contract number DLA400-82-C-4764 in the amount of $34,659 was made to
The Sign Company on February 18, 1983. A stop payment order was issued
against the check on March 29, 1983, but the check had already been
paid. DLA unsuccessfully demanded repayment from The Sign Company.
First Interstate Bank subsequently demanded $26,655 from DLA. DLA,
however, has refused payment on two grounds. First, DLA contends that
First Interstate has not shown that its loan to The Sign Company was
made to finance performance under contract number DLA400-82-C-4764,
thereby making the assignment proper under the Assignment of Claims Act.
See Coleman v. United States, 158 Ct. Cl. 490 (1962).
We do not concur in DLA's position and conclude that the assignment
must be deemed to be proper. First Interstate is clearly a financing
institution and contends in its submission that the $26,655 was advanced
to The Sign Company "against the contract." DLA has pointed to no
circumstances or evidence casting doubt on that assertion or on the
validity of the assignment in general. Further, DLA received and
acknowledged notice of the assignment well before the incorrect payment
was made. DLA does not dispute that The Sign Company was paid the
contract proceeds erroneously and attempted to prevent the negotiation
of the erroneously issued check and to recover the erroneously paid
funds. In Produce Factors Corporation v. United States, 467 F.2d 1343,
1349 (Ct. Cl. 1972), the Court of Claims held:
When the Government receives notice that an assignment of
proceeds under a Government contract has been made, it can no
longer discharge its payment obligation under the contract by
paying the contractor. The Government has only a reasonable time
to determine the validity of the assignment; thereafter the
assignee is entitled to all amounts earned by the contractor's
performance.
DLA further contends that a "release" executed by First Interstate
subsequent to the erroneous payment relieves it of responsibility to pay
First Interstate. DLA refers to a May 20, 1983 letter from an Assistant
Vice President of First Interstate to The Sign Company. The May 20
letter purported to "release the interest of First Interstate Bank" in
several contracts, including contract number DLA400-82-C-4764. The
letter was supplied by The Sign Company to DLA. DLA interprets this
release as a "release of the assignment and money due thereunder." First
Interstate contends, however, that the May 20 document did not release
the Government, but only released The Sign Company from its obligations
under the loan contract, thereby converting "a recourse assignment into
an assignment without recourse."
The intended legal effect of the May 20 letter is unclear. It
appears, at most, to have been effective to release The Sign Company
from its obligation under the loan agreement between The Sign Company
and First Interstate to assign the proceeds of contract number
DLA400-82-C-4764 to First Interstate. In any event, we conclude that
the May 20 letter, whatever its intended effect, should not operate to
extinguish First Interstate's right to payment from the Government. The
May 20 letter was addressed to The Sign Company, not to DLA. The
Federal Acquisition Regulations provide that an assignment may be
released upon filing by the contractor of "a written notice of release
together with a true copy of the release assignment instrument" with the
contracting officer, any surety, and the disbursing officer. 48 C.F.R.
Section 32.805(e) (1984). No such procedure was followed in this case.
Further, there is no indication that DLA relied on the May 20 letter, so
that First Interstate should now be estopped to enforce the assignment.
The erroneous payment took place months before DLA received a copy of
the May 20 letter.
Finally, First Interstate has also claimed interest in the amount of
$3,829.80. It is firmly established principle that interest is not
recoverable against the United States unless it is expressly authorized
in the relevant statute or contract. 45 Comp. Gen. 169 (1965). We know
of no statute which is pertinent in this case and no relevant contract
provision has been brought to our attention. Therefore, the claim of
First Interstate for interest must be disallowed.
Accordingly, the claim of First Interstate Bank may be paid in the
amount of $26,655.
B-216918, 65 Comp. Gen. 594
Matter of: Investigative Jurisdiction of Equal Employment
Opportunity Commission over the Superior Court of the District of
Columbia, May 27, 1986
The Superior Court of the District of Columbia, although established
by Congress under Article I of the Constitution, is more analogous to a
state court than to a Federal court for purposes of Title VII of the
Civil Rights Act of 1964. Accordingly, and since its employees are not
in the competiive service, it is subject to the jurisdication of the
Equal Employment Opportunity Commission under section 706 of the Civil
Rights Act, which generally covers state and local governments, rather
than section 717 which applies to Federal entities.
The late Chief Judge of the Superior Court of the District of
Columbia requested our opinion on whether the Equal Employment
Opportunity Commission (EEOC) has jurisdiction over employment
discrimination complaints against the court under Title VII of the Civil
Rights Act of 1964, as amended by the Equal Employment Opportunity Act
of 1972. Specifically, the question is whether the court is subject to
the EEOC's enforcement authority found in section 706 of the Act.
Before preparing our response, we solicited the views of the EEOC on
this issue. We have fully considered the Commission's comments in
preparing this decision. For the reasons stated below, we conclude that
the court is subject to section 706.
Generally, Title VII of the Civil Rights Act of 1964 (codified at 42
U.S.C. Sections 2000e-2000e-17 (1982)) provides protections against
discrimination in employment and appropriate remedies. As originally
enacted, Title VII did not cover Government employees. The Equal
Employment Opportunity Act of 1972 amended the Civil Rights Act to
extend the protections of Title VII to most Federal, state and local
government employees. As a result of the 1972 amendment, section 717
/1/ sets forth the administrative procedures for the enforcement of
Title VII protections which are applicable to Federal employees, and
section 706 /2/ provides procedures applicable to state and local
government employees.
Under the procedures set forth in section 706 and the EEOC's
implementing regulations, employees bringing a charge against an
employer to whom section 706 applies are, with exceptions not relevant
here, required to begin the administrative complaint process by filing
their charge with the Commission. 42 U.S.C. Section 2000e-5(b). The
Commission, after serving the respondent with a copy of the charge,
conducts a full investigation of the matter. 29 C.F.R. Sections
1601.14, 1601.15. The EEOC is authorized to subpoena witnesses and
documents and to hold public hearings to carry out its investigation.
29 C.F.R. Section 1601.16, 1601.17.
Once it has taken jurisdiction of a charge under section 706, the
Commission may dispose of it in a number of ways. It may dismiss a
charge which was not timely filed or which fails to state a claim under
Title VII. 29 C.F.R. Section 1601.19. It may encourage a negotiated
settlement of the matter. 29 C.F.R. Section 1601.20. If the charge is
not settled or dismissed, the Commission may make a determination that
there is reasonable cause to believe that an unlawful employment
practice has occurred or is occurring and then endeavor to eliminate the
practice informally. 29 C.F.R. Section 1601.24. Finally, if the matter
remains unresolved, the EEOC may issue a notice of right to sue, thereby
enabling the aggrieved party to bring a civil action. 29 C.F.R. Section
1601.28.
By contrast, Title VII complaints covered by section 717 are not
subject to the Commission's complaint process. Under the applicable
regulations, the employing agency, not the EEOC, is responsible for
carrying out the administrative process for discrimination complaints
against "section 717 employers." 29 C.F.R. 1613.211-1613.283. The
process is somewhat analogous to the section 706 procedure, concluding
with the head of the agency or his designee making a final decision on
the complaint. The Commission's role in section 717 cases is generally
limited to hearing the appeals of complaints which have been adversely
decided by agency heads. 29 C.F.R. Sections 1613.231-1613.234.
Section 717 specifies that it covers employees "in those units of the
Government of the District of Columbia having positions in the
competitive service * * *." 42 U.S.C. Section 2000e-16(a). Section 706
does not apply to employees of "any department or agency of the District
of Columbia subject by statute to procedures of the competitive service
(as defined in section 2102 of Title 5) * * *" 42 U.S.C. Section
2000e(b). The legislative history of the Equal Employment Opportunity
Act of 1972 indicates that the term "competitive service" as used above
was intended to mean the Federal competitive service. a
section-by-section analysis inserted into the Congressional Record at
the time the Senate considered approval of the Conference Report on the
later enacted bill, in explaining the Act's definition of "employer"
upon which Title VII coverage is based, stated:
This subsection defines the terms "employer" as used in Title
VII. This subsection would now include, within the meaning of
term "employer" all state and local governments, governmental
agencies, and political subdivisions, and the District of Columbia
departments or agencies (except those subject by statute to the
procedures of the Federal competitve service as defined in 5
U.S.C. Section 2102, who along with all other Federal employees
would now be covered by section 717 of the Act). 120 Cong. Rec.
S3460 (daily ed. March 6, 1972) (following remarks of Sen.
Williams).
Interpreting these provisions and their legislative history, the courts
have held that Title VII complaints against District of Columbia
governmental units are covered by the procedures of either section 706
or section 717, depending upon whether the unit has positions in the
competitive service. Bethel v. Jefferson, 589 F.2d 631 (D.C. Cir.
1978); Torre v. Barry, 661 F.2d 1371 (D.C. Cir. 1981).
Employees of the Superior Court of the District of Columbia are not
in the competitive service. Under 5 U.S.C. Section 2102(a)(3), the
competitive service includes "positions in the government of the
District of Columbia which are specifically included in the competitive
service by statute." The court's employees are not included in the
competitive service by statute. On the contrary, the statutory
provisions pertaining to court personnel indicate clearly that court
employees are not subject to competitive service procedures. Section
11-1725 of the District of Columbia Code provides that the Court's
Executive Officer shall appoint and remove non-judicial court personnel
subject to the approval of the Joint Committee on Judicial
Administration of the District of Columbia.
The "non-competitive service" status of such District of Columbia
Superior Court employees coincides with the status of District of
Columbia employees generally. Although a number of District of Columbia
employees were in the Federal competitive service at the time of the
enactment of Title VII, they no longer are. Under the authority of the
District of Columbia Self-Government Act, Public Law No. 93-198
(December 24, 1973), Section 422(3), 87 Stat. 774 at 791, the District
of Columbia has enacted its own merit personnel system (See D.C. Law
2-139, Section 3202, D.C. Code Section 1-633.2(a)(2) thereby making
District of Columbia employees generally not subject to the Federal
competitive system. See also B-217270, October 28, 1985, regarding
"non-competitive service" status of employees of the Superior Court of
the District of Columbia.
Since court employees do not hold competitive service positions, the
court would appear to be subject to the EEOC's complaint process under
section 706, unless there is some reason to distinguish the court from
other departments or agencies of the Government of the District of
Columbia. Clearly the Superior Court is an element of the Government of
the District of Columbia. The complication arises in that the court is
also an "Article I court," i.e., it was established by Congress under
Article I of the Constitution. D.C. Code Section 11-101. In this
sense, it differs from other state and local courts, which are subject
to section 706. The late Chief Judge noted that section 717(a) (42
U.S.C. Section 2000e-16(a)) appears to exclude courts established by
Congress under Articles I and III of the Constitution from EEOC's
section 706 complaint process. He further noted that "the Congress has
retained authority over the Court despite the enactment of the District
of Columbia Self-Government and Governmental Reorganization Act." For
these reasons he asked whether, for purposes of Title VII, it is correct
to treat the court as a state or local court, in which event section 706
applies, or whether it is more correct to consider the court as
analogous to a Federal court, in which event is subject presumably only
to section 717.
In our opinion, the Superior Court is subject to section 706 because
it is analogous to a state or local court, and the fact that it was
established under Article I does not affect its status as a local
governmental unit.
We note initially that Title VII does not mention Article I or
Article III courts specifically. Rather, for purposes of determining
the applicability of section 706 or section 717, Title VII speaks, in
effect, in terms of whether an employer is one of certain specified
Federal departments or agencies, a state or local agency, or a unit of
the Government of the District of Columbia. The late Chief Judge's
question suggested the view that Article I courts, because they are
federally created, should be considered Federal employers for Title VII
purposes.
A court need not, in our view, be considered a Federal employer
merely because it is established by Congress under Article I. The
Congress established the Superior Court of the District of Columbia
pursuant to power granted to it in clause 17 of section 8 of Article I,
which authorizes the Congress to exercise exclusive jurisdiction over
the District of Columbia. As our following discussion indicates, the
Congress, although acting under Article I, intended the Superior Court
to be strictly local in character and analogous to a state court.
We base our opinion on several United States Supreme Court decisions
in which the Court has viewed the Superior Court as tantamount to a
state or local court by interpreting the legislative intent of the Court
Reform Act. For example, in Palmore v. United States, 411 U.S. 389
(1973), the Court stated that the Court Reform Act was intended to
establish a strictly local court system to relieve the formerly burdened
Article III "federal" courts of the responsibility for trying local
criminal matters in order to support its holding that a felon need not
constitutionally be tried by an Article III judge. In discussing the
Court Reform Act, the Court stated:
* * * Here Congress has expressly created two systems of courts
in the District. One of them, made up the United States District
Court for the District of Columbia and the United States Court of
Appeals for the District of Columbia Circuit, are constitutional
courts manned by Art III judges to which the citizens of the
District must or may resort for consideration of those
constitutional and statutory matters of general concern * * *.
The other system is made up of strictly local courts, the Superior
Court and the District of Columbia Court of Appeal. These courts
were expressly created pursuant to the plenary Art I power to
legislate for the District of Columbia, DC Code Ann Section
11-101(2) (Supp. V. 1972, * * *. Here, Congress reorganized the
court system in the District of Columbia and established one set
of courts in the District with Art III characteristics and devoted
to matters of national concern. It also created a wholly separate
court system designed primarily to concern itself with local law
and to serve as a local court system for a large metropolitan
area.
(This separate court system has) functions essentially similar
to those of the local courts found in the 50 States of the Union
with responsibility for trying and deciding those distinctively
local controversies that arise under local law, including local
criminal laws having little, if any, impact beyond the local
jurisdiction. 411 U.S. at 406-409.
Following Palmore, the Supreme Court has taken the view that it is
proper to consider the Superior Court of the District of Columbia as a
local court in other contexts as well. See for example, Key v. Doyle,
434 U.S. 59, 64 (1977); and Swain v. Pressley, 430 U.S. 372, 375
(1977).
In light of these Supreme Court decisions, we believe that, for
purposes of Title VII, the Superior Court is more appropriately viewed
as a state or local, rather than a Federal, government entity. As such,
and since its employees are not in the competitive service, the Court
would be subject to the investigative jurisdiction of the EEOC as
provided in section 706.
(1) 42 U.S.C. Section 2000e-16.
(2) 42 U.S.C. Section 2000e-5.
B-222097, 65 Comp. Gen. 588
Matter of: Permanency of Weapon Testing Moratorium Contained in
Fiscal Year 1986 Appropriations Act, May 22, 1986
Section 8097 of the Department of Defense Appropriations Act, 1986,
Pub. L. No. 99-190, 99 Stat. 1185, 1219 (1986), does not constitute
permanent legislation. A provision contained in an appropriation act
may not be construed as permanent legislation unless the language or
nature of the provision makes it clear that such was the intent of the
Congress. Here, the provision in question includes no words of futurity
and the provision is not unrelated to the purposes of the Act. Further,
the provision is not rendered ineffectual by a finding that it is not
permanent.
This decision is in response to a request from Representatives Les
AuCoin, George E. Brown, Jr., Norman D. Dicks, and Lawrence Coughlin,
for the opinion of this Office as to whether section 8097 of the
Department of Defense Appropriations Act, 1986, Pub. L. No. 99-190, 99
Stat. 1185, 1219 (1986), constitutes permanent legislation. Section
8097 prohibits the use of appropriated funds to carry out a test of an
anti-satellite weapon against an object in space until the President
makes certain certifications to Congress. As set forth below, we
conclude that section 8097 does not constitute permanent legislation,
but rather is applicable only to funds made available by the DOD
Appropriations Act, 1986, or other legislation providing funding for
anti-satellite weapon testing during fiscal year 1986.
Funding is provided for the testing of anti-satellite weapons in the
Department of Defense Appropriations Act, 1986, in Title IV, "Research,
Development, Test, and Evaluation, Air Force." The funds provided are
2-year funds, "to remain available for obligation until September 30,
1987." 99 Stat. 1200. However, section 8097 of that Act reads as
follows:
Sec. 8097. None of the funds appropriated by this Act may be
obligated or expended to carry out a test of the Space Defense
System (anti-satellite weapon) against an object in space until
the President certifies to Congress that the Soviet Union has
conducted, after October 3, 1985, a test against an object in
space of a dedicated anti-satellite weapon.
There is a presumption that any provision in an annual appropriation
act is effective only for the covered fiscal year. 31 U.S.C. Section
1301(c); 20 Comp. Gen. 322, 325 (1940). See also Pub. L. No. 99-190,
90 Stat. 1185, 1204 (1985) (Section 8008 of DOD Appropriations Act,
1986). This is because appropriation acts are by their nature
non-permanent legislation. Thus, unless otherwise specified, the
provisions of an appropriation act for a given fiscal year expire at the
end of that fiscal year. Accordingly, it has been the longstanding
position of this Office that a provision contained in an appropriation
act may not be construed as permanent legislation unless the language or
nature of the provision makes it clear that such was the intent of the
Congress. 62 Comp. Gen. 54, 56 (1982); 10 Comp. Gen. 120, 121 (1930).
Permanency is indicated most clearly when the provision in question
includes "words of futurity" such as "hereafter" or "after the date of
approval of this act." See e.g., 36 Comp. Gen. 434 (1956). Here,
section 8097 includes no such words of futurity. In our view, the
phrase, "this Act or any other Act," does not constitute words of
futurity. In interpreting similar language in the past, we held that
the words "or any other act" do not indicate futurity, but merely extend
the effect of the provision to other appropriations available in that
fiscal year. B-145492, September 21, 1976. See also B-208705,
September 14, 1982. Accordingly, in the case at hand, the inclusion in
section 8097 of the phrase "this Act or any other Act" does not make the
anti-satellite weapon testing restriction permanent, but rather merely
extends the applicability of the restriction to any other funds
available during fiscal year 1986, in addition to funds made available
by the Department of Defense Appropriations Act, 1986, for
anti-satellite weapon testing. These funds would include carry-over
funds which were available from prior fiscal years, as well as funds
transferred from other appropriation accounts under existing authority
or additional funds made available during fiscal year 1986. Of course,
since the funds for anti-satellite weapon testing provided by the fiscal
year 1986 appropriation act are available until September 30, 1987, the
restriction on use of those particular funds would continue to apply
until their expiration.
The use of words of futurity is not essential for an appropriation
act provision to constitute permanent legislation "if the permanent
character of the legislation is otherwise clearly indicated." 9 Comp.
Gen. 248, 249 (1929). One indication of permanence is when the
provision is of a general nature, bearing no relation to the objects of
the appropriation act. 62 Comp. Gen. 54, 56 (1982); 26 Comp. Gen. 354,
357 (1946). However, in the instant case, section 8097 is clearly
related to the objects of the Department of Defense Appropriations Act,
1986. It restricts funding for testing of the Space Defense System, for
which funds are provided in the Act. See Title IV, "Research,
Development, Test and Evaluation, Air Force," 99 Stat. 1200; H.R. Rep.
No. 332, 99th Cong., 1st Sess. 333 (1985).
Permanency of an appropriation act provision may also be indicated
when the provision would be rendered futile or meaningless were it not
interpreted to be permanent legislation. 62 Comp. Gen. 54, 56 (1982).
This is a corollary of the rule of statutory construction that a statute
should not be construed in a way which renders it wholly ineffective.
See B-214058, February 1, 1985. However, this principle is not
applicable in the case at hand. Even though not construed to be
permanent, section 8097 is effective as a moratorium on testing at least
during fiscal year 1986.
Therefore, based on the language and nature of section 8097, we
conclude that it does not constitute permanent legislation. We conclude
that the anti-satellite weapon testing restriction is applicable only to
funds made available by the DOD Appropriations Act, 1986, or other
legislation providing funding for anti-satellite weapon testing during
fiscal year 1986. The restriction, accordingly, would not be applicable
to new funds appropriated by the Congress for fiscal year 1987.
We have usually looked to legislative history to confirm our
interpretation of an appropriation act provision. We have not relied on
legislative history alone to overcome the statutory presumption that
provisions in appropriation acts do not constitute permanent legislation
unless expressly provided otherwise. 31 U.S.C. Section 1301(c). See
B-214058, February 1, 1984; 62 Comp. Gen. 54, 56 (1982). In this
instance, the legislative history of section 8097 is ambiguous and
includes conflicting statements regarding the permanence of the
anti-satellite testing restriction.
The restriction in section 8097 was included in H.R. 3629 when the
bill was reported from the House Appropriations Committee. The
provision at the point referred only to "funds appropriated by this
Act," with no reference to funds appropriated by "any other Act." While
the bill language clearly limits the restriction to the FY 1986
appropriation, the House Appropriations Committee report included the
following statement, which could be read as an understanding that the
restriction would be permanent:
The Air Force requested $149,934,000 for Space Defense Systems
to continue development of an anti-satellite capability. The
Committee recommends the budgeted amount. The Committee concurs
in the concerns expressed over continued testing against objects
in space, absent such testing by the Soviet Union. The Committee
has therefore included in the bill a General Provision which
prohibits obligating or expending funds for such testing until the
President has certified that the Soviet Union conducted a test
after October 3, 1985.
H.R. Rep. No. 332, 99th Cong., 1st Sess. 333 (1985). Nonetheless,
statements on the floor of the House when H.R. 3629 was considered seem
to indicate a prevailing understanding that the restriction, as framed
at the time, was temporary. See, e.g., 131 Cong. Rec. H 9401-9402
(daily ed. October 30, 1985).
When H.R. 3629 was considered in the Senate, the restriction
regarding funding of anti-satellite weapon testing had been eliminated
by the Committee on Appropriations. S. Rep. No. 176, 99th Cong., 1st
Sess. 353 (1985).
H.R. 3629 was subsequently considered by the Congress as part of H.J.
Res. 465, which was ultimately enacted as Pub. L. No. 99-190, the fiscal
year 1986 continuing resolution. When the House-Senate Conference
Committee considered the matter, the conferees agreed to include the
anti-satellite testing restriction in the resolution. Additionally,
they added new language restricting funds appropriated by "any other
Act." The Conference Committee explained as follows:
The conferees agree to the House position that no fiscal year
1986 funds are to be used for testing on anti-satellite weapons
against objects in space. Bill language has been provided which
further prohibits obligation or expenditure of funds provided by
this or any other Act for such testing until the President
certifies to Congress that the Soviet Union has conducted after
October 3, 1985, a test against an object in space of a dedicated
anti-satellite weapon.
H.R. Rep. No. 450, 99th Cong., 1st Sess. 259 (1985) (Italic supplied.)
See also H.R. Rep. No. 443, 99th Cong., 1st Sess. 258 (1985).
The language used by the conferees to explain their action with
regard to funding of anti-satellite testing is ambiguous. The first
sentence of the explanatory statement refers to fiscal year 1986 funds.
However, the explanatory statement goes on to note that "language has
been provided which further prohibits obligation or expenditure of funds
provided by this or any other Act." It is unclear what the conferees
intended the new language, "or any other Act," to add to section 8097.
The conferees may have intended to extend the restriction on the use of
appropriated funds for anti-satellite testing to any other funds
properly available in fiscal year 1986 for such testing (e.g., funds
carried over from fiscal year 1985). See 131 Cong. Rec. S18153 (daily
ed. December 19, 1985) (remarks of Senator Wallop). This interpretation
would be consistent with the position of this Office regarding
interpretation of the phrase "this or any other act." Alternatively, it
may have been the intent of the conferees to extend the testing
restriction to funds available under future appropriation acts,
effectively making the restriction permanent.
When the continuing resolution was debated on the floor of both the
House and Senate, conflicting statements were made regarding permanency
of the anti-satellite testing restriction. In general, statements made
in the House appeared to indicate that the restriction would be
permanent. For example, Representative AuCoin had the following
comments:
We can stop Asat testing on both sides. That's what this
resolution does. No "ifs" "ands," or "buts." No hokey escape
clauses that let the President test if he certifies he's thinking
about attempting to consider negotiating about when to have the
next arms control talks.
Just clear, cold turkey no testing. We block not just two
tests, but all tests of this weapons in any fiscal year. * * *
131 Cong. Rec. H12977 (daily ed. December 19, 1985) (Italic supplied.)
Similarly, Representative Weiss had the following comment:
On the other hand, if we act to ensure that the stiff new
prohibition on Asat tests contained in the continuing resolution
is preserved, it is likely that such an arms race can be
successfully avoided. The conference committee language denies
appropriations for Asat testing under 'this or any act,' meaining
that Asat testing will not be allowed to resume unless specific
language repealing the ban is enacted in the future.
131 Cong. prec. H13034 (daily ed. December 19, 1985) (Italic supplied.)
See generally 131 Cong. Rec. H12160, 12162 (daily ed. December 16, 1985)
(remarks of Representative Conte); id. at H12189 (remarks of
Representative Chappell); id. at H12191 (remarks of Representative
AuCoin); id. at H12194 (remarks of Representative Kemp); 131 Cong.
Rec. H12985 (daily ed. December 19, 1985) (remarks of Representative
Fascell); id. at 13031 (remarks of Representative Brown).
However, statements made in the Senate suggest that section 8097 was
not intended to have permanent effect. For example, Senator Wallop
commented as follows:
"The U.S. Asat Program, ready for tests No. 2 and No. 3 is
effectively put on ice for the remainder of this fiscal year.
"Testing is necessary. Only one test has been completed, on
September 13, 1985. It demonstrated that certain problems with
the motors had been solved. Under the Defense authorization bill,
three tests were authorized for fiscal year 1986 including the
September 1985 test. Following the testing plan, on December 13,
1985, the Air Force launched two targets for use in the remaining
two tests for this year. Launching these two targets cost
approximately $20 million.
Because these targets have a limited lifetime, a moratorium for
fiscal year 1986 would result in the loss of $20 million. Very
efficient my colleagues. Very efficient.
131 Cong. Rec. S18153-18154 (daily ed. December 19, 1985) (Italic
supplied.)
Senator Stevens, a Senate conferee, had the following comment which
seems to indicate that he too believed the provision would be temporary,
although his position is not absolutely clear.
"The downside of this good news is the concession to the House
position against space testing of the anti-satellite weapons
system, commonly called Asat. We fought hard on this issue, Mr.
President, to preserve the Senate position allowing limited
testing under specific conditions, but the House was adamant. In
the end Asat testing became a key link in the overall agreement
and, in effect, the price for the successful conclusion of other
high priority issues. So the agreement is on a testing
moratorium, but the Senate position is that this issue can be
reopened at any time in future appropriation acts. We will watch
the progress of arms control negotiations in Geneva, and we will
watch the activities of the Soviets in Asat development to ensure
that this temporary halt in testing does not jeopardize our
defense posture."
131 Cong. Rec. S18137 (daily ed. December 19, 1985) (Italic supplied.)
See generally 131 Cong. Rec. S17662-17663 (daily ed. December 16, 1985)
(remarks of Senator Proxmire); id. at S17711-17712 (remarks of Senator
Kerry).
Representatives AuCoin, Brown, Dicks, and Coughlin, in support of
their position that section 8097 "was to apply to all appropriations on
a permanent basis," cite a prepared answer submitted by the Air Force,
concerning an earlier certification requirement, in response to a
written question posed by the House Armed Services Committee during the
fiscal year 1985 Department of Defense authorization and oversight
hearings. That question, and the Air Force answer, were as follows:
Question. It has been interpreted by some within the Senate
that the Tsongas certification requirement will remain in effect
until it is fulfilled, regardless of whether the first test
against the ITV occurs in FY84. Is this your interpretation of
the legal constraints imposed on the Air Force by the Tsongas
Amendment?
Answer. The text of the Tsongas Amendment states that
"Notwithstanding any other provision of law, none of the funds
appropriated pursuant to our (sic) authorization contained in this
or any other Act may be obligated or expended to test any
explosive or inert anti-satellite warheads in space unless * * *".
This would seem to indicate that the amendment is not limited to
the 1984 DOD Authorization Act.
Hearings on Department of Defense Authorization of Appropriations for
Fiscal Year 1985 Before the House Committee on Armed Services, 98th
Cong., 2nd Sess. Part 4, 169 (1984).
In our view, this hearing excerpt cannot be given great weight in
determining congressional intent with regard to the permanency of
section 8097. Initially, we note that the Tsongas Amendment, although
somewhat similar to section 8097 in effect, is an entirely distinct
legislative provision. See Pub. L. No. 98-94, Section 1235, 97 Stat.
614, 695-96 (1983), as amended by Pub. L. No. 98-525, Section 205, 98
Stat. 2492, 2509-10 (1984). More significantly, it was included in an
authorization act, not in an appropriation act. Because authorization
acts are not by definition time limited, the presumption against
permanency does not automatically apply to them. Finally, with respect
to the certification requirement of section 8097, we note that the Air
Force Office of General Counsel informally has taken the position that
the provision is not permanent.
Because of the ambiquities and conflicting statements in the
legislative history of section 8097, the legislative history is not
conclusive in determining the intent of Congress with regard to the
permanence of the anti-satellite testing restriction. Therefore, it
does not contradict our determination that section 8097 is not
permanent.
In summary, none of the circumstances which could support a finding
that section 8097 constitutes permanent legislation is present in the
case at hand. Accordingly, we conclude that section 8097 of the
Department of Defense Appropriation Act, 1986, does not constitute
permanent legislation but rather is applicable only to funds made
available by the DOD Appropriations Act, 1986, or other legislation
providing funding for anti-satellite weapon testing during fiscal year
1986.
B-221851, 65 Comp. Gen. 585
Matter of: Ocean Enterprises, Ltd., May 22, 1986
Subcontractor selection is not made for the government within the
meaning of the exception allowing General Accounting Office review
because the prime contractor is not operating a government-owned
facility and is not otherwise serving as a mere conduit between the
government and the subcontractor.
Ocean Enterprises, Ltd. (OEL), protests the award of a subcontract to
Buccaneer Marine, Ltd. (Buccaneer), under request for quotations (RFQ)
No. 34-468-00 issued by Science Applications International Corporation
(ASIC), a prime contractor performing services for the United States
Department of the Navy. The RFQ called for the bare boat charter of a
vessel at the Santa Cruz Acoustic Range Facility (SCARF) on Santa Cruz
Island, California. OEL argues that SAIC gave the awardee unfair
competitive advantages and improperly analyzed the proposed costs. We
dismiss the protest.
SCARF is an ocean laboratory and measurement facility which is used
for experiments and tests requiring an open ocean environment. In
particular, nearly all high speed acoustical trials of Navy ships and
submarines are performed there. The facility entails little more than
one acre of land, which is leased by SAIC from a private owner, on the
Santa Cruz Island and an offshore area which apparently is owned by the
federal government.
On October 1, 1984, the Navy awarded SAIC a cost-plus-fixed-fee
contract under which SAIC was to provide all necessary support services
required to conduct Navy operations involving SCARF and/or SCARF support
vessels. The contract requires SAIC to provide a support vessel to
assist the Navy in its testing operations at the facility, and SAIC
initially met this requirement when it awarded a charter to OEL for a
vessel for the period of February 5, 1985, to September 30, 1985.
On July 19, 1985, SAIC issued RFQ No. 34-468-00 to provide a
continuation of the vessel services. The solicitation included 23 lease
vessel specifications that had to be met in order to accomplish the work
performed by the charter vessel. Since these specifications require
hull modifications to the craft, the RFQ provided that the vessel
specifications would "be aboard, in place and operating when the vessel
goes on charter," instead of requiring the specifications to be met at
the time of the offer. The solicitation further provided that the
performance period will be October 1, 1985, through September 30, 1986,
with an option for the 2-year period of October 1, 1986, through
September 30, 1988. The solicitation set August 9 as the closing date
for the receipt of quotations.
As an initial matter, the Navy argues that the protest should be
dismissed because it involves a subcontract award over which our Office
lacks jurisdiction. Our office does not review subcontract awards by
government prime contractors except where the award is by or for the
government. GAO Bid Protest Regulations, 4 C.F.R. Section 21.3(f)(10)
(1985). This limitation on our review is derived from the Competition
in Contracting Act of 1984, 31 U.S.C.A. Section 3551, et seq. (West
Supp. 1985), which limits our bid protest jurisdiction to protests
concerning solicitations issued by federal contracting agencies. In the
context of subcontractor selections, we interpret the act to authorize
our Office to review protests only where, as a result of the contractual
relationship between the prime contractor and the government, the
subcontract in effect is awarded on behalf of the government. For
example, we will consider protests regarding subcontractor selections
where they concern subcontracts awarded by prime contractors operating
and managing Department of Energy facilities; purchases of equipment
for government-owned, contractor-operated (GOCO plants; and
procurements by construction management prime contractors. Information
Consultants, Inc., B-213682, Apr. 2, 1984, 84-1 C.P.D. Paragraph 373.
In each of those cases, the prime contractor principally provides
large-scale management services to the government and, as a result,
generally has an ongoing purchasing responsibility. In effect, the
prime contractor acts as a middleman or conduit between the government
and the subcontractor and, as a result, the subcontract is said to be
"for" the government. Rohde & Schwarz-Polarad, Inc. -- Reconsideration,
B-219108.2, July 8, 1985, 85-2 C.P.D. Paragraph 33.
OEL does not assert that this case involves a purchase of equipment
for a GOCO plant or a procurement by a construction management prime
contractor. Rather, it appears to argue that the situation here is
similar to a subcontract awarded by a prime contractor operating and
managing a Department of Energy facility. It contends that SCARF is a
government-owned facility for which SAIC provides large-scale management
services and has ongoing purchasing responsibility. The Navy contends
that none of the circumstances in which our Office has found
jurisdiction over subcontract awards are present here and, therefore,
this subcontract is not "for" the government. We agree with the Navy.
As evidence of its position, OEL initially points to several
documents and brochures prepared prior to this protest being filed in
which the Navy and SAIC both characterized SCARF as a GOCO which is
operated by SAIC. These documents, however, do not serve as a
determination of the legal status of these parties. In particular, the
Navy documents were prepared by technical personnel who were not
familiar with the legal or contractual meaning of the term GOCO.
Further, the Navy has established procedures for the establishment and
maintenance of GOCO's and there has not been any determination under
these procedures that SCARF is a GOCO. See SECNAV Instruction 4862.8A,
Dec. 18, 1981; Department of Defense Directive 4275.5, Oct. 6, 1980.
In order for a facility to be a GOCO, the government must own the
facility and that facility must be operated by the contractor. The
Navy, however, does not own the land on which SCARF is based -- the
prime contractor leases the land from a private owner. The site
primarily consists of equipment housed in relocatable buildings and
trailers; there is no permanent facility or plant.
Further, the contract between the Navy and SAIC indicates that SAIC
does not operate SCARF, that is, if does not provide large-scale
management services. A review of the contract between the Navy and SAIC
establishes that this is a support services contract under which the
contractor provides maintenance and operations assistance to the Navy,
while the Navy manages the project operations at the site. In
particular, the statement of work set forth in the contract shows that
the primary duties under the contract are to provide technical and
logistical services in support of testing operations and to maintain
government-furnished and contractor-owned or leased equipment. For
example, SAIC is to inspect, operate, maintain, and repair all of the
government-furnished equipment (GFE) located at SCARF and on board the
various support vessels and, here, it is to provide a vessel to
accomplish specified services necessary to support Navy testing
operations. We note that the task assignments issued pursuant to the
contract merely reiterate tasks set forth in the contract and serve only
to obligate funds under the contract.
Further, the contract provision estimating the number of man-hours
per year necessary to perform the contract demonstrates that this
contract is for support services. The contract estimates that 20,000
man-hours a year will be required to perform the contract, but less than
2,000 hours of that total are for managerial/operation functions. Thus,
SAIC is providing some management services, but they constitute less
than 10 percent of services under the contract and, therefore, the prime
contractor is not principally providing management services.
Since SAIC is not providing large-scale management services to the
government, it follows that it does not have an ongoing purchasing
responsibility. SAIC's purchasing responsibilities are incidental to
performance of its support and maintenance tasks. For example, its duty
is to repair GFE and it is to make any purchases necessary in order to
meet that duty. Similarly, here, SAIC is to operate a vessel to support
Navy testing operations and it is responsible for meeting that
obligation, whether it is necessary for the firm to lease the vessel or
not. The subcontract for Buccaneer's vessel binds SAIC, not the Navy.
Moreover, there is no indication in the Navy's contract with SAIC that
SAIC is to purchase "for" the government.
We therefore conclude that SAIC is not acting as a middleman or
conduit between the government and the subcontractor. Thus, SAIC is not
acting for the government in awarding subcontracts and we therefore will
not review this procurement. See American Medical Supply & Service
Corp. -- Request for Reconsideration, B-219266.2, July 24, 1985, 85-2
C.P.D. Paragraph 80; Rohde & Schwarz-Polarad, Inc. -- Reconsideration,
B-219108.2, supra.
B-222549, 65 Comp. Gen. 584
Matter of: Falcon Systems, Inc., May 14, 1986
The United States Postal Service is not subject to the General
Accounting Office's bid protest jurisdiction under the Competition in
Contracting Act of 1984 as a result of the statutory provision (39
U.S.C. 410) exempting the Postal Service from any federal procurement
law not specifically made applicable to it.
Falcon Systems, Inc. protests the award of a contract to Grid Systems
Corporation under solicitation No. 104230-86-B-0025 issued by the United
States Postal Service. Falcon contends that the Postal Service
improperly found that the product offered by Falcon was not in current
production or commercially available. Because the Postal Service is not
subject to our bid protest jurisdiction, we dismiss the protest.
Under the Competition in Contracting Act of 1984 (CICA), 31 U.S.C.A.
Sections 3551 et seq., (West Supp. 1985), our bid protest jurisdiction
extends to alleged violations of procurement statutes or regulations in
connection with procurements by federal agencies. See Monarch Water
Systems, Inc., 65 Comp. Gen. 756 (1985), 85-2 CPD Paragraph 146. Under
39 U.S.C. Section 410(a) (1982) the Postal Service is specifically
exempted from any "Federal law dealing with public or Federal
contracts," except for those laws enumerated in 39 U.S.C. Section
410(b); CICA is not included in the list of statutes made applicable to
the Postal Service by 39 U.S.C. Section 410(b). Accordingly, due to the
general exemption from federal procurement laws in 39 U.S.C. Section
410(a), the Postal Service is not subject to CICA. See Bid Protest
Regulations, 4 C.F.R. Section 21.3(f)(8) (1985).
In support of its position, Falcon Cites Monarch Water Systems, Inc.,
supra, in which we held that the Tennessee Valley Authority (TVA) is
subject to our bid protest jurisdiction under CICA. The holding in
Monarch is inapposite, however, since TVA's enabling legislation has no
provision equivalent to the exemption from federal procurement laws in
39 U.S.C. Section 410 pertaining to the Postal Service.
The protest is dismissed.
B-221374, et al., 65 Comp. Gen. 573
Matter of: Fort Wainwright Developers, Inc.; Sadco Enterprises;
Fairbanks Associates, May 14, 1986
Where a cost ceiling is included in a solicitation for the purpose of
comparing life cycle costs for government construction of military
family housing with the same costs for contractor construction, and the
government's cost is expressed in terms of present value, the cost for
contractor construction also must be converted to present value. A
proposal that, before discounting, exceeds the cost ceiling should not,
therefore, be rejected.
Protester was not prejudiced by the failure of the solicitation to
state whether an annual cost ceiling represented anticipated actual
expenditures where the protester did not rely on the cost ceiling in
formulating its price proposal.
Where a solicitation does not specify the inflation rates to be used
to evaluate cost proposals for a 19.5 year lease, but merely states that
during the term of the lease, maintenance costs will be allowed to
escalate according to "Economic Indicators" prepared by the Council of
Economic Advisors, the agency is not required to use an average of past
indicators for evaluation purposes, but rather is free to use any
reasonable index of future inflation.
Whether an agency improperly excluded an initial proposal from the
competitive range because of its inclusion of an interest rate
contingency is academic when the agency in fact evaluates an unsolicited
best and final offer from which the contingency has been deleted.
Protest challenging selection of a higher-priced offeror is denied
where the selection is consistent with the evaluation scheme in the
solicitation, under which offerors are ranked according to cost per
quality point.
Forth Wainwright Developers, Inc., Fairbanks Associates, and Sadco
Enterprises protest the award of a contract to North Star Alska Housing
Corporation under request for proposals (RFP) No. DACA85-85-R-0019,
issued by the U.S. Army Corps of Engineers. The procurement is for the
construction, leaseback to the government, and operation and maintenance
of military family housing at Fort Wainwright, Fairbanks, Alaska. The
agency made award to North Star on December 31, 1985, but suspended
performance between January 22 and March 25, 1986, when, in accord with
the Competition in Contracting Act of 1984 (CICA), it determined that
urgent and compelling circumstances justified performance
notwithstanding the protests. /1/
The protesters principally complain that the award to North Star was
improper because the "average annual cost" of the firm's initial
proposal exceeded the RFP's cost ceiling. Fairbanks Associates also
complains that rejection of its initial proposal as nonresponsive
because of an interest rate contingency was improper. Additionally, the
protesters complain that the award to an offeror whose price was more
than their own was not in the best interest of the government.
In supplemental protests, Fort Wainwright Developers and Fairbanks
Associates complain that North Star's proposed development plan does not
comply with (1) building setback and road construction requirements of
the City of Fairbanks, which are incorporated into the RFP, (2) numerous
design criteria of the RFP, and (3) the development boundary limits.
Because the supplemental protests have later dead-lines for agency
reports and protester and party comments, see 4 C.F.R. Section 21.3
(1985), we will resolve them in a separate decision.
We deny the protests considered in this decision in part and dismiss
them in part.
The Corps conducted this procurement pursuant to section 801 of the
Military Construction Authorization Act of 1984, 10 U.S.C.A. Section
2828(g) (West Supp. 1985), as amended by the Military Construction
Authorization Act of 1986, Pub. L. No. 99-167, Section 801, 99 Stat.
961, 985-86. The statute provides that the Secretary of a military
department may enter into a contract for the lease of family housing
units to be constructed on or near a military installation where there
is a validated deficit in family housing. 10 U.S.C.A. Section
2822(g)(1). No contract may be entered into, however, until the
Secretary of Defense submits to the appropriate committees of Congress,
in writing, "an economic analysis (based upon accepted life cycle
costing procedures) which demonstrates that the proposed contract is
cost effective in comparison with the alternative means of furnishing
the same facilities," i.e., government construction. 10 U.S.C.A.
Section 2828(g)(6)(A).
Here, in anticipation of the arrival of the 6th Light Infantry
Division at Fort Wainwright in the summer of 1987, the RFP contemplated
construction of 400 family housing units that the contractor will lease
back to the government and operate and maintain for 19.5 years. The RFP
provided for technical proposals to be evaluated on the basis of site
design and engineering, dwelling unit design and engineering, and
maintenance plans, with a maximum of 1,300 points available for these
factors.
The RFP indicated that life cycle costs also would be a basis for
evaluation. Offerors were to submit separate first-year prices for two
cost elements, designated "shelter rent" (the contractor's "return on
and return of his investment") and "maintenance rent" (the contractor's
charge for keeping the development in adequate repair). According to
the RFP, shelter rent will remain fixed for each year of the contract,
but maintenance rent will be allowed to escalate "at a rate pegged to
the 'Economic Indicators' prepared for the Joint Economic Committee of
Congress by the Council of Economic Advisors . . ."
The RFP further provided that the relative value of proposals would
be established by means of a cost/quality ratio. This was to be
calculated by dividing the combined shelter and maintenance rent for
each proposal, protected over 19.5 years, by the quality (technical)
points that the proposal received during the technical evaluation.
However, the RFP warned that the final selection would be made by the
selection board to ensure an award in the best interest of the
government and in compliance with applicable statutory limitations.
Since the underlying objective of the procurement was to determine
whether contractor construction and leaseback of the housing units under
section 801 would be more cost effective than government construction,
the RFP also advised offerors that an economic analysis, based on life
cycle costs, would be prepared and submitted for congressional review.
In this regard, the RFP specified that the "average annual cost" of
shelter and maintenance was not to exceed $8,140,000. Although not
stated in the solicitation, this figure represents the uniform annual
equivalent of the cost of government construction, expressed in present
value terms, less 5 percent. Whether the awardee's initial price
exceeded this amount is a protest issue.
Six offerors submitted proposals by the July 5, 1985 closing date.
The Corps describes the actual evaluation of these proposals as
comprising the following steps:
1. Initial review to ensure that proposals included required
submittals and met minimum design criteria;
2. Evaluation consisting of two steps:
a) Technical review by a 10-member multi-disciplinary team to
whom the identity of offerors was not known;
b) Ranking of proposals according to projected cost per quality
point (the highest-ranked proposal was the one having the lowest
cost per point); and
3. Economic analysis, comparing the life cycle cost of the
highest-ranked proposal with that of government construction, as
required by the enabling legislation.
The Corps ranked the initial proposals at issue here as follows: /2/
per
Quality
$169,168
175,719
182,054
192,433
The Corps' subsequent economic analysis resulted in an evaluated life
cycle cost of $56,169,071, or a uniform annual equivalent of $7,427,807
for North Star's proposal. The agency considered this cost effective
compared with the corresponding figure for government construction,
$8,140,000, and submitted the economic analysis to the appropriate
committees of Congress. /4/
In December 1985, however, the staff of the Subcommittee on Military
Construction, House Committee on Appropriations, advised that all
proposals were too high. The agency advised offerors of this fact and
requested best and final offers by December 16, 1985. Specifically, the
Corps requested offerors to adjust shelter and/or maintenance rent, but
stated that no changes should be made in technical proposals. North
Star provided a best and final offer in the amount of $7,730,920,
approximately 5 percent less than its initial offer of $8,139,800.
Although the agency had determined that Fairbanks Associates' offer was
"nonresponsive" because of an interest rate contingency, /5/ the firm
learned of the request for best and finals and submitted one in which it
reduced its price and deleted the contingency.
The agency ranked the best and final offers at issue here as follows:
per
Quality
Point
$160,665
163,694
169,348
181,291
Because the Corps had found North Star's initial proposal to be cost
effective, it states that it did not perform an economic analysis of
best and final offers. The Corps awarded the contract to North Star on
December 31, 1985.
All three protesters maintain that North Star's initial proposed
price, as evaluated, exceeds the RFP's $8,140,000 cost ceiling, and that
the firm's initial proposal therefore should have been summarily
rejected as "nonresponsive." They base their protests on paragraph J of
the RFP, as amended, which states:
J. Annual Cost. Congress established this program as a test to
determine if leasing is more cost effective than alternative means
of furnishing the same housing. Economic analyses will be
prepared and submitted to the Congress for their review.
Proposals in excess of that amount will be considered
nonconforming and will not be further evaluated. The average
annual cost based on shelter rent and maintenance rent cost from
exhibit "B" of section VI is expected to be between $5,000,000 and
$7,000,000 but shall not exceed $8,140,000.
Fort Wainwright Developers argues, based upon information provided to
it in a debriefing and in portions of the agency report, that the Corps
improperly used only North Star's first-year shelter and maintenance
rent in determining that its average annual cost was less than
$8,140,000. Fort Wainwright argues that the Corps considered, but
rejected, an amendment to the RFP that would have applied the ceiling to
first-year costs only.
Both Fort Wainwright Developers and Fairbanks Associates argue that
the Corps should have calculated the average annual cost referred to in
paragraph J simply by averaging each offeror's projected 19.5 year
costs. Both protesters have submitted calculations showing that,
evaluated this way, the average annual cost of North Star's initial
proposal is more than $8,536,000.
Fort Wainwright acknowledges that responsiveness does not generally
apply to a negotiated procurement, but argues that certain requirements
may be so material that a proposal which fails to meet them is
technically unacceptable. The protester argues that the cost ceiling
was such a requirement, because the RFP stated that average annual cost
"shall not" exceed $8,140,000 and that proposals in excess of that
amount would not be further evaluated.
Fairbanks Associates, citing Corbetta Construction Co.of Illinois,
Inc., 55 Comp. Gen. 201 (1975), 75-2 CPD Paragraph 144; aff'd 55 Comp.
Gen. 972 (1976), 76-1 CPD Paragraph 240, argues that "shall" and "will"
signify mandatory requirements, and that where an initial proposal fails
to comply with a mandatory requirement, it must be summarily rejected.
In the alternative, Fairbanks Associates argues that the term
"average annual cost" was ambiguous, and that it was prejudiced as a
result of the ambiguity. Fairbanks Associates contends that without the
cost ceiling as it interpreted it, the firm could have designed and
proposed a more elaborate project and would have been awarded more
quality points.
Fairbanks Associates further maintains that the evaluation was flawed
because the inflation rates used by the Corps to project maintenance
rent differed from those in the RFP. The protester states that because
the solicitation indicated that maintenance rent would be allowed to
escalate according to the "Economic Indicators" prepared by the Council
of Economic Advisors, it based its proposal on an average of these
indicators for the years 1982 to 1984, which was 4.7 percent. Fairbanks
Associates argues that using this rate, it calculated that its
first-year proposed price could not exceed $7,440,000.
The protester argues that the Corps improperly used rates supplied by
the Office of Management and Budget through the Office of the Secretary
of Defense (OMB/OSD), which are less than the average of past "Economic
Indicators." /6/ Fairbanks Associates concludes that the Corps' use of
the lower OMB/OSD inflation rates also prejudiced it competitively in
the sense that it could have prepared a higher priced, more elaborate
proposal and earned more quality points.
Range
Fairbanks Associates also protests the Corps' determination that its
initial proposal was "nonresponsive" because, as noted above, the firm
included an interest rate contingency. The protester alleges that it
was orally advised that the contingency was acceptable, and argues that
the Corps is estopped from rejecting the proposal on this ground. The
Corps, however, denies giving such advice and states that the
contingency rendered the proposal too indefinite to evaluate, so that it
was eliminated from the competitive range before the request for best
and finals.
The protesters also allege that award to North Star was improper
because the cost of North Star's proposal exceeded the cost of each of
their respective proposals. Fort Wainwright Developers points to the
final award factor -- whether selection is in the best interest of the
government -- and maintains that award to North Star is not in the best
interest of the government due to the cost discrepancy between the
awardee's proposal and its own.
We have carefully considered all submissions by each of the parties.
However, we do not consider it necessary to review each and every
argument here. We believe that the following discussion is adequate for
purposes of resolving the protests.
We find first that Sadco's protest is academic, since its proposal
was ranked fourth among those at issue here. Sadco has argued only that
the awardee's proposal should have been summarily rejected, and has not
protested concerning either of the other offerors, whose proposals cost
less per quality point than its own. We dismiss the protest, since the
firm would not be in line for award even if we found that its
allegations had legal merit. See Claude E. Atkins Enterprises, Inc.,
B-205129, June 8, 1982, 82-1 CPD Paragraph 553. We note, however, that
the issues raised by Sadco generally duplicate those raised by the other
two protesters, so that our discussion should resolve Sadco's concerns.
With regard to average annual cost, we believe that the protesters
misunderstood the derivation of the $8,140,000 ceiling in the RFP,
leading to a misunderstanding of how and when the Corps would determine
whether offers exceeded it. While the RFP could have been more clearly
drafted, as discussed below, we do not find the protesters were
prejudiced by the deficiency.
The record -- particularly the economic analyses prepared for the
Congress and at the request of our Office following a conference --
makes it clear that the $8,140,000 figure is the result of a present
value analysis of the life cycle cost of construction and maintenance of
the housing units if performed by the government.
A present value analysis is required by the applicable Office of
Management and Budget Circular, No. A-104, which covers decisions on
lease or purchase of real property. As North Star points out in its
comments to our Office, the circular specifically states that
"undiscounted cash flow analysis will not be the basis for identifying
the most economic of lease-or-purchase alternatives."
The protesters' suggested method of determining average annual cost,
i.e., merely averaging total projected costs (by dividing total
projected shelter and maintenance rents by 19.5), does not permit a
meaningful comparison of the cost of government construction with the
cost of contractor construction under section 801. The protesters'
method takes inflation into account. However, because the projected
costs for 19.5 years are not discounted, the total of these costs does
not reflect the fact that inflated dollars (paid by the government to
the contractor in the year 2000, for example) will be worth less than
current dollars. In short, since the $8,140,000 ceiling in the RFP was
based on discounted costs, the Corps also had to discount projected
shelter and maintenance rent before it could determine which alternative
was most cost effective.
The RFP does not clearly state that the cost ceiling is equal to the
uniform annual equivalent of the cost of government construction,
expressed in present value terms. Nevertheless, paragraph J concerns
the economic analysis and, in our opinion, indicates that the ceiling
would be applied at this stage of the evaluation process. We do not
agree with the protesters that the Corps should have summarily rejected
North Star's initial proposal because the average of its total projected
costs, undiscounted, exceeded $8,140,000.
Nor do we agree that Fairbanks Associates was prejudiced by the
Corps' failure to state more explicitly how proposals would be measured
against the cost ceiling. The firm in effect contends that it would
have offered a higher price had it realized that it would be discounted
before comparison with the ceiling. It is clear from the procurement
record that neither Fairbanks Associates nor Fort Wainwright Developers
used the cost ceiling to establish its price.
As evaluated by the Corps, Fairbanks Associates' undiscounted average
annual cost, $7,767,662, was $372,338 (4.6 percent) less than the cost
ceiling as the protester understood it. After the Corps told offerors
that all prices were considered to be too high, the cost ceiling was no
longer relevant to Fairbanks Associates' offer, since it was already
below the ceiling, whether calculated as the Corps intended or as
Fairbanks Associates believes reasonable. Fairbanks Associates then
lowered its price significantly. Fort Wainwright's initial price was
similarly less than the cost ceiling (7.6 percent), as determined
without discounting, and it too submitted further reductions in its best
and final offer. Thus, the protesters' contention that, but for their
understanding of the cost ceiling, they would have offered a higher
price, is not persuasive.
We also question whether, by its increasing price, either Fairbanks
Associates or Fort Wainwright Developers could have displaced North
Star. Increased prices would in themselves make the firms' offers less
competitive by increasing their cost per quality point ratios. An
increased price would have to result in an increase in technical score
that not only outweighed the detriment from the higher price but also
made up the substantial differences in technical scores between North
Star and the other two offerors.
Here, there was a difference of 122 quality points (12.4 percent)
between Fairbanks Associates and North Star, and of 178 quality points
(18.1 percent) between Fort Wainwright Developers and North Star. Using
best and final offers, this translates into a difference of $3,029 per
quality point for Fairbanks Associates and $8,683 for Fort Wainwright
Developers. In their debriefings, each offeror was shown the number of
technical points that it received, according to category, versus the
points assigned to North Star. The protesters have not suggested how
they could have improved their technical proposals -- for example, by
adding additional tot lots, by upgrading appliances or carpeting, and so
on -- that would have resulted in a substantial increase in quality for
an unspecified additional price. Fairbanks Associates' bare statement
that it would have submitted a more elaborate proposal if it had known
the actual nature of the cost ceiling is not, in itself, sufficient to
show that the firm would have had a reasonable chance of receiving the
award. See WHY R&D, Inc., B-221817, Apr. 16, 1986, 86-1 CPD Paragraph
375; Digital Radio Corp., B-216441, May 10, 1985, 85-1 CPD Paragraph
526.
In considering the protests that North Star's initial proposal should
have been summarily rejected as nonresponsive, we also note that the
term responsiveness, as used by the protesters, is generally inapposite
in a negotiated procurement. As Fort Wainwright contends, it can be
used in an RFP to mean requirements that are so material that a proposal
failing to conform to them would be considered unacceptable. Computer
Machinery Corp., 55 Comp. Gen. 1151, 1154 (1976), 76-1 CPD Paragraph
358. Even then, however, an agency should not automatically reject a
nonconforming initial proposal in the same manner that it would reject a
nonresponsive bid. Scan-Optics, Inc., B-211048, Apr. 24, 1984, 84-1 CPD
Paragraph 464. Rather, the agency must determine whether the proposal
is reasonably susceptible to being made acceptable through discussions.
Id.; see also Federal Acquisition Regulation (FAR), 48 C.F.R. Section
15.609(a) (1984) (requiring that competitive range determinations
include all proposals that have a reasonable chance of being selected
for award).
Here, the solicitation did not specifically use the term responsive.
However, it did warn that proposals in excess of "that amount," which
the protesters interpreted as an average annual cost of $8,140,000,
would be considered nonconforming and would not be further evaluated.
Regardless of the derivation of this figure, we do not believe it would
have been reasonable to apply the cost ceiling to initial proposals.
The Corbetta cases, cited by the protesters, also involved a
procurement for the design and construction of military family housing
units; all but one initial proposal exceeded a statutory limitation on
the average cost per housing unit. We interpreted the applicable
procurement regulation, /7/ providing that a proposal containing prices
that exceed statutory cost limitations should be rejected, as not
requiring rejection of an initial proposal, even if the price exceeds
the statutory limitation. We found that during discussions offerors
might reduce prices so as to come within the statutory limitation. See
55 Comp. Gen. supra at 982; 55 Comp. Gen. supra at 219; Corbetta
Construction Co. of Illinois, Inc., B-182979, Mar. 10, 1978, 78-1 CPD
Paragraph 191 at 4. /8/
Even if, for the sake of argument, we view North Star's initial
proposal as having an average annual cost of more than $8,140,000, it
was reasonably susceptible to being made acceptable through discussions.
In North Star's best and final offer, proposed first-year prices for
shelter and maintenance rent; the annual average of these costs,
projected over the 19.5 year term of the lease; and the uniform annual
equivalent were all less than the amount specified in the RFP.
Accordingly, we deny the protests that North Star's initial proposal
should have been summarily rejected.
With regard to the inflation rates used to escalate offerors'
proposed first-year maintenance rents, the RFP did not specify any rate
for evaluation purposes. The RFP indicated only that during the term of
the lease, maintenance rent would be allowed to escalate at a rate
pegged to the "Economic Indicators" (identified in the sample lease
included in the RFP as the Housing, Shelter, Maintenance, and Repair
Index for the 12 months preceding payment) prepared for Joint Economic
Committee of Congress by the Council of Economic Adivsors. In its
economic analysis, the Corps states that it assumed that the OMB/OSD
inflation indexes that it used for evaluation purposes would equate to
future changes in the Economic Indicators. We believe this assumption,
and use of the lower OMB/OSD rates, was reasonable.
The Housing, Shelter, Maintenance, and Repair Index is one of the
component indexes of the Consumer Price Index (CPI). The CPI is a
statistical measure of change over time in the prices of goods and
services in major expenditure groups (for example, food, housing,
apparel, transportation, health and recreation). It compares the prices
of the same goods and services in a current month with those in the
previous month or year. /9/ The CPI is frequently used as an index of
inflation. However, it is relevant solely for measurement of past price
changes. It does not project future inflation rates.
Although the RFP referred to the "Economic Indicators," it did not
state that indicators for past years would be used for evaluation
purposes. When the solicitation is read as a whole, it indicates only
that the pegging of the maintenance rent to the increase or decrease in
the referenced CPI will be for the purpose of adjusting payments during
the term of the lease. Since the Corps did not specify the inflation
rate or rates that it would use for evaluation purposes, as opposed to
payment purposes, we believe it was free to use any reasonable index,
including the OMB/OSD rates that are specifically intended to predict
future inflation. Although Fairbanks Associates' method of estimating
future inflation, using an average of "Economic Indicators" for past
years, may have been reasonable, the protester has not met its burden of
showing that the agency's method was unreasonable. See Centurial
Products, B-216517, Sept. 19, 1985, 64 Comp. Gen. 858, 85-2 CPD
Paragraph 305; Western Filament, Inc., B-181558, Dec. 10, 1974, 74-2
CPD Paragraph 320.
Fairbanks Associates' also argues that it was competitively
prejudiced by the use of lower inflation rates to project maintenance
rent. As discussed above in the context of the cost ceiling, even if
the firm had been aware that the Corps would use the lower OMB/OSD
inflation rates to evaluate its proposed first-year maintenance rent, we
do not believe that there was a reasonable possibility that the firm
could have increased its technical score by an amount sufficient to
displace the awardee by increasing the portion of its proposed price
representing maintenance rent. Maintenance represents less than 16
percent of Fairbanks Associates' proposed first-year price, and it is
not reasonable to assume, based upon the protester's bare assertion,
that a small increase in this small portion of its offered price would
have increased the firm's cost/quality ratio.
We deny the protest that the cost evaluation was flawed because the
Corps used OMB/OSD rates to project maintenance rent.
Range
With regard to Fairbanks Associates' protest that the Corps
improperly eliminated its initial proposal from the competitive range
because of the inclusion of an interest rate contingency, we find the
matter academic.
Although the Corps did not request a best and final offer from
Fairbanks Associates, the firm, as noted above, in fact submitted a
revised offer, lowering its price and deleting the interest rate
contingency to which the Corps objected. We find nothing improper in
this, since despite the Corps' request that offerors not change their
technical proposals, as long as negotiations are still open, offerors
within the competitive range have a right to change or modify their
proposals in any manner. See PRC Information Science Co., 56 Comp. Gen.
768 (1977), 77-2 CPD Paragraph 11; The FMI-Hammer Joint Venture,
B-206665, Aug. 20, 1982, 82-2 CPD Paragraph 160.
Moreover, even if the Corps improperly found the firm's initial
proposal to be unacceptable, it actually evaluated and ranked Fairbanks
Associates; best and final according to cost per quality point. For
all practical purposes, the firm was included in the competitive range,
and we will not consider this basis of protest further.
The Corps clearly took the protesters' lower prices into account by
virtue of its use of the cost per quality point evaluation formula
specified in the RFP. We have recognized the propriety of using such a
formula to determine which proposal is most advantageous to the
government, see Shapell Government Housing Inc., et al., 55 Comp. Gen.
839 (1976), 76-1 CPD Paragraph 161; Claude & Atkins Enterprises, Inc.,
supra, and we note that mathematically, the formula results in giving
equal weight to cost and technical factors. In a negotiated
procurement, there is no requirement that award by made on the basis of
lowest price or cost to the government unless the solicitation so
specifies. See Washington Health Services, Ltd., B-220295.2, Feb. 13,
1986, 86-1 CPD Paragraph 157.
Here, North Star's final cost per quality point was $3,029 less than
that of Fairbanks Associates and $8,683 less than that of Fort
Wainwright Developers. We find that the award to North Star was
reasonable and in accord with evaluation scheme set forth in the
solicitation. We therefore deny the protests with regard to the award
to higher-priced offeror.
The protests are dismissed in part and denied in part.
(1) Only the initially-filed Fort Wainwright Developers protest
effected suspension of performance, since only it was filed and the
agency notified within 10 calendar days of award. See the Federal
Acquisition CICA Regulation (FAR), Section 33.104(c)(5) (FAC-84-9),
implementing 31 U.S.C.A. Section 3553(d)(1) (West Supp. 1985).
(2) Of the remaining initial proposals, the Corps ranked that of Ben
Lomond and Company second and Green Builders Construction Company sixth.
The agency determined, however, that the Lomon proposal was
unacceptable because, like that of Fairbanks Associates, it included an
interest rate contingency. The Corps did not ask Lomond to submit a
best and final offer, and it did not do so. Green's best and final
offer was ranked last. Neither of these offerors has protested or
commented on the subject protests.
(3) To protect proposed costs over the lease period, the Corps first
multiplied the first year shelter rent by 19.5. To this, it added total
maintenance rent, adjusted for inflation for each year after the first.
Then, to calculate the cost per quality point in accord with the formula
in the REP, it divided total projected costs by the quality points for
each proposal. The agency used inflation rates stipulated by the Office
of Management and Budget through the Office of the Secretary of Defense
(OMB/OSD) to escalate maintenance rent. In projecting proposed costs,
the agency did not discount them as it did in the subsequent economic
analysis.
(4) The Corps calculated life cycle costs for the government
construction option over a 21-year period (1986-2006), allowing 1.5
years for construction and 19.5 years for operation and maintenance. It
then applied a discount factor of 12 percent to projected costs, year by
year, to obtain a net present value of $64,458,170. The Corps converted
this figure to a uniform annual equivalent, $8,523,954, in order to
reflect the fact that money would be spent at different times during the
period of construction and operation of the housing units. Finally the
Corps reduced the uniform annual equivalent by 5 percent to allow for
possible errors, leading to the $8,140,000 identified in the RFP as the
"average annual cost." Life cycle costs and the uniform annual
equivalent for North Star's proposal were calculated in the same way.
(5) The firm had stated that if interest rates rose to more than 14
percent before contract award, it would require a feasibility analysis
and possible adjustment of the proposal.
(6) The OMB/OSD rates used by the Corps were 4 percent for fiscal
year 1984 and 4.4 percent for fiscal year 1985. The rates gradually
decrease to 3.4 percent for fiscal year 1989 and each year thereafter to
2006.
(7) Armed Services Procurement Regulation, Section 18-110(c) (1974).
The comparable current section is the Federal Acquisition Regulation, 48
C.F.R. Section 36.205 (1984).
(8) Unlike Corbetta here, there is no statutory limitation on cost.
The legislative history of section 801 specifically states that the
intent of Congress was not to impose a ceiling on the maximum annual
lease, so long as it was cost effective when compared with the
alternative of government construction. H.R. Rep. No. 359, 98th Cong.,
1st Sess. 45 (1983).
(9) Joint Economic Comm., 96th Cong., 2d Sess., 1980 Supplement to
Economic Indicators: Historical and Descriptive Background 85 (Comm.
Print 1980); Bureau of Labor Statistics, Dept. of Labor, Rep. No. 517,
The Consumer Price Index: Concepts and Content Over the Years (1977).
B-220699, 65 Comp. Gen. 570
Matter of: Bureau of Land Management, Department of the Interior --
Disposition of Forfeited Bonus Bids Received At Competitive Mineral
Lease Sales, May 14, 1986
When the high bidder for a mineral lease offered by the Bureau of
Land Management does not execute a lease, the one-fifth bonus submitted
with the bid is forfeited. Section 35 of the Mineral Lands Leasing Act
of 1920, as amended (30 U.S.C. 191), provides that all money received
from sales, bonuses, royalties, and rentals are to be distributed under
that section. Therefore, the forfeited bonuses are to be distributed in
the same manner as other lease proceeds to which section 35 is
applicable.
The Bureau of Land Management of the Department of the Interior (BLM)
requests a decision on the disposition of forfeited bonus bid receipts
it holds as deposits against the completion of certain competitive
mineral leases. We conclude that these forfeited receipts should be
distributed in the same manner as other lease proceeds.
In conducting the competition for these leases, BLM receives
one-fifth of the bonus bid from the winning bidder as a deposit pending
completion of the lease. The lease is executed only if the bidder pays
the remaining four-fifths of the bonus bid and the first year rental
within 30 days of notice of bid acceptance. If the bidder does not
complete payment within this time period, the bonus bid deposit is
forfeited to BLM.
We are asked if these amounts should be transferred to Interior's
Minerals Management Service for distribution under section 35 of the
Mineral Lands Leasing Act in the same way as other lease proceeds
subject to section 35, or instead should be deposited as miscellaneous
receipts in the General Fund of the U.S. Treasury. The Interior
Solicitor's Office has advised BLM that the moneys should be considered
"money received from sales" or "money received from * * * bonuses" under
the Mineral Lands Leasing Act, both of which are subject to section 35
distribution. We are told that the Solicitor's Office cites Watt v.
Alaska, 451 U.S. 259 (1981) in support of this view.
Unless otherwise authorized by law, all receipts are to be deposited
in the general fund of the Treasury as miscellaneous receipts, under 31
U.S.C. Section 3302, Section 35 of the Mineral Lands Leasing Act of
1920, as amended, is codified at 30 U.S.C. Section 191. Under the
provision --
All money received from sales, bonuses, royalties * * * and
rentals of the public lands under the provisions of this chapter
(Leases and Prospecting Permits) * * * shall be paid into the
Treasury of the United States * * *.
Fifty percent of this amount is then required to be paid to the State
where the leased land or deposits are located (ninety percent to
Alaska); forty percent to the Reclamation Fund established under the
Reclamation Act of 1902; and the remaining 10 percent is to be credited
to miscellaneous receipts.
Under 43 C.F.R. Section 3120.5 (1985), the successful bidder at a
mineral lease sale conducted by BLM is required within 30 days of notice
to execute lease forms, pay the balance of the bonus bid as well as the
first year's rental and the publication costs. If this is not done or
the bidder otherwise fails to comply with applicable regulations, the
one-fifth bonus accompanying the bid is forfeited. 43 C.F.R. Section
3120.6.
Our review of the legislative history of section 35 does not indicate
that any special consideration was given for receipts which are retained
because of the high bidder's failure to execute a lease, as contrasted
to the retention of the amounts received subsequent to the signing of a
lease. Since under section 35, forfeited amounts are not distinguished
from other moneys properly retained by BLM, and not returned to the
payor, they should be considered as "money received" under that
provision.
Moreover, under 43 C.F.R. Section 3120.7 Interior has the right to
offer a lease to the next highest bidder if the high bid is rejected.
This may be done if the difference between the two bids is no greater
than the one-fifth of the rejected bid. The effect of this provision is
to assure that the receipts from the sale to the next highest bidder,
including the forfeited one-fifth bonus bid, shall not be less than the
bid originally offered. In this circumstance, the failure to include
the forfeited one-fifth bonus bid in the section 35 distribution would
reduce the amounts received by the affected states and by the
reclamation fund (other than for Alaska) even though the total amount
received for the lease equals or exceeds the total original bid, which
would be distributed under section 35. We do not believe that this
result was intended. As moneys properly received and retained by the
United States, the amounts forfeited should be distributed under section
35.
According to the request for our decision, the Interior Solicitor's
Office considers Watt v. Alaska, cited above, as supporting the
disposition of forfeited bonus bids under section 35, notwithstanding
the later enactment of the Wildlife Refuge Revenue Sharing Act of 1964
which contained a different sharing formula. In that case, the Supreme
Court of the United States held that revenues from oil and gas leases on
federal wildlife refuges consisting of reserved public lands must be
distributed under section 35. The Court concluded that the term
"minerals" in section 401(a) of the Wildlife Refuge Revenue Sharing Act,
49 Stat. 383, as amended in 1964 by Pub. L. No. 88-523, 78 Stat. 701,
applies only to minerals on acquired refuge lands. We considered the
same issue in 55 Comp. Gen. 117 (1975) but concluded that all revenues
from oil and gas found on wildlife refuge lands, whether the lands were
acquired or reserved, were subject to the Wildlife Refuge Revenue
Sharing Act rather than the Mineral Lands Leasing Act. The question at
hand does not really concern which leases are subject to section 35, but
only how forfeited bids on lands which are subject to section 35 are to
be treated. Accordingly, we do not think that Watt v. Alaska is
relevant in determining the question presented to us. For future
reference in appropriate cases, however, we would consider our holding
in 55 Comp. Gen. 117 modified to the extent necessary to conform to the
Supreme Court's decision.
Accordingly, for the reason indicated, we conclude that the one-fifth
bonus paid by a high bidder for a mineral lease and forfeited to the
United States upon failure to execute a lease, is to be distributed in
the same manner as lease proceeds otherwise subject to section 35 of the
Mineral Lands Leasing Act of 1920, as amended.
B-222045, 65 Comp. Gen. 569
Matter of: W. H. Smith Hardware Co., May 13, 1986
Agency which terminated contract after discovering that solicitation
understated its requirements and that awardee's product would not meet
its needs should reinstate the solicitation and make award to the
protester since protester's offer will meet the agency's actual needs
and was the lowest technically acceptable offer under the original
solicitation.
W. H. Smith Hardware Company protests the actions of the Defense
Construction Supply Center (DCSC) under solicitation No.
DLA700-86-R-0285 for lavatory faucets. Smith originally protested the
rejection of its offer as unacceptable and the award of a contract to
State Plumbing and Heating Systems, Inc. Before the resolution of the
protest, DSCS terminated the contract with State on the ground that the
solicitation did not set forth all of the agency's needs. It proposes
to resolicit the requirement. Smith now contends that DCSC should
reinstate the original solicitation and award it a contract because its
original offer meets all the agency's needs.
We sustain the protest.
The solicitation, as amended, contained a National Stock Number and a
short description of the item. It also listed three manufacturers and
their approved part numbers. DCSC received nine offers in response to
the solicitation, including two from State. Both the low (submitted by
State) and the second low offer (submitted by Sunbury Supply Company)
were rejected as technically unacceptable because the faucets offered
contained a knob style control rather than the specified lever control.
The third low offer (submitted by Smith) was also rejected as
technically unacceptable because the item offered was thought to contain
a plastic valve body, leaving State's alternate offer as the lowest
acceptable offer. A contract was awarded to State on January 27, 1986.
After receiving Smith's protest, DCSC reevaluated the protester's
offer and found it to be technically acceptable. The agency also
discovered that the item description in the solicitation had omitted any
reference to male adapters that were required by the agency. DCSC also
found that two of the three approved manufacturers' part numbers listed
in the solicitation as acceptable were in fact unacceptable because they
did not include the male adapters. DCSC terminated State's contract
because the item which State offered did not include the male adapters.
The agency proposes to resolicit the requirement with a revised item
description.
Smith argues that DCSC should reopen the solicitation and award it
the contract based on its original offer because that offer was the
lowest which proposed a product which contained the required male
adapters.
While the procurement regulations provide no specific direction or
guidance regarding how procuring agencies should proceed after a
contract termination such as the one involved here, we think that the
agency's determination either to resolicit the requirement or, if
practicable, to make award under the prior solicitation must be
reasonably supported. See Koehring Co., Speedstar Division, B-219667.2,
Feb.6, 1986, 65 Comp. Gen. 268, 86-1 CPD Paragraph 135.
Here, the record shows that the item offered by Smith does include
the required male adapters and that Smith has indeed submitted the low
offer which meets the agency's actual needs. Smith's offer is also
lower than the State alternate offer which resulted in the initial
award. The lower offers submitted by Sunbury and State were rejected
for reasons unrelated to the defect in the solicitation concerning the
male adapters and therefore would presumably be unacceptable under the
proposed resolicitation.
The agency proposes to resolicit the requirement because the
solicitation's item description was defective in that it did not specify
that the faucets to be supplied must include a male adapter. We note,
however, that Smith's low offer appears to meet the agency's needs.
Further, since the solicitation understated rather than overstated the
agency's needs, the other offerors would not be prejudiced by an award
to Smith based on its low offer. Consequently, we do not believe that
any useful purpose would be served by resoliciting the requirement
rather than awarding a contract to Smith based on its offer under the
original solicitation, assuming, of course, that the offer is otherwise
acceptable and that Smith is responsible. See Hemford Co., B-216811,
Feb. 8, 1985, 85-1 CPD Paragraph 167. We are by letter of today making
such a recommendation to the contracting agency.
The protest is sustained.
B-221075, 65 Comp. Gen. 563
Matter of: Retroactive Modification of Rate Tender, May 13, 1986
A provision of a tender negotiated under the Military Traffic
Management Command's Guaranteed Traffic program permits otherwise
applicable rates to be used. This permits lower rates in the motor
carrier's existing non-negotiated rate tender which are lower than the
negotiated rates to be applied in the absence of evidence that special
services were requested and performed on specific shipments.
Rates applicable on the date that transportation services are
performed are binding on the parties. In the absence of a benefit to
the Government, the applicable tender may not be retroactively modified
to nullify its application to a particular point of origin which would
result in higher charges being due the carrier.
A carrier submitted supplemental claims to the General Services
Administration (GSA) for payment for certain transportation services at
higher rates quoted in one of the carrier's tenders. /1/ Based on the
record before us, including GSA's administrative report and a report
from the Military Traffic Management Command, we find that lower rates
in another of the carrier's tenders apply to the service performed.
Between late November 1984 and January 1985 the Department of Defense
issued Government Bills of Lading to Ryder/PIE Nationwide, Inc. (Ryder),
for the transportation of eight shipments of "Freight All Kinds" from
the Defense General Support Center, Richmond, Virginia (Bellbluff), to
various destinations. The carrier billed and was paid charges derived
from rates published in Ryder's rate Tender No. ICC-RYPI-78. Tender 78,
which as effective July 5, 1983, offered rates for the transportation of
"Freight All Kinds" between various points including Bellbluff. After
payment the carrier presented supplemental bills in April 1985 to the
GSA in the total amount of $11,925.36, on the basis of higher rates
published in Ryder's Tender No. ICC RYPI-263. /2/ The higher rates in
Tender 263, effective November 10, 1984, were the result of a Guaranteed
Traffic program solicitation issued by the Military Traffic Management
Command.
The GSA disallowed the claims pursuant to its authority to audit
Government transportation bills. 31 U.S.C. Section 3726 (1982). The
basis for disallowance was a provision in Items 20g and 28 of Tender
263. Item 20g provides that the tender shall not apply where its
charges exceed charges otherwise applicable for the same service. Item
28 provides that rates and charges in Tender 263 "alternate with rates
in other tenders" when it results in lower cost to the Government. There
is no dispute that the rates in Tender 78 were lower than those in
Tender 263.
On September 10, 1985, Ryder again filed the claims with GSA using
the same higher rates in Tender 263. To establish the inapplicability
of the lower rates in Tender 78, Ryder produced Supplement 7 to that
tender. Supplement 7 was not issued until August 30, 1985, or about 9
months after the transportation services were performed, yet it
purported to delete Bellbluff as an origin point retroactively to the
effective date of Tender 263, November 10, 1984. The Military Traffic
Management Command approved the retroactive modification.
GSA's view that Supplement 7 could not have the legal effect of
nullifying the provisions allowing use of a lower rate in another tender
is based on the general principle that the rate applicable at the time
of movement binds the parties, and on the fact that Government officials
have no authority to waive a contractual right without benefit to the
Government. In support of its position GSA cites 37 Comp. Gen. 287
(1957). GSA contends that the lower rates in Tender 78 were applicable
at the time of movement and, in the absence of consideration for the
waiver of that contractual right, there was no authority to agree with
the retroactive modification of Tender 78.
The Military Traffic Management Command contends that the
modification was made to conform with the intentions of the parties
under its Guaranteed Traffic program. They explain that under that
program sealed rates are tendered in response to a solicitation. The
tenders are publicly opened and evaluated and a carrier is selected on
the basis of lowest overall cost and the ability to provide responsive,
responsible service in a specific traffic lane. Ryder, as the low-cost
carrier, received award of the exclusive right to handle traffic from
Bellbluff to various destinations at fixed rates for a 12-month period.
The Military Traffic Management Command argues that it was necessary
to modify Tender 78 because the provisions of Tender 263 allowing use of
lower rates derived from other tenders were inconsistent with various
other provisions of that tender which awarded exclusive traffic to
Ryder. They conclude that Tender 78 was not "otherwise applicable" to
shipments from Bellbluff because it does not offer the special services
contemplated by Tender 263. They explain that carriers participating in
the Guaranteed Traffic program are required to provide many services
which carriers normally do not provide, and that they perform the
services at rates that are less than those charged by other carriers.
The extra services are provided at no extra charge even though they
otherwise would result in extra charges. These services include
providing more timely delivery, maintaining firm rates, furnishing
delivery receipts, and providing heater and refrigerator service.
Star World Wide Forwarders, B-190757, July 28, 1978, is cited by the
Military Traffic Management Command as support for their contention that
the agency can waive a tender provision even though the waiver has the
effect of increasing rates.
Clearly, the relevant issue is which rates, those in Tender 263 or
78, are applicable. That issue turns on whether the provisions in
Tender 263 permitting use of lower rates from other tenders have legal
effect and whether the retroactive cancellation of Tender 78's
application to Bellbluff was effective. /3/
Item 20g of Tender 263 reads:
This tender shall not apply where charges for service provided
under this tender exceed charges otherwise applicable for the same
service. Receipt and acceptance of this tender by the Government
shall not be considered as a guarantee to the carrier of a
particular volume of traffic described in this tender.
Item 28 reads:
Alternation of Rates and Charges
Carrier agrees that rates and charges named in this tender will
alternate with rates and charges published in carrier/Bureau
tender/tariff in which carrier is a participant, effective on the
issue date of this tender, which such alternation results in lower
cost to the Government. Provisions of Items 25 and 26 apply. /4/
The Military Traffic Management Command contends that these items are
inconsistent with several other tender provisions, namely, items 16, 23
(note 4), 26, 27, 29, and 40.
Item 16, entitled "Governing Publications," which states that no
other tenders apply, relates to governing publications such as rules
tariffs and tariffs which provide for special services. It means,
simply, that if Tender 263 is applicable, there is no need to consult
other tariffs for additional rules and conditions. The self-contained
nature of the tender is not inconsistent with the possible application
of another tender when it produces lower charges.
Note 4 of item 23 provides that the rates published in the tender are
firm and cannot be increased for 12 months. Clearly this does not
preclude application of lower charges.
Item 26 provides that the rates and charges "are firm for the term of
this tender and may not be increased," and that this rule "supersedes
that part of item 20 referring to tender amendments." Item 20e provides
that the tender may be "canceled" by the carrier on written notice of
not less than 30 days, and cancellations or amendments may be made upon
shorter notice by mutual agreement with the Government. Item 20g
provides that there is no guarantee of tonnage. Reading items 26 and 20
together, it seems that, except to increase rates, the parties can amend
or cancel the tender with specified notice. In any event we do not view
these provisions as being inconsistent with the provisions which permit
lower rates derived from other existing tenders to be applied.
Item 27 provides for negotiation of charges on services not
specifically named in the tender. It contemplates negotiation before
services are performed, and not later. This presumes that the tender is
applicable, and does not exclude applying an alternate lower cost
tender.
Item 29 reflects the carrier's agreement to meet certain truckload
transit times. This provision and various other provisions, which
indicate that the carrier will perform certain services not normally
provided by motor carriers, do not present inconsistencies with the
provisions permitting use of lower rates from other tenders. However,
as discussed later, they raise the question of whether Tender 78 applies
to a specific shipment if that tender and its governing publications did
not offer certain services which were actually requested and performed.
Item 40 simply states that the tonnages shown in the tender are
estimates and that certain shipments moving by other transportation
modes have been excluded from the estimates. There appears to be no
question that the carrier received the available tonnage, thus that is
not at issue.
The Military Traffic Management Command argues that the provisions of
Tender 263 are not similar to the provisions of Tender 78 to the extent
that Tender 78 should not be considered "otherwise applicable." They
point out that the Government may contract to pay higher rates than
those assessed to the public generally if necessary to obtain services
not available to the public. See Hilldrup Transfer & Storage Co., 58
Comp. Gen. 375 (1979). The argument seems to be that Tender 263 should
be considered as offering services so different from those authorized by
Tender 78 that Tender 78 should not be considered otherwise applicable.
Tender 263 offers a single rate for transportation even though certain
extra cost services may be provided and it binds the carrier to certain
terms not usually applicable. Nevertheless, Tender 263 does not
specifically supersede other tenders; in fact, it specifically permits
the use of other tenders offering lower rates. We cannot conclude,
therefore, that Tender 78 may not be used for shipments otherwise
covered by its terms. Further, GSA reports that there is nothing on the
Government Bills of Lading or elsewhere in the record showing that the
special services offered at no extra charge in Tender 263 were requested
or performed on the shipments involved here. Further, if special
services were actually requested and performed, they may be covered by
tariffs governing Tender 78 at lower overall cost than Tender 263
provides. Whether Tender 78 and its governing publications offered
lower rates for the same services as Tender 263 is a determination for
GSA to make in the first instance. The carrier has the burden of
showing that any special services billed for were requested and
performed. Ultra Special Express, 54 Comp. Gen. 308 (1974); Trans
Country Van Lines, Inc., 53 Comp. Gen. 603 (1974).
Since the clause in item 28 of Tender 263 was included in addition to
the standard tender provision contained in item 20g, both of which
provide for the use of lower rates, it seems clear that the parties
intended to permit the use of lower rates in tenders other than Tender
263. Thus, we cannot find that the attempted retroactive modification
of Tender 78 was to carry out the original intent of the parties under
Tender 263.
Contrary to Military Traffic Management Command's contention, in Star
World Wide Forwarders, supra, we did not hold that a Government agency
may waive a contractual right. That decision held that since there was
evidence that a new rate tender was intended to be an increase in rates,
a former tender could not thereafter be used to apply lower rates.
There, the increase in rates was accepted before the transportation
services were performed and the only deviation authorized was from an
agency procedure dealing with the method of filing tenders. Since in
the present case it has not been shown that the Government received any
benefit for the modification, and no officer or employee of the
Government can waive, modify, or otherwise change contractual
obligations without a compensatory benefit, that modification is not
retroactively effective. See 40 Comp. Gen. 309, 311 (1960); and 37
Comp. Gen. 287, supra.
Accordingly, we find that the Military Traffic Management Command did
not have authority to accept the retroactive modification of Tender 78
as a means of nullifying its use as an alternative to Tender 263 which
would have the effect of retroactively allowing Ryder the higher
charges. On the basis of this record, the GSA properly disallowed the
carrier's claims.
Guaranteed Traffic agreements with carriers may preclude the use of
lower rates published in existing tenders, but the new agreement must
provide that lower rates in other tenders will not be applicable. Cf.
B-154967, December 21, 1964; and Puerto Rico Marine Management, 57
Comp. Gen. 584 (1978).
(1) A certifying officer, Michael D. Hipple, Director, Transportation
Audit Division, General Services Administration, has asked for an
advance decision on the question of whether he properly disallowed eight
claims presented by a motor carrier for additional charges for
transportation services performed for the Department of Defense.
(2) GSA reports that there are claims of approximately $250,000
affected by this issue, some of which involve RYPI-264, a tender that is
similar in material respects to RYPI-263.
(3) Since rate applicability is the relevant issue and the carrier
has not alleged that it did not receive the traffic under the Guaranteed
Traffic solicitation, we will not address a collateral question rasied
by GSA concerning the applicability of the Federal Acquisition
Regulations. Where the Government Bill of Lading is the basic
procurement document, the Federal Acquisition Regulations do not apply.
See B-188513, April 10, 1978, and 49 U.S.C. Section 10721 (1982).
Ordiniarily, a tender is a continuing offer and not a continuing
contract obligating the carrier to provide the service. 39 Comp. Gen.
352 (1959).
(4) Item 25 provides for application of lowest total charges; it
states that the rates apply on shipments subject to transit time, and
that the Government reserves the right to use another carrier where the
primary carrier cannot provide expedited service. Item 26 states that
the rates cannot be increased.
B-219664.3, 65 Comp. Gen. 558
Matter of: Dynalectron Corporation - Request for Reconsideration,
May 13, 1986
General Accounting Office (GAO's) Bid Protest Regulations, 4 C.F.R.
21.1(c)(4) (1985), require that an initial protest set forth a detailed
statement of the legal and factual protest grounds and do not
contemplate a piecemeal presentation of arguments or information even
where they relate to the original grounds for protest. Where, however,
the initial protest called into question the accuracy of all the
workload estimates in a solicitation and the agency possessed sufficient
information to take comprehensive corrective action or otherwise to
fully respond to the protest, then a subsequently submitted specific
enumeration of defective estimates is timely.
Protest by incumbent contractor that workload estimates in
solicitation are defective because they differ from the current workload
is denied where protester fails to show that the estimates are not based
on the best information available concerning the agency's anticipated
future requirements, otherwise misrepresent the agency's needs, or
result from fraud or bad faith.
General allegation that multiple dissimilar tasks should not have
been consolidated under single work category for purposes of calculating
payment deduction is untimely to the extent the protester failed to
identify in its initial protest the specific work categories to which
its general allegation applied, since such a determination depends on
subjective criteria not defined by the protester and the contracting
agency therefore could not reasonably determine which work categories,
in the protester's view, were covered by the general allegation.
Dynalectron Corporation (Dynalectron) requests reconsideration of our
decision in Dynalectron Corp., B-219664, Dec. 6, 1985, 65 Comp. Gen. 92,
85-2 CPD Paragraph 634. In that decision, we denied Dynalectron's
protest against the terms and conditions of request for proposals (RFP)
No. DAVA01-85-R-0001, issued by the Defense Audiovisual Agency (DAVA)
for the procurement of audiovisual services. We affirm our prior
decision.
The solicitation requested proposals for supplying audiovisual
services at a firm, fixed price and for undertaking audiovisual
productions on an indefinite-quantity basis, for a 9-month base period
and 4 option years, in connection with DAVA's operations at Norton Air
Force Base in California. The Air Force assumed the functions of DAVA
after September 30, 1985.
Under the audiovisual services portion of the solicitation, offerors
were provided with estimates of DAVA's requirements for a number of
audiovisual services ("Required Services" or "RS") and were required to
propose a total price for providing all these services during each of
the base and option periods.
In its initial protest of August 9, 1985, Dynalectron, then the
incumbent contractor, alleged that the solicitation's workload estimates
for the audiovisual services were erroneous and misleading because they
differed substantially from the government's actual requirements.
Dynalectron identified 20 RS for which the current, actual workloads
under DAVA's contract with Dynalectron exceeded the estimated workloads
set forth in this solicitation by at least 100 percent. In addition,
Dynalectron generally alleged that the estimates for approximately 40
other unidentified RS were overstated by at least 50 percent and that
the estimates for approximately two-thirds of the RS differed
significantly from the current workload.
In the administrative report responding to the protest, DAVA conceded
that figures for the actual workload experienced under the current
contract were not considered in deriving the estimates in the
solicitation. Rather, these estimates were based upon the estimates
contained in the prior solicitation which resulted in the current
contract. This was done to facilitate a comparison of the advantage of
accepting an offer for a new contract with the government's option of
extending the current contract. Nevertheless, DAVA indicated that it
would amend the solicitation to include revised workload estimates which
took into account the actual workload experience under Dynalectron's
current contract.
Shortly thereafter, DAVA amended the solicitation to revise not only
the estimates for all except one of the 20 specific RS which Dynalectron
had identified in its initial protest, but also the estimates for a
number of other RS. Approximately 30 percent of all the workload
estimates were revised. DAVA described the revised estimates as the
"fruit of the Government's best judgment based on the most current
data," indicating that both actual workload figures through July 1985
and projections of the future workload after the Department of the Air
Force takes over the functions of DAVA were considered.
Dynalectron conceded in its subsequent comments of September 30 that
the corrections to the workload estimates for six of the 20 RS
originally identified as defective appeared to reflect actual
experience. The protester contended, however, that for the other
estimates, the corrections were "erratic to non-existent." In addition,
Dynalectron provided that it alleged to be the actual 1984 and 1985
workloads for all the RS and identified additional RS' for which the
workload estimates in the solicitation were allegedly defective.
DAVA thereupon amended the solicitation to revise an additional 20
percent of the workload estimates.
In our prior decision, we held the Dynalectron had failed to meet its
burden of providing that the workload estimates for the 20 RS identified
in Dynalectron's original protest, as revised by DAVA, were not based on
the best information available as to the agency's anticipated future
requirements, otherwise misrepresented the agency's needs, or resulted
from fraud or bad faith. Cf. D.D.S. Pac, B-216286, Apr. 12, 1985, 85-1
CPD Paragraph 418. In addition, we found untimely Dynalectron's
allegations regarding the additional RS first identified as defective in
Dynalectron's September 30 comments. Notwithstanding the general
allegation in Dynalectron's initial protest that the estimates for
two-thirds of the RS differed from the current workload, we concluded
that Dynalectron could and should have identified all the allegedly
defective estimates in the original protest.
Upon reconsideration, we now agree with Dynalectron that its protest
letter adequately raised the question of the propriety of the
subsequently identified, additional workload estimates. Dynalectron's
initial allegations identified a general defect in the solicitation,
i.e., the use of workload estimates derived from the prior solicitation
which often substantially differed from the more recent historical
workloads. It thereby generally called into question the basis for all
the workload estimates and, in particular, called into question each
workload estimate which substantially differed from the recent
historical workload. Since DAVA knew the actual workload under the
prior contract, it knew which workload estimates Dynalectron considered
defective. The agency therefore was in a position to take comprehensive
corrective action to remedy any defective workload estimate or otherwise
to respond to Dynalectron's allegations in this regard. We therefore
will consider on the merits Dynalectron's allegations concerning the
workload estimates.
In its request for reconsideration, Dynalectron once again argues
that the additional workload estimates identified in its September 30
comments are defective because they deviate from the current, actual
workload under Dynalectron's contract with DAVA. Dynalectron does not
explain why DAVA's estimates in the specific categories identified were
improper, except for its initial general contention that actual workload
data from prior years should be used. That argument is unpersuasive,
however, since Dynalectron has not shown a correlation between DAVA's
current and future requirements. As we stated in our original decision,
workload estimates represent the best estimates of the agency's
anticipated future, not current, requirements. Here, Dynalectron are
presented no evidence to show that DAVA's future requirements will be
the same as its requirements under the contracts with Dynalectron for
1984 and 1985. On the contrary, it is reasonable to assume that the
requirements will be different since the actual workload figures
themselves show significant fluctuations in the character and quantity
of work year to year; a new agency with potentially different
priorities is assuming responsibility for DAVA's functions; and a
contract under the RFP at issue could be extended by the exercise of
options to a period of nearly 5 years.
Consistent with the requirement to formulate the workload estimates
based on its future requirements, DAVA has revised the estimates twice
in response to the protest. The revisions were based on both the actual
workload figures through July 1985 and projections of the future
workload after the Air Force takes over the functions of DAVA. Since
Dynalectron has presented no evidence to show that these workload
estimates were not based on the best information available as to DAVA's
future requirements or otherwise result from fraud or bad faith, we find
that Dynalectron has failed to show that the workload estimates are
defective.
In its original protest, Dynalectron also challenged the solicitation
provisions relating to payment deductions for defective performance.
Dynalectron maintained that the payment deductions set forth in the RFP
had been fixed without reference to the probable actual damages that
would be suffered as a result of defective performance and, therefore,
that they constituted an unenforceable penalty.
In its initial protest of August 9, Dynalectron alleged that the RFP
permitted deduction of an amount representing the value of several
different tasks where an inspection revealed a defect in only one type
of task, citing RS-48 as "an example." Although the solicitation
included separate workload estimates for 10 different tasks under RS-48
(including providing presentation charts, briefing charts, blue
line/black line prints, plaques, photoplates, nameplates, posters,
displays, certificates and lobby displays), the RFP only provided for a
single entry for these services, "(p)roduce quality Graphic Art work," a
single deduction category based upon the defective percentage in the
sample of any particular lot, and a single maximum payment percentage of
RS value.
In response to the initial protest, DAVA issued amendment No. 6 to
the RFP which in part separated RS-48 for graphic art services into 10
distinct subtasks. DAVA maintained, however, that a further breakout of
tasks under other RS was inappropriate.
In our prior decision, we held that the breakout of work under RS-48
into 10 separate deduction categories as requested by Dynalectron
rendered its initial protest in that regard academic. Although we
recognized that Dynalectron, in its September 30 comments, identified
additional, specific RS which allegedly contained dissimilar tasks, we
pointed out that these were apparent prior to the August 9 closing date.
Since solicitation improprieties apparent prior to the closing date
must be protested prior to closing, 4 C.F.R. Section 21.1(a)(1) (1985),
and our Bid Protest Regulations do not contemplate a piecemeal
presentation or development of protest issues, we considered the
allegation as to the additional RS to be untimely.
In its request for reconsideration, Dynalectron challenges our
finding that its allegations concerning the additional payment deduction
categories identified in its September 30 comments were untimely. The
protester argues that it clearly identified the relevant problems with
the payment deduction categories in its initial protest and contends
that a review of the information available to the agency would have
revealed all the allegedly defective categories. Dynalectron considers
the additional payment deduction categories identified in its September
30 comments merely to be additional support for its previous, timely
filed grounds of protest.
The crux of Dynalectron's argument is that its general allegation --
that it was improper to consolidate dissimilar tasks under one RS
category for purposes of calculating the payment deduction -- was
sufficient to identify the specific RS which Dynalectron regarded as
defective. We disagree. In its initial protest, Dynalectron stated
that RS-48 was defective because it combined 10 "completely separate and
independent tasks" under one category. As Dynalectron framed the issue,
therefore, the key determination is which categories involve "completely
separate and independent" tasks.
In none of its submissions, however, including the request for
reconsideration, has Dynalectron defined what in its view constitutes
"completely separate and independent" tasks. Without any such
indication from Dynalectron, DAVA could not reasonably determine which
specific RS were allegedly defective, since such a determination depends
on Dynalectron's own judgment as to what constitutes separate and
independent tasks. Since Dynalectron's general allegation thus was
based on subjective, not objective, criteria -- i.e., does any
particular RS involve "completely separate and independent" tasks as
defined by Dynalectron? -- it was incumbent on Dynalectron to identify
the specific RS to which its general allegation applied. /1/
In its request for reconsideration, Dynalectron has recast and in
effect broadened its initial allegation. Instead of categories
involving "completely separate and independent" tasks, Dynalectron now
states that "(a)ny Required Service which was comprised of multiple
tasks with only one payment deduction percentage falls under the
category of deficiency identified in the protest." (Italic supplied.)
Dynalectron concludes that simply examining each RS thus would produce a
list of allegedly defective RS identical to the list furnished by
Dynalectron in its comments on the agency report. We disagree. A
review of the RS reveals several which are not included in Dynalectron's
list even though they involve "multiple tasks" and thus fit
Dynalectron's definition of allegedly defective RS in its request for
reconsideration. For example:
(1) RS-52 -- Design and prepare artwork for publication.
Defined in sec. C-5, Paragraph 5.2.9.2.6: "The contractor shall
design and construct materials for publication and prepare
camera-ready artwork for the printer."
(2) RS-54 -- Provide training aids. Defined in sec. C-5,
Paragraph 5.2.9.2.8: "The contractor shall design and construct
training aids, and two/three dimensional training aid display
items."
(3) RS-58 -- Black and white copy photography. Defined in sec.
C-5, Paragraph 5.2.9.3.4: "Black and white negatives shall be
produced from art work, publications, displays, pictures, charts,
etc., in a variety of sizes ranging from 35mm to 8 x 10 inch.
Both continuous tone negatives and high contrast line copy
negatives will be required."
Thus, even applying Dynalectron's most recent description of the RS
covered by its general allegation does not yield the same list of RS as
identified by Dynalectron. In our view, this confirms our conclusion
that DAVA could not reasonably be expected to respond to Dynalectron's
general allegation without an enumeration of specific RS regarded as
defective by Dynalectron. Since Dynalectron chose not to identify the
specific RS involved until its comments on the agency report, /2/ we
affirm our original finding that Dynalectron's protest was untimely with
regard to those specific RS.
Our prior decision is affirmed.
(1) This is the key distinction between Dynalectron's allegation
regarding the workload estimates, discussed above, and its allegation
concerning the payment deductions. Unlike the payment deduction
allegation, the workload estimate allegation put DAVA on notice of the
objective criteria on which it was based and which could be applied to
determine the specific workload estimates covered by the general
allegation.
(2) In its comments on the report, Dynalectron stated that it had
identified 13 RS as defective in its initial protest. This is
inaccurate, As noted above, the initial protest did no more than
identify one RS, RS-48, as an example of the alleged defect.
B-221686, 65 Comp. Gen. 557
Matter of: Carl Trueblood, May 8, 1986
Transferred employee may not be reimbursed a transaction privilege
tax imposed by Arizona on construction of new houses even though the tax
was passed on to the employee when he purchased a newly constructed
residence at his new duty station. Although the tax qualifies as a
"transfer tax" within the meaning of Federal Travel Regulations,
paragraph 2-6.2d, it was a charge imposed incident to the construction
of a new residence, and therefore may not be reimbursed in view of the
specific prohibition contained in paragraph 2-6.2d.
The question in this case is whether a transferred employee may be
reimbursed for a transaction privilege tax imposed by Arizona on
builders of new houses which was passed on to him when he purchased a
residence at his new duty station. /1/ We conclude that he may not be
reimbursed since the tax was a charge incident to the construction of a
new residence.
Incident to his transfer to Arizona, Mr. Carl Trueblood, an employee
of the Department of the Interior, purchased a newly constructed
residence. Together with his claim for real estate purchase expenses,
Mr. Trueblood submitted a sales tax receipt executed by the seller's
agent indicating that the purchase price of the new home included state
and city sales taxes totaling $3,032.61 imposed in compliance with
Section 42-1310.02 (now Section 42-1308) of the Arizona Revised
Statutes. The taxes here in issue are in fact transaction privilege
taxes imposed upon prime contractors engaged in the construction of new
houses in Arizona. These taxes, although paid to Arizona by the
contractors, are collected from the purchasers in the price of the new
home. City of Mesa v. Home Builders Assn. of Central Arizona, Inc., 111
Ariz. 29, 523 P.2d 57 (1974).
Paragraph 2-6.2d of the Federal Travel Regulations (FTR) (Supp. 4,
Aug. 23, 1982), incorp. by ref. 41 C.F.R. Section 101-7.003 (1983),
specifies that expenses that result from construction of a residence are
not reimbursable, except to the extent they are comparable to expenses
that are reimbursable in connection with the purchase of an existing
residence. See FTR, para. 2-6.2d(1)(j) and para. 2-6.2(2)(f). The
transaction privilege taxes included in the purchase price of Mr.
Trueblood's house are assessed only on newly constructed houses. They
are nearly identical to the privilege tax that was passed on to the
purchaser considered in 54 Comp. Gen. 93 (1974). Although that decision
was overruled on other grounds by 63 Comp. Gen. 474, supra,
reimbursement of the New Mexico tax involved in 54 Comp. Gen. 93 was
specifically disallowed on the basis that it was a charge incident to
the construction of a new residence. See also Mr. Clyde Treat,
B-181795, November 11, 1974; James L. Starshak, B-178943, September 17,
1974.
Therefore, although the Acting Regional Director believes that it is
unfair to penalize the purchaser of a new home, we conclude that the
transaction privilege taxes in this case are expenses resulting from
construction which may not be allowed under the applicable regulations.
Accordingly, the taxes claimed by Mr. Trueblood may not be reimbursed.
(1) This action is in response to a request for a decision received
from Mr. Edward M. Hallenbeck, Acting Regional Director, Lower Colorado
Regional Office, Bureau of Reclamation, U.S. Department of the Interior.
B-221717, 65 Comp. Gen. 554
Matter of: Priority to Contract Proceeds, May 5, 1986
Assignee bank has priority over the Internal Revenue Service for
payment of contract proceeds even though tax debt matured before
assignee satisfied requirements of Assignment of Claims Act, 31 U.S.C.
3727, since contract included a no setoff clause, the assignment was
made to finance the contract, and the assignor still owes the assignee
bank more than the amount of the contract proceeds.
An Army Corps of Engineers disbursing officer asks about priority
between the Internal Revenue Service (IRS) and the assignee, Security
State Bank of Aitkin, Minnesota (Bank), for distribution of $7,068.55
proceeds due under a purchase order contract between the Corps of
Engineers and Ray Kullhem, and the proper amount to be paid to each.
For the reasons given below, assuming the Bank's factual assertions are
correct, the proceeds should all be paid to the Bank.
On January 24, 1984, an assignment under the Uniform Commercial Code
of all the accounts receivable of Ray Kullhem in favor of the Security
State Bank of Aitkin was recorded in the Office of the County Recorder
for Aitkin County, Minnesota. On August 6, 1985 an IRS tax lien was
issued against Ray Kullhem in the assessed amount of $5,529.64. The
dates of the assessments were March 5, 1984 and March 18, 1985.
In September 1985, Mr. Kullhem entered into a purchase order contract
with the Corps of Engineers for construction of a swimming pool for
$9,983. Subsequently, the contract amount was increased to $13,123.
The contract permitted assignments under the Assignment of Claims Act,
31 U.S.C. Section 3727, and contained a no setoff clause. The clause
stated: "(P)ayments to an assignee of any amounts due or to become due
under this contract shall not to the extent specified in the Act, be
subject to reduction or setoff."
On November 7, 1985, Mr. Kullhem executed an assignment of the
described purchase order contract to the Security State Bank of Aitkin.
The assignment provided that all sums payable on the contract would be
payable to the Bank. The assignee informs us that the assignment was
given in exchange for the Bank providing financing for the work on the
purchase order contract. The assignment was not immediately served on
the Corps of Engineers disbursing or contracting officers.
Subsequently, on December 12, 1985, an IRS Notice of Levy was issued
and served on the Army Corps of Engineers disbursing officer for the St.
Paul District. The levy was in the amount of $7,068.55, consisting of
an assessed amount of $5,601.08 and statutory penalties and additions of
$1,467.47. The IRS informs us that the $71.44 difference between the
assessed amount described in the lien and that in the levy was due to a
$20 filing fee and a $51.44 bad check written by Mr. Kullhem. On
December 19, 1985, the Bank sent two copies of the November 7 assignment
to the Corps of Engineers' Office of Counsel, requesting that they be
forwarded to the disbursing officer and contracting officer. (The Bank
also forwarded a copy of the January 24, 1984 UCC assignment.) The Corps
received the Bank's letter on December 23, 1985, and its acting
disbursing officer acknowledged receipt of the assignment on December
24, 1985.
The IRS maintains that its lien and levy have priority over any
existing assignment. The assignee, Security State Bank of Aitkin,
contends that its UCC filing and the November 7, 1985 assignment take
priority over any interest of the IRS. The assignee also maintains that
the amount Mr. Kullhem still owes on the loan for financing the contract
exceeds the $7,068.55 to be distributed.
The Assignment of Claims Act, 31 U.S.C. Section 3727, permits an
assignment to a bank of money due or to become due from the United
States under a contract providing for payments aggregating $1,000 or
more. The Act requires that the assignment cover all amounts payable
under the contract not already paid. Moreover, we have held that the
assignee must have a financial interest in the contractor's operations
under the contract. B-195629, Sept. 7, 1979. Generally, this means
that an assignment is valid only if it secures a loan which the assignee
has made to the assignor to finance the assignor's performance of the
contract. See 62 Comp. Gen. 683, 684 (1983), Modifying 60 Comp. Gen.
510 (1981). Thus, blanket assignments usually do not meet the Act's
requirements.
The Act also requires the assignee to file written notice of the
assignment together with a copy of the instrument of assignment with the
contracting officer or head of the contracting officer's agency, and the
disbursing officer, if any, for the contract. 31 U.S.C. Section
3727(c)(3). An assignment does not become effective until this
requirement is satisfied.
Under the Act the Government is precluded from asserting certain
setoffs against funds payable under a Government contract containing a
"no setoff" provision when the rights to those funds have been properly
assigned to a bank. /1/ Id. Section 3227(d). Where applicable the no
setoff provision defeats operation of IRS tax liens and levies and
reduces the Government's common law right of setoff to the extent the
assignor is indebted to the assignee. 31 U.S.C. Section 3727(d); 37
Comp. Gen. 318, 320, 322 (1957). A no setoff clause will protect an
assignee only from an assignor's indebtedness resulting from loans for
contract performance. 49 Comp. Gen. 44, 46 (1969).
In this instance, the purchase order contract between the Corps of
Engineers and Mr. Kullhem did contain a no setoff clause. Moreover, the
assignment complied with the requirements of the Assignment of Claims
Act: as we understand it the assignment was to underwrite Mr. Kullhem's
performance of the purchase order contract, and the Corps received
notice of the assignment on December 23, 1985. Although the assignment
did not become valid for purposes of the Assignment of Claims Act until
December 23, 1985, and the tax liability and tax lien representing that
liability arose prior to that date, we have consistently held that when
a no setoff clause is included in an assigned contract neither the IRS
nor any other Government agency can set off amounts due from the
assignor against the contract proceeds owed to the assignee, even if the
IRS claim matures prior to the date on which the assignment becomes
effective -- the date notice of the assignment is received by the
contracting agency. 62 Comp. Gen. 683, 690 (1983) modifying 60 Comp.
Gen. 510 (1981): 37 Comp. Gen. 318, 320 (1957). Accordingly, if as the
assignee contends the assignor still owes the assignee bank more than
the $7,068.55 contract proceeds being held by the Corps of Engineers,
and the assignor's debt to the Bank resulted from a loan to finance the
purchase order contract, that money should be distributed to the Bank.
Should the amount still owed the assignee by the assignor be less
than the remaining $7,068.55 proceeds, the no setoff clause would only
protect the assignee for the lesser amount. Any amounts above that
should be paid to the IRS. Furthermore, if the loan underlying the
assignment was not made to finance the purchase order contract, the no
setoff clause would not protect the assignee against the IRS's claim to
the proceeds. /2/ That claim arose before the November 7, 1985
assignment became valid under the Assignment of Claims Act, supra, and
thus would prevail but for the effect of the no setoff clause. For
similar reasons the IRS tax claim would prevail over the January 24,
1984 UCC assignment: that assignment was received by the Corps after
the tax claim arose, and was not made to finance the purchase order
contract.
(1) Although the provision in the Act authorizing limitations of
setoff states that it applies only "in war or national emergency", the
provision has been extended by subsequent legislation. Pub. L. No.
94-412, 90 Stat. 1255, 1258 (1976), codified at 50 U.S.C. Section
1651(a)(4). The legislative history of the provision shows the no setoff
authorization was continued because of its importance in financing
government contracts. H.R. Rep. No. 238, 94th Cong., 1st Sess. 12, 16
(1975). See also S. Rep. No. 1086, 95th Cong., 2d Sess. 1-2 (1978).
(2) The Bank has told us that the assignment was made in exchange for
monies to finance the contract, and that the assignor still owes the
Bank more than $7,068.55 on that loan. To date, however, the Bank has
not submitted documentation confirming this. Since the IRS has
expressed a need for a decision quickly, we will assume these facts are
correct. Nevertheless, before distributing the proceeds to the Bank,
the Corps should verify these assertions.
B-221983.2, 65 Comp. Gen. 552
Matter of: Franklin Lumber, Inc., May 2, 1986
General Accounting Office (GAO) will not waive regulatory requirement
that protester provide contracting officer with a copy of its protest
within 1 day of filing where the agency otherwise did not have specific
knowledge concerning the protest's details so that it would be able to
file a responsive report within the statutorily-required timeframe.
Franklin Lumber, Inc., requests reconsideration of our March 4, 1986
dismissal of its protest challenging the award of a contract under
invitation for bid (IFB) No. DABT56-85-B-0085. The IFB was issued by
the United States Army Engineer Center, Fort Belvoir, Virginia. We
affirm our dismissal.
Franklin first challenged this award by filing a protest with the
Army by letter of January 17, 1986. The protest consisted of a single
sentence alleging that the apparent low bidder had submitted an
unbalanced bid. The Army denied the protest by letter of January 29.
In denying Franklin's protest, the Army stated that its review of the
low bid indicated that it was not materially unbalanced.
On February 7, Franklin filed a protest with our Office, adding
details to its earlier complaint to the Army, and identifying several
line items on which it alleged the low bid was unbalanced. Franklin
failed to provide the Army with a copy of this protest, so that, on
March 4, we dismissed the matter. Our action was based on section 21.1
of our Bid Protest Regulations, 4 C.F.R. part 21 (1985), which requires
the protester to provide the contracting officer with a copy of the
protest no later than 1 day after the protest is filed with our Office.
In requesting reconsideration, Franklin suggests that we waive the
requirements of section 21.1, arguing that, by virtue of its January 17
protest, the Army had actual knowledge concerning the basis of the
protest filed in our Office.
The regulatory requirement that the contracting officer receive a
copy of the protest 1 day after filing stems from the requirement
imposed on the procuring activity by the Competition in Contracting Act
of 1984 (CICA), 31 U.S.C.A. Section 3553(b)(2)(A) (West Supp. 1985),
that the activity furnish our Office with a report within 25 days. This
requirement affects, in turn, the ability of our Office to meet the
90-day deadline established in CICA for issuing our decision. Due to
the importance of the statutory timeframes, waivers of section 21.1 are
considered exceptional and are granted sparingly. See Julie Research
Laboratories, Inc., B-219866.2; B-219867.2, Sept. 18, 1985, 85-2 C.P.D.
Paragraph 302; Sabin Metal Corp. -- Reconsideration, B-219171.2, July
24, 1985, 85-2 C.P.D. Paragraph 79.
In requesting reconsideration of our dismissal, Franklin relies on
previous decisions of this Office where we chose to waive the
requirements of section 21.1. See Colt Industries, B-218834.2, Sept.
11, 1985, 85-2 C.P.D. Paragraph 284; Hewitt, Inc., B-219001, Aug. 20,
1985, 85-2 C.P.D. Paragraph 200; Florida Precision Systems, Inc. --
Request for Reconsideration, B-219448.2, Aug. 12, 1985, 85-2 C.P.D.
Paragraph 160. In those cases, however, we elected to consider the
merits of the protests despite the lack of strict compliance with
section 21.1 only because we found that the contracting officers had
precise knowledge concerning the bases of the protests and were able to
file timely reports with our Office. In each case, the contracting
officer received an exact copy of the protest filed in our Office --
albeit from a source other than the protester -- within sufficient time
to prepare and submit the agency's report to our Office within 25 days.
The report that CICA requires an agency to file must contain a
detailed response to the allegations raised by the protester. See 31
U.S.C.A. Section 3553(b)(2). In a case like Franklin's, possession by
the agency of a copy of the protest is essential to its ability to
accomplish this task. As noted above, Franklin's protest to the Army
stated only that the apparent low bid was unbalanced. In contrast,
Franklin's appeal to our Office included calculations on 5 of the 99
line items purporting to prove unbalancing, and alleged that numerous
other items were unbalanced as well. Thus, notwithstanding the earlier
protest, the contracting officer had no knowledge of the specific
charges to which he needed to respond. He also could not know whether
Franklin had asserted new arguments or points of law or had raised
entirely new protest issues. In sum, we cannot say that the agency could
have filed a responsive report with our Office within the statutory
timeframe, without having been provided a copy of Franklin's February 7
protest.
In light of Franklin's failure to comply with our Bid Protest
Regulations, we will not consider its protest. The dismissal is
affirmed.
B-221356, 65 Comp. Gen. 549
Matter of: Kiss Engineering Corporation, May 2, 1986
Where a solicitation requires offerors to propose a single daily rate
for preparing appraisal reports, but is ambiguous as to the meaning of a
"Total Daily Rate" and does not estimate the length of time necessary
for the work or otherwise relate the daily rate to the price of work
orders to be negotiated for each appraisal report, it is deficient since
bidders are unable to compete on an equal basis and the rate is not
related to the probable cost to the government of competing proposals.
KISS Engineering Corporation protests the rejection of its proposal
submitted in response to request for proposals (RFP) No.
DACW69-85-R-0044, issued by the United States Army Corps of Engineers.
The Army found the proposal to be technically unacceptable for failing
to propose a single daily rate for performing the work, which involves
the preparation of appraisal reports. KISS contends that a single rate
was not required, and that its proposal complied with the pricing
requirements of the solicitation.
We sustain the protest.
The Army sought offers to prepare between 5 and 36 reports appraising
the value of oil, gas and other subsurface properties underlying land in
and around the Stonewall Jackson Lake Project in Lewis, County, West
Virginia. The RFP, issued on August 6, 1985, stated that separate
fixed-price work orders would be negotiated with the contractor for each
appraisal report ordered. The solicitation listed the following
evaluation factors in descending order of importance: specialized
experience in the work required; cost; qualifications and capabilities
of principals, supervisors, and personnel; experience in the general
geographic area; capability to complete acceptable and quality work in
the required time; volume of previous Department of Defense work; and
experience as an expert appraisal witness in federal court.
The description of the second factor in importance, "cost of work,"
stated that offerors must submit price proposals and daily fees for any
required court testimony. The solicitation included a schedule for
offerors to insert a "Total Daily Rate," a "Per Diem Rate," "Travel
(Mileage)," and a "Fee for attending pre-trial conferences and
(providing court) testimony." Each of these proposed rates was to be on
a per day basis except mileage, which was to be on a per mile basis.
The only other indication of what the Army desired in price proposals
was the following statement, which appeared in the section concerning
evaluation factors for award and which is central to the issue in this
protest:
As part of the proposal, each offeror must indicate the total
daily rate for all those disciplines necessary to accomplish the
work described herein. Total daily rates shall include all
overhead allowances authorized, profit, labor, plant, equipment,
and materials to perform each work order. Travel expenses and per
diem will not exceed the amounts specified in JTRs (Joint Travel
Regulations) for government employees. . . .
In its schedule, KISS noted "See Proposal" following "Total Daily
Rate" and in the proposal itself included a schedule of fees listing
hourly and daily rates for six categories of employees. On September 26,
the Army notified KISS that its proposal had not been considered since
the agency could not determine the firm's intended price from the
schedule. The Army considered KISS' failure to provide a single
combined rate for all employees to be a material deviation from the
requirements of the solicitation. KISS initially protested to the Army
and, following a denial by the agency, filed this protest. The Army
awarded a contract to MSES Consultants, Inc., without conducting
discussions, but performance has been suspended pending our decision.
The Army argues that to the extent the protester complains of an
ambiguity in the RFP or asserts that the solicitation is unreasonable,
the protest is untimely. Our Bid Protest Regulations, 4 C.F.R. Section
21.2(a)(1) (1985), require that protests based upon alleged
improprieties in a solicitation that are apparent before the closing
date for receipt of initial proposals must be filed by that date. Thus,
the Army argues that the ambiguity here was apparent on the face of the
solicitation and should have been raised before proposals were due on
September 6.
KISS' protest is not that the solicitation was ambiguous, but that
the only reasonable interpretation of the solicitation is that it
required offerors to propose daily rates for each discipline involved in
the work, rather than one rate for the entire effort. The protester
contends that the RFP language quoted above, requiring "rates" to
include overhead and other costs, indicates that multiple rates were
described. KISS also contends that the reference to a "Total Daily
Rate" for all disciplines could refer to a separate rate for each.
The protester points out that the fixed price of the appraisal report
for each tract of land will be separately negotiated, and will depend
upon the size and mineral content of the tract, the number and types of
necessary staff, and the estimated time required by each staff member.
The RFP expressly states that "those disciplines necessary to accomplish
each work order" will be considered in negotiating the price of each
appraisal report. Therefore, KISS contends, it would not be reasonable
to read the RFP as requiring only a single combined daily rate, since
such a rate would have no meaningful relationship to the actual contract
price. Conversely, daily rates for the various categories of employees
required would have a direct relationship to the contract price, since
the RFP provides that the skills required will be a factor in
negotiating the price for each work order.
We believe that the protester presents a reasonable interpretation.
Read as a whole, however, the solicitation is ambiguous, i.e., subject
to more than one reasonable interpretation. The RFP requirement for
offerors to indicate the "total daily rate for all . . . disciplines"
could refer to separate rates for each discipline that represent a total
of direct labor, overhead, profit and other allocable items. This view
is supported by the RFP statement that "total daily rates" shall include
overhead, etc. On the other hand, the Army also offers a reasonable
interpretation. "Total Daily Rate" could refer to a combination of
rates into single rate, and this reading is supported by the fact that
space for only one rate was provided in the schedule included in the
RFP.
More importantly, we find the solicitation deficient in that it did
not permit an accurate assessment of probable costs. Agencies must
consider cost to the government in evaluating competitive proposals. 10
U.S.C.A. Section 2305(b)(4) (West Supp. 1985); 48 C.F.R. Sections
15.605(b), 15.611(d) (1984); Aurora Associates, Inc., B-215565, Apr.
26, 1985, 85-1 CPD Paragraph 470. The RFP, however, did not require
offerors to describe how they determined their daily rate, to indicate
how many days the average report might take them to prepare, or to
specify any other costs except for mileage, per diem, and fees for court
testimony. Thus, offerors might have estimated less intensive effort
for longer periods in order to propose a lower daily rate.
It is not clear from the evaluation record in this case how the
agency determined the "cost of work" factor, which was worth up to 25
percent of the available points, for each offeror. Since the
highest-rated offeror for this factor only provided a single total daily
rate, per diem and mileage (at the maximum allowable rates), and fees
for court testimony, we conclude that the "Total Daily Rate" was the
dominant, if not the sole, element of the Army's cost evaluation. We
find no necessary relationship between this rate and the likely actual
cost of the contract to the government. The price of each work order
will not be determined by the contractor's daily rate -- the price is to
be separately negotiated considering "those disciplines necessary" and
other individual factors related to the work or the particular tract to
be appraised.
In short, for purposes of an award decision, "Total Daily Rate" would
not necessarily indicate whether one offeror's proposal would be more or
less costly than another's, and the KISS proposal should not have been
rejected summarily for failure to provide it.
We therefore are recommending that the agency evaluate the KISS
technical proposal and determine whether the firm is in the competitive
range. (Two other offerors who apparently provided a single daily rate
and scored slightly higher than the awardee on the cost evaluation
factor do not appear to be in this range, since their scores on the
technical evaluation factors were extremely low. Their overall scores
were 29 and 36 points, compared with the awardee's 92 points, and we
assume they would not have had a reasonable chance for award.) A fifth
offeror was also rejected as "nonresponsive." We cannot determine from
the record whether this was also for reasons related to the cost
evaluation factor. If so, its proposal also should be evaluated and a
determination made as to whether that firm is in the competitive range.
Assuming that a competitive range of more than one will result, we
recommend that the agency then conduct discussions and request best and
final offers on a basis that will allow equal competition and that will
obtain information the Army can use to determine the probable cost of
accepting each offeror's proposal. If the outcome warrants, the awarded
contract should be terminated for the convenience of the government.
We sustain the protest.
B-220869, 65 Comp. Gen. 542
Matter of: Uniformed Services University of the Health Sciences --
Application of Pay Caps to Faculty Members, April 30, 1986
Civilian faculty members of the Uniformed Services University of the
Health Sciences question whether their pay is subject to statutory pay
caps imposed on federal salaries for fiscal years 1979-1981. Although
the salaries of the faculty members are set by the Secretary of Defense
under 10 U.S.C. 2113(f) to be comparable with other medical schools in
the vicinity of the District of Columbia, we hold these salaries are
subject to the statutory pay caps imposed by Congress for fiscal years
1979 and 1981. Pay increases for these positions were also limited by
administrative determination for fiscal year 1980 to be comparable with
other Federal executive pay increases. A recent court decision
involving backpay for Senior Executive Service employees is not
applicable to these faculty members.
The issue in this decision is whether statutory limitations on pay
increases apply to the salaries of civilian faculty members of the
Uniformed Services University of the Health Sciences. We hold that the
salaries of the civilian faculty members were properly capped in fiscal
years 1979-1981 and that they are not affected by a recent court
decision awarding backpay to members of the Senior Executive Service.
The decision is in response to a request from the General Counsel of
the Department of Defense (DOD) for an advance decision concerning the
application of certain statutory pay caps to civilian faculty members of
the Uniformed Services University of the Health Sciences (USUHS). The
question arose in connection with an inquiry by a faculty member as to
the possible application of the decision in Squillacote v. United States
/1/ involving backpay to Senior Executive Service employees whose pay
was capped under statutory pay limitations in fiscal years 1979, 1980,
1981, and 1982.
The USUHS employs both military and civilian professors, instructors,
and administrative staff. Under the provisions of 10 U.S.C. Section
2113(f) (1982), the civiliam members of the faculty and staff receive
salary rates and retirement and other benefits prescribed by the
Secretary of Defense which shall be comparable "with the employees of
fully accredited schools of the health professions within the vicinity
of the District of Columbia." However, since 1978 the Department of
Defense has limited pay increases to these faculty members based on pay
caps applicable to salaries paid at rates equal to or in excess of the
rate for level V of the Executive Schedule.
The request from DOD sets forth two opposing arguments: (1) that the
salaries of the USUHS faculty members are capped by the statutory pay
limitations; and (2) that these salaries are not limited under the pay
freeze legislation and the faculty members are entitled to backpay. In
addition, we requested and received comments on this matter from the
Office of Personnel Management (OPM), and those comments are set forth
below.
Argument against pay cap
The DOD argument against application of the pay caps is that the
salaries of civilian faculty members of USUHS are to be fixed on a
comparable basis with other faculty members in schools of the health
professions in the vicinity of the District of Columbia as prescribed by
statute, and application of a pay cap would make it impossible to follow
this legislative mandate. In addition, DOD argues that the USUHS salary
rates are not fixed at or limited to rates equal to or greater than
rates payable for level V of the Executive Schedule as prescribed in the
applicable pay legislation, and, thus, the faculty salaries are not
subject to that legislation. Finally, DOD argues that the specific
statutory provision for fixing USUHS faculty salaries takes precedence
over general legislation imposing a pay cap on federal salaries.
Argument in favor of pay cap
The DOD argument in favor of applying the pay caps cites the
legislative history to the fiscal year 1979 pay cap as intending a pay
cap for all persons employed by the Federal Government whose salaries
were equal to or greater than the rate for level V of the Executive
Schedule. In addition, we note that the DOD has applied this and other
pay caps to the salaries of the USUHS faculty since late 1978.
OPM Comments
In response to our request for comments, the Deputy General Counsel
of OPM states that the Squillacote decision applies only to the Senior
Executive Service (SES) and does not extend to other employees under
SES-type pay systems. The comments from OPM also state that since the
pay system of the USUHS faculty members is outside of OPM's purview, OPM
cannot comment further as to any backpay entitlement.
As noted above, the statutory authority for fixing the salaries of
USUHS faculty members is contained in 10 U.S.C. Section 2113(f) (1982).
There is nothing contained in the legislative history of section 2113(f)
to indicate whether the Congress intended that these civilian faculty
members receive salaries and other benefits without regard to the
limitations imposed on other federal executives and employees. We note,
however, that the USUHS may obtain the services of military professors,
but there is no specific authority to compensate such military officers
in any manner different than that provided under 37 U.S.C. Sections
201-209 and 302-303a (1982).
The pay cap first cited by the DOD was a general limitation on salary
increases for fiscal year 1979 contained in section 304(a) of Public Law
95-391, 92 Stat. 788-789, September 30, 1978, which provides as follows:
No part of the funds appropriated for the fiscal year ending
September 30, 1979, by this Act or any other Act may be used to pay the
salary or pay of any individual in any office or position in the
legislative, executive, or judicial branch, or in the government of the
District of Columbia, at a rate which exceeds the rate (or maximum rate,
if higher) of salary or basic pay payable for such office or position
for September 30, 1978, if the rate of salary or basic pay for such
office or position is --
(1) fixed at a rate which is equal to or greater than the rate
of basic pay for level V of the Executive Schedule under section
5316 of title 5, United States Code, or
(2) limited to a maximum rate which is equal to or greater than
the rate of basic pay for such level V (or to a percentage of such
a maximum rate) by reason of section 5308 of title 5, United
States Code, or any other provision of law or congressional
resolution.
We believe section 304(a) by its very terms applies to the civilian
faculty positions at the USUHS. First, the pay cap is imposed on funds
appropriated under that Act or any other act for the fiscal year.
Second, the pay cap refers to the salary of pay of any individual in any
office or position in the legislative, executive, or judicial branch of
Government, and the USUHS, established under the Department of Defense,
is clearly part of the executive branch. For these two reasons, we
disagree with the DOD argument that the specific statutory authority for
fixing USUHS faculty salaries takes precedence over general legislation
imposing a pay cap on federal salaries.
Next, DOD argues the pay cap is not applicable since the faculty
salary rates are not fixed at or limited to rates equal to or greater
than level V of the Executive Schedule. However, the pay cap refers to
a rate of salary which is fixed at a rate equal to or greater than level
V of the Executive Schedule or limited to a maximum rate which is equal
to or greater than level V. Thus, we disagree with the DOD argument on
this point since it is the rate of salary for each position which is
determinative of whether the pay cap will apply, not whether the pay
scales have been fixed at rates equal to or greater than level V of the
Executive Schedule.
Finally, the DOD argues that application of the pay cap would make it
impossible to follow the statutory requirement to fix salaries on a
comparable basis to salaries of certain faculty members in the health
professions. However, this factor is not sufficient to overcome the
plain language of the pay cap legislation cited above.
The language of the pay cap for fiscal year 1981 is comparable to the
language for fiscal year 1979. /2/ We hold that this pay cap applies to
the USUHS positions for the same reasons cited above in the discussion
of the fiscal year 1979 pay cap.
Although the language of the pay cap for fiscal year 1980 is
different than the pay caps in other years cited above, we believe the
salaries of these faculty members were properly capped for that year as
well, for the reasons that follow. By its terms, the pay cap for fiscal
year 1980 refers to executive employees whose pay would have increased
by 12.9 percent but who, because of the pay cap, were not to receive
more than a 5.5 percent increase. Public Law 96-86, Section 101(c),
October 12, 1979, 93 Stat. 657. As noted by the Court of Appeals in
Squillacote, cited above, the pay cap for fiscal year 1980 refers to pay
set under the Federal Pay Comparability Act of 1970, 5 U.S.C. Sections
5301-5308, or the Executive Salary Cost-of-Living Adjustment Act, 5
U.S.C. Section 5318. Since the pay of the USUHS civilian faculty
members is set by the Secretary of Defense and not under these two
statutory authorities, the pay cap for fiscal year 1980 does not
specifically apply to these faculty positions.
We note, however, that for fiscal year 1980, the Assistant Secretary
of Defense for Manpower, Reserve Affairs and Logistics, by memorandum
dated November 6, 1979, approved the salary schedules for USUHS faculty
and staff members, but limited the increase called for by these
schedules to 5.5 percent for positions whose salary was equal to or
greater than $47,500 "in order to achieve equitable treatment of all
federal executive employees." We conclude that it was within the
discretion accorded to the Secretary of Defense (or his designee) by 10
U.S.C. Section 2113(f) to set the pay of these faculty members and to
limit the pay increases of these faculty members for fiscal year 1980.
See, for example, Bureau of Engraving and Printing, B-211956, October
21, 1983. Therefore, we conclude that the salaries of these faculty
members were properly capped during fiscal years 1979, 1980, and 1981.
Finally, we are not persuaded that the Squillacote decision has any
application to the salaries of the civilian faculty positions at the
USUHS. In Squillacote v. United States the Court of Appeals ruled that
SES members were subject to the fiscal year 1979 pay cap contained in
section 304(a) of Public Law 95-391 and were thus limited to salary
rates based on a maximum rate for level V of the Executive Schedule
instead of level IV. /3/ However, the Court of Appeals ruled that SES
members were not described in the applicable pay cap contained in
section 101(c) of Public Law 96-86 for fiscal year 1980 and, therefore,
were not capped at level V of the Executive Schedule. /4/ The court's
decision means that the salaries of the SES members for fiscal year 1980
were only subject to the level IV limitation on SES pay contained in 5
U.S.C. Section 5382(b).
As noted in the comments from OPM, the court's decision in
Squillacote applied only to the Senior Executive Service in the
Executive Branch under 5 U.S.C. Sections 3131-3136 (1982), and we
believe the court's decision has no general application to positions
outside of the SES or positions whose salaries have no relation to the
SES. The court in Squillacote did not overturn the pay cap generally;
rather, the court held that SES members were not specifically covered by
the level V pay cap and the cap imposed on executive level salaries.
Therefore, we decline to apply either the holding or the rationale of
the Squillacote decision to positions outside of the SES such as
civilian faculty members of the USUHS.
Accordingly, we conclude that the salaries of the civilian faculty
members of the USUHS were subject to the statutory pay caps imposed by
Congress for fiscal years 1979 and 1981, and to the administratively
imposed pay cap for fiscal year 1980.
(1) 562 F. Supp. 338 (E.D. Wis. 1983), aff'd in part and rev'd in
part, 739 F.2d 1208 (7th Cir. 1984), reh'g denied, 747 F.2d 432 (7th
Cir. 1984), cert. denied, 105 S. Ct. 2021 (1985).
(2) See Public Law 96-369, Section 101(c), October 1, 1980, 94 Stat.
1352; Public Law 96-536, Section 101(c), December 16, 1980, 94 Stat.
3167; Public Law 97-12, Section 401, June 5, 1981, 95 Stat. 95, cited
in the note to 5 U.S.C. Section 5318 (1982).
(3) 739 F.2d 1208, at 1211-1215.
(4) Id.
B-221264, 65 Comp. Gen. 541
Matter of: Charles Wener, April 29, 1986
When the allotment check of an Army employee was not received by his
bank, the employee requested that the check be reissued. He did not
receive the reissued check until several months later. The Army may not
pay interest on the amount of the allotment since interest may only be
paid under express statutory or contractual authorization and no such
authorization exists under these circumstances.
This action is in response to a request for an advance decision
regarding whether interest may be paid to Charles Wener. /1/ We are
aware of no authority which would allow the payment of interest in the
particular circumstances.
Mr. Wener, an employee of the Army Corps of Engineers, had arranged
for an allotment of $300 to be deducted from his pay and sent directly
to his bank. Check No. 71729185 was issued on August 10, 1984, to be
deposited in Mr. Wener's account. Mr. Wener made inquiry of the Army
when he learned that the bank had not received the check. A replacement
check was not issued until April 1985. Because it has been unable to
provide a justification for the delay in reissuing the check, the Army
asks whether interest may be paid to Mr. Wener.
The Army states that it is aware of the well-established rule that
payment of interest by the Government on its unpaid accounts or claims
may not be made except when interest is provided for under express
statutory or contractual authorization. The Army refers, however, to a
settlement by our Claims Group which allowed payment of interest in the
case of an Army employee under circumstances involving a delay in the
payment of amounts owed to him by the Government.
The case referred to by the Army involved a member of the Uniformed
Services who had deposited money with the Army under the Uniformed
Services Savings Deposit Program established pursuant to 10 U.S.C.
Section 1035 (1970). That statute authorized payment of interest
prescribed by the President, not to exceed 10 percent a year on amounts
deposited under the program. Although the law was not repealed, the
program was phased out for most depositors as of June 30, 1974, when
funds for the payment of interest were reduced and amounts on deposits
were returned to the service members. In the particular case before
this Office, the funds which had been depositzd by the individual were
not returned to him until September 20, 1974. Payment of interest for
the period between June 30, 1974, and September 20, 1974, was authorized
by our Claims Group based on office memorandum B-183769-O.M., April 6,
1976, cited by the Army. In that memorandum we found that the
Government had specific statutory authority to pay interest on funds
deposited under the program until they were returned to the service
member.
In the present case, the employee arranged for an allotment to be
deducted from his pay and sent to his bank for deposit. Authority for
such deductions is found in 5 U.S.C. Section 5525 and implementing
regulations at 32 C.F.R. Section 89.1 et seq. This authority, unlike
the savings program established by 10 U.S.C. Section 1035, does not
provide for depositing funds with the Government, nor does it provide
for payment of interest. In the case of an allotment made under this
authority, there is neither a contractual agreement nor statutory
authority which would provide a basis for payment of interest when the
issuance of an allotment check is delayed.
Further, we note that the courts have held that delay by the United
States in making payment, even if that delay can be termed unreasonable,
does not create an entitlement to interest. See United States v. N.Y.
Rayon Importing Co., 329 U.S. 654, 660 (1947); Economy Plumbing and
Heating Co. v. United States, 470 F.2d 585, 594 (Ct. Cl. 1972).
In conclusion, we find that there is no authority for payment of
interest on the amount of the allotment check issued to Mr. Wener's
account, even though there apparently was a delay by the Government in
reissuing that check.
(1) The request was made by J. M. Burke, Finance and Accounting
Officer, U.S. Army, Omaha District Corps of Engineers, Omaha, Nebraska.
B-219235, 65 Comp. Gen. 533
Matter of: Bureau of Indian Affairs Questions on Payments to
Indians, April 29, 1986
Amounts received by an Indian as overpayment from an erroneous Indian
probate proceeding distribution and which, together with accrued
interest on overpayment, were withdrawn by the Indian in good faith but
were subsequently recovered by the Interior Department from monies
deposited in the Indian's Individual Indian Money account from an
unrelated proceeding, may be returned to Indian overpaid.
Amounts received by an Indian as overpayment from an erroneous Indian
probate proceeding distribution and which, together with accrued
interest on the overpayment, the Interior Department subsequently
recovered from monies in the Indian's Individual Indian money account
attributable to the same proceeding, may not be returned to Indian
overpaid.
Consistent with general rule that Government cannot be charged
interest without a specific waiver of sovereign immunity either in a
statute, treaty, or contract, and decisions of this Office and the
United States Claims Court strictly applying the rule, Government cannot
be charged interest on monies it pays to Indian notwithstanding
Government breached its trust responsibilities to Indian.
Monies returned to Indian, which earlier were improperly recovered,
should be repaid from the current lump-sum appropriation to the Bureau
of Indian Affairs for "Operation of Indian Programs." Since such
repayment would not be improper or incorrect, there is no need for the
disbursing officer to request relief under section 3527(c) of title 31
of the United States Code or for this Office to grant relief.
Under the authority of section 3529 of title 31 of the United States
Code, the Indian Service Special Disbursing Agent (ISSDA), Interior
Department Bureau of Indian Affairs (BIA), asks numerous questions about
his duties and responsibilities in rectifying erroneous disbursements of
funds from Individual Indian Money (IIM) accounts. The key issue
provoking these questions is whether he should overdraft his account and
refund $19,457.26 to Linda Slockish and $2,238.62 to Carmen Johnson,
plus interest accruing from May 1981 to the present, and whether he
would be granted relief for these payments under section 3527(c) of
title 31 of the United States Code. Since this issue is pressing, as
agreed with the ISSDA, we will respond to it in this opinion. If
necessary we will answer the other questions raised in a later decision.
For the reasons given below, we conclude that the ISSDA may refund
$19,457.26 to Ms. Slockish, representing both an overpayment to her of
$13,374.21 and imputed interest of $6,083.05, both of which were
recovered from her in May 1981. On the other hand, Interior may not
refund to Ms. Johnson the $2,238.62, representing an overpayment of
$1,538.79 and accrued interest, that was recovered from monies in her
IIM account. Consistent with the general prohibition on the Federal
Government's payment of interest, the ISSDA may not pay accrued interest
from May 1981 to the present to Ms. Slockish. Furthermore, since the
refund to Ms. Slockish is a proper payment, there is no reason for BIA
to request relief for the ISSDA making the payment or for us to grant
relief. The refund to Ms. Slockish should be paid from the lump-sum
appropriation currently available to the BIA for "Operation of Indian
Programs."
Section 372 of title 25 of the United States Code authorizes the
Secretary of the Interior to ascertain the legal heirs of intestate
decedents holding allotments of lands held in trust by the United
States. This authority has been delegated to the Interior Department
Office of Hearings and Appeals. See 43 C.F.R. Section 4.1.
On December 5, 1975, in a proceeding before the Office of Hearings
and Appeals involving the Estate of Harvey Kaiser Phillips, an
administrative law judge rendered an Order Determining Heirs. Estate of
Harvey K. Phillips, IP PO 008L 76-9 (Off. Hearings App. Dec. 5, 1975).
The Order made several mistakes /1/ resulting in larger distributions of
property to Ms. Slockish and Ms. Johnson than were warranted, and
underdistributions to other heirs. As neither Ms. Slockish nor Ms.
Johnson were enrolled members of the Yakima Tribes, under section 607 of
title 25, the Tribes properly exercised their right to buy the
distributed trust lands at the fair market value. By Order of December
28, 1976, the same administrative law judge ordered distributed the
trust funds arising from sale of the lands. The monies awarded to Ms.
Slockish and Ms. Johnson, including the overpayments of $13,374.21 and
$1,538.79 respectively were placed in their IIM accounts. The monies in
these accounts are held in trust by the United States. On March 8,
1977, payment was made directly to Ms. Slockish by Treasury check from
her IIM account. As she was a minor, Ms. Johnson's money was left on
deposit in her IIM account.
On July 19, 1978, the same administrative law judge issued a
Modification Order correcting the heirship interest erroneously
described in the Order of December 5, 1975. Estate of Harvey K.
Phillips, IP PO 008L 76-9 (Off. Hearings App. July 19, 1978). This
procedure was consistent with regulations which allowed administrative
law judges to reopen probate cases within 3 years from the date of the
final decision, on their own motion or at the request of the BIA to
prevent "manifest error." 43 C.F.R. Section 4.242(d). Interior
Department administrative precedent /2/ also required redistribution to
proper heirs where there existed a reasonable possibility for correction
of interests. Estate of Tennyson B. Saupitly, 6 IBIA 140, 143 (1977).
At time of the Modification Order Ms. Slockish had no funds on deposit
on her IIM account. The distribution to Ms. Johnson was still in her
account.
Subsequently, in October 1978, the BIA Superintendent, Yakima Agency,
requested the comments of the Portland Area Office staff concerning
recovery of the overpayments. The request suggested it would be
necessary to debit the accounts of Ms. Slockish and Ms. Johnson. Since
Ms. Slockish has withdrawn her funds and was not known to possess any
assets, the requests suggested that any funds later inherited could be
used to defray the overpayment.
Between the date of the Superintendent's request and May 1, 1981, the
day the overpayments were recovered, there transpired considerable
correspondence between the BIA Portland Area Office and the Department
of the Interior Office of the Solicitor. The correspondence focused on
the policy set forth in a memorandum of January 6, 1960, from the BIA
Commissioner. In effect, the policy stated that any private
distribution made under a legal order should stand, and that no
collection action would be initiated against those receiving erroneous
payments, at least to the extent that erroneously distributed funds did
not remain in trust accounts.
Apparently in disregard of the January 6, 1960 memorandum, the Yakima
Agency recovered the overpayment to Ms. Slockish of $13,374.21 by offset
against her inheritance from the estate of her father, Edward E.
Johnson. The agency also withheld $6,083.05 of her inheritance to cover
lost interest on the overpayment, from the time of distribution in March
1977 to recovery in May 1981. /3/ An amount of $1,538.79 plus interest
of $699.83 was recovered from the IIM account of Ms. Johnson for the
overpayment to her. The submission states that neither Ms. Slockish nor
Ms. Johnson was notified of the offsets nor were provided opportunity to
challenge them. The recovered funds were paid to the heirs of the
Harvey K. Phillips estate who originally had been underpaid.
On September 11, 1981, the BIA Associate Solicitor issued an opinion
affirming the policy expressed in the January 6, 1960 memorandum. The
opinion said that orders for redistribution would only apply to
undistributed funds or funds subsequently credited to an estate but not
to funds distributed pursuant to a valid though erroneous order. Under
this interpretation only funds in an IIM account attributable to an
erroneous probate order could be recovered.
Several years later, in March 1985, Ms. Slockish requested the BIA
Portland Area Office to review the propriety of the recovery of the
overpayment and the interest assessment. Ms. Slockish contended she
should not have had to repay the funds since the Government was at fault
in making the error in distribution.
Based on various internal memoranda, the Department now suggests that
recovery of the overpayment to Ms. Slockish was improper, and that she
should be repaid the entire amount recovered from her. Although the
Department was less conclusive about the recovery from Ms. Johnson, at
least the BIA Yakima Agency Superintendent recommends that she also be
repaid the entire amount recovered.
It is a fundamental rule that persons who receive monies erroneously
paid by a Government agency or official acquire no right to such money,
and the courts consistently have held that such persons are bound in
equity and good conscience to make restitution. For example, in
DiSilvestro v. United States, 405 F.2d 150, 155 (2d Cir. 1968), cert.
denied, 396 U.S. 964 (1969), the court said:
It is, of course, well established that parties receiving monies from
the Government under a mistake of fact or law are liable ex aequo et
bono to refund them, and that no specific statutory authorization upon
which to base a claimed right of set-off or an affirmative action for
the recovery of these monies is necessary.
Accord, United States v. Bentley, 107 F.2d 382, 384 (2d Cir. 1939)
(payments made through mistakes of United States officials are
recoverable and hardship of refunding what the defendant may have spent
cannot stand against injustice of keeping what never rightfully was
his). See also B-176867, Oct. 12, 1972. This principle is embodied in
the general requirement of the Federal Claims Collection Act, codified
at 31 U.S.C. Sections 3711-19, as amended by the Debt Collection Act of
1982, Pub. L. No. 97-365, 96 Stat. 1749, 1754-56, that Federal agencies
try to collect debts for money or property arising from their
activities.
It is also well-settled that the Federal Government has the same
right belonging to every creditor to apply undisbursed monies owed to a
debtor to fully or partially extinguish debts owed to the Government.
United States v. Munsey Trust Co., 332 U.S. 234, 239 (1947); Gratiot v.
United States, 40 U.S.C. (15 Pet.) 336, 370 (1841). Consistent with
this principle, on several occasions we have held that the United States
could set off monies it was holding in trust for Indians for debts the
Indians otherwise owed the United States though the funds involved were
not held in IIM accounts, 34 Comp. Gen. 152, 154 (1954) (nothing in Act
of June 17, 1954, Public Law 83-399, authorizing $1,500 per capita
payments to members of Menominee Indian Tribe precludes Government from
exercising its right of setoff to liquidate indebtedness of tribe
members to United States); B-121910, Nov. 29, 1954 (Osage headright
payment to Indians may be setoff against debt Indians owed for fines and
penalties levied by Court).
General trust principles are in accord. If a trustee makes an
overpayment to a trust beneficiary, the beneficiary would be unjustly
enriched if permitted to retain the amount overpaid. III Scott, Law of
Trusts Section 254 (3d ed. 1967); Restatement (Second) of Trusts
Section 254 (1959). Thus, in most circumstances, a trustee should be
able to set off against the sums due a beneficiary a debt of the
beneficiary to the trustee in the trustee's representative capacity.
Bogert, Law of Trusts and Trustees Section 814 (Rev. 2d ed. 1981).
Notwithstanding these considerations, consistent with the United
States' general and particular trust responsibilities to American
Indians, we think improper Interior's recovery of the overpayment from
Ms. Slockish as well as the interest assessed on the overpayment.
In its management of Indian trust funds the United States has charged
itself with "moral obligations of the highest responsibility and trust,"
and its conduct in dealing with Indians should be judged by the "most
exacting fiduciary standards." Seminole Nation v. United States, 316
U.S. 286, 296-97 (1942). Where the Federal Government has control or
supervision over tribal monies or properties, the Government's fiduciary
relationship normally exists even though nothing is expressly said in
the authorizing statute about a trust fund, a trust or fiduciary
relationship. Navajo Tribe v. United States, 624 F.2d 981, 987 (Ct. Cl.
1980). There is no dispute that the Federal Government through the
Interior Department was trustee of the monies in the IIM accounts of Ms.
Slockish and Ms. Johnson.
Consistent with these general trust responsibilities, by statute,
regulation, and precedent of the Interior Board of Indian Appeals, the
Secretary of the Interior is authorized to waive use of IIM account
monies to satisfy indebtedness of Indians to the United States. Section
410 of title 25 of the United States Code states:
No money accruing from any lease or sale of lands held in trust by
the United States for any Indian shall become liable for the payment of
any debt of, or claim against such Indian contracted or arising during
such trust period * * * except with the approval and consent of the
Secretary of the Interior.
Moreover, section 115.9 of title 25 of the Code of Federal
Regulations authorizes but does not require the Secretary of the
Interior to apply IIM account monies against indebtedness to the United
States. Funds accruing from the sales of lands held in trust by the
United States often are placed in IIM accounts as occurred in this case.
The Interior Department Board of Indian Appeals has characterized the
statute and the regulation /4/ together as requiring the Secretary's
approval before funds derived from trust property may be applied against
debts owed by an Indian. United States v. Mossette, 9 IBIA 151, 153-54
(Bd. Ind. App. Jan. 8, 1982). As described earlier, the Interior
Department policy /5/ in effect at the time the overpayments to Ms.
Slockish and Ms. Johnson were recovered was that distribution under a
legal probate order should stand, and recoveries of overpayments could
only be effected through transfers of funds remaining in IIM accounts
from the original distributions.
We think the authorities described prevail over the Federal
Government's general debt collection responsibilities. In United States
v. Mossette, 9 IBIA 151, 153-54 Appeals held that neither the Federal
Claims Collection Act nor its implementing regulations repealed or
overrode the Secretary's trust duties to American Indians, or affected
the Secretary's authority to approve or disapprove use of IIM funds
including approval of payment of debts. Furthermore, while the GAO
decisions cited above permitted setoff of Indian debts to the Federal
Government, neither involved setoffs from IIM accounts nor the same
compendium of statute, regulation, and policy that imposed particular
trust responsibilities on the Secretary of the Interior. Accordingly,
we have no objection to Interior paying to Ms. Slockish the $19,457.26
which Interior agrees was erroneously recovered from her; that is, both
the principal amount of the overpayment and the assessed interest.
On the other hand, refund to Ms. Johnson of the $2,238.62 recovered
from her is not warranted. Although it is arguable from a strict
reading of the January 6, 1960 BIA memorandum that the overpayment and
the accrued interest attributable to the overpayment should not have
been recovered, we think the better view is the memorandum contemplated
that collection would take place if there still remained monies in an
IIM account from the original distribution. This was the interpretation
reached by the BIA Associate Solicitor in the September 11, 1981
opinion. Moreover, this view accords with the general requirement that
overpayments should be recovered if possible. Thus, since the
overpayment and the accrued interest still were in her IIM account,
recovery from her was proper. /6/
We next consider the ISSDA's question about whether Ms. Slockish
should be awarded interest from May 1981 to date on the $19,457.26 that
was improperly recovered. It is well recognized that a private trustee
who breaches a fiduciary relationship to a beneficiary would be liable
for interest. Restatement (Second) of Trusts Section 207 (1959); III
Scott, Law of Trusts Section 207 (1967). In this instance, Interior did
breach its trust responsibilities to Ms. Slockish. /7/ Interior did not
provide her with an opportunity to contest recovery of the overpayment
and assessment of interest, nor with notice of the recovery by setoff.
This violated her procedural due process rights guaranteed by the Fifth
Amendment to the United States Constitution. Matthews v. Eldridge, 424
U.S. 319, 332 (1976); Kennerly v. United States, 721 F.2d 1252, 1257
(9th Cir. 1983).
Nevertheless, it is well settled that absent a treaty, statute, or
specific provisions therefor in a contract, interest as interest or as
an element of damages may not be awarded against the United States or
its agencies. United States v. Alcea Band of Tillamooks, 341 U.S. 48,
49 (1951); United States v. Mescalero Apache Tribe, 518 F.2d 1309,
1315-16 (Ct. Cl. 1975) cert. denied 425 U.S. 911 (1976). The rule,
which is based on the doctrine of sovereign immunity, 518 F.2d at 1315,
does not permit payment of interest on equitable grounds and applies
even where the Government unreasonably has delayed payment. E.g., Grey
v. Dukedom Bank, 216 F.2d 108, 110 (6th Cir. 1954); Muenich v. United
States, 410 F. Supp. 944, 947 (N.D. Ind. 1976). Furthermore, it has
been held that the character of interest cannot be changed by calling it
damages, loss, earned increment, just compensation, discount, offset,
penalty or any other term. Mescalero Apache, 518 F.2d at 1322. The
interest prohibition has been applied frequently and consistently by
this Office as well as the courts. E.g., 59 Comp. Gen. 380, 382 (1980).
In two major cases the Indian Claims Commission and the United States
Court of Claims were in conflict about awards of interest to Indian
claimants when the United States was a trustee for the Indian monies in
question. In other instances the Court of Claims reversed Indian Claims
Commission rulings that interest should be assessed. United States v.
Gila River Pima-Maricopa Indian Community, 586 F.2d 209 (Ct. Cl. 1978)
rev'gt 33 Ind. Cl Comm. 1 (1976); United States v. Mescalero Apache
Tribe, 518 F.2d 1309 (Ct. Cl. 1975) rev'g 31 Ind. Cl. Comm. 417 (1973).
The Court differentiated between interest that was required to be
paid by statute and that assessed by the Commission where there was no
statute. Thus, it sustained the award of interest on monies erroneously
paid from "Indian Moneys, Proceeds of Labor" funds, as section 161(b) of
title 25 of the United States Code requires interests to be paid on
those funds; but reversed the award for interest on monies erroneously
paid from IMM accounts, there not being any statute that required
interest to be paid on those monies. 586 F.2d at 216-17; accord,
American Indians Residing on Maricopa-AK Chin Reservation v. United
States, 667 F.2d 980, 1003 (Ct. Cl. 1981).
This Office is not bound to follow precedents set by the United
States Court of Claims; however, we do give them careful consideration
and generally will follow those that are consistent with longstanding
administrative interpretations of law.
In view of the longstanding practice of both the courts and this
Office not to award interest unless it is clearly authorized by treaty,
statutes or contracts, we will follow the rulings of the United States
Claims Court. In this regard, we deem it crucial that the United States
is not specifically required to pay interest on IIM accounts.
A question remains about how payment to Ms. Slockish should be made.
The ISSDA suggests that he overdraft his account and request relief for
this action under section 3527(c) of title 31 of the United States Code,
the provision dealing with relief of accountable officers for improper
payments. If relief were granted, the overdrafted accounts would be
replenished from the lump-sum appropriation for "Operation of Indian
Programs," the apprporiation used for the accountable officer function
covering Indian programs.
Initially, we would point out that since the refund to Ms. Slockish
would not be an improper or incorrect payment, there would be no reason
for Interior to request relief for the disbursing officer from liability
for making the payment or for us to grant it. The payment can be made
from appropriations currently available for the activity involved. We
understand this would be the yearly appropriations for "Operation of
Indian Programs." E.g., Pub. L. No. 98-473, 98 Stat. 1837, 1847. In
this regard, we have held that where the United States is not obligated
to pay a claim until a final determination of the Government's liability
is made, the appropriation current when such final action is taken is
the appropriation properly chargeable with payment. B-174762, Jan. 24,
1972; Comp. Gen. 338, 340 (1958). This is how we handle both payments
of tort claims, 38 Comp. Gen. 38, 340 (1958), and adjustments of
accounts of accountable officers granted relief either for physical
losses of funds or illegal, improper or incorrect payments when no
appropriation is specifically available for the charge. 31 U.S.C.
Section 3527(d)(1)(B). Although the payment to be made here is not
technically a claim award, we think it sufficiently similar to warrant
application of the same principle.
(1) The judge reversed two categories of heirs, and the probate clerk
misinterpreted ancestral distribution.
(2) BIA policy also mandated immediate adjustment action when credit
to an individual account was found to be in error, and stated that
erroneous payments should not delay payment of funds to rightful owners.
(3) The interest was computed on the amount that would have been
earned over the 4.2-year period if the monies had been placed in an IIM
account and held for the other heirs. The Department informs us that
IIM funds are invested and interest rates are determined every 6 months.
(4) When the case was decided the proper citation of the section was
25 C.F.R. Section 104.9 (1980).
(5) Interior's policy has some analogous support in statute. For
example, section 5584 of title 5 of the United States Code permits
waiver of an overpayment to a Federal Government employee when
collection would violate equity and good conscience and would not be in
the best interests of the United States. Furthermore, both the Federal
Claims Collection Act and the general principles of private trust law
allow for waiver of collection when a debtor does not have the present
or prospective ability to pay. 31 U.S.C. Section 3711(a)(3); III
Scott, Law of Trusts Section 254.1 (3rd ed. 1967); Restatement (Second)
of Trusts Section 254 (1959).
(6) As suggested by the ISSDA, there may be some inequity in this
since the reason the monies still were in her account probably was
because she was a minor and thus her ability to withdraw the funds was
restricted.
(7) This was also true of Ms. Johnson.
B-222308, et al., 65 Comp. Gen. 530
Matter of: S.A.F.E. Export Corporation, April 28, 1986
A firm proposed for debarment from government contracting generally
is precluded from receiving government contracts pending a final
debarment decision.
Where actions of a debarred firm following an initial debarment so
warrant, the debarment may be extended in order to protect the
government's interests.
The Federal Acquisition Regulation, 48 C.F.R. 9.406-1(b), provides
that a debarring official may extend the decision to debar a contractor
to all of its affiliates only if each affiliate is specifically named on
the notification of proposed debarment. The failure of the debarring
official to comply with this requirement is a mere procedural defect,
not affecting the validity of the proposed debarment of the affiliate,
where the affiliate is otherwise on notice of proposed action and is
afforded the opportunity to respond.
S.A.F.E. Export Corporation protests the decision of the U.S. Army
Contracting Agency, Europe, not to consider it for award under four
solicitations: DAJA37-86-R-0321, -0322, -0333, and -0425. S.A.F.E.
Export contends that although it previously has been debarred, it was
eligible for award under these solicitations because it had been removed
from the debarred bidders list before the awards were to be made. The
Army rejected the firm's offer or refused to solicit it, advising the
firm that it was once again being considered for debarment. While
conceding that the Army is currently proposing debarment of S.A.F.E.
oHG, an affiliate, S.A.F.E. Export maintains that it is not a party to
this action.
We dismiss the protests.
The record indicates that S.A.F.E. oHG, its affiliated companies, and
Mr. E. J. P. Tierney, the president of S.A.F.E. Export and a partner in
S.A.F.E. oHG, were debarred and thus ineligible for contract award from
June 5, 1984 through February 10, 1986. By letter dated February 7,
1986, a copy of which the Army has furnished us, the agency advised Mr.
Tierney that pursuant to the Federal Acquisition Regulation (FAR), 48
C.F.R. Section 9.406-4(b) /1/ (1984), he, S.A.F.E. oHG, and affiliated
companies were being proposed for debarment for an additional 3-year
period for new and independent reasons. Among these, the Army stated,
was the fact that although S.A.F.E. oHG was debarred in June 1984, it
had continued to solicit and enter into government contracts. In so
doing, the Army continued, S.A.F.E. oHG willfully deceived contracting
and ordering officers about its eligibility to receive contracts and
blatantly disregarded the June 5, 1984 debarment order and the
procedures set forth in the FAR, 48 C.F.R. Section 9.406-4(c) for
seeking relief from debarment.
As further justification for this proposed action, the Army referred
to several of S.A.F.E. oHG's subsequent business dealings with the
military that it believed demonstrated the continued lack of business
integrity and business responsibility necessary for award of government
contracts. For example, the Army stated, the firm accepted a $750 order
for electronic locks, issued by a contracting officer who was not aware
of the debarment. Although the Army paid for the supplies, the firm
attempted to recover interest in a proceeding before the Armed Services
Board of Contract Appeals (ASBCA), alleging that payment had not been
timely. According to the Army, it subsequently rescinded the contract,
and the ASBCA dismissed the claim for lack of jurisdiction. The Army
notes that during these proceedings, S.A.F.E. oHG asserted that it did
not recognize the debarment as legal and that it intended to continue to
accept Army contracts.
The FAR provides that agencies will not solicit offers from, award
contracts to, renew or otherwise extend contracts with, or consent to
subcontracts with, contractors proposed for debarment. 48 C.F.R.
Section 9.406-3(c)(7). The Army maintains that it was thus precluded
from awarding contracts under the protested solicitations to S.A.F.E.
oHG and affiliated companies, including S.A.F.E. Export, and that its
rejection of S.A.F.E. Export's offers submitted in response to these
solicitations was therefore proper.
S.A.F.E. Export responds that under the FAR, 48 C.F.R. Section
9.406-1(b), affiliates of contractors proposed for debarment are not
automatically precluded from receiving government contracts. To be so
precluded, the affiliate must be specifically named and given written
notice of the proposed debarment, as well as an opportunity to respond.
S.A.F.E. Export contends that the Army did not comply with this
procedural requirement when it proposed to debar affiliates of S.A.F.E.
oHG, since its February 7 letter to S.A.F.E. oHG did not specifically
name S.A.F.E. Export. S.A.F.E. Export concludes that this proposed
debarment consequently does not affect its eligibility for contracts to
be awarded under the protested solicitations.
Our review of this matter is restricted to an examination of whether
the contracting officer's determination that S.A.F.E. Export was
ineligible for contract award was reasonable. See Solid Waste Services
Inc., B-218445 et al., June 20, 1985, 85-1 CPD Paragraph 703. In
examining the reasonableness of the agency's action here, we recognize
that the Army, by not specifically naming S.A.F.E. Export in the
February 7 notice of debarment, indeed failed to conform to the precise
requirements of the regulation. We view this failure as a mere
procedural defect, however, not one that affects the validity of the
Army's decision to exclude S.A.F.E. Export from the subject
competitions.
The thrust of the regulation that debarments may be extended to
affiliated firms only where the affiliate is specifically named is to
ensure that the affected affiliate has notice of the proposed action so
that it may respond to it. Here, we think the Army's February 7 letter,
by referring to affiliated companies of S.A.F.E. oHG, was sufficient to
place S.A.F.E. Export on notice of the proposed debarment. In this
regard, we particularly note that S.A.F.E. Export is nothing more than a
mail drop in Baltimore, Maryland, for correspondence that is to be
forwarded to S.A.F.E. oHG in Frankfurt, Germany, and that Mr. Tierney is
the principal officer and employee of both companies. See S.A.F.E.
Export Corp., B-203346, Jan. 15, 1982, 82-1 CPD Paragraph 35. Thus, we
believe that Mr. Tierney's receipt of the letter was sufficient to
ensure that S.A.F.E. Export was on notice of the proposed debarment.
Accordingly, we conclude that the Army properly viewed the February 7
notification of proposed debarment as applying to S.A.F.E. Export as
well as S.A.F.E. oHG. Under applicable regulations, FAR, 48 C.F.R.
Paragraph 9.406-3(c)(7), S.A.F.E. Export, therefore, was generally
precluded from being solicited for or receiving government contracts
pending the debarment decision. Titan Construction Co., B-220691 et
al., Oct. 15, 1985, 85-2 CPD Paragraph 412.
The Army now informs us that the debarment proposed in February 1986
has become final. As S.A.F.E. Export thus has been continually
ineligible for contract award since the inception of its initial
debarment in June 1984, we have no legal basis to object to the Army's
actions under the protested solicitations. Moreover, given its status,
S.A.F.E. Export is not an interested party under our Bid Protest
Regulations, and we will not consider future protests from the firm
while it remains debarred. See 4 C.F.R. Section 21.0(a) (1985); Solid
Waste Services, Inc., supra.
The protests are dismissed.
(1) This regulation provides in pertinent part that where the actions
of a debarred firm since the imposition of its initial debarment so
warrant, a debarring official may extend the debarment for an additional
period, if that official determines that an extension is necessary to
further protect the government's interests.
B-221745, 65 Comp. Gen. 528
Matter of: Janice M. Simmons -- Erroneous Promotion -- De Facto
Employment, April 28, 1986
An employee was temporarily and then permanently promoted from a GS-4
position to a GS-5 position. It was later discovered that the promotion
was erroneous because she did not meet the general experience
requirement of the position to which she was promoted. The error was
corrected and a Bill of Collection issued. Because she performed the
duties of the GS-5 position based on the apparent authority of the
promoting personnel, she is to be regarded as a de facto employee and is
therefore entitled to retain the compensation of a GS-5.
This decision is in response to a request from the Controller,
Department of Energy, that a waiver be granted under 5 U.S.C. Section
5584 (1982), for overpayments to Janice M. Simmons totaling $1,409.31.
Ms. Simmons received the excess payments between February 8, 1981, and
September 16, 1983, due to an erroneous promotion. The Department
requests a waiver because the overpayments resulted from an
administrative error by the servicing personnel office and there was no
indication of fraud or fault on the part of Ms. Simmons. We find that
the issue of waiver need not be reached since Ms. Simmons is entitled to
retain the compensation received for the services performed as a de
facto employee.
The record reveals that on February 8, 1981, Ms. Simmons, a GS-4 for
the Western Area Power Administration -- Phoenix Office, was temporarily
promoted to GS-5 Support Services Specialist position. On July 12,
1981, Ms. Simmons was permanently promoted to the Support Services
Specialist position. Apart from other miscellaneous pay adjustments,
Ms. Simmons received within grade increases -- in increments of one step
each -- on February 21, 1982, and February 20, 1983. A personnel
management evaluation conducted at the servicing personnel office in
March 1983 culminated in a report issued on September 9, 1983, which
indicated that Ms. Simmons did not qualify for her promotion. Although
she fully performed the duties and responsibilities of the position to
which she was promoted, apparently Ms. Simmons lacked the requisite 3
years general experience for the Support Services Specialist position
until November 8, 1981. Consequently, on September 16, 1983, the
improper personnel actions were cancelled and corrected personnel
actions were issued. A Bill of Collection in the amount of $1,409.31,
representing the total amount of wage overpayments from the erroneous
promotion, followed on March 21, 1984. Subsequently, on April 4, 1984,
Ms. Simmons requested a waiver of the entire overpayment.
A promotion is a new appointment to a position of higher rank and
pay. B-168953, April 10, 1970. Ms. Simmons promotion was, therefore, a
new appointment to the Support Services Specialist, GS-5 position. Her
appointment was later found to be invalid because she lacked the general
experience requirement of the position. We have held that where an
appointment is invalid, but the invalidity does not result from an
absolute statutory bar, an individual who performs the duties of the
position with apparent right and a claim of title to the position is
considered a de facto employee and is entitled to retain compensation
already received. See 30 Comp. Gen. 228, 229 (1950); 52 Comp. Gen.
700, 701 (1973). Recoupment of payments is only necessitated where
there exists an absolute statutory bar which either expressly prohibits
the payment of appropriated funds to the employee or requires a refund
by the employee. Department of Labor, B-195279, September 26, 1979,
citing 18 Comp. Gen. 815 (1939).
According to the record, Ms. Simmons performed the duties of the
position to which she was promoted, and did so in good faith based on
the apparent authority of the appointing officer to so promote her. She
had no reason to suspect the personnel office's mistake. In short, Ms.
Simmons performed the duties of the position under color of appointment
with apparent right and claim of title to the position. See Marie L.
Vaughn, B-219565, February 11, 1986. The invalidity of Ms. Simmons'
appointment did not result from an absolute statutory bar expressly
prohibiting the payment of appropriated funds to her or requiring a
refund from her. Thus, Ms. Simmons is entitled to retain the pay of
Support Services Specialist, GS-5, as a de facto employee.
Hence, the Bill of Collection sent to Ms. Simmons on March 21, 1984,
was incorrect. Ms. Simmons is, therefore, entitled to retain the
additional compensation of $1,409.31 that she received between February
8, 1981, and September 16, 1983.
B-222323, 65 Comp. Gen. 524
Matter of: Railroad Rehabilitation and Improvement Fund -- Authority
to Issue Fund Anticipation Notes, April 24, 1986
Fiscal year 1986 funds appropriated to the Treasury Secretary to
purchase Fund Anticipation Notes used to finance the Department of
Transportation's Redeemable Preference Share Program, are available to
buy Notes and thus continue the rail improvement projects financed under
the Program in 1986, despite the expiration of the Program's organic
authority on September 30, 1985. A specific appropriation for an
expired program provides a sufficient legal basis to continue that
program, absent a contrary expression of congressional intent. 55 Comp.
Gen. 289 (1975).
Unobligated balances in the Rail Fund lapsed under the provisions of
the 1984 DOT appropriation act, but obligated balances remain available
to liquidate outstanding obligations.
The General Counsel of the Department of Transportation (DOT)
requested our legal opinion on the Secretary of Transportation's
authority to issue and sell Fund Anticipation Notes (Notes) to finance
the Redeemable Preference Share Program (Program) in fiscal year 1986.
The question arises in the context of an apparent conflict between the
Program's enabling act, which expired on September 30, 1985, and the
fiscal year 1986 DOT Appropriations Act, which provided new 1986 funds
for the purchase of Notes and authority to use the proceeds of the sale
of Notes for the Program. For the reasons explained below, we conclude
that the Secretary is authorized to issue and sell Notes, despite the
expiration of the Program's organic authority. We also considered a
related issue on the status of prior year funds and conclude that
obligated balances remain available to carry out the projects for which
they were originally obligated.
The funds in question were proposed for rescission in the Special
Message transmitted to the Congress on February 5, 1986. Since the
Congress did not approve the proposed rescission within 45 days, the
funds must now be released. 2 U.S.C. Section 683 (1982).
The Secretary of Transportation administers the Railroad
Rehabilitation and Improvement Fund (Rail Fund) to provide financial
assistance to marginal railroads. The Rail Fund is capitalized in
several ways including the use of Fund Anticipation Notes, a kind of
promissory note. As needed, Congress appropriates money to the
Secretary of the Treasury to purchase these Fund Anticipation Notes.
The Secretary of Transportation then issues the Notes, sells them to the
Treasury and deposits the proceeds in the Rail Fund. The Rail Fund
provides financial assistance to railroads by purchasing a special class
of preferred stock, called "Redeemable Preference Shares," from the
railroads. The shares are deposited in the Rail Fund and held until
repurchase by the issuing railroad on an agreed date. The Secretary of
Transportation will eventually repay the Treasury on the original Notes
with either the repayments on redemption, or with funds raised by
issuance of Fund Bonds (if statutorily authorized at a later date).
Appropriations may also be provided in the future for the purpose of
satisfying the Notes. This whole procedure constitutes the "Redeemable
Preference Share Program." 45 U.S.C. Section 822, 825-27, and 829
(1982).
Issuance of the Fund Anticipation Notes is authorized by 45 U.S.C.
Section 827(a) which provides:
The Secretary shall, until September 30, 1985, issue and sell, and
the Secretary of the Treasury until such date shall, to the extent of
appropriated funds, purchase Fund anticipation notes in an aggregate
principal amount of not more than $1,400,000,000 * * *.
A bill extending the September 30, 1985, expiration date for 2 years
passed the House on September 5, 1985, but was tabled. /1/
The purchase of these Notes by the Treasury is authorized by 45
U.S.C. Section 829(a) which provides:
There is authorized to be appropriated to the Secretary of the
Treasury for the purposes of the Fund not to exceed $1,400,000,000 and
the Secretary of the Treasury is authorized and directed to purchase,
from time to time, prior to September 30, 1985, from the Secretary, out
of such moneys in the Treasury as are appropriated under this sentence,
Fund anticipation notes * * *.
Use of funds derived from the sale of Notes was made further
contingent on prior approval in an annual appropriations act. Id. To
satisfy this latter requirement, DOT appropriation acts have always
contained both an authorization to use the Rail Fund and appropriations
to the Secretary of the Treasury to purchase the Notes. The 1986 act is
no exception. The Department of Transportation and Related Agencies
Appropriations Act, 1986, Pub. L. No. 99-190, 99 Stat. 1185, 1280 and
1284 contained the following language authorizing use of the Rail Fund
and appropriating funds for the purchase of Notes:
Notwithstanding any other provision of law, the Secretary of
Transportation is hereby authorized to expend proceeds from the sale of
fund anticipation notes to the Secretary of the Treasury and any other
moneys deposited in the Railroad Rehabilitation and Improvement Fund
pursuant to sections 502, 505-507, and 509 (45 U.S.C. 822, 825-27 and
829) of the Railroad Revitalization and Regulatory Reform Act of 1976
(Public Law 94-210), as amended * * * for uses authorized for the Fund,
in amounts not to exceed $33,500,000; and
For the acquisition, in accordance with section 509 of the Railroad
Revitalization and Regulatory Reform Act of 1976, as amended, * * * of
fund anticipation notes, $33,500,000.
The Chief Counsel of the Federal Railroad Administration (FRA)
analyzed the enabling language and the appropriations act language and
concluded that the authority provided in the appropriations act was
insufficient to justify continuation of the Redeemable Preference Share
Program beyond the expiration date in the enabling act. We disagree.
It is a well-settled rule of appropriations law that when Congress
has appropriated funds for a program whose authorization has expired
there is sufficient legal basis to continue the program, absent an
expression of congressional intent to the contrary, 55 Comp. Gen. 289
(1975); B-137063, May 21, 1966; B-171019, June 29, 1976.
The rule was explained in 55 Comp. Gen. 289, in which we considered a
similar situation. The enabling act for the School Breakfast Program
expired on June 30, 1975. The continuing resolution for fiscal year
1976 appropriated funds to the Agriculture Department for general food
programs "and the School Breakfast Program." Meanwhile, a bill extending
the authorization for the School Breakfast Program had passed, but
experienced major delays at the conference and would not be completed
until well into the fiscal year, if at all. On these facts, we held the
School Breakfast Program should continue for as long as the continuing
resolution was in effect, whether the authorization was signed during
that period or not.
Our rule draws on two other established principles. First, a prior
authorization act, although traditional, is not required by law to
support each activity conducted with appropriations, although by reason
of House and Senate Rules, the lack of a prior authorization act may
give rise to a point of order which, if sustained, may defeat the
proposed appropriation. B-202992, May 15, 1981. No such challenge was
upheld in the instant case, however. Second, since one Congress cannot
bind a future Congress, the most recent expression of congressional
intent (in this case the appropriation act) controls. In other words, a
specific appropriation can become its own authorization when an
authorization act is lacking.
Here Congress appropriated funds to the Secretary of the Treasury to
purchase Notes, the initial action in the funding of the Redeemable
Preference Share Program. The FRA Chief Counsel's Memorandum, which
reached the contrary result, does not contest the Congress' intent to
continue the program. It simply concludes that although the act
provided the "requisite appropriation language" to buy the Notes, this
is "clearly distinguishable from the requisite program authorizing
language."
In our view, the language in the appropriation act itself, which
authorizes the Secretary of Transportation to "expend proceeds from the
sale of fund anticipation notes to the Secretary of the Treasury,"
necessarily presupposes the issuance of Notes to the Treasury. Since
unobligated balances in the Rail Fund apparently lapsed on September 30,
1985, authority to use the proceeds of the sale of Notes would be
meaningless unless new sales were authorized with the newly appropriated
funds. The Secretary could hardly use the proceeds of sales of Notes
without first issuing and selling the Notes to obtain the proceeds.
Moreover, the appropriation language incorporates by reference section
507 (45 U.S.C. Section 827), the section of the organic act which
authorized the Secretary to issue and sell Notes in the first place.
While it is true that the organic act has expired, it is not unusual for
subsequently-passed legislation to utilize a provision or authority
contained in the expired act as a short-hand way of describing the
purpose of the new appropriation. See, e.g., the School Breakfast
Program, discussed, supra.
As the FRA acknowledges, the 1984 DOT appropriations Act authorized
DOT to expend proceeds from Note sales obtained with appropriations made
in previous years. We also agree with FRA that any such proceeds which
were not obligated by September 30, 1985 must be considered to have
lapsed. A lapsed appropriation cannot be revived by the use of the
phrase "Notwithstanding any other provision of law," enacted several
months after the funds in question are moribund.
We differ with FRA, however, about the fate of the amounts in the
Rail Fund that were validly obligated prior to the September 30, 1985
expiration date. It is an elementary rule of appropriations law that
obligated balances remain available to liquidate the obligation well
beyond the period for which the appropriation is available to incur new
obligations. See, e.g., B-212151, July 11, 1983. We cannot agree,
therefore, that "the conclusion is inescapable that Congress intended
the 1984 DOT Act to reach all unspent funds, whether unobligated or
awaiting deobligation." It is true that had such funds been deobligated,
they too would have lapsed after September 30, 1985. However, the funds
in question have not been deobligated. Accordingly, we find that
obligated prior year funds remain available to carry out the projects
for which they were originally obligated.
Based on the foregoing, it is our conclusion that because the
proposed rescission of these funds was not approved, the Secretary of
Transportation must take action to draw on the funds in a timely and
reasonable manner by issuing Fund Anticipation Notes. /2/
(1) 131 Cong. Rec. H7285 (daily ed. Sept. 5, 1985). This program has
been extended five times since its inception in 1976. Four out of the
five renewals have been late. See, e.g., Pub. L. No. 97-468, signed on
January 14, 1983, extending the September 30, 1982, expiration date and
the fiscal year 1983 appropriation act, Pub. L. No. 97-369, signed on
December 18, 1982, providing $5 million in "new money" for the expired
program during the fiscal year already in the progress.
(2) A sequestration of $1.4 million under Pub. L. No. 99-177, 99
Stat. 1037 has reduced the amount available to $32,059,000.
B-217447, 65 Comp. Gen. 520
Matter of: Transportation of Household Goods, April 24, 1986
Under current regulations service members who have their household
goods and automobiles shipped to an overseas duty station in
anticipation of the family move are not entitled to return
transportation if the family, for personal reasons, changes its plans
and does not join the member. The applicable statute, 37 U.S.C. 406(h),
is broad enough to provide authority for regulations authorizing return
transportation of the household goods and privately owned vehicle
independent of travel by the member or the dependents in these
circumstances when the service finds that the transportation is in the
best interest of the member or the dependents and the United States. To
the extent they are inconsistent herewith, 49 Comp. Gen. 695 (1970) and
44 Comp. Gen. 574 (1965) are overruled. 45 Comp. Gen. 442 (1966) is
overruled in part.
This action is in response to a request from the Department of
Defense asking that we reconsider our conclusions in 49 Comp. Gen. 695
(1970) regarding shipment of household goods and privately owned
vehicles independent of travel by a member or his dependents. /1/ In
that decision we found that advance transportation of uniformed services
members' household goods and privately-owned vehicles may not be
provided from overseas independent of travel of members' dependents.
Upon reconsideration of the matter we find that the applicable statutory
authority does not prohibit transportation of household goods and
vehicles under the circumstances described. Therefore, we do not object
to amendment of travel regulations to provide for such transportation.
We have been requested to reconsider the question of whether the
Joint Travel Regulations may be amended to provide for return of
household goods at Government expense from an overseas station to a
designated place in the United States when dependents, for personal
reasons, do not join the member as originally intended. The Defense
Department points out that it is a recurring problem for members and
their dependents when household goods have been shipped in anticipation
of the member's permanent change of station from the United States to an
overseas location and the family, for personal reasons, does not join
the member.
The Department notes that the member is faced with a number of
problems when the household goods may not be shipped back at Government
expense. The member must either pay for storage of his goods, while his
family does without them, he must pay for their return shipment or he
may be forced to sell his household goods and have his family replace
them. In addition, the Department points out that a rising number of
dependents perform travel overseas and, upon arrival, almost immediately
request an advance return to the United States, traveling essentially to
qualify for return shipment of their household goods. This causes the
services to incur the extra expense of the dependents' transportation,
an expense which could be avoided by changing the current rule.
Authority for travel and transportation of dependents, baggage,
household effects, and privately-owned vehicles is found at 37 U.S.C.
Section 406. The transportation at Government expense may be authorized
in connection with a change of duty station for the member. Exceptions
to the requirement that the transportation be in connection with a
change of duty station are found in sections 406(e) and 406(h).
Section 406(e) provides that when orders directing a permanent change
of station for a member have not been issued or when they have been
issued but cannot be used as authority for the transportation of his
dependents, baggage and household effects, the Secretaries of the
Services may authorize movement of dependents, baggage and household
effects in cases involving "only unusual or emergency circumstances"
incident to some military operation or requirement.
Section 406(h) of title 37, as added by Public Law 88-431, /2/
provides authority for transportation beyond the limited authority
provided in 406(e) for "unusual or emergency circumstances." Section
406(h) provides in pertinent part:
(h) In the case of a member who is serving at a station outside the
United States or in Hawaii or Alaska, if the Secretary concerned
determines it to be in the best interests of the member or his
dependents and the United States, he may, when orders directing a change
of permanent station for the member concerned have not been issued, or
when they have been issued but cannot be used as authority for the
transportation of his dependents, baggage, and household effects --
(1) authorize the movement of the member's dependents, baggage, and
household effects at that station to an appropriate location in the
United States or its possessions and prescribe transportation in kind,
reimbursement therefor, or a monetary allowance in place thereof, as the
case may be, as authorized under subsection (a) or (b) of this section;
and
(2) authorize the transportation of one motor vehicle that is owned
by the member (or a dependent of the member) and is for the personal use
of the member or his dependents to that location by means of
transportation authorized under section 2634 of title 10.
As is indicated above, the issue presented here, whether the Joint
Travel Regulations may be amended to allow return transportation of
household goods when dependents do not perform the travel as originally
scheduled, has been addressed by this Office in 49 Comp. Gen. 695. In
that case we found that there was no authority to allow amendment of the
regulations to authorize movement of household effects independently of
the movement of dependents. That decision relies heavily on a prior
decision, 44 Comp. Gen. 574 (1965), in which we held that section 406(h)
did not provide authority for evacuation of the household effects and
vehicle of a member without dependents. In 44 Comp. Gen. 574 we noted
that section 406(e) had been interpreted in the regulations to authorize
transportation of household effects and vehicles contingent on an
authorization for transportation of dependents. We reviewed the
legislative history of section 406(h) and came to the conclusion that
section 406(h) was not intended to have any broader scope in that
respect.
Subsequent to the decision in 49 Comp. Gen. 695, we reexamined the
scope of section 406(h) in considering whether it provided authority for
the shipment of the household effects and vehicle of members without
dependents when they are discharged under other than honorable
conditions while stationed overseas. See 55 Comp. Gen. 1183 (1976). We
noted that in adding section 406(h), Congress primarily was concerned
with providing authority, in addition to the limited authority in
section 406(e), for the advance movement of dependents, and thus the
legislative history is primarily concerned with that specific subject.
Upon reexamination of our previously held positions, and in view of
facts presented there, we found that the language of section 406(h) was
broad enough to provide authority for transportation of household
effects and vehicles of members without dependents in the circumstances
of that case.
To the extent they were inconsistent with the above, we therefore
overruled 44 Comp. Gen. 574, 49 Comp. Gen. 695, and another related
decision, 45 Comp. Gen. 442 (1966). See 55 Comp. Gen. 1183, at 1185-86.
Thus, we have modified somewhat our original position concerning the
scope of section 406(h) so that it is now considered to apply to members
without dependents in certain cases.
We have again examined the language and legislative history of
section 406(h). We find that there is no language in the statute which
makes dependent travel a prerequisite for movement of household goods,
baggage or a vehicle. It provides that dependents, household goods,
baggage and privately-owned vehicles may be transported at the
discretion of the Secretary under certain conditions.
The legislative history of Public Law 88-431, which added section
406(h), shows that Congress recognized the limitations of section 406(e)
and provided broader authority for transportation of dependents,
household goods, baggage and privately-owned vehicles.
The Senate Armed Services Committee report on the bill which became
Public Law 88-431 emphasizes that the Department of Defense felt that
advance movement of dependents, baggage and household goods was
desirable under conditions which did not qualify as unusual or emergency
circumstances. Such transportation would be provided under this
addition to the statute. The report specifically mentions compelling
unforeseen family problems, financial or marital problems and changes in
a member's status which, at times, make advance return of dependents,
baggage, household goods and vehicles in the best interest of the member
and the United States. S. Rep. No. 1284, 88th Cong. 2d Sess. 1-2
(1964).
The House Armed Services Committee report on that bill explains that
the limitations of the then-current authority had been found to be too
restrictive to meet the needs of the services. It points out also that
the problems caused by the dependents, their baggage, household goods
and vehicles can place an additional administrative burden on the
overseas commander and have adverse effects on the sponsor's performance
and the operational readiness of combat forces. H. Rep. No. 415, 88th
Cong. 1st Sess. 1-2 (1963).
The legislative history shows that Congress was concerned about the
restrictive limitations of section 406(e) and intended to provide
flexibility for movement of dependents and their effects when it was
found in the best interest of the member or his dependents, and the
United States. Thus, section 406(h) was intended to allow the personal
problems of the member and his dependents to be considered, unlike the
strictly military occurrences or emergencies covered by section 406(e).
As pointed out by the Department in its submission, the same
considerations (personal family problems, administrative burdens on the
overseas commander and adverse effects on the member) arise in the
situation where the dependents originally intend to accompany the
member, but for personal reasons are unable to perform the travel and
the household effects have already been shipped in anticipation of the
move.
It is now our view, therefore, that 37 U.S.C. Section 406(h) is broad
enough to provide authority for transportation of household goods for
members stationed outside of the continental United States independent
of the travel of dependents, where the family originally intends to
accompany the member but is unable to perform the travel and the service
finds that such transportation is in the best interest of the member or
his dependents and the United States. Thus, we would not oppose the
suggested amendment to the regulations.
To the extent that the holdings in 44 Comp. Gen. 574 and 49 Comp.
Gen. 695, supra, are inconsistent with this decision, they no longer
will be followed.
(1) The request was submitted by Assistant Secretary of the Air
Force, Tidal W. McCoy, Chairman, Per Diem, Travel and Transportation
Allowance Committee.
(2) Section 1(a), 78 Stat. 439 (1964)
B-221525, 65 Comp. Gen. 517
Matter of: Barbara J. Cox -- Claim for Retroactive Salary
Adjustment, April 23, 1986
Employee accepted grade GS-3, step 1 position with Veterans
Administration (VA) but seeks retroactive salary adjustment and backpay
because the VA did not allow her additional steps in grade GS-3 based on
her highest previous rate (grade GS-6, step 8). The employee's claim is
denied since (1) payment of the highest previous rate is discretionary
with the agencies, (2) applicable VA regulations do not require payment
of the highest previous rate in these circumstances, and (3) the VA's
determination was not shown to be arbitrary, capricious, or an abuse of
discretion. This decision distinguishes B-202863, January 8, 1982.
The issue in this decision concerns the claim of an employee to
receive the benefit of her highest previous rate upon appointment to a
position with the Veterans Administration (VA). We hold that since
payment of the employee's highest previous rate by the VA is
discretionary under the circumstances, the employee is not entitled to
the benefit of her highest previous rate, absent evidence that the
agency action was arbitrary, capricious, or an abuse of discretion.
This decision is in response to a request from the National
Federation of Federal Employees (NFFE), reference: 153-RE-53, seeking a
retroactive salary adjustment and backpay based on the highest previous
rate rule for Mrs. Barbara J. Cox. The request for our decision was
filed under our labor-management procedures contained in 4 C.F.R. Part
22 (1985).
The letter from NFFE states that, in 1979, Mrs. Cox transferred from
her position as an Accounting Technician at the National Security Agency
(NSA), Ft. Meade, Maryland, to a similar position at the Naval Air
Station in Jacksonville, Florida. Both positions were permanent
positions, but the transfer involved a downgrade from her grade GS-7,
step 6, position with NSA to a grade GS-5, step 10, position with the
Naval Air Station. Mrs. Cox was subsequently promoted at the Naval Air
Station in 1980 to the level of grade GS-6, step 8.
On April 21, 1981, Mrs. Cox was granted leave without pay for 90 days
from her position at the Naval Air Station, and effective June 14, 1981,
she received a temporary appointment as a Clerk-Typist, grade GS-3, step
1, with the Veterans Administration (VA) Regional Office in St.
Petersburg, Florida. In December 1981, Mrs. Cox transferred to another
temporary appointment as an Accounting Technician, grade GS-4, step 1,
at MacDill Air Force Base, Florida. Finally, in February 1981, Mrs. Cox
received a permanent appointment at MacDill AFB as a Budget and
Accounting Technician, grade GS-7, step 1.
The union argues that the VA improperly denied Mrs. Cox the benefit
of her highest previous rate and should have fixed her salary in grade
GS-3 at a step comparable to her highest previous rate of pay. The
union states that by denying Mrs. Cox the benefit of her highest
previous rate, she has lost step increases and pay in the VA position
and in her subsequent positions at MacDill AFB.
The union concedes that the VA has discretion in applying the highest
previous rate rule, but the union argues that the VA granted another
employee this benefit and that all employees must be treated equally.
The union points out that Mrs. Cox should have been paid the highest
previous rate since she has 5 years of prior Federal service as
clerk-typist. The union also cites several prior decisions from our
Office as precedent for granting employees the benefit of their highest
previous rate upon transfer, promotion, demotion, or other personnel
action. Therefore, the union seeks a retroactive adjustment in Mrs.
Cox's rate of pay in her VA position based on her previous rate of grade
GS-6, step 8, along with retroactive adjustments to her rates of pay in
her subsequent positions.
We requested and received comments from the Personnel Officer, VA
Regional Office, St. Petersburg, Florida, and that report states that
under agency regulations, salary rates received in non-VA positions may
be taken into account in mixing salary rates, if appropriate in the
judgment of the authorizing official, but there is no vested right to
receive a higher rate based on that service. In addition, the VA report
also states the authorizing official must determine that the experience
gained in the prior position would enhance the employee's qualifications
for the new position. The VA report concludes that based on these
regulations, Mrs. Cox was denied her highest previous rate, but that
consistent with these regulations, the other employee cited by the
union, Mrs. Joie A. Stiles, received a higher rate for a similar
position.
Under the provisions of 5 U.S.C. Section 5334(a) (1982) and 5 C.F.R.
Section 531.203(c,d) (1985), an employee who is reemployed, reassigned,
promoted, or demoted, or who changes the type of appointment may be paid
at the highest rate of the grade which does not exceed the employee's
highest previous rate. This is referred to as the highest previous rate
rule. Carma A. Thomas, B-212833, June 4, 1984.
Our decisions have consistently held that it is within the agency's
discretion to fix the initial salary rate at the minimum salary of the
grade to which appointed and that an employee has no vested right upon
transfer or reemployment to receive the highest salary rate previously
paid to the employee. See 31 Comp. Gen. 15 (1951), Thomas, cited above,
and Barbara S. McCoy, B-196686, January 17, 1980. Each agency may
formulate its own policy regarding application of the highest previous
rate rule, and such policy may allow for mandatory or discretionary
application of the employee's highest previous rate. Thomas, cited
above.
The VA regulations applicable to Mrs. Cox's appointment provide, as
noted above, that salary rates received in non-VA positions may be taken
into account in fixing salary rates, if appropriate in the judgment of
the authorizing official. VA Regulation MP-5, Part I, chap. 531, sec.
B, para. 4c. The VA regulations also provide the earned rate (highest
previous rate) rule will be controlling:
* * * only where the record indicates, in the authorizing official's
judgment, that the experience gained in the position on which the rate
is proposed to be based was of such quality and duration that the
individual's total qualifications were likely thereby to have been
enhanced. * * * VA Regulation MP-5, Part I, chap. 531, sec. B, para.
4d.
As noted above, the report from the VA Regional Office states that
the grades and step rates for Mrs. Cox and the other employee cited by
the union were selected in accordance with these regulations. The
report continues by stating that the authorizing official "apparently
determined that Mrs. Cox's experience would not enhance her ability to
perform basic typing duties in this office."
The agency regulations in this case are clearly discretionary with
respect to applying the highest previous rate rule to an employee whose
previous rate was earned in a non-VA agency. Our decisions have held
that where the agency exercises its discretion to set the salary rate
below the highest previous rate, there may be no retroactive adjustment
of the salary rate in the absence of administrative error. 31 Comp.
Gen. 15, cited above, McCoy, cited above, and Crystal G. Sharp,
B-190257, September 13, 1978. Administrative error would be found only
where the agency's action was arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law. See 54 Comp. Gen.
310 (1974), and McCoy, cited above.
There is no evidence in the record before us to indicate that the
VA's action in setting Mrs. Cox's salary rate at step 1 of grade GS-3
was arbitrary, capricious, or an abuse of discretion. The union has
submitted documents showing that the other VA employee in question, Mrs.
Stiles, was placed in step 4 of grade 3 under the applicable VA
regulations concerning use of the highest previous rate cited above.
However, there is no evidence before us to indicate that granting the
highest previous rate to Mrs. Stiles and denying the rate to Mrs. Cox
was arbitrary, capricious, or an abuse of discretion. Therefore, in the
absence of evidence supporting Mrs. Cox's claim, we have no legal basis
to overturn the VA's pay-setting determination in this case.
The union cites four decisions of our Office holding that it is
within the discretion of the employing agency to use the highest
previous rate rule upon the employee's transfer, promotion, demotion, or
reinstatement. B-61181, November 27, 1946 (26 Comp. Gen. 368); 26
Comp. Gen. 530 (1947); B-11354, March 3, 1953, and B-118245, February
24, 1954. We agree that these prior decisions have not been overruled
or modified, but these decisions provide no basis to allow Mrs. Cox's
claim, as discussed above.
Finally, the union cites our decision in Bobby M. Siler, B-202863,
January 8, 1982, sustained upon reconsideration, B-202863, February 8,
1984, where we held an Internal Revenue Service (IRS) employee was
entitled to a rate of pay within grade GS-3 based on his highest
previous rate of grade GS-4, step 1. We believe our decision in Siler
is distinguishable since we held in Siler that, under the applicable IRS
regulations concerning use of the employee's highest previous rate, the
appointing official must use the employee's highest previous rate for
the grade GS-3 position if the employee was eligible for appointment at
the grade GS-4 level based on prior experience and education.
In the present case, the VA regulations do not require the mandatory
or nondiscretionary use of the employee's highest previous rate in Mrs.
Cox's situation, and, therefore, the application of the highest previous
rate under these circumstances is discretionary. Accordingly, we must
deny Mrs. Cox's claim for a retroactive adjustment and backpay.
B-221459, 65 Comp. Gen. 510
Matter of: Topley Realty Co., Inc., April 23, 1986
A protest involving a questionable application of definitive
responsibility criteria by the contracting agency raises an issue
significant to the procurement system, 4 C.F.R. 21.2(c)(2) (1985), and
will be considered on the merits even though it is untimely filed.
Where a bidder is found to be responsible even though it does not
meet definitive responsibility criteria requirements set out in the
solicitation, and the agency deletes from subsequent solicitations the
requirements for a specific minimum number of years of experience in the
same areas of expertise, the definitive responsibility criteria in the
first solicitation overstated the agency's minimum needs and unduly
restricted competition.
Protest that firm lacks sufficient time to prepare its bid concerns
and apparent impropriety in the solicitation and must be filed prior to
bid opening in order to be timely.
Allegation that agency improperly relaxed specifications and sought
to preclude protester from competition is rendered academic by award to
protester.
Topley Realty Co., Inc. (Topley), protests the award of contracts by
the Department of Housing and Urban Development (HUD) under invitation
for bids (IFB) Nos. 02-85-033 (South Allegheny County area), 05-85-033
(Beaver County area), and 06-85-033 (McKean County area), and the
solicitation of offers under IFB No. 04-85-033 (Westmoreland County
area). These solicitations were issued by HUD to provide management
broker services related to the inspection, repair, maintenance and
disposition by sale or lease of HUD-acquired single family homes in
Pennsylvania. We sustain the protest in part and deny it in part.
Under IFB No. 02-85-033, HUD solicited offers to provide management
broker services for approximately 20 HUD-acquired homes in the South
Allegheny County area, including certain wards of the City of
Pittsburgh, Pennsylvania. The solicitation required the potential
contractor to meet certain "special standards" of responsibility,
including:
1. CONSTRUCTION COST ESTIMATING TECHNIQUES
The contractor, or a member of his staff who has been in his/her
employ for at least two years, must possess five years of verifiable
experience in construction techniques and cost estimating which would
qualify him/her to:
(a) Prepare comprehensive repair specifications for 1 to 4
family structure
(b) Coordinate and supervise repair work as required, including
emergency repairs relative to health and safety hazards to tenants
and/or the public
(c) Arrange for maintenance and custodial services
(d) Insure payment of utility and other service bills.
2. Appraisal
The contractor must possess five years of verifiable experience in
property appraisal which would qualify him/her to accurately determine
the following values on 1 to 4 family properties:
(a) "As-is" fair market value
(b) "Repaired" fair market value
(c) Fair Market "rental" value
(d) Damage estimates.
HUD received offers from four firms. Phoenix Real Estate (Phoenix)
-- N. Jorinda Saunders, owner -- submitted the low bid of $197.50 per
house, while Topley submitted the second low bid of $225 per house. The
contracting officer, making an affirmative determination of Phoenix's
responsibility, made award to that firm on September 26, 1985. Topley
initially protested the award to the agency and subsequently filed a
protest with our Office.
The president of Topley alleges that he was informed by a contracting
official that it was HUD policy to award the South Allegheny contract to
a member of a minority group.
Topley argues that HUD, so as to assure that a minority firm received
the contract, failed to apply the special responsibility standards set
forth in the solicitation. It contends that the agency made award to
Phoenix even though Saunders had been "in the real estate business" for
only 3 1/2 years. Topley refers us to a September 13, 1985, article
from a Pittsburgh newspaper stating that Saunders "has been in the real
estate business for 3 1/2 years, the last 6 months as the broker of her
own business, Phoenix Real Estate." Topley also alleges that Phoenix's
successful bid was the "result of inside information."
HUD initially questions the timeliness of Topley's protest to our
Office. We agree that there is a serious question as to the timeliness
of Topley's protest to our Office. Our Bid Protest Regulations,
however, provide that where a protest raises issues significant to the
procurement system we may consider that protest even if it was untimely
filed. 4 C.F.R. Section 21.2(c). Since it appears to us from the
record of Topley's initial protest that a serious question is raised as
to the application of definitive responsibility criteria which led to
the award, we will consider the merits of its protest.
First, HUD denies that Topley was the victim of racial
discrimination. The agency believes that Topley may instead be
misinterpreting the agency's Minority Business Participation Plan for
the Pittsburgh Office, pursuant to which the agency encourages the
participation of minority firms by providing copies of solicitations.
HUD notes that the solicitation was provided to Phoenix not under the
Minority Business Participation Plan, but rather in response to a
request from Phoenix. In addition, HUD defends the determination that
Phoenix met the special responsibility standards set forth in the
solicitation.
As for compliance with the special responsibility standards, we note
that our Office will review an agency's affirmative determination or
responsibility only if possible fraud on the part of the contracting
officials is shown or if the solicitation contains definitive
responsibility criteria which allegedly have not been applied.
Definitive responsibility criteria are specific and objective standards
established by an agency for use in a particular procurement for the
measurement of a bidder's ability to perform the contract. These
special standards of responsibility limit the class of bidders to those
meeting specified qualitative and quantitative qualifications necessary
for adequate contract performance. We have previously found
requirements that a contractor possess specific experience in a
particular area to constitute definitive responsibility criteria. See
Vulcan Engineering Co., B-214595, Oct. 12, 1984, 84-2 C.P.D. Paragraph
403 (requirement that contractor have experience in successfully
installing six specific foundry process systems); Urban Masonry Corp.,
B-213196, Jan. 3, 1984, 84-1 C.P.D. Paragraph 48 (requirement that
installer have 5 years experience in the erection of precast concrete
units similar to those required under solicitation).
The scope of our review is limited to ascertaining whether evidence
of compliance has been submitted from which the contracting officer
could reasonably conclude that the definitive responsibility criteria
had been met. Although we have indicated that the relative quality of
the evidence is a matter for the judgment of the contracting officer, we
have insisted upon the presence of objective evidence from which the
contracting officer could find compliance with the definitive
responsibility criteria, Vulcan Engineering Co., B-214595, Supra, 84-2
C.P.D. Paragraph 403 at 7, and we have sustained protests against
affirmative determinations of responsibility where such evidence is
lacking. Id.; Ampex Corp., B-212356, Nov. 15, 1983, 83-2 C.P.D.
Paragraph 565; Power Systems, B-210032, Aug. 23, 1983, 83-2 C.P.D.
Paragraph 232.
In her submission to the contracting officer, Saunders indicated that
Phoenix had been in business since March 30, 1985. Saunders informed
the contracting officer in regard to the first special responsibility
standard, that either the contractor or a staff member in the
contractor's employ for at least 2 years must possess 5 years of
experience in construction cost estimating techniques, that a licensed
salesperson employed by her, Steven Forbes, had a separate business
providing contracting services, had been in business for 5 years, and
possessed the required experience in construction cost estimating
techniques. In regard to the second special responsibility standard,
that the contractor possess 5 years of experience in property appraisal,
Saunders cited her own experience and further indicated that she
employed a licensed salesperson who had been licensed since 1978 and who
had served as an appraisal assistant for 3 years. Saunders went on to
add, however, that:
my real estate experience was gained from the following periods of
apprenticeship:
1981 -- General Development Corporation-Interstate Land Sales
1982-1983 -- Quality Real Estate-Residential, Commercial Sales
1983-1984 -- Allegheny Landmark Realty-Residential, Commercial
Sales Extensive Experience
1984 -- Until Opening of Phoenix-Northern Shore
Realty-Residential, Commercial Sales, Rentals Development
Packaging.
I have V.A. and HUD sales experience from all of these agencies I was
affiliated with.
The contracting officer emphasizes that in making an affirmative
determination of Phoenix's responsibility, he determined that the
"backgrounds and experience of Ms. Saunders and her staff in its
totality" (italic supplied) met the responsibility standards, that
Phoenix "has the qualifications to fulfill its contract," and that
"satisfactory performance of the HUD contract requirements can be
reasonably expected" from the firm.
Despite the contracting officer's conclusion, since Saunders was
employed by another firm prior to Phoenix's commencement of business in
March 1985, Forbes presumably had not been in the employ of either
Phoenix or Saunders for the 2 years specified under the first special
responsibility standard. Further, since Saunders indicated that her
real estate experience commenced in 1981, she apparently lacked at the
time of award 5 years of experience in either construction cost
estimating techniques or property appraisal. Thus, although we find no
basis for the protester's allegation that the determination of Phoenix's
responsibility was racially motivated, it appears that Phoenix in fact
did not meet the definitive criteria established in this procurement.
Where, however, a bidder is found to be responsible even though it
does not meet definitive responsibility criteria set out in the
solicitation, such criteria may be deemed to exceed the agency's minimum
needs and to be unduly restrictive of competition. See Haughton
Elevator Division, Reliance Electric Co., 55 Comp. Gen. 1051 (1976),
76-1 C.P.D. Paragraph 294; International Computaprint Corp., B-185403,
Apr. 29, 1976, 76-1 C.P.D. Paragraph 289. We note that not only did the
contracting officer here make an affirmative determination of Phoenix's
responsibility, thereby waiving the definitive responsibility criteria,
but in subsequent solicitations for management broker services he
deleted the requirements that the contractor or a member of his staff
possess a specific minimum number of years of experience in construction
cost estimating techniques and property appraisal and that a staff
member be in the contractor's employ for a specific prior period of
time. This convinces us that the definitive responsibility criteria in
the South Allegheny solicitation overstated the agency's minimum needs
and unduly restricted competition. On that basis, we sustain Topley's
protest as it relates to the South Allegheny contract.
We do not recommend a resolicitation here since there is no
indication that Phoenix and Topley would have bid different prices on
the basis of lesser experience requirements. Since Topley was led to
compete on the basis of an agency's statement of its needs which was in
excess of what it actually required, however, we find that Topley should
be allowed to recover its costs of filing and pursuing this protest
before our Office and of preparing its bid in response to the South
Allegheny solicitation. 4 C.F.R. Section 21.6(d)(e). Topley should
submit its claim for such costs directly to HUD. 4 C.F.R. Section
21.6(f).
Under IFB Nos. 05-85-033 and 06-85-033 -- issued as small business
set-asides on November 14, 1985 -- HUD solicited offers to provide
management-broker services for an estimated 21 HUD-acquired houses in
the Beaver County area (05-85-033) and one HUD-acquired house in the
McKean County area (06-85-033).
Since the proposed contract actions were not expected to exceed
$10,000, HUD was exempt from the requirement to synopsize the
procurements in the Commerce Business Daily. See 41 U.S.C.A. Section
416 (West Supp. 1985); Federal Acquisition Regulation (FAR), Section
5.201 (FAC No. 84-5, Apr. 1, 1985). The agency instead posted notices
of the proposed contract actions at the main post office in Pittsburgh
and at HUD's Pittsburgh area office, and mailed copies of the
solicitation to all firms on the bidder's mailing list. Seven firms
were solicited for Beaver County and five firms for McKean County.
By bid opening at 2 p.m. on December 16, HUD had received two bids in
response to the Beaver County solicitation and one bid in response to
the McKean County solicitation. Topley did not submit a bid for either
area.
Shortly after bid opening, however, Topley filed this protest at our
Office. Although its protest letters were dated December 10 and
December 11, they were received by us at 3:10 p.m. on December 16.
Notwithstanding Topley's protest, the contracting officer subsequently
made award to the low bidder under the Beaver County solicitation -- Ed
Shields Realtor -- and to the only bidder under the McKean County
solicitation -- Scott and Chase Real Estate Agency.
Topley contends that as a result of its dispute with the contracting
officer over the award of the South Allegheny contract, the contracting
officer attempted to preclude the firm from bidding for the Beaver
County and McKean County areas.
In its initial protest to our Office, Topley contended that although
the contracting officer knew of Topley's interest in responding to
solicitations for management broker services in all areas, he did not
send the firm a copy of the solicitations. In particular, the protester
alleged that it was "already too late to bid on the Beaver or McKean
contracts which we did not receive (bid) packages for."
In its administrative report responding to this protest, however, HUD
denied that the contracting officer sought to preclude Topley from
bidding. The contracting officer reported that after discussing the
procurements with Topley on December 10, he had sent Topley a copy of
the solicitation for Beaver County on December 11 and the solicitation
for McKean County on December 12.
We note that Topley, in its comments on the administrative report,
now expressly admits that it received a copy of the Beaver County bid
package 2 days before bid opening. It nevertheless maintains that this
allowed "insufficient time to investigate, prepare and submit a bid." In
addition, it impliedly admits that it also received the McKean County
bid package, stating that "(a)gain, two days is insufficient time to bid
on such a project."
A protest that a firm lacks sufficient time to prepare its bid
concerns an apparent impropriety in the solicitation and must be filed
prior to bid opening in order to be timely. See P&P Brothers General
Services, B-219678, Oct. 22, 1985, 85-2 C.P.D. Section 438 (copy of
solicitation received 1 day prior to bid opening). Topley, however, did
not file its protest at our Office until shortly after bid opening on
December 16. Although in its comments on the administrative report
Topley states that "(t)he protest was filed immediately, verbally on the
date of bid openings and in writing to HUD through" Topley's
congressional representatives, oral protests are no longer provided for
under the FAR and Topley's letters to its congressional representatives
concerned the South Allegheny procurement, not the Beaver and McKean
Counties procurements. Topley's protest as it relates to these two
areas is therefore untimely. In any case, it lacks merit.
In order to promote efficiency and economy in contracting and to
avoid unnecessary burdens for agencies and contractors, the Competition
in Contracting Act of 1984 provides for the adoption of simplified
procedures for small purchases not exceeding $25,000. 41 U.S.C.A.
Section 253(g)(1) (West Supp. 1985). Although agencies must
nevertheless "promote competition to the maximum extent practicable," 41
U.S.C.A. Section 253(g)(4), they need not synopsize proposed contract
actions not expected to exceed $10,000, 41 U.S.C.A. Section 416, and
solicitation of at least three sources generally may be considered to
promote competition to the maximum extent practicable. FAR, Section
13.106(b)(5) (FAC No. 84-5, Apr. 1, 1985).
As indicated above, HUD solicited seven firms for the Beaver County
procurement and five firms for the McKean County procurement, receiving
two bids for the former and one bid for the latter. Further, Topley
apparently received copies of the solicitations 2 days prior to bid
opening. We note in this regard that HUD reports that Topley's office
is only approximately 10 miles from HUD's Pittsburgh office and that the
firm submitted a bid for the Westmoreland County area the day after the
agency had sent it a copy of that solicitation.
The contracting officer determined that the low bids offered fair and
reasonable prices. Although only one bid was received for the McKean
County area, the bid price was the same as the price under the prior
contract even though the agency had expected a 10 percent increase to
account for inflation. See FAR, Section 13.106(c). In any case, Topley
has not alleged that the bid prices were unreasonable.
Topley has failed to demonstrate that HUD made a deliberate or
conscious attempt to preclude the protester from competing. In view of
these circumstances, we conclude that Topley has not shown that the
agency failed to act so as to promote competition to the maximum extent
practicable. Cf. S. C. Services Inc., B-221012, Mar. 18, 1986, 86-1
C.P.D. Paragraph . . . .
Topley alleges that HUD improperly relaxed its usual special
responsibility standards when drawing up the solicitation -- IFB No.
04-85-033 -- for management broker services for the Westmoreland County
area and that the agency sought to preclude Topley from bidding for this
area. Since, however, HUD has awarded the contract for Westmoreland
County to Topley, its protest in this regard is academic and will not be
considered on the merits. See Lion Brothers Company, Inc., B-220576,
Oct. 10, 1985, 85-2 C.P.D. Paragraph 402.
The protest is sustained in part and denied in part.
B-200650, 65 Comp. Gen. 508
Matter of: J. D. MacWilliams, April 23, 1986
An employee of the Forest Service who conducted at his duty station a
General Management Review meeting with timber associations and other
private users of the Mt. Baker-Snoqualmie National Forest may not be
reimbursed for the cost of a meal served at the meeting. The general
rule is that in the absence of specific statutory authority the
Government may not pay for meals of civilian employees at their
headquarters. Reimbursement has been allowed where the meal was
incident to a formal meeting or conference that included substantial
functions separate from the meal. This case did not meet this threshold
requirement.
An employee may not be reimbursed for a meal at his headquarters
solely by virtue of having met the three-part test established in Gerald
Goldberg, et al., B-198471, May 1, 1980. Rather, the employee must
first show that the meal was part of a formal meeting or conference that
included not only functions such as speeches or business carried out
during a seating at the meal, but also included substantial functions
that took place separate from the meal. See Randall R. Pope and James
L. Ryan, 64 Comp. Gen. 406 (1985).
This decision is in response to a request from C. E. Tipton, an
authorized certifying officer of the Forest Service, U.S. Department of
Agriculture. The issue presented is whether payment of the cost of
expenses incurred for a dinner meal by an employee while attending a
meeting held at the employee's official duty station may be allowed.
Because the meal involved here was not part of a formal meeting or
conference involving substantial functions outside of the meal, we
conclude that payment may not be allowed.
In August 1983, Mr. J. D. MacWilliams, Forest Supervisor, Mt.
Baker-Snoqualmie National Forest, Washington, participated in a General
Management Review (GMR) involving the Mt. Baker-Snoqualmie National
Forest. During the GMR, a Forest Service team meets with
representatives from various timber associations and firms to provide an
update of Forest Service activities in the National Forest. Likewise,
the meeting enables the GMR team to hear presentations from the industry
about their concerns and their relationship with the Mt.
Baker-Snoqualmie National Forest. Mr. MacWilliams attended this meeting
and submitted a travel voucher claiming $14 for the cost of a meal
served at the meeting.
As a general rule, an employee may not be paid a per diem allowance
or actual subsistence expenses at his permanent duty station as such
expenses are considered personal to the employee. Paragraph 1-7.6a,
Federal Travel Regulations, FPMR 101-7 Supp. 1, Sept. 28, 1981, incorp.
by ref., 41 C.F.R. Section 101-7.003 (1983). We have repeatedly held
that in the absence of specific statutory authority, the Government may
not pay subsistence expenses or furnish free meals to employees at their
official duty stations even where unusual working conditions are
involved. 53 Comp. Gen. 457 (1974); Sandra L. Fergerson, et al.,
B-210479, December 30, 1983; and J. D. MacWilliams, B-200650, August
12, 1981. Compare 53 Comp. Gen. 71 (1973).
There are, however, several exceptions. One permits reimbursement of
registration fees that include costs of a meal. Thus, we have held that
5 U.S.C. Section 4110 (1982) permits the reimbursement of registration
fees for attendance by employees at meetings held at their official duty
station where meals are provided at no additional charge and represent
an incidental part of the meeting. 38 Comp. Gen. 134 (1958).
Another exception permits reimbursement under 5 U.S.C. Section 4110
where meals are not included in a registration fee for attendance, but a
separate charge for the meal is made. However, in order for
reimbursement to be made under this exception the agency must find that:
(1) the meals are incidental to the meeting; (2) attendance of the
employee at the meals is necessary for full participation in the
business of the meeting; and (3) the employee was not free to partake
of his meals elsewhere without being absent from essential formal
discussions, lectures or speeches concerning the purpose of the meeting.
Gerald Goldberg, et al., B-198471, May 1, 1980.
Goldberg involved employees who participated in an annual meeting of
the President's Committee on Employment of the Handicapped conducted
over a 3-day period at their headquarters. There was no charge or
registration fee to attend the meeting but there was a charge for three
meals served at the event. The question raised in that case was whether
the agency could legally pay for the meals which were determined to have
been an integral part of the overall conference.
After citing the general rule that an employee may not be paid a per
diem allowance in lieu of subsistence at his permanent duty station, we
noted that in exceptional circumstances, payment for meals that are
incidental to meetings and conferences has been permitted. We found
that the 3-day conference in Goldberg met this test.
Recently, employees have claimed reimbursement relying on Goldberg's
three-part test for meals taken during the course of routine meetings
held at headquarters. Randall R. Pope and James L. Ryan, 64 Comp. Gen.
406 (1985), involved attendance by representatives of the Midwest Region
of the National Park Service at monthly meetings of the Omaha-Lincoln
Federal Executive Association. These luncheon meetings were organized
to permit representatives of various Government agencies to discuss
issues of common concern. In denying reimbursement for the meal, we
held that in order to meet the three-part Goldberg test, "a meal must be
part of a formal meeting or conference that includes not only functions
such as speeches or business carried out during a seating at a meal but
also includes substantial functions that take place separate from the
meal." 64 Comp. Gen. at 408. We noted the difficulty in determining
whether the meetings were incidental to the luncheon or whether the
luncheon was incidental to the meeting. We concluded that a meeting
that lasts no longer than the meal certainly does not qualify for
reimbursement.
Thus, the test of Pope and Ryan must precede the application of the
Goldberg three-part test. While the record of this case indicates that
the participants conducted business during a seating at a meal and for a
brief time thereafter, there is no evidence that any substantial
functions occurred separate from the meal. Thus, the meeting in this
case does not compare with the elaborate 3-day conference presented in
Goldberg, where the meals clearly were incidental to the conference, nor
does it meet the standard set forth in Pope and Ryan. We therefore
conclude that Mr. MacWilliams may not be reimbursed for meal expenses.
B-221855, 65 Comp. Gen. 505
Matter of: Challenger Pipings, Inc., April 18, 1986
Failure of the low bidder to list specific manufacturers and
suppliers of equipment the bidder was required to supply does not
require rejection of the bid where the listing requirement was not
intended to prevent bid shopping, but rather was intended to insure the
use of acceptable suppliers and manufacturers, and the low bidder agreed
to use suppliers which had been given prior approval by the procuring
agency and were on a list included in the invitation.
The test to be applied in determining the responsiveness of a bid is
whether the bid as submitted is an offer to perform, without exception,
the exact thing called for in the invitation. The required commitment
to the terms of the invitation need not be made in the manner specified
by the solicitation; all that is necessary is that the bidder, in some
fashion, commit itself to the solicitation's material requirements.
Protest that second low bid is nonresponsive is academic and not for
consideration where the protester has not presented a basis upon which
to question a prospective award to the low bidder.
Challenger Piping, Inc. (Challenger), protests the proposed award of
a contract to Fred B. DeBra Company (DeBra) under invitation for bids
(IFB) No. 539-84-101, issued by the Veterans Administration Medical
Center (VA), Cincinnati, Ohio for all necessary labor, material,
equipment, and supervision to modernize a VA boiler plant. Challenger
contends that the bids of the proposed awardee, DeBra, and the second
low bidder, H. F. Randolph Co. (Randolph) are nonresponsive for failure
to comply with an IFB special instruction which requires bidders to list
the manufacturers and suppliers of major equipment and materials,
thereby allegedly making Challenger's third low bid the lowest priced
responsive bid. The VA is withholding award pending the resolution of
this protest.
We deny the protest.
The IFB contained special instructions which required bidders to
supply certain information with their bids and stated that a bid would
be considered nonresponsive if it lacks the required information.
Special instruction No. 2 required bidders to:
List manufacturers and suppliers of major equipment and materials,
including burners, deaerator, instrumentation, pumps, emergency
generator, motor control center and temporary boilers (upon) which bid
is based. If manufacturers or suppliers are different from those listed
in section 15052 of this specification, bid shall include sufficient
qualifying information about each to assure full compliance with the
specifications. Bid will be considered non-responsive if any equipment
or material on which bid is based is determined by the A/E
(architect/engineer) Professional to not meet specification.
Section 15052 of the IFB listed acceptable manufacturers/suppliers of
the major equipment for the boiler project. Under most of the required
types of equipment, more than one manufacturer/supplier was listed as
acceptable to the VA.
In response to special instruction No. 2, DeBra's bid stated that it
would supply equipment of manufacturers/suppliers "in accordance with
those listed in section 15052 of the specification." DeBra's bid did not
specifically list which of the optional acceptable
manufacturers/suppliers of the various products outlined in section
15052 that it proposed to use.
Challenger argues that one of the VA's reasons for requiring a list
of manufacturers/suppliers was to prevent bid shopping. (Bid shopping
refers to the seeking after award by the prime contractor of lower-price
suppliers or subcontractors than those originally considered in the
formulation of the prime contractor's bid). A. Metz, Inc., B-213518,
Apr. 6, 1984, 84-1 C.P.D. Paragraph 386). Challenger contends that,
since the list of suppliers which DeBra referenced in its bid (section
15052 of the IFB) contained many acceptable suppliers, acceptance of
DeBra's bid would permit DeBra to bid shop.
The VA states that the purpose of the manufacturers/suppliers listing
clause was "to insure that acceptable equipment would be furnished by
the acceptable bidder." The agency argues that the solicitation sought
to encourage bidders to use suppliers that were listed in section 15052
of the IFB and states, therefore, that the listing requirement was not
an anti-bid shopping device, but a device to guaranty the use of
acceptable suppliers. The VA states that all of the equipment items
listed in section 15052 are standard commercial products and, therefore,
there would not be a need for an anti-bid shopping provision. The VA
concludes that DeBra's offer to use the suppliers listed in section
15052 is responsive to the IFB requirement.
We find that the clause in question, by its language, was not
directed against bid shopping. The clause states that a bid will be
considered nonresponsive if the equipment or material on which the bid
is based is determined by the VA's A/E professional not to meet the
specifications. We agree with the VA that this provision evidences an
intention to insure that the commercially available equipment conforms
to the government's specifications and not to prevent bid shopping. The
VA also indicates, and Challenger does not dispute, that the equipment
solicited is standard and commercially available. Thus, the danger of
bid shopping -- that the awardee may substitute a supplier after award
which could lead to shoddy workmanship or other cost cutting measures --
is not a significant concern. George E. Jensen Contractor, Inc.,
B-187653, Mar. 10, 1977, 77-1 C.P.D. Paragraph 181. Under these
circumstances, we think DeBra's bid need not be rejected for failure to
state specifically which of the manufacturers/suppliers it planned to
use. See John W. Cowper Co., B-190614, May 18, 1978, 78-1 C.P.D.
Paragraph 382; Dubicki & Clarke, Inc., B-190540, Feb. 15, 1978, 78-1
C.P.D. Paragraph 132.
Challenger also argues that, although DeBra referenced the list of
acceptable suppliers in section 15052 of the IFB, it did not comply
strictly with the solicitation requirement for the submission of a list
of manufacturers or suppliers. Challenger states that the requirement
is for a list and the submission at anything else does not meet the
literal terms of the solicitation. Challenger argues that such
noncompliance should render DeBra's bid nonresponsive. We disagree.
Responsiveness concerns whether a bid constitutes an offer to
perform, without exception, the exact thing called for in the
invitation. Central Mechanical Construction, Inc., B-220594, Dec. 31,
1985, 85-2 C.P.D. Paragraph 730; 49 Comp. Gen. 553, 556 (1970). Unless
something on the face of the bid, or specifically a part of it, limits,
reduces, or modifies the bidder's obligation to perform in accordance
with the terms of the invitation, the bid is responsive. Energy
Efficient Improvements, B-218014.3, Apr. 24, 1985, 85-1 C.P.D. Paragraph
466; 49 Comp. Gen. 553, 556, supra. The required commitment to the
terms of the invitation need not be made in the manner specified by the
solicitation; all that is necessary is that the bidder, in some
fashion, commit itself to the solicitation's material requirements.
Fisher Berkley Corp; International Medical Industries, B-196432;
B-196432.2, Jan. 9, 1980, 80-1 C.P.D. Paragraph 26; A. A. Beiro
Construction Co., Inc., B-192664, Dec. 20, 1978, 78-2 C.P.D. Paragraph
425. Furthermore, a solicitation requirement is not necessarily
material simply because it is accompanied by a warning that failure to
comply will result in rejection of the bid. Fisher Berkeley Corp.;
International Medical Industries, B-196432; B-196432.2, supra.
Here, as noted above, the material requirement in question was that
the bidder commit itself to use manufacturers/suppliers that either were
on the invitation's list of approved sources or to designate other
manufacturers/suppliers and then include sufficient information to show
full compliance with the specifications. The list itself was not the
material requirement; evidence of competent and satisfactory
manufacturers and suppliers was the material requirement. DeBra agreed
in its bid to use only contractors that were already approved by the VA,
and DeBra therefore committed itself to the material requirements found
in special instruction No. 2. Consequently, we conclude that DeBra's
bid was responsive to the requirement outline in special instruction No.
2.
Because we find that Challenger's contentions concerning the
responsiveness of DeBra's low bid are without merit and thus DeBra is in
line for award, we need not address Challenger's contention concerning
the responsiveness of the second low bid since the issue is academic.
Hawthorne Aviation, B-211216, Apr. 5, 1983, 83-1 C.P.D. Paragraph 369.
The protest is denied.
B-222483, 65 Comp. Gen. 504
Matter of: Environmental Tectonics Corp., April 16, 1986
General Accounting Office has no authority to consider a protest of
the award of a contract by the Government of Egypt to be financed under
the Foreign Military Sales program because the solicitation was issued
and the award made by other than a federal agency.
Environmental Tectonics Corp. protests the award of a contract for
aeromedical equipment to Technology, Inc. by the Government of Egypt.
The contract is to be financed by the Defense Security Assistance Agency
under the Foreign Military Sales program.
Under the Competition in Contracting Act of 1984 (CICA), 31 U.S.C.A.
Sections 3551-3556 (West Supp. 1985) and our implementing Bid Protest
Regulations, 4 C.F.R. Section 21.1(a) (1985), an interested party may
protest to this Office a solicitation issued by or for a federal agency
for the procurement of property or services, or the proposed award or
award of such a contract. A "federal agency" is defined to mean any
executive department or independent establishment in the executive
branch, including any wholly owned government corporation, and any
establishment in the legislative or judicial branch, except the Senate,
the House of Representatives, and the Architect of the Capitol and any
activities under his direction. See 4 C.F.R. Section 21.0(b).
Here, although it appears that the contract may be financed through a
loan made by a "federal agency," the solicitation was issued and the
award was made by the Government of Egypt, which clearly is not a
"federal agency." Since the protest does not concern a solicitation
issued by or for a federal agency, it does not fit within our bid
protest authority under CICA. See Chas. G. Stott & Co., Inc., B-220302,
Sept. 24, 1985, 85-2 CPD Paragraph 333.
The protest is dismissed.
B-221753, 65 Comp. Gen. 503
Matter of: Semtex Industrial Corp., April 15, 1986
Protest is dismissed where debarment proceeding against the protester
has been initiated because, pending a debarment decision, the firm is
not eligible for government contract awards.
Under the Small Business and Federal Procurement Competition
Enhancement Act of 1984, contracting agencies must refer to the Small
Business Administration nonresponsibility decisions against small
business concerns even though small purchase procedures are used.
Semtex Industrial Corp. (Semtex) protests the award of 51 purchase
orders from November 22 to December 31, 1985, pursuant to requests for
quotations (RFQ's) issued by the Defense Logistics Agency (DLA) for
electronic components. Semtex asserts that it submitted the low
quotation for each solicitation, but was improperly denied the
contracts.
We dismiss the protest.
The 51 purchase orders were awarded by DLA pursuant to small purchase
procedures, which apply to awards anticipated as less than $25,000 and
under which an agency has broad discretion with respect to making
purchases, including the authority to solicit only particular suppliers.
Gradwell Company, Inc., B-216480, Feb. 8, 1985, 85-1 C.P.D. Paragraph
166. DLA reports that due to past performance problems, contracting
officials recommended to the agency's debarring official that Semtex, a
small business concern, be debarred. As a result, Semtex was not
requested to submit quotations for the solicitations in question. DLA
further states that it nevertheless received and evaluated offers from
Semtex for 17 of the RFQ's. DLA reports that Semtex did not submit the
low quotation for three of them and, although Semtex was low for the
remaining 14, the firm was not awarded contracts because the contracting
officer determined that Semtex was not a responsible concern. Finally,
DLA has informed our Office that on March 24, 1986, the DLA debarring
official formally initiated debarment action against Semtex.
Semtex argues that DLA improperly subjected Semtex to a de facto
debarment by declaring the firm nonresponsible for the 14 solicitations
under which its quotations were low. Semtex complains that DLA neither
made the nonresponsibility determinations on a case-by-case basis nor
referred them to the Small Business Administration (SBA) for a
certificate of competency (COC) decision.
Under our Bid Protest Regulations, a protesting party must have some
legitimate interest in the matter before this Office will consider the
protest. 4 C.F.R. Section 21.1(a) (1985). A firm for which debarment
has been initiated is precluded from receiving any government contract
awards pending a final debarment decision. See Federal Acquisition
Regulation (FAR), 48 C.F.R. Section 9.406-3(c)(7) (1984). We will not
consider Semtex's protest on the merits because, even if we sustain the
protest, Semtex is not eligible to receive awards under any of the
protested solicitations. See Ikard Mfg. Co., B-213017, July 23, 1984,
84-2 C.P.D. Paragraph 80.
Despite our conclusion, we find it necessary for the purpose of
future procurements to point out a deficiency in the procedures followed
by DLA. In its report to this Office, DLA submits that it did not refer
the nonresponsibility determinations concerning Semtex to the SBA for a
COC because the agency was using small purchase procedures. To justify
this action, DLA relies on FAR, 48 C.F.R. Section 19.602-1(a)(2), which
provides that referral to SBA for COC consideration, normally required
when a small business is found nonresponsible by a contracting officer,
is not required in small purchases.
The exception in the FAR, however, no longer applies. Under the
Small Business and Federal Procurement Competition Enhancement Act of
1984, 15 U.S.C.A. Section 637(b)(7)(C) (West Supp. 1985), all
nonresponsibility determinations must be referred to the SBA for review
regardless of the dollar value of the contract unless the business
concern does not want its application considered. The W. H. Smith
Hardware Co., B-219654, Nov. 12, 1985, 85-2 C.P.D. Paragraph 536.
The protest is dismissed.
B-221538, 65 Comp. Gen. 500
Matter of: BWC Technologies, Inc., April 15, 1986
A quotation that is submitted 7 months after the date it was due, and
after the agency's repeated solicitation of the offeror during that
period, is not a late offer since it essentially was not submitted in
response to the solicitation. The quotation therefore cannot be
accepted without first surveying the market and permitting other
potential suppliers to submit quotations.
Where a drawing accompanying a timely small purchase quotation from
the protester is in need of clarification; the agency does not make
award for 7 months after receiving the drawing; and the agency actively
solicits the awardee's quote during the delay, the protester should have
been given an opportunity during the delay to clarify its drawing.
BWC Technologies, Inc. (BWC), protests the placing of a purchase
order with the Elliott Company (Elliott) under request for quotations
(RFQ) No. DLA-700-85-Q-EL10, issued by the Defense Logistics Agency
(DLA) under small purchase procedures for the procurement of 28 dirt and
liquid deflectors. BWC principally complains that its low quote
improperly was declared technically unacceptable since DLA solicited a
quote from Elliott over a period of months, while engaging in almost no
communication with BWC concerning its quote. We sustain the protest.
The RFQ, issued March 25, 1985, sought quotations on Elliott part
number 44B-3521-253C on or before April 25. Although the solicitation
warned that this manufacturer's part number was the only part number
approved for the solicitation and that no drawings were available at the
field activity, DLA considered alternate parts acceptable provided
offerors established the technical acceptability of such parts. BWC was
the only firm to respond by the closing date, and offered an alternate
part produced by Unique Systems, Inc. (Unique), for $209.71 each, but
furnished no drawings for the part. DLA requested drawings from BWC on
May 31, and by letter of June 5 BWC sent a drawing, which appeared to be
a copy of the original drawing for Elliott's part, as well as the name
and phone number of its contact person at Unique should additional
information be needed. In the meantime, DLA requested a quote from
Elliott by phone on May 31. On July 7, DLA again spoke to Elliott
concerning a price for the parts.
On September 19, BWC asked DLA whether an order had been placed and,
if so, with whom, and at what quantity and price. Another conversation
took place between DLA and Elliott on September 27, during which Elliott
indicated that a written quote was on the way. BWC's quote was sent for
technical review on October 2, and on October 17 the technical evaluator
determined that he did not have enough data to evaluate the quote,
particularly in the presence of certain handwritten dimensions on the
drawing BWC submitted. A fourth conversation between Elliott and DLA
took place on December 3, during which DLA again requested a price from
Elliott. A telex of the same date from Elliott proposed a price of $374
per item.
BWC received notice of its technical unacceptability on December 26,
and filed its protest with our Office on January 2, 1986. Though a
purchase order was placed with Elliott on January 8, DLA has directed
Elliott to cease performance.
BWC takes the position that Elliott's offer was late and should not
have been accepted. BWC also argues that it was at least unfair for DLA
to go to great lengths to secure a late offer from Elliott without
engaging in a similar effort to obtain clarification of BWC's drawing.
In this regard, BWC points out that since it submitted a Bureau of
Shipping number with its drawing, DLA itself could have cleared up any
doubts about the drawing BWC submitted by obtaining the original part
drawing from the government's drawing archives or from another agency.
DLA did not attempt to do so and never contacted BWC for clarification
or more information.
DLA asserts that BWC was on notice from the solicitation that DLA
kept no technical drawings, and that BWC thus should have known, in
offering an alternate part, that it was required to establish that
part's technical acceptability. DLA reports that the rejection of BWC's
offer was based on BWC's failure to include that technical data
necessary for evaluation of the part with its offer. It is DLA's view,
apparently, that it was not required to afford BWC a second opportunity
to furnish all the necessary technical information. At the same time,
DLA points out, the solicitation expressly reserved the right of the
government to consider late quotes, such as Elliott's, if "in (the
government's) best interests."
The small purchase procedures of the Federal Acquisition Regulation
(FAR) set forth abbreviated competitive requirements designed to
minimize administrative costs that otherwise might equal or exceed the
cost of relatively inexpensive items. For example, competition is
deemed sufficiently maximized where the contracting officer orally
solicits quotations from a reasonable number of sources (three or more).
FAR, 48 C.F.R. Section 13.106(b) (1984). Notwithstanding the
streamlined nature of small purchase procedures, we will review a small
purchase to assure that it was conducted in a manner consistent with
principles of fair and open competition. See Gradwell Company, Inc.,
B-216480, Feb. 8, 1985, 85-1 C.P.D. Paragraph 166. We find that BWC was
not treated fairly.
We cannot accept DLA's characterization of Elliott's December
quotation as simply a late quotation whose acceptance was authorized by
the solicitation, which DLA never had canceled. Solicitations that
establish due dates for offer submission contemplate that the field of
competition, and at least initial prices, will be drawn as of that
particular time. The rules that govern acceptance of late offers
address offers that are prepared and received close enough to that time
so that all firms that timely wanted to compete could, and on an equal
footing in terms of their current capabilities and pricing strategies.
Where an agency, however, itself actively solicits a quotation from a
firm that chose not to compete, and is only able to secure a price from
that firm more than 7 months after the solicitation involved has closed,
the agency has, in effect, conducted a new procurement, and on an
improper sole-source basis; the fact that the solicitation never was
formally canceled is irrelevant. The quotation in such case really is
not submitted in response to the solicitation to which timely offerors
responded, and its submission and acceptance occur at a time so removed
from the closing date that changes in economic conditions, and in the
number of potential competitors and suppliers, may warrant another
review by the agency of the market to ascertain whether an open
competition is appropriate. In this case, for example, by the time the
Elliott quote came in, BWC may have secured other drawings or made
arrangements with other suppliers, or other firms may have entered the
field.
We also do not think it was reasonable for DLA to solicit a quote
from Elliott repeatedly over a period of 7 months without also
permitting BWC an opportunity to clarify the dimensions shown on its
drawing, or to provide other information during this lengthy delay.
That is, once DLA determined that award could be delayed significantly
beyond the closing date to enable Elliott to compete, we believe
fairness required that DLA also permit BWC to benefit from the delay;
the agency at least should have telephoned BWC for clarification, since
the evaluator determined only that it was unclear from BWC's drawing
whether BWC's alternate part was acceptable. Time certainly does not
appear to have been a factor in the decision not to seek clarification
since, even ignoring the fact that DLA was in possession of BWC's
drawing as of June 5, the technical review was conducted October 17,
almost 3 months prior to the January 8 award to Elliott. The failure to
permit BWC to clarify its offer constituted unequal treatment under the
circumstances, and was improper.
In view of our conclusion, by separate letter to DLA we are
recommending that the agency survey the market to determine whether
there is new interest in the requirement since the RFQ first was issued
and, if there is such interest, permit those firms to submit quotations.
In any case, BWC should be afforded an opportunity to clarify its
drawing and establish that its alternate part will meet DLA's needs. If
BWC's or some other offeror's part meets DLA's requirements, Elliott's
contract should be terminated and award should be made to the low
offeror.
The protest is sustained.
B-221133, 65 Comp. Gen. 497
Matter of: Department of Defense Military Pay and Allowance
Committee Action Number 559, April 15, 1986
Travel allowances payable in advance to enlisted service members at
the time of their final discharge for their subsequent personal travel
home may not properly be subjected to offset on account of their debts
to the Government, since it has long been recognized as a matter of
public policy that it is impermissible to discharge enlisted service
members at their last post of duty without the means of returning home.
This policy has no application to former enlisted members who have
completed their separation travel, however, and travel allowances
remaining due to them after they have returned home may be withheld and
applied against their debts.
The question presented in this matter is whether --
In the case of an enlisted military member being separated from the
Service while indebted to the United States, may an administrative
offset from final pay include payments for the member's separation
travel due after completion of travel? /1/
We conclude that separation travel allowances which remain due to the
former enlisted members, after they have been discharged and have
completed their travel home from their last duty station, may properly
be withheld and applied toward the satisfaction of their debts. This,
however, does not extend to travel allowances payable in advance to
enlisted service members at the time of their final discharge for their
subsequent personal travel home.
Subsection 404(a) of title 37, United States Code, currently provides
that under regulations prescribed by the Secretaries concerned, members
of the uniformed services are entitled to allowances for their personal
travel upon separation from service from their last duty station to
their home or the place from which they were called or ordered to active
duty. Subsection 404(f)(2)(A) of title 37 further provides, however,
that only transportation in kind by the least expensive mode of
transportation available, or a monetary allowance that does not exceed
the cost to the Government of such transportation in kind, may be
furnished to enlisted members who (1) on the date of their separation
have not served a period of active duty equal to at least 90 percent of
the period of time for which they initially enlisted, or (2) are
separated from the service under other than honorable conditions.
Implementing regulations are contained in Volume 1 of the Joint
Travel Regulations. Paragraph M1100-1 of those regulations generally
authorizes full payment of service members' personal travel allowances
in advance of the performance of separation travel, subject to certain
limitations and conditions. Paragraph M1100 also provides specifically,
however, that those service members described by 37 U.S.C. Section
404(f)(2)(A), who elect to receive a monetary allowance rather than to
be provided with transportation in kind for their separation travel, may
only be advanced an amount equal to 75 percent of the least costly mode
of common carrier transportation available.
The Department of Defense Military Pay and Allowance Committee notes
that in 1954 we held that travel allowances payable to enlisted members
upon discharge for their personal travel home are not subject to setoff
against their debts to the Government, and this holding has been
incorporated in the regulations governing their pay entitlements. /2/
The Committee further notes, however, that in 1955 we subsequently held
that allowances payable under the statutes and regulations then in
effect to former service members after their separation as reimbursement
for the transportation of their dependents and household goods could be
subject to set off against the members' debts, since "(t)he fact that
reimbursement is claimed shows that the members had sufficient funds (in
advance) to obtain the necessary transportation." /3/
The Committee indicates the belief that when former enlisted service
members have returned to their homes after being discharged and then
seek reimbursement of their personal travel expenses, there should
similarly be no need for concern about the possibility of their having
insufficient funds to travel home. The Committee consequently questions
whether amounts remaining due to former enlisted service members for
their separation travel, after that travel is performed, may properly be
withheld and applied toward the satisfaction of their debts to the
Government. The Committee indicates that this question primarily
concerns former members who fail to complete their initial terms of
enlistment or are discharged under other than honorable conditions, and
who are consequently eligible to draw only a part of their authorized
monetary travel allowance in advance of their actual performance of
travel under the current regulations. However, the issue would relate
generally to all former enlisted members applying for reimbursement of
their personal traveling expenses after completing their travel home.
It is well settled that amounts due from the Government to former
members and under certain circumstances to current members of the
uniformed services, including travel allowances which may be payable to
them, are subject to setoff against their debts to the Government. /4/
Nevertheless, the accounting officers of the Government have long held
that the debts of enlisted members may not properly be charged against
the allowances payable to them at the time of their discharge for the
purpose of providing them with return travel to their home or place of
enlistment. /5/ This principle is not specifically prescribed by
statute, but is predicated on the longstanding and uncontroverted view
that the Congress, as a matter of public policy, did not intend that
enlisted members should be discharged, often far from home, without
sufficient funds to return to their homes. /6/ This policy was founded
on an observation that it would be highly injurious to the service, to
say nothing of the country at large, to discharge enlisted service
members in places distant from their homes and leave them without the
means of returning there. /7/
In the present matter it is therefore our view that under the
statutes and regulations currently in effect, enlisted service members
may be paid advance travel allowances at the time of their final
discharge for their travel home to the extent authorized under paragraph
M1100-1 of the Joint Travel Regulations, without any checkage on account
of debts they owe the Government. Our further view is, however, that
amounts due former enlisted members on claims for reimbursement
submitted after they have completed their separation travel should be
subjected to offset if they are indebted to the Government. In that
situation where the separation travel has been completed there can be no
basis for invoking the policy of exempting travel allowances from setoff
to avoid the possibility of stranding former service members at their
last post of duty without the means of returning home.
The question presented is answered accordingly.
(1) This question was submitted by the Principal Deputy Assistant
Secretary of Defense (Comptroller). The circumstances giving rise to
the question are described in Department of Defense Military Pay and
Allowance Committee Action Number 559, which was forwarded with the
request for a decision.
(2) See 34 Comp. Gen. 164, 167 (1954); and table 7-7-6 (rules 1 and
4), Department of Defense Military Pay and Allowances Entitlements
Manual.
(3) See 34 Comp. Gen. 504, 506-507 (question 2) (1955). There we
also noted that the longstanding policy against withholding travel
allowances due enlisted members upon separation had never been extended
to and did not apply to officers of the uniformed services.
(4) See 58 Comp. Gen. 501, 503 (1979); and David J. DuCharme,
B-188257, July 7, 1977.
(5) See, e.g., 20 Comp. Dec. 707 (1914) and 8 Comp. Dec. 624 (1902).
(6) 36 Comp. Gen. 106, 107 (1956); 34 Comp. Gen. 164, supra, at 167.
(7) 8 Comp. Dec. 624, supra, at 625. In addition, it has long been
the rule that if indebted enlisted members are given an option at the
time of their discharge of receiving either a monetary allowance or
transportation in kind for their travel home they need not choose
transportation in kind and may instead elect to receive the full amount
of the advance travel allowance authorized without checkage on account
of their debts. 20 Comp. Dec. 707, supra, at 709.
B-221333, 65 Comp. Gen. 490
Matter of: Tandem Computers, Inc., April 14, 1986
Protester may delay filing protest until after debriefing is held
where protest is based on information regarding the awardee's proposal
and that information was first revealed at the debriefing.
Awardees noncompliance with salient characteristics set out in a
request for proposals may not be waived notwithstanding that awardee's
product meets the government's needs, since the characteristics were
material to protester's and other potential offerors' decision to
compete.
Offerors may reasonably rely on request for proposals as indicating
the government's needs. Where, based on such reliance, a protester
submits a proposal that is in line for award but is not accepted because
the government determines that its needs can be met by significantly
less expensive equipment of different type, the protester may recover
its proposal preparation costs unless it chooses to compete under the
revised RFP.
Tandem Computers, Inc. protests the award of a contract to Federal
Computer Corporation under request for proposals (RFP) No.
N00189-85-R-0379, issued by the Navy on a brand name or equal basis for
computer hardware, software, training and maintenance for the Navy's
Automated Procurement and Accounting Data Entry System. The protester
contends that the hardware offered by Federal Computer failed to meet
several salient characteristics in the RFP. We sustain the protest.
The RFP called for an indefinite quantity of hardware, software and
related services to be provided over a 3-year period from the date of
award. The principal hardware items to be furnished were display
terminals, identified as Tandem Model 6530, or equal; workstations,
identified as Tandem Model 6546, or equal; and cluster concentrators,
identified as Tandem Model 6820, or equal.
Proposals were received from three offerors: the protester, Federal
Computer, and Federal Data Corporation. The protester and Federal Data
offered the brand name terminals, workstations, and concentrators;
Federal Computer offered IBM Personal Computers (PCs and PC/XTs (PC)),
and Tandem 6600 cluster controllers. The Navy found all three offerors'
initial proposals to be technically acceptable but subject to
clarification. Following clarification, all three offerors submitted
best and final offers, which were found to be acceptable. Award then
was made on November 15, 1985 to Federal Computer as the lowest-priced,
technically acceptable offeror.
According to Tandem, the PCs and controllers offered by Federal
Computer are not equivalent to the brand name products and were not
acceptable.
Timeliness
At the outset, we consider the Navy's contention that Tandem was on
notice by November 19 of the facts on which its protest is based. The
Navy argues that the protest is untimely and should be dismissed because
it was not filed until December 9, more than 10 working days after the
basis of protest was or should have been known, as provided by our Bid
Protest Regulations. 4 C.F.R. Section 21.2(a)(2) (1985).
The protester was first notified of the award during a November 19
telephone conversation with the Navy contract specialist. While the
parties disagree as to the precise content of the conversation; they
agree that Tandem was given some information regarding the manufacturer
and model number of the major hardware and software proposed by Federal
Computer. The parties also agree that Tandem orally requested a
debriefing and was told that such a request would have to be made in
writing. On November 21, Tandem sent the Navy a telegram requesting a
debriefing.
Tandem also on that date telephoned the Navy's project manager.
According to Tandem, the purpose of this call was to ensure that Tandem
received official notice of the award and a debriefing in a timely
fashion. Tandem admits that during the conversation it acknowledged
that it was aware of the award to Federal Computer and had been given a
partial hardware and software list. The Navy maintains that Tandem's
remarks went further, and raised specific objections regarding Federal
Computer's compliance with the salient characteristics.
The protester disagrees with the Navy's position, arguing that it had
insufficient information on which to formulate its protest until the
debriefing, which was held on November 25, and that it then filed a
timely protest with our Office on December 9, the ninth working day
after the debriefing. Tandem says it could not formulate its protest
without obtaining more detailed technical information than was provided
earlier, because it had no information concerning Federal Computer's
plans to achieve required integration of the products with the Navy's
existing system.
We think that the protest is timely. Even assuming, as the Navy
argues, that Tandem could have formulated some grounds for its protest
based on the information available before the debriefing, the record
shows that Tandem had not yet received comprehensive information about
the awardee's proposal. Tandem acted in a timely manner to arrange a
debriefing. Under these circumstances, we do not believe Tandem was
required, in effect, to file its protest piece-meal, as information on
Federal Computer's proposal was obtained; it was reasonable for Tandem
to delay filing its protest until after the debriefing. See American
Management Systems, Inc., B-215283, Aug. 20, 1984, 84-2 CPD Paragraph
199. Since the protest was filed within 10 days after the debriefing,
the protest is timely. 4 C.F.R. Section 21.2(a)(2).
Salient Characteristics
The Navy, in part, concedes Tandem's contention that Federal
Computer's proposal did not comply with several of the salient
characteristics identified in the RFP. The agency acknowledges that
Federal Computer did not comply with characteristics requiring 16
programmable function keys and an adjustable key "click" feature. The
Navy also admits that data communications using the proposed equipment
will not fully conform to the RFP.
The RFP describes the salient characteristics of the workstation
keyboard in relevant part as follows:
The keyboard shall be detachable and low profile, have a two-position
tilt angle (5-15 degrees), have sculptured keys, contain 16 programmable
function keys, cursor control and edit keys, adjustable click sound and
10 IBM PC compatible function keys. (Italic supplied.)
The Tandem brand name workstation includes a total of 26 separate
keys: one set of 10 IBM PC compatible keys, plus a set of 16 additional
keys that are not found on the standard PC keyboard. When the Tandem
workstation is being used as a personal computer, the 10 IBM PC
compatible keys are activated; the other 16 function key set is
activated when the workstation is used as a terminal connected to a
mainframe computer.
The protester's argument concerning the keyboard focuses on the
requirement for this "16 + 10" key configuration, and particularly on
the requirement that 16 separate function keys be available when the
workstation is used as a computer terminal. It says that the equipment
accepted not only deviates physically from the salient characteristic,
and is therefore unacceptable, but that the IBM PC is not functionally
equivalent because, due to the fewer number of keys, operators must
strike multiple keys to perform functions that are performed with a
single key on the brand name equipment.
In response, the Navy says the IBM PC is acceptable to it because the
PC can perform the same functions as the Tandem workstation. It points
out that in terminal mode the 16 separate function keys on the Tandem
model perform a total of 32 functions when depressed along with an
auxiliary key. The 10 function keys included on the IBM PC keyboard,
when used in combination with auxiliary keys ("shift", "alt", and
"control"), can perform a total of 40 functions. The Navy says, citing
Magnaflux Corp., B-211914, Dec. 20, 1983, 84-1 CPD Paragraph 4, that it
was proper for it to waive Federal Computer's noncompliance with the 16
+ 10 key requirement and award the contract to that firm, since the
protester does not make a less expensive IBM-like machine, and thus was
not prejudiced by waiver of the requirement.
We find that the IBM PC offered by Federal Computer does not contain
the 16 separate programmable function keys identified as a salient
characteristic of the Tandem product and that its proposal, therefore,
did not conform to the RFP. In brand name or equal procurements, when
salient characteristics are listed in terms of specific performance
standards or design features, the "equal" product must meet these
requirements precisely. Cohu, Inc., B-199551, Mar. 18, 1981 81-1 CPD
Paragraph 207. Further, a brand name or equal solicitation describing
various aspects of a particular firm's approach as salient
characteristics is not to be interpreted as expressing only a functional
requirement. Castle/Division of Sybron Corp., B-219056, Aug. 7, 1985,
85-2 CPD Paragraph 142; MII Lundia, Inc., B-214715, Jan, 3, 1985, 85-1
CPD Paragraph 14. On the contrary, technical requirements, stated in
clear and precise terms, are presumed to be material to the needs of the
government. MII Lundia, Inc., B-214715, supra. Notwithstanding that
negotiated procurement techniques are used, offerors have the right to
assume that such requirements will be enforced and, on the basis of
them, to anticipate the scope of competition for award. Squibb-Vitatek,
Inc., B-205306, July 27, 1982, 82-2 CPD Paragraph 81.
We also find that Federal Computer failed to offer the adjustable key
click required by the RFP. A key click feature makes a sound when the
operator strikes a key. The adjustable click feature permits the
operators to control the volume of the sound. The Navy does not argue
that the RFP requirement was met, but rather, as in its defense of the
function key issue, states that it has determined that it does not
require the adjustable click feature. According to the Navy, the
requirement was included because the description of the salient
characteristics in the RFP was taken directly from the descriptive
literature for the brand name model, which has the adjustable feature,
without first considering whether the feature was required to meet the
Navy's needs.
Finally, the RFP required concentrators to permit multiple terminals
to communicate over a single line with a mainframe that, the record
shows, presently supports a Tandem 6530 protocol. /1/ Specifically, the
RFP identified the brand name product as a Tandem 6820 Terminal Cluster
Concentrator and stated that the hardware proposed "shall communicate
using the 6530 Tandem line protocols."
While Federal Computer originally proposed the Tandem 6820
concentrator, it substituted a Tandem 6600 cluster controller in its
best and final offer. It is not clear why it made the substitution,
which, as the Navy points out, involves a more expensive unit. It is
clear, however, that the 6600 model communicates with mainframe
equipment using an IBM protocol and does not support a Tandem 6530
compatible data stream (much less the 6530 protocol) unless additional
software is installed on the mainframe. Federal Computer's best and
final offer did not propose such software, although the Navy reports
that the awardee subsequently indicated it would be furnished without
additional cost.
According to Tandem, only its model 6820 concentrator, or one of
several fully equivalent competing products, meets the Navy's
requirements as stated in the RFP; Tandem insists the equipment offered
by Federal Computer does not support the required protocol and is
unacceptable. In response, the Navy says that with the software Federal
Computer says it intended to include, the controller will support 6530
communications to the PCs, although the Navy admits that communications
with the mainframe will not conform to the protocol.
Even assuming that Federal Computer would be legally bound to furnish
software it does not mention in its proposal (and only confirmed
orally), this would only allow the 6600 controller to support the Tandem
protocol between the controller and the workstations. Input to the 6600
controller from the mainframe must still conform to the IBM standards.
Consistent with the cases cited earlier, we look to the brand name
product in interpreting the scope of a listed salient characteristic.
The Tandem 6820 supports the 6530 protocol in communicating both with
the mainframe and with the terminals connected to it. Tandem's
interpretation of the salient characteristic as requiring its 6820
concentrator, or other equipment that is equally capable of using the
6530 protocol, thus appears to be correct. As a result, Federal
Computer failed to comply with the salient characteristic since
communications between the 6600 model and the mainframe will not conform
to the 6530 protocol as required.
In support of its decision to make award to Federal Computer despite
its noncompliance with the salient characteristics discussed above, the
Navy maintains that waiver of the noncompliance was proper because the
awardee's equipment will meet the Navy's needs and Tandem was not
prejudiced. We believe, however, that the waiver involved a significant
deviation from the salient characteristics and resulted in prejudice to
Tandem and other potential offerors. Federal Computer's offer to
furnish 10 physical function keys is not substantially equivalent to an
offer to furnish a 10 + 16 key configuration; the differences in the
configurations offered have a direct bearing on how the operator uses
the equipment, because more keystrokes must be entered. Moreover,
differences between protocols have a direct impact on the
interchangeability and compatibility of equipment; the record shows,
for example, that the 6820 (but not the 6600) concentrators can be
cascaded -- connected to each other to increase the number of units
supported. In view of Federal Computer's failure to comply with these
requirements, we need not decide whether, as the Navy contends, the key
click discrepancy, standing alone, could have been waived.
Concerning prejudice, we think it is significant, as Tandem points
out, that while it is only one of several manufacturers who produce
equipment equivalent to the brand name product, there are many
manufacturers who offer less expensive units that are functionally
similar to the IBM PC offered by Federal Computer. Tandem asserts that
if potential offerors had understood that the Navy did not need
specialized equipment such as it manufactures, the government would have
received many more offers than it did from manufacturers of these
PC-type units. For its part, Tandem says that, had it known of the
Navy's actual needs, it might well have elected not to compete. Tandem
thus was prejudiced by the Navy's action inasmuch as the Navy induced
Tandem to incur the cost of competing in a procurement in which it might
not have participated had it known the Navy did not need the kind of
terminals it manufactures.
In these circumstances, it is clear that the Navy acted improperly in
relaxing its requirements without amending the RFP. Of course, the Navy
should not acquire equipment that exceeds its needs; the proper course
of action was to solicit offers under an RFP with salient
characteristics that reflected only the government's actual
requirements. See Andrew Corp., et al., B-217024, et al., Mar. 25,
1985, 85-1 CPD Paragraph 344; Scanray Corp., B-215272, Sept. 17, 1984,
84-2 CPD Paragraph 299. Consequently, we are recommending that the
contract awarded to Federal Computer be terminated for convenience and
that the Navy resolicit using revised specifications that will permit
competition from vendors who may be capable of meeting the government's
needs but who could not have met the unduly restrictive requirements set
out in the original solicitation.
We also find Tandem entitled to its proposal preparation costs and
the costs of filing and pursuing its protest, including attorney's fees.
First, we allow recovery of bid or proposal preparation costs if the
protester was improperly excluded from the competition and none of the
remedies listed in section 21.6(a)(2)-(5) of our regulations, 4 C.F.R.
Section 21.6(a), is appropriate. EHE National Health Service, Inc.,
B-219361.2, Oct. 1, 1985, 85-2 CPD Paragraph 362. Although we are
recommending recompetition, a remedy specifically provided for in
section 21.6(a)(3), in this case that remedy may not benefit the
protester since Tandem generally does not compete in the market for
PC-type units. Since by using the specifications it did the agency
improperly induced Tandem to incur the expense of competing, we
concluded that Tandem should recover its proposal preparation costs.
If Tandem does decide to participate in the recompetition, however,
as it indicated it might attempt to do, Tandem may not also recover its
proposal preparation costs.
Second, regardless of whether Tandem participates in the
recompetition, our sustaining its protest here will further the purpose
of the Competition in Contracting Act of 1984, Pub. L. No. 98-369, title
VII, 98 Stat. 1174, by broadening competition. Under these
circumstances, Tandem is entitled to its protest costs. Washington
National Arena Ltd. Partnership, B-219136, Oct. 22, 1985, 65 Comp. Gen.
25, 85-2 CPD Paragraph 435. Tandem should submit its claims for such
costs directly to the agency. 4 C.F.R. Section 21.6(f).
The protest is sustained.
(1) A protocol is a set of rules governing the operation of a
communication system in order to communicate with each other, the units
in the system must follow the same protocol.
B-219828.3, 65 Comp. Gen. 488
Matter of: Edgewater Machine & Fabricators, Inc., April 14, 1986
While a protest against the award of a contract to a materially
unbalanced offeror was sustained, the protester's subsequent claim for
proposal preparation costs and the costs of filing and pursuing the
protest is denied where the record shows that the protester did not have
a substantial change of receiving the award and was therefore not
unreasonably excluded from the competition because the protester's price
proposal was also materially unbalanced, although to a lesser degree.
Edgewater Machine & Fabricators, Inc. (Edgewater) has submitted a
claim for proposal preparation costs and the costs of pursuing its
protest, including attorney's fees, following our decision, Edgewater
Machine & Fabricators, Inc., B-219828, Dec. 5, 1985, 85-2 CPD Paragraph
630, sustaining its protest. The protest concerned the award of a
contract for missile shipping containers to Precision Machining, Inc.,
by the Department of the Army under request for proposals (RFP) No.
HAAH01-85-R-0430. Essentially, Edgewater had protested that Precision's
price for the containers, although low, was not reasonable because its
price for units to be delivered for first article testing was so high
that Precision would receive a financial windfall by being paid all of
its anticipated overhead costs and profit before completing the first
production unit.
We deny Edgewater's claim for proposal preparation costs and for the
costs of pursuing the protest, including attorney's fees.
By way of background, of the 18 proposals received by the Army, the
four lowest priced were rejected or withdrawn. Precision's price of
$2,989,139 was then the lowest and was composed of $750,000 for the six
first article units at $125,000 each and $2,239,139 for the 7,439
containers at $301 each. Precision's total price without the first
article units was $2,983,039 for 7,439 containers at $401 each, or
$6,100 less than its bid with first articles. Edgewater's price of
$3,128,648.80 included the price of $159,000 for the six first article
units at $26,500 each and was the second lowest offer. Its bid without
first articles was $2,781 less. The Army awarded a contract requiring
the first article units to Precision; Edgewater then filed its protest.
Edgewater conceded in its protest that Precision's total price was
low and reasonable, but contended that the loading of the first article
units with a price of $750,000 resulted in the other items not carrying
their share of the costs of the work and profit.
In sustaining the protest, we found that the actual value of the
first articles, as determined from the face of the bids, nowhere
approached the amount bid by either Precision or Edgewater. Rather, the
bid prices received strongly suggested to us that Precision valued the
first articles at about $6,100 (the difference in its total bid with and
without first articles). We found that contracts based on bids such as
Precision's that are egregiously front-loaded provide the contractor
with funds to which it is not entitled if payment is to be measured on
the basis of value received. Thus, as in Riverport Industries, Inc., 64
Comp. Gen. 441 (1985), 85-1 CPD 364; aff'd upon reconsideration,
B-218656.2, July 31, 1985, 85-2 CPD Paragraph 108, we held that even if
a bid offers the lowest price to the government, but is grossly
unbalanced mathematically, it should be viewed as materially unbalanced
since acceptance of the bid would result in the same evils as an advance
payment. An advance payment is prohibited by law and occurs where a
payment under a contract to provide a service or delivery an article is
more than the value of the service already provided or the article
already delivered. See 31 U.S.C. Section 3324(a) (1982). However, we
also noted that Edgewater's bid suffered from the same defect because it
had valued the first articles at about $2,800 (as compared with its
actual bid price of $159,000 for the six first articles). Thus, we did
not recommend termination of Precision's contract.
Edgewater now requests that it be allowed recovery of its bid
preparation costs and the costs of filing and pursuing its protest,
including attorney's fees. We will allow a protester to recover its bid
preparation costs only where the protester had a substantial chance of
receiving the award, but was unreasonably excluded from the procurement,
and the remedy recommended is not one delineated in 4 C.F.R. Section
21.6(a)(2-5) (1985). See EHE National Health Services, Inc.,
B-219361.2, Oct. 1, 1985, 65 Comp. Gen. 1, 85-2 CPD Paragraph 362. Our
regulations also only permit recovery of the costs of filing and
pursuing a protest in situations where the protester is unreasonably
excluded from the procurement. 4 C.F.R. Section 21.6(e).
Since Edgewater's bid was also front-loaded and, thus, also
materially unbalanced (albeit to a lesser degree than the bid of
Precision), it is clear that under the Riverport standard, Edgewater was
not entitled to the award even if Precision's bid was rejected. It
follows that Edgewater was not unreasonably excluded from the
procurement.
There is, therefore, no basis to recommend the award of proposal
preparation costs and the costs of pursuing the protest.
The claim is denied.
B-219220, 65 Comp. Gen. 485
Matter of: John R. MacDonald, April 14, 1986
When an agency assigns employees to the merit pay system and then
reassigns them back to the General Schedule system, those employees are
not entitled to retroactive pay and within-grade waiting time credit
equal to what they would have accrued if they had remained in the
General Schedule system, unless administrative error occurred. An
agency that properly converted an employee to merit pay status and then
reconverted him to the General Schedule upon its prospective adoption of
a new standard of employee coverage under the merit pay system, and
properly assigned the employee to comparable pay levels, acted in
conformity with the relevant statutes and regulations, and did not
commit administrative error. Therefore, the employee is not entitled to
additional pay and within-grade waiting time credit based on his claim
that he was improperly assigned to the merit pay system.
We have been asked to review a settlement of our Claims Group denying
the claim of Environmental Protection Agency (EPA) employee John R.
MacDonald for backpay and within-grade step increase waiting time credit
arising out of his assignment to the merit pay system. In light of the
facts presented, and the applicable provisions of statute and
regulation, we deny Mr. MacDonald's claim and sustain our Claims Group's
settlement in the matter.
The Civil Service Reform Act of 1978 established a merit pay system
for federal supervisors and management officials in GS-13, 14 and 15
positions. Employees assigned to the merit pay system receive pay
adjustments based upon performance appraisals and are eligible for cash
awards in recognition of superior service. See, generally, 5 U.S.C.
Sections 5401-5405.
Mr. MacDonald, a grade GS-13, step 4, employee at the EPA, was
determined to be a "management official" and was consequently assigned
to the merit pay system on October 4, 1981. As a result he was also
found ineligible for membership in his labor-management bargaining unit.
He was classified as a GM-13, and placed into a pay scale comparable to
GS-13, step 4, which resulted in an increase in his pay at that time
equal to the comparability increase applicable to GS-13, step 4, which
became effective on that date, under 5 U.S.C. Section 5402(c)(2). On
November 30, 1982, the American Federation of Government Employees
brought charges against the EPA on Mr. MacDonald's behalf before the
Federal Labor Relations Authority (FLRA). The union alleged that the
EPA improperly removed Mr. MacDonald from membership in a bargaining
unit. The charges were subsequently withdrawn on March 29, 1983, and we
have been advised that an informal settlement was reached. Based upon
the FLRA interpretation of the term "management official" announced in
Department of the Navy, Automatic Data Processing Selection Office, 7
FLRA 24, October 30, 1981, the agency reviewed its implementation of the
merit pay system. Under the new standard, several hundred employees,
including Mr. MacDonald, no longer qualified for merit pay, and were
reassigned to the General Schedule. The EPA reassigned Mr. MacDonald to
the General Schedule on April 3, 1983, in grade GS-13, step 5, pursuant
to 5 C.F.R. Section 531.204(d).
Mr. MacDonald petitioned the EPA for additional amounts he believed
he would have earned if he had not been assigned to the merit pay
system. He also asked that the waiting period for his increase to step
6 be deemed to have begun on March 9, 1982, because his grade GS-13
within-grade step increase qualifying date prior to his conversion to
merit pay had been March 9.
The EPA referred this claim to the Claims Group of our Office. The
Claims Group determined that Mr. MacDonald was not entitled to backpay
and restoration of his initial within-grade qualifying date because the
EPA did not commit administrative error in assigning him to merit pay
status. The Claims Group found that the EPA violated no statutory,
regulatory or nondiscretionary policy, and there was therefore no reason
for allowing his claim. Mr. MacDonald has now requested a review of our
Claims Group's determination.
The law governing merit pay was enacted in Title V of the Civil
Service Reform Act of 1978, Public Law 95-454, approved October 13,
1978, 92 Stat. 1179, as amended and codified, 5 U.S.C. Sections
5401-5405. It is provided under 5 U.S.C. Section 5402 that:
(a) * * * the Office of Personnel Management shall establish a merit
pay system * * *.
(c)(2) Any employee whose position is brought under the merit pay
system shall, so long as the employee continues to occupy the position,
be entitled to receive basic pay at a rate of basic pay not less than
the rate the employee was receiving when the position was brought under
the merit pay system * * *.
Implementing federal regulations issued by the Office of Personnel
Management state that when an employee loses merit pay status, "the
employee shall receive his or her existing rate of basic pay, plus * * *
(4) In the case of an employee whose resulting rate of basic pay falls
between two steps of a General Schedule grade * * * the amount of any
increase that may be necessary to pay the employee the rate for the next
higher step of that grade * * *." 5 C.F.R. Section 531.204(d).
Our decisions have generally held that personnel actions cannot be
made retroactively effective unless clerical or administrative errors
occurred that (1) prevented a personnel action for taking effect as
originally intended; (2) deprived an employee of a right by statute or
regulation; or (3) would result in failure to carry out a
non-discretionary administrative regulation or policy if not adjusted
retroactively. Benedict C. Salamandra, B-212990, July 23, 1984;
Internal Revenue Service, 55 Comp. Gen. 42 (1975). We have specifically
held that agencies have the authority to determine coverage under the
merit pay system, and that a redetermination of an employee's status
returning him to a General Schedule position is not viewed as resulting
from administrative error which would warrant correction of the
personnel action. Benedict C. Salamandra, B-212990, supra.
The determination of whether each individual employee should be under
the merit pay system is the responsibility of the head of each agency.
5 C.F.R. Section 540.102(c) (1980) (currently 5 C.F.R. Section
540.103(b)(1)). That determination is to be made under the definitions
of the terms "supervisor" and "management official" as contained in 5
U.S.C. Section 7103(10) and (11) relating to labor-management relations
for federal employees. The same definitions are applied by the Federal
Labor Relations Authority in determining whether employees are eligible
for inclusion in a bargaining unit, i.e., supervisors and management
officials may not be included. Under this authority to place positions
under the merit pay system, some agencies adopted a broad definition of
"management official" which resulted in the inclusion of all or most
individuals in General Schedule levels GS-13, 14 and 15 in the merit pay
system. A secondary result was the removal of some of these individuals
from labor bargaining units. Employee appeals of such removals to the
Federal Labor Relations Authority resulted in the adoption of a narrow
definition of "management official" by the Authority for purposes of
bargaining unit inclusion. Thus the Authority determined that many
individuals included in the merit pay system should not be excluded from
the bargaining units of their activities but, in making that decision,
the Authority specifically noted that it had no authority to determine
whether these same employees were properly included under the merit pay
system because this responsibility had been given to the heads of
government agencies. 4 FLRA 99, December 16, 1980, as applied in
Department of the Navy, Automated Data Processing Selection Office, 7
FLRA 24, supra.
The agency determination to include the affected employees in the
merit pay system was not and could not be overturned by the Federal
Labor Relations Authority. However, upon reevaluation in light of the
Federal Labor Relations Authority interpretation of the terms being
applied, the agency removed hundreds of individuals from the merit pay
system.
In similar circumstances, we have held that no administrative error
occurs when individuals are converted to the merit pay system based upon
reasonable agency classification of positions. Thus, when the employees
are returned to General Schedule positions they are not entitled to have
their pay recomputed as if they had never been included in the merit pay
system. Instead, the employees are subject to the pay computation
applied to individuals removed from the merit pay system by authorized
administrative action. Benedict C. Salamandra, B-212990, supra.
In the present case, the EPA established Mr. MacDonald's pay upon
conversion to the merit pay system in conformance with 5 U.S.C. Section
5402(c)(2). After adopting the FLRA interpretation of "management
official," the EPA reassigned Mr. MacDonald to the General Schedule as a
GS-13, step 5, as provided by 5 C.F.R. Section 531.204(d). Since that
action did not involve the correction of an administrative error,
recomputation of pay for the period of time Mr. MacDonald was subject to
the merit pay system and allowing him pay as if never assigned to that
system is not authorized. Accordingly, there is no basis for
retroactively adjusting Mr. MacDonald's pay or within-grade waiting
credit. We therefore deny the claim of Mr. MacDonald to backpay and
within-grade waiting time credit.
B-218489.4, 65 Comp. Gen. 476
Matter of: Mounts Engineering, April 14, 1986
The discussions with three architect-engineer (A-E) firms -- as to
anticipated concepts and the relative utility of alternative methods of
approach -- required under the Brooks Act, 40 U.S.C. 541-544 (1982),
should contribute to making possible a meaningful ranking of the A-E
firms. Accordingly, they should occur prior to the selection of the
most highly qualified firm. Moreover, they may include questions
reasonably related to an evaluation of a firm's qualifications.
Evaluator's inquiry as to cost of protester's equipment, made during
discussions which preceded the final ranking of architect-engineer
firms, has not been shown to have been an inappropriate concern and in
any event did not prejudice the protester where (1) agency reports that
question was motivated only by personal interest and that the answer was
not considered in evaluation, (2) nothing in record indicates otherwise,
and (3) there is no showing that the cost of the equipment -- as opposed
to the cost of personnel -- was such that it would be a substantial
factor in determining the likely fee.
Protest filed more than 10 working days after basis was known is
untimely. 4 C.F.R. 21.2(a)(2) (1985).
In procurements conducted under the Brooks Act, 40 U.S.C. 541-544
(1982), the contracting agency is required to consider the location of
an architect-engineer firm and its knowledge of the locality of the
project -- unless application of the criterion would not leave an
appropriate number of qualified firms. Higher evaluation score for
location closer to project is reasonable.
Protest that the architect-engineer (A-E) firm selected as the most
highly qualified A-E firm did not comply with state licensing laws is
denied where the statement of work only required the use of a registered
surveyor, the awardee proposed to use a registered surveyor, and a state
investigation indicated that the awardee hired licensed surveyors.
Contracting agency did not act unreasonably when it failed to inform
the board evaluating the qualifications of architect-engineer firms of
the allegation that one firm had failed to fully comply with a
requirement in a prior contract for use of a registered surveyor where
the question of licensing is unresolved and pending before the state
licensing authority.
Mounts Engineering (MOUNTS) protests the selection by the Bureau of
Mines, Department of the Interior (Interior), of Potomac Engineering and
Surveying (Potomac) as the architect-engineer (A-E) firm most qualified
to collect mine subsidence data at Kitt No. 1 Mine in Barbour County,
West Virginia. The selection of Potomac -- and the consequent decision
not to terminate the contract (No. SO156015) for the same services
previously awarded to Potomac -- was made after a reevaluation of
qualifications undertaken pursuant to our decision in Mounts
Engineering; Department of the Interior -- Request for Advance
Decision, B-218489, et al., Aug. 16, 1985, 64 Comp. Gen. 772, 85-2
C.P.D. Paragraph 181. We deny Mounts' protest.
Generally, under the selection procedures governing the procurement
of A-E services as set forth in the Brooks Act, 40 U.S.C. Sections
541-544 (1982), and in the implementing regulations in the Federal
Acquisition Regulation (FAR), 48 C.F.R. Sections 36.600-36.609 (1984),
the contracting agency must publicly announce requirements for A-E
services. An A-E evaluation board set up by the agency evaluates the
A-E performance data and statements of qualifications already on file,
as well as those submitted in response to the announcement of the
particular project. The board then must conduct "discussions with no
less than three firms regarding anticipated concepts and the relative
utility of alternative methods of approach for furnishing the required
services." 40 U.S.C. Section 543. The firms selected for discussions
should include "at least three of the most highly qualified firms." FAR,
48 C.F.R. Section 36.602-3(c). Thereafter, the board recommends to the
selection official in order of preference no less than three firms
deemed most highly qualified.
The selection official then must make the final selection in order of
preference of the firms most qualified to perform the required work.
Negotiations are held with the firm ranked first. If the agency is
unable to agree with that firm as to a fair and reasonable price,
negotiations are terminated and the second-ranked firm is invited to
submit its proposed fee.
By notice published in the Commerce Business Daily (CBD) of September
11, 1984, Interior announced a requirement for the collection of mine
subsidence data -- data on ground surface movements caused by
underground mining -- at Kitt No. 1 Mine in Barbour County, West
Virginia. The agency requested interested firms to submit Standard
Forms (SF's) 254, "Architect-Engineer and Related Services
Questionnaire," by which A-E firms can document their general
professional qualifications, and 255, "Architect-Engineer and Related
Services Questionnaire for Specific Project," by which A-E firms can
supplement the SF 254 with specific information on the firm's
qualifications for a particular project. Potomac, Mounts and nine other
firms responded to the announcement.
Interior then evaluated qualifications without holding the required
discussions with three A-E firms. In the agency's initial evaluation
Potomac received the highest point score, 890 points, while Mounts
received the second highest score, 880 points. The next highest point
score was only 770 points.
Given the closeness of the evaluation of the two firms, contracting
officials determined that Potomac and Mounts were "equally preferred"
and therefore requested them to submit cost proposals. Mounts thereupon
submitted a cost proposal in which it offered to provide the required
services at unit prices ranging from 26.7 percent to 100 percent above
those offered by Potomac.
Shortly thereafter, the evaluation board was requested to reevaluate
the qualifications of Potomac and Mounts in order to select the most
preferred firm. Upon reevaluation, the board gave Potomac's
qualifications a score of 930 points and Mounts' qualifications a score
of 915 points.
When Interior subsequently selected Potomac as the most preferred
firm, Mounts protested first to the agency and then to our Office.
In addition to challenging the failure to conduct discussions and the
request for cost proposals prior to selecting the most preferred firm,
Mounts alleged that (1) there was no indication that Potomac could meet
the requirement set forth in the CBD announcement for "registered
surveyor(s)," since the SF's 254 and 255 initially submitted by Potomac,
although indicating that the firm employed "Surveyors," did not indicate
that its surveyors were "registered"; (2) the persons listed in
Potomac's SF 255 as key personnel for this project either lacked
surveying experience or were not employed by the firm; (3) Potomac
lacked the necessary experience and capacity; and (4) the board failed
to give Mounts credit for having a local office near the work site and
for its allegedly superior knowledge of the locality of the project.
In response, Interior admitted that it had failed to conduct the
required discussions. It also acknowledged that the SF's 254 and 255
submitted by Potomac for purposes of evaluation were "not up-to-date."
Accordingly, the agency proposed to (1) obtain updated SF's 254 and 255
from the three firms previously rated most highly qualified; (2)
appoint a new evaluation board, comprised of qualified personnel from
outside the Bureau of Mines, to conduct discussions with and reevaluate
the qualifications of the three firms; and (3) determine, based upon
the results of the above, whether to continue the contract with Potomac
or to terminate it and make award to another firm.
In our prior decision, we concluded that the failure to conduct the
required discussions could have prevented a meaningful ranking and could
have deprived Mounts of the opportunity for award. We also indicated
that the evaluations were open to question on other grounds as well. We
pointed out that while SF 255 must be current as of the time of the
particular project, Interior had indicated that Potomac's SF's 254 and
255 were "not up-to-date." Moreover, we found Interior's request that
firms submit cost proposals prior to its selecting the most highly
qualified firm for negotiations to be improper since the Brooks Act only
provided for the consideration of cost during negotiations -- i.e.,
after the final ranking of firms, 40 U.S.C. Section 544 -- and the
regulations prohibit the consideration of fees during discussions. FAR,
48 C.F.R. Section 36.602-3(c). We therefore sustained Mounts' protest
and concluded that there was no reason to question Interior's decision
to conduct discussions with the three firms ranked highest in the
initial evaluations and to reevaluate their qualifications.
Interior su&sequently requested Potomac, Mounts and a third firm --
L. Robert Kimball & Associates (Kimball) -- to submit updated SF's 254
and 255. A new evaluation board reviewed the up-dated forms and
conducted discussions with the three firms.
Under the evaluation criteria provided to the board, the firms were
to be evaluated on the basis of (1) professional qualifications
necessary for satisfactory performance (25 percent), (2) "(l)ocation in
general geographical area of the project and knowledge of the locality
of the project" (25 percent), (3) specialized experience and technical
competence in the type of work required (20 percent), (4) capacity to
accomplish work in the required time (15 percent), and (5) past
performance (15 percent).
Potomac was found to be the most qualified firm under these criteria,
receiving a total of 968 evaluation points. Mounts was ranked second,
receiving 951 points, while Kimball was ranked third at 808 points.
Mounts thereupon filed this protest.
Mounts question both the timing and content of the discussions held
with the three firms.
Mounts first contends that the evaluation board acted improperly when
it held discussions "prior to the re-evaluation."
We disagree. FAR, 48 C.F.R. Section 36.602-3(d), provides that the
evaluation board shall:
Prepare a selection report for the agency head or other designated
selection authority recommending, in order of preference, at least three
firms that are considered to be the most highly qualified to perform the
required services. The report shall include a description of the
discussions and evaluation conducted by the board to allow the selection
authority to review the considerations upon which the recommendations
are based.
Since the selection of the most highly qualified firm should take
into account the content of the discussions held with the three firms,
the discussions must occur prior to the final evaluation of
qualifications. /1/
As for the content of the discussions, Mounts points out that one of
the evaluators inquired as to the cost of the equipment which Mounts
proposed to utilize for this project. Mounts suggests that since the
cost of its equipment "directly influences" the fee it must charge, this
inquiry was improper. In addition, Mounts argues that the evaluation
board acted improperly when it questioned the firm about the design of a
theoretical subsidence program, since, according to Mounts, that was a
subject "completely outside the scope of the required services."
In response, Interior explains that the evaluator inquired about the
cost of Mounts' equipment "only to compare (the cost with) what his
office had paid for similar equipment"; it denies that the evaluation
board considered the cost in the evaluation. The agency maintains that
the questions about the design of a theoretical subsidence program were
undertaken pursuant to the requirement in FAR, 48 C.F.R. Section
36.602-3(c), to discuss "concepts and the relative utility of
alternative methods of furnishing the required services" and indicates
that the answers "revealed much about a firm's qualifications to perform
the project."
Mounts has not demonstrated that the evaluator's inquiry about the
cost of certain equipment was an inappropriate concern. In any event,
nothing in the record indicates that Mounts suffered any prejudice as a
result of the questions and its answers. Mounts has made no showing
that the cost of the equipment -- as opposed to the cost of its
personnel -- was such that it would be a substantial factor in
determining the fee Mounts was likely to propose. Moreover, nothing in
the record indicates that the evaluation board in fact considered the
cost of the equipment in evaluating Mounts' qualifications. See also
Douglas County Aviation, Inc., et al., B-213205.2, Sept. 27, 1985, 64
Comp. Gen. 888, 85-2 C.P.D. Paragraph 345 (protest of evaluation method
denied in the absence of prejudice from use of the method).
In addition, we conclude that Mounts has not shown that the questions
about the design of a theoretical subsidence program were not reasonably
related to a consideration of alternative approaches or to the
evaluation of Mounts' professional qualifications.
As indicated above, an evaluation criterion for "(l)ocation in the
general geographical area of the project and knowledge of the locality
of the project" was assigned 25 percent of the total possible evaluation
points. Although both Potomac and Mounts had previously worked in
northern West Virginia, Potomac maintained an office within 35 miles --
or a 1-hour drive -- of the project site while Mounts' nearest office
was determined by the board to be within 60-65 miles -- or a 2-hour
drive -- of the project. The evaluation board therefore assigned
Potomac an average evaluation score of 241.66 points for location and
knowledge of the locality, 29 more points than the 212.66 points
assigned to Mounts under this criterion. /2/
Mounts, however, objects to the consideration of geographical
location, maintaining that both firms are located in the same general
geographical area. In a December 23 submission to our Office, Mounts
pointed out that the chairman of the evaluation board stated in his
report of the evaluation results -- a report which Mounts included in
its submission -- that since all three firms were located within 100
miles of the project site, location should not have been an evaluation
factor. The chairman indicated that Mounts was the most qualified firm
if location was not considered.
In a subsequent submission to our Office filed on January 31, Mounts
pointed out that the chairman had also stated in the report to the
contracting officer that if location was to be considered, then
assigning 25 percent of the possible evaluation points to the criterion
was excessive. Mounts therefore argued that if location was a proper
criterion, it was "certainly weighted too heavily."
We initially point out that our Bid Protest Regulations, 4 C.F.R. pt.
21 (1985), require that protests -- other than those based upon alleged
improprieties in a solicitation -- be filed within 10 working days after
the basis of protest is known or should have been known, whichever is
earlier. 4 C.F.R. Section 21.2(a)(2). Since Mounts knew at least as
early as its December 23 submission that Interior had assigned 25
percent of the possible evaluation points to the criterion for location,
but did not protest the weight accorded this criterion until its
submission filed on January 31, more than 10 working days later, its
protest in this regard is untimely.
Moreover, we note that FAR, 48 C.F.R. Section 36.602-1(a)(5),
provides for the consideration of geographical location and knowledge of
the locality, except where the application of this criterion would not
leave an appropriate number of qualified firms. Mounts does not
challenge the adequacy of the competition remaining after application of
this criterion, and we have no independent basis to question the
agency's decision to consider geographical location. Cf. Bartow Group,
B-217155, Mar. 18, 1985, 85-1 C.P.D. Paragraph 320 (requirement for an
office within 30 miles of project). Nevertheless, since Mounts bases
its argument on the conclusion that Potomac and Mounts were essentially
equal in regard to location, we consider it to be challenging the
application of the criterion as well as its propriety.
Our review of an agency selection of an A-E contractor is limited to
examining whether that selection is reasonable. We will question the
agency's judgment only if it is shown to be arbitrary. Moreover, the
protester bears the burden of affirmatively proving its case. Y. T.
Huang & Assocs., Inc. B-217122, B-217126, Feb. 21, 1985, 85-1 C.P.D.
Paragraph 220.
Although the chairman of the evaluation board assigned the same point
score to both Potomac and Mounts under the criterion for location, the
remaining two members of the board assigned a higher point score to
Potomac as a result of its office being located 30-35 miles closer to
the project site. Since evaluating proposals involves subjective as
well as objective judgments, it is not unusual for individual evaluators
to reach disparate conclusions. Digital Radio Corp., B-216441, May 10,
1985, 85-1 C.P.D. Paragraph 526; Western Engineering and Sales Co.;
B-205464, Sept. 27, 1982, 82-2 C.P.D. Paragraph 277. The average scores
here for the location criterion, and therefore the total evaluation
scores, reflected the conclusion of two of the three evaluators that
Potomac's location 30-35 miles closer to the project site justified a
higher score under the location criterion. Mounts has failed to
demonstrate that the overall judgment of the evaluation board in this
regard lacked a reasonable basis.
The CBD notice stated that the project "requires a registered
surveyor(s) to conduct the survey," while the Statement of Work
indicated that "registered surveyor(s) and crew(s) shall conduct the
survey(s)." In the SF 255 it submitted in response to Interior's request
for updated SF's 254 and 255, Potomac listed 6 "Surveyors" as currently
employed by the firm and provided a brief resume for one land surveyor
-- registered in West Virginia, Maryland and Ohio -- whose services it
anticipated utilizing for the project.
Mounts, however, points out that by letter of June 5, 1985, the State
Board of Examiners of Land Surveyors in West Virginia -- the state where
Kitt No. 1 Mine is located and where Potomac maintains an office --
notified Potomac that the Board of Examiners had received a complaint
filed by Mounts and that it appeared that Potomac was "not in full
compliance" with West Virginia law "since . . . (the owner of Potomac)
is not a licensed land surveyor." When Potomac allegedly failed to
respond to this letter, the Board of Examiners, by letter of August 26,
informed the firm that "in view of the information provided by Mounts
Engineering regarding your surveying/activities, you are requested to
cease and desist such practice in the State of West Virginia."
A contracting agency may require an offeror to comply with a specific
known state or local licensing requirement as a prerequisite to award.
See Olson and Assocs. Engineering, Inc., B-215742, July 30, 1984, 84-2
C.P.D. Paragraph 129. It need not, however, impose such a requirement,
and if it does not then the contracting officer generally need not
concern himself with state or local licensing requirements. See North
Park Village Homes, Inc., B-216862, Jan. 31, 1985, 85-1 C.P.D. Paragraph
129; Olson, B-215742, supra, 84-2 C.P.D. Paragraph 129 at 2.
The statement of work here did not require the proposed contractor
itself to possess a license as a prerequisite to award. Rather, it
merely required that the contractor use a registered surveyor and crew
to conduct the survey; a requirement which Potomac proposed to meet
through utilization of the services of a registered land surveyor. Cf.
Mounts Engineering, B-218102.3, May 31, 1985, 85-1 C.P.D. Paragraph 622
aff'd, Mounts Engineering -- Reconsideration, B-218102.4, July 24, 1985,
85-2 C.P.D. Paragraph 77 (offeror took no exception to requirement for
registered surveyor).
In any case, we note that the West Virginia Board of Examiners on
October 8 requested the Attorney General of West Virginia to clarify the
relevant state law, noting that Potomac is a "sole proprietorship" which
"hires persons licensed and/or registered in both the Engineering and
Surveying fields to certify the work or services provided." Further, we
also note that the contracting officer indicates that he will take
"(a)ppropriate action" once the Attorney General clarifies state law.
See Lewis & Michael, Inc.; Stark Van Lines of Columbus, Inc. --
Reconsideration, B-215134.2, B-215134.3, June 26, 1984, 84-1 C.P.D.
Paragraph 673 (if contractor is not in compliance with state or local
law and, as a result of enforcement action by the state or locality,
chooses not to perform the contract or is prohibited from doing so, the
contract may be terminated for default).
In these circumstances, the August 26 cease and desist order did not
render the subsequent selection of Potomac unreasonable. Cf.
Metropolitan Ambulance Service, Inc., B-213943, Jan. 9, 1984, 84-1
C.P.D. Section 61 (where a contracting officer determines that
enforcement attemps by state or local authorities are likely and that
there is a reasonable possibility that such action may delay performance
by an unlicensed contractor, he may find the contractor nonresponsible
under a solicitation's general licensing requirement).
Potomac listed its current work under a contract for mine subsidence
survey -- the Blacksville project in Pennsylvania and West Virginia --
in the sections of its updated SF's 254 and 255 in which offerors are
asked to provide examples of projects undertaken in the past 5 years (SF
254) and projects best illustrating the firm's current qualifications
for providing the required services (SF 255). /3/
Mounts, however, alleges that the evaluation board was not informed
by Interior of certain allegations concerning Potomac's compliance with
the requirement in the Blacksville contract for use of a registered
surveyor. In particular, Mounts refers to a September 6, 1985, letter
from the Bureau of Mines in which the agency informed Potomac that it
had received information that the land surveyor whom the firm indicated
was supervising the Blacksville project in fact "never certified nor
sealed any plans, documents or reports relative to this project."
Interior therefore requested Potomac to furnish the agency with
"evidence of the actual individual providing these services" so as to
assure the agency of "full compliance" with the requirements of the
contract.
Interior informs us that the "licensing matter is in question pending
further information from the state Board of Professional Engineers" and
Mounts reports that state licensing proceedings regarding Potomac's
practice in Pennsylvania are pending in that state. Interior therefore
argues that since the matter is still "unresolved," it was not for
consideration by the evaluation board.
We note that the evaluation board was provided with the updated SF's
254 and 255 by letter of October 25, 1985, and that the chairman of the
board reported the evaluation results by letter of November 15. Since
Interior viewed the licensing concerns as "unresolved," we do not
consider that it was unreasonable for the agency to refrain from
reporting these concerns to the evaluation board. Cf. NJCT Corp.,
B-219434, Sept. 26, 1985, 64 Comp. Gen. 883. 85-2 C.P.D. Paragraph 342
(protester failed to demonstrate that agency lacked a reasonable basis
for characterization of potential contractor's performance on other
contracts).
The protest is denied.
(1) We note that there was no requirement here for a preliminary
evaluation to select the three firms with which discussions would be
conducted, since these firms were already selected on the basis of the
original evaluations.
(2) Although Mounts alleged during its prior protest that it
maintained an office in Philippi, West Virginia, "only a few miles from
the site," the updated SF 254 submitted to the evaluation board
indicates that its closest office is in Washington, Pennsylvania,
approximately 60 miles from Barbour County, West Virginia, where the
project site is located.
(3) Although Potomac in fact described the Bureau of Mines project in
question in its SF's 254 and 255 as "Mine Subsidence Survey,
Blacksville, WV (West Virginia)," with an estimated cost of $110,000, we
understand the reference to be to contract No. S0156011, awarded to
Potomac by the Bureau of Mines for a $110,000 mine subsidence survey at
"Blacksville No. 2 Mine" in Greene County, Pennsylvania. We have been
informally advised by Potomac that it has received only one contract for
a Blacksville mine subsidence survey, but that the project in fact
extends over two states, West Virginia and Pennsylvania.
B-220736, 65 Comp. Gen. 473
Matter of: John C. Bisbee, April 10, 1986
The statutes and regulations authorizing transferred federal
employees to be reimbursed for the expenses of the "sale" of their
residence at their old duty station place no definitive limitations on
the meaning of the term "sale." Hence, a transferred employee who
conveyed the title of his old residence to a state agency in exchange
for $10 and a release from his mortgage contract may be reimbursed for
his allowable expenses in the sales transaction, even though it was not
an ordinary open-market real estate sale.
The Federal Travel Regulations provide that transferred federal
employees may be allowed reimbursement of legal expenses associated with
the sale of their old residence, including the expenses of advisory and
representational services not involving litigation before the courts. A
transferred employee may therefore be reimbursed for legal fees
reasonably and necessarily paid to obtain representational services to
negotiate his release from a mortgage contract in exchange for his
conveyance of his ownership of his old residence in a situation that did
not involve foreclosure proceedings or other type of litigations.
The issue presented in this matter is whether a transferred federal
employee may be reimbursed for legal fees and expenses incurred in
transferring ownership of his residence at his old duty station to an
agency of a state government. /1/ In view of the facts of record, and
the applicable provisions of statute and regulation, we conclude that
the employee is entitled to reimbursement.
Mr. John C. Bisbee is an employee of the U.S. Forest Service,
Department of Agriculture. In 1980 he and his wife bought a house in
Moffat County, Colorado, where he was then stationed. They financed the
purchase of this house through a mortgage with a private lending
institution, and Mr. Bisbee indicates that in this transaction they
obtained a loan guarantee from a state agency, the Colorado Housing
Finance Authority, under a state "low-income mortgage" program.
The Forest Service transferred Mr. Bisbee from Colorado to Indiana 3
years later in December 1983. Because of economic conditions prevailing
at the time in Moffat County, Colorado, he and his wife were unable to
sell their old residence on the open market at a price that equaled or
exceeded the amount of their outstanding mortgage indebtedness. For
that reason they entered into negotiations to dispose of the property in
December 1984 with the mortgage lender and the Colorado Housing Finance
Authority. These negotiations produced a settlement in May 1985 in
which the Bisbee's mortgage contract was cancelled, and they transferred
their title to the property by warranty deed to the Colorado Housing
Finance Authority in exchange for a payment in the sum of $10 made by
that agency to them.
Mr. Bisbee then submitted a claim to the Department of Agriculture in
the amount of $450.02 as reimbursement of the legal fees and expenses he
incurred in the negotiations leading to the transfer of ownership of his
old residence in Colorado. In claiming reimbursement he stated that
these fees and expenses were for the transfer of ownership of his old
residence in a "deed in lieu of foreclosure," however, and because of
his use of the word "foreclosure" the Department of Agriculture
disallowed his claim for the reason that costs of foreclosure
proceedings are not reimbursable as real estate expenses under the
regulations covering the relocation entitlements of transferred federal
employees.
Mr. Bisbee has now reclaimed reimbursement of the legal fees and
expenses, indicating that no foreclosure action or other litigation was
ever actually initiated in the matter. He indicates instead that he did
not default on his mortgage obligations and entered into negotiations
for the disposal of the property in December 1984 without any threat of
foreclosure. He states that while he conceivably might have been forced
into foreclosure proceedings if those negotiations had failed, the
settlement reached had avoided that possibility.
In requesting an advance decision concerning Mr. Bisbee's renewed
claim, the agency's accountable officer in effect questions whether the
claim should be disallowed either because the transaction did not
involve a normal sale of a residence, or because the legal fees related
to negotiations involving possible litigation in foreclosure proceedings
rather than to services for an ordinary real estate sale.
Section 5724a of title 5, United States Code, provides that to the
extent considered necessary and appropriate under implementing
regulations, funds available to an agency for administrative expenses
are available for the reimbursement of certain relocation expenses of
transferred employees. Among the relocation expenses specifically
enumerated are the "(e)xpenses of the sale of the residence * * * of the
employee at the old station." 5 U.S.C. Section 5724a(a)(4)(A).
Implementing regulations are contained in Chapter 2, Part 6 of the
Federal Travel Regulations. /2/ Those regulations provide that the
Government shall reimburse transferred employees for expenses required
to be paid by them in connection with the sale of a residence of their
old official station, and no definitive limitations are prescribed for
the term "sale." FTR, para. 2-6.1. Among the items specifically
authorized for reimbursement are legal and related expenses paid by the
seller of a residence at the old official station, except that the
"(c)osts of litigation are not reimbursable." FTR, para. 2-6.2c.
We have adopted the view that these provisions of statute and
regulations permit reimbursement of allowable expenses incurred for the
purpose of conveying title by other than the usual sale transaction.
/3/ Thus, we have authorized payment of allowable real estate expenses
associated with transfers of title not only through open-market sales,
but by gift and barter as well. /4/ We have also previously indicated
that we would authorize payment of allowable expenses associated with
conveyances of title arranged for the purpose of satisfying an
employee's mortgage loan obligations, in transactions not involving
sales on an open real estate market. /5/
Concerning the reimbursement of legal expenses associated with
transferring ownership of a residence, we have held that the expenses of
advisory and representational services may be allowed as well as the
expenses of title searches and other services specifically described
under the regulations. /6/ As indicated, however, the regulations
expressly preclude reimbursement of the costs of litigation, and for
that reason we have consistently disallowed claims for reimbursement of
attorney fees and other expenses incurred in the course of foreclosure
proceedings initiated in state courts, including the expenses of a
court-ordered sale of an employee's former residence. Nevertheless, we
have expressed the view that the term "litigation" as used in the
regulations has the limited meaning of a suit at law or an action before
a court. /7/
In the present case we consequently find that Mr. and Mrs. Bisbee's
transfer of title to their old residence by warranty deed to the
Colorado Housing Finance Authority, in exchange for $10 and their
release from their mortgage contract, constituted a "sale" within the
meaning of that term as used in 5 U.S.C. Section 5724a and FTR, para.
2-6.1, notwithstanding that the transaction did not involve an ordinary
open-market realty sale. We further find that Mr. Bisbee's claim may
not properly be disallowed on the basis that he is seeking reimbursement
of the costs of litigation, since no suit at law or action before a
court was ever initiated in this matter.
In addition, we find that the legal fees and expenses incurred by Mr.
Bisbee were necessary and reasonable for representational and advisory
services required in negotiating the transfer of title, and that he may
therefore be reimbursed in the full amount claimed if the agency
determines that the fees and expenses were within the customary range in
the locality. /8/
The question presented is answered accordingly. The voucher and
related documents are returned for further processing consistent with
the conclusions reached here.
(1) This action is in response to a request received from Mr. W. D.
Moorman, Authorized Certifying Officer, National Finance Center,
Department of Agriculture, for an advance decision concerning the
propriety of certifying a voucher for payment in the amount of $450.02
in favor of Mr. John C. Bisbee.
(2) FRT, para. 2-6.1 et seq., incorp. by ref., 41 C.F.R. Section
101-7.003.
(3) See, generally, Bonnie S. Petrucci, 64 Comp. Gen. 557, 559
(1985).
(4) B-173652, October 27, 1971; B-166419, April 22, 1969.
(5) See Foreclosure Sale, 61 Comp. Gen. 112, 113 (1981); and Allan
R. Irwin, B-198940, July 29, 1980. In those cases we held, however,
that costs of litigation and hypothetical expenses not actually incurred
were not allowable as reimbursable expenses under the provisions of 5
U.S.C. Section 5724a and FTR, para. 2-6.1 et seq.
(6) See George W. Lay, 56 Comp. Gen. 561 (1977); and Daniel J.
Everman, B-210297, July 12, 1983. Compare also Robert W. Webster, 63
Comp. Gen. 68 (1983), concerning legal expenses not directly associated
with a transfer of ownership of real property.
(7) See Foreclosure Sale, 61 Comp. Gen. 112, supra; and Foreclosure
Sale, B-214837, October 11, 1984.
(8) See George W. Lay, 56 Comp. Gen. 561, supra; and Daniel J.
Everman, B-210297, supra.
B-221572, 65 Comp. Gen. 470
Matter of: Agro Construction and Supply Co., Inc., Apr. 9, 1986
Due to special experience requirement in invitation for bids (IFB),
which agency determined was not necessary to meet its needs, only one of
five actual bidders was eligible for award and other potential bidders
were excluded from competing. Canceling the IFB after bid opening in
order to resolicit without the experience requirement therefore was
proper since both actual and potential bidders would be prejudiced by
award under the original IFB.
Agro Construction and Supply Co., Inc., protests the decision by the
Fish and Wildlife Service, Department of the Interior to cancel
invitation for bids (IFB) No. FWS 2-86-05 for construction of a corral
system and to issue a new IFB with revised specifications and
requirements. Agro maintains that the specifications in the original
IFB adequately described the work required and that the revisions
proposed by the agency either are unnecessary or will not meet the
agency's needs. We deny the protest.
The IFB called for construction of corrals for buffalo and longhorns
at the Wichita Mountains Wildlife Refuge, Oklahoma. The IFB was issued
on November 1, 1985, with bid opening set for December 2. Amendment No.
1 to the IFB, also issued on November 1, in part added the following
provision:
All offerors shall be required to provide proof of similar corral
construction experience by virtue of successful construction of at least
three projects in excess of $50,000 each consisting of similar welded
steel construction including handling and sorting facilities.
Five bids were received, ranging from $492,400 (submitted by Johnson
Engineering Co., Inc.) to $845,000. Agro submitted the second lowest
bid ($562,310). According to the agency, the total amount of funds then
available for the contract was $515,000. At bid opening, the low
bidder, Johnson Engineering, was found inteligible for award for failure
to meet the special experience requirement added to the IFB by Amendment
No. 1. The agency subsequently found that only one of the five bidders,
Agro, satisfied the experience requirement.
By letter dated December 12, the contracting officer notified all
bidders that he had decided to cancel the IFB and issue a new
solicitation. The decision to cancel was based on the contracting
officer's determination that certain revisions to the specifications
would lower the cost of the project, and that the special experience
requirement unnecessarily discouraged potential bidders from competing.
In its report on the protest, the agency originally argued that the
cancellation was proper because all bids except Johnson's exceeded the
amount of funds available for the contract; the revised specifications
would result in lower costs to the government; and the revised IFB
would omit the experience requirement which had hindered full and open
competition. In a subsequent submission, the agency advised that the
funding limitation no longer was a problem because additional funds had
since been made available for the project. The agency also conceded
that the proposed revisions to the specifications would increase, not
decrease, the cost of the project as a whole. Nevertheless, the agency
maintains that cancellation of the IFB was proper because (1) the
experience requirement, which will be eliminated from the revised IFB,
unnecessarily limited the field of competition; and (2) the revised
specifications will better meet the agency's needs.
Agro argues that the specifications in the original IFB adequately
describe the agency's needs. In addition, Agro maintains that the
experience requirement ensured that the successful bidder would be
capable of performing under the contract. Agro also states that the
experience requirement was a significant factor in its decision to
submit a bid, since Agro assumed that it would be competing only against
firms which, like Agro, had the specialized experience called for by the
IFB.
We find that it was proper for the agency to cancel the IFB in order
to eliminate the special experience requirement and issue a new IFB.
Because of the potential adverse impact on the competitive bidding
system of canceling an IFB after bid opening, the contracting agency
must have a compelling reason to do so. Dynetheria, Inc., B-211525.2,
Oct. 31, 1984, 84-2 CPD Paragraph 484; Federal Acquisition Regulation,
48 C.F.R. Section 14.404-1(a)(1) (1984). When an agency's decision to
cancel is challenged, a key factor in deciding whether a compelling
reason for the cancellation exists is whether award of a contract under
the original IFB would result in prejudice to other actual or potential
bidders. See Doug Lent, Inc., B-209287.2, June 21, 1983, 83-2 CPD
Paragraph 9 (cancellation was proper where potential bidders were
precluded from bidding due to defective specification); Haughton
Elevator Division, Reliance Electric Co., 55 Comp. Gen. 1051, 1058
(1976), 76-1 CPD Paragraph 294 (prejudice to actual and potential
bidders due to inclusion of unnecessary experience requirement in IFB
was compelling reason to cancel).
Here, the agency concluded that the special experience requirement is
not necessary to ensure that the firms participating in the competition
are qualified to perform under the contract; the protester has not
shown that this conclusion is unreasonable. The agency also reasonably
determined that the special experience requirement had a significant
adverse effect on competition since four of the five bidders, including
the low bidder, did not satisfy the requirement. Awarding a contract
under the original IFB thus would prejudice the low bidder who did not
meet the requirement as well as other firms which may have bid if the
experience requirement had not been included in the IFB. In addition,
we note that the agency's cancellation of the IFB in order to issue a
revised IFB without the restrictive experience requirement is consistent
with the requirement in the Competition in Contracting Act, 41 U.S.C.A.
Section 253(a)(1)(A) (West Supp. 1985), that contracting agencies obtain
"full and open competition" in conducting procurements. Accordingly, we
find that the agency had a compelling reason to cancel based on its
determination that actual and potential bidders were unreasonably
excluded and full and open competition therefore was not obtained. See
Lesko Associates, Inc., B-209703, Apr. 22, 1983, 83-1 CPD Paragraph 443;
Gould, Inc., B-190787, Aug. 31, 1978, 78-2 CPD Paragraph 158.
In addition to removing the experience requirement, the agency cited
the need to revise the IFB to include the agency's increased
requirements as a reason for canceling the IFB. We need not consider
the protester's objections in this regard because, even if Agro's
assertions concerning the specification revisions are correct, the
cancellation nevertheless is proper, based on the agency's decision to
eliminate the special experience requirement.
Agro requested that it be awarded its bid preparation costs and the
costs of pursuing the protest. Recovery of costs is allowed only where
a protest is found to have merit. 31 U.S.C.A. Section 3554(c)(1) (West
Supp. 1985); Bid Protest Regulations, 4 C.F.R. Section 21.6(d) (1985).
Since we have denied the protest, we also deny Agro's claim for recovery
of costs.
B-211490, 65 Comp. Gen. 468
Matter of: Transportation of Privately Owned Vehicles, Apr. 9, 1986
Civilian employees of the Government who are separated from service
at an overseas post may be allowed to have privately-owned vehicles
which were transported to those posts at Government expense transported
to an alternate destination not in the United States or the country in
which the employee's actual residence is located. Such transportation
is subject to the limitation that the cost may not exceed the
constructive cost of having the vehicle shipped to the employee's place
of actual residence when transferred to his last duty station overseas
and may not be authorized if separation occurred before April 10, 1984,
the date of the decision Thelma I. Grimes, 63 Comp. Gen. 281.
This action is in response to a request for a decision regarding a
proposed change in the Joint Travel Regulations which would allow
shipment of privately-owned vehicles at Government expense in connection
with the separation of civilian employees stationed overseas to a
location other than to the country and location of the employee's actual
residence at the time of the assignment to duty outside the United
States. /1/ Based on a recent change in our decisions, we hold that
civilian employees are not entitled to transportation of privately-owned
vehicles under these circumstances. Such entitlement is not dependent
upon a change in the regulations.
Authority for transportation and travel expenses of a civilian
employee to an overseas duty station and return to his or her country of
actual residence at the time of assignment to that duty station is
provided in 5 U.S.C. Section 5722 for new appointees and by 5 U.S.C.
Section 5724(d) for transferred employees by reference to section 5722.
Section 5722 was originally interpreted by us to limit the employee to
return to the United States, or the country of actual residence at the
time of overseas assignment, within a reasonable time after completion
of duty at the overseas duty station. It was held that there was no
authority for payment of travel of these employees to points other than
the country of actual residence, which in most cases was the United
States. 31 Comp. Gen. 389 (1952).
However, we have recently reconsidered our position regarding
transportation and travel expenses allowed to civilian employees upon
separation at overseas posts. We have held that payment or
reimbursement for travel and transportation expenses incurred by
civilian employees upon separation overseas to an alternate point may be
allowed even though not in the country of actual residence at the time
of the appointment to the overseas post. However, the cost to the
Government may not exceed the constructive cost of travel and
transportation to the employee's place of actual residence at the time
of the overseas assignment. Thelma I. Grimes, 63 Comp. Gen. 281 (1984).
Shipment of privately-owned vehicles is authorized at Government
expense between the United States and an employee's post of duty abroad
or between duty posts outside the United States when the agency head
determines that it is in the interest of the United States for the
employee to have a privately-owned vehicle at his post abroad. 5 U.S.C.
Section 5727. This authority extends to employees who are transferred
under 5 U.S.C. Section 5722.
Since transportation of privately-owned vehicles is authorized by
reference to the authority contained in 5 U.S.C. Section 5722, it
follows that shipment of a privately-owned vehicle should be treated as
are other transportation and travel expenses authorized by that
provision of law. Therefore, 5 U.S.C. Section 5727 should be construed
to authorize a civilian employee to have his privately-owned vehicle
shipped at Government expense to an alternate destination not in the
country of his or her actual residence at the time of the appointment,
with the limitation that the cost of shipment of the vehicle to the
alternate destination may not exceed the constructive cost of shipment
to the actual residence. Since this is a change in our view and is
predicated upon the result of our decision in Thelma I. Grimes, 62 Comp.
Gen. 281, supra, it may not be applied to individuals separated prior to
April 10, 1984, the date of that decision.
We have reviewed the current provisions of the Joint Travel
Regulations, especially Chapter 11 concerning the shipment of
privately-owned vehicles, and do not find that the provisions thereof
prohibit shipment to an alternate port by a separating employee. In
fact, paragraph C11004-2b of Chapter 11 (Change 226, August 1, 1984)
appears broad enough to permit shipment to a destination specified by
the employee. Thus, although the regulation could be changed to make
the allowance of an alternate destination entirely clear, as in
paragraphs C4201 and C7003-3b(1), we do not find that allowance of such
alternate destinations is dependent upon a change in the regulation.
Likewise, the controlling provisions of the Federal Travel
Regulations, incorp. by ref., 41 C.F.R. Section 101-7.003 (1985),
Chapter 2, Part 10, relating to the transportation of privately-owned
vehicles do not prohibit transportation in the circumstances in
question. Paragraph 2-1.5g(4) of those regulations contains the general
statement that "under decisions of the Comptroller General, ordinarily
an employee is entitled to travel and transportation expenses upon
separation only to the country of actual residence at the time of
assignment to such duty." However, this statement predates our decision
in Thelma I. Grimes, supra, and is no longer accurate in view of that
decision.
Accordingly, the cost of shipping privately-owned vehicles to a port
serving the alternate destination of a separating employee, not to
exceed the cost of travel to the port serving the actual residence, may
be paid by the Government. However, payment may be made only in
connection with separations after the date of our decision in Thelma I.
Grimes, 62 Comp. Gen. 281, supra, i.e., April 10, 1984.
(1) The request was made by the Honorable Delbert L. Spurlock, Jr.,
Assistant Secretary of the Army (Manpower and Reserve Affairs), in his
capacity as Chairman, Department of Defense Per Diem, Travel and
Transportation Allowance Committee.
B-217821, 65 Comp. Gen. 464
Matter of: Reimbursement by Navy to Federal Aviation Administration
for Damage to Instrument Landing System, April 8, 1986
The Federal Aviation Administration may not be reimbursed by the Navy
for replacement cost of an Instrument Landing System owned by the
Government at the El Paso, Texas International Airport which was
destroyed by the crash of a Navy aircraft, since property of Government
agencies is not the property of the separate entities but rather of the
Government as a single entity and there can be no reimbursement by the
Government to itself for damage to or loss of its own property. This
decision distinguishes 41 Comp. Gen. 235.
Although the Federal Aviation Administration (FAA) charged the cost
of replacement of Instrument Landing System (ILS) to its "Facilities and
Equipment (Airport and Airway Trust Fund)" appropriation account which
consists of appropriations made to the FAA from the Airport and Airway
Trust Fund for the purpose of funding the acquistiion, establishment and
improvement of air navigation facilities, this does not bring activity
within exception to interdepartmental waiver rule recognized by this
Office for damage caused to property held in trust by the Government on
behalf of particular identifiable beneficiaries in order to protect
beneficiaries equitable interest in property. FAA is using Federal
funds to repair damage to Government-owned property and is not acting as
trustee on behalf of particular group of identifiable beneficiaries in
repairing ILS. This decision distinguishes 41 Comp. Gen. 235.
This decision is in response to a request from J. E. Murdock, III,
Chief Counsel, Federal Aviation Administration (FAA), Department of
Transportation, dated March 5, 1985, asking whether it may be reimbursed
by the Navy for the replacement cost of an Instrument Landing System
(ILS) owned by the Government at the El Paso, Texas International
Airport which was destroyed by the crash of a Navy aircraft. The FAA
replaced the ILS at a cost of $33,000.00 and then sought reimbursement
from the Navy. However, this request was denied in a letter dated
December 2, 1983, from the Assistant Counsel for the Office of the Navy
Comptroller, Office of General Counsel, Department of the Navy, on the
grounds that the decisions of this Office preclude inter-agency payment
of claims for damages caused by employees of one agency to property
owned by the Government and under custody and control of another agency.
While the Navy recognized that certain limited exceptions to the rule
exist, it is its view that this case does not fall within any of these
exceptions. This position was affirmed in a letter submitted at our
request by the Counsel for the Office of the Navy Comptroller.
On the other hand, the FAA contends that since the funds it used to
replace the ILS came from the Airport and Airway Trust Fund, this case
falls within the exception recognized by this Office in 41 Comp. Gen.
235 (1961).
For the reasons stated below we find that the reimbursement by Navy
to the FAA for destruction of the ILS owned by the Government under the
custody and control of the FAA is not authorized.
We have held that:
Generally, Federal inter-agency claims for damages to property are
not reimbursed * * * on the theory that all property of agencies and
instrumentalities of the Federal Government is not the property of
separate entities but rather of the Governments as a single entity.
Thus there can be no reimbursement by the Government to itself for
damage to or loss of its own property. 60 Comp. Gen. 710, 714 (1981).
Like most rules (this one is commonly referred to as the
interdepartmental waiver rule), this one is not without its exceptions,
express or implied. Thus, where the Congress has by statute required an
inter-agency activity to operate on a self-sustaining basis by the
recovery of all capital equipment and operating costs from other agency
users on a reimbursable basis, a statutory exception to the rule is
created. See 59 Comp. Gen. 515 (1980).
The FAA points out however that even in the absence of express
statutory authority, we held in 41 Comp. Gen. 235 (1961) that a claim
against the Air Force submitted by the Bureau of Indian Affairs on
behalf of the users of the San Carlos Irrigation Project, Coolidge,
Arizona (characterized as a Government instrumentality), for damages to
the project's power lines was not precluded under the interdepartmental
waiver rule. /1/ We held that:
* * * while title to and control of the San Carlos project remains
vested in the United States and the project is a Government
instrumentality it is clear that the only funds available for repair of
the damage caused to the project are funds of the project beneficiaries
held in trust for them by the Government. And, as stated by the
Assistant Secretary, it is they rather than the Government who are
bearing the instant loss. 41 Comp. Gen. 237-238 (1961) (Italic
supplied.)
Relying upon the reference to the trustee status of the Government
which resulted in the claim not being on behalf of another Government
agency, but instead, on behalf of the third party beneficiaries, the FAA
feels it enjoys a similar status because repairs to the ILS are funded
from the Airport and Airway Trust Fund. We disagree.
The Airport and Airway Trust Fund (Trust Fund) is currently
authorized and established under 26 U.S.C. Section 9502 (1982). Under
subsection 9502(b) amounts equivalent to taxes received in the Treasury
under various aviation excise tax provisions are appropriated to the
Trust Fund. In addition, there is authorized to be appropriated to the
Trust Fund such amounts as are required to make any authorized
expenditures. 26 U.S.C. Section 9502(c). Interest on Trust Fund
investments, as well as the proceeds from the sale of any Trust Fund
investment asset, are to be credited to the Trust Fund. 26 U.S.C.
Section 9602(b)(3).
The Congress has authorized use of the Trust Fund for the purpose of
meeting obligations of the United States. 26 U.S.C. Section 9502(d).
For example, the Congress has authorized the Trust Fund to obligate up
to certain specified amounts for each fiscal year from 1982 through 1987
for making project grants to sponsors for airport planning or
development.
The law also authorizes the making of appropriations to the Secretary
of Transportation from the Trust Fund for the purpose of funding the
acquisition, establishment and improvement of air navigation facilities,
49 U.S.C. App. Sections 1348(b), 2205(a) (1982); the direct cost of
operating and maintaining air navigation facilities, 49 U.S.C. App.
Sections 2205(c) (1982); and for research, engineering, development,
and demonstration projects relating to improved facilities and to meet
the needs of safe and efficient navigation, 49 U.S.C. App. Sections
1353, 2205(b) (1982). The ILS falls within the definition of an air
navigation facility. /2/
Appropriations for capital improvements for air navigation facilities
are included in the annual "Facilities and Equipment (F&E) (Airport and
Airway Trust Fund)" appropriation account for the FAA. Appropriations
for operation and maintenance expenses (including repairs) are included
in the annual "Operations" appropriations to the FAA. This includes
operations, maintenance and repairs to air navigation facilities. Each
year some portion of this appropriation is . derived from the general
fund in the Treasury and the remainder from the Trust Fund. The FAA
charged the $33,000.00 cost of replacing the ILS to its F&E account, as
opposed to its Operations account, apparently on the ground that the ILS
could not be repaired but had to be replaced.
In our opinion, the situation described in 41 Comp. Gen. 235 (1961)
is clearly distinguishable from the situation presented here. The San
Carlos Irrigation project was undertaken in consequence of the special
trust relationship the Government exercises with regard to Indians. No
such special relationship exists with regard to air carriers or air
passengers. The San Carlos Irrigation project was characterized as a
Government instrumentality operating in furtherance of this special
trust relationship. Here, a Government agency -- the FAA -- is serving
the Government's interest on behalf of the public generally.
Although the San Carlos Irrigation project (which includes both
irrigation and electrification activities) was initially constructed
using appropriated funds, the construction cost was required to be
repaid by the project's users. Additionally, users were required to pay
the cost of operating and maintaining the project. Presumably this
liability included the cost of repairing the damaged power lines. The
beneficiaries of the San Carlos Irrigation project entered into a
debtor-creditor relationship with the Government to pay the project's
costs either by virtue of statutory lien's being placed upon Indian
lands to assure payment of their proportionate share of costs or by
contracts executed with public or private landowners agreeing to pay the
assessed charges. Here, funds are raised by excise taxes which remain
constant unless adjusted by legislation. Furthermore, the legal
liability is limited to the tax assessed and ends when payment for the
particular item or service subject to the tax is made. No additional
liability accrues by virtue of use of purchase of the item or service.
The assessments paid by the beneficiaries of the San Carlos
Irrigation project were deposited directly to a trust fund account which
a permanent appropriation made available for the purpose of operating
and maintaining the San Carlos Irrigation Project, 25 U.S.C. Section
385a (formerly 31 U.S.C. Section 725S-1) and were not viewed as Federal
funds. Here, the excise taxes are deposited to the general fund of the
Treasury and amounts equal to receipts are transferred to the credit of
the Trust Fund. However, no expenditures for construction, operation
and maintenance of air navigation facilities may take place unless the
Congress appropriate funds for that purpose. Once appropriated they
remain Federal funds. Furthermore, should they choose to do so, there
is nothing to preclude the Congress from appropriating the funds for
some other purpose unrelated to construction, operation or maintenance
of air navigation facilities. While the Trust Fund serves to identify a
source of funding for these purposes, the Congress has not limited
itself to amounts in the Trust Fund for purposes of funding these
activities and appropriations from the general fund are available and
used to supplement the Trust Fund.
Nothing in the FAA's submission warrants our concluding (or even
contends) that the ILS was not property owned by the United States in
its sovereign capacity on behalf of the public generally, but instead as
trustee exercising fiduciary duties in relationship to the property on
behalf of specific identifiable beneficiaries. Merely appropriating
amounts equivalent to aviation excise taxes collected to the Trust Fund
is insufficient to create an equitable interest in the Trust Fund or the
property purchased with funds appropriated from the Trust Fund on behalf
of the various excise taxpayers. In such a situation we cannot
distinguish the interests represented by the Government on behalf of
some particular beneficiary with regard to the ILS purchased with funds
appropriated from the Trust Fund that would warrant not applying the
interdepartmental waiver rule, and the interest normally represented by
the Government on behalf of taxpayers generally with regard to property
purchase with funds appropriated from the general fund of the Treasury
which in the past has not served to preclude application of the
interdepartmental waiver rule.
Therefore we find no basis for holding that the interdepartmental
waiver rule is inapplicable in this situation.
(1) While we held that the interdepartmental waiver rule did not
apply to the claim in this case, we indicated that other factors may
have served to preclude the claim. 41 Comp. Gen. 288 (1961). Even if a
claim may be presented, some basis of attributing liability to the
agency alleged to have caused the damage in question must be found to
exist.
(2) 49 U.S. Sec. 1301(8) defines air navigation facility to mean:
* * * any facility used in, available for use in, or designed
for use in, aid or air navigation, including landing areas,
lights, any apparatus or equipment for disseminating weather
information, for signaling, for radio-directional finding, or for
radio or other electrical communication, and any other structure
or mechanism having a similar pupose for guiding or controlling
flight in the air or the landing and takeoff of aircraft.
B-221120, 65 Comp. Gen. 461
Matter of: Edgar K. Epp -- Accrual of Annual Leave -- Temporary
Disability Retired List, Apr. 2, 1986
A former member of the United States Navy who was separated from the
service with disability severance pay (10 U.S.C. 1212), has been a
civilian employee of the government since 1960. At the time of civilian
appointment, he was credited with 6 years, 6 months and 10 days of
military years of service for annual leave accrual purposes (5 U.S.C.
6303), which included 3 years, 7 months and 10 days of time spent on the
Temporary Disability Retired List (TDRL). The TDRL time is not properly
creditable for this purpose. Under 5 U.S.C. 6303(a), and 5 U.S.C.
8332(c)(1)(A), while military service is creditable, the term "military
service" is defined in 5 U.S.C. 8331(13) to mean "honorable active
service." Since placement of a military member's name on the TDRL list
removes his name from the active duty list, he is in a retirement status
during that time. Therefore, the employee's civilian service
computation date must be reestablished and his annual leave balance
adjusted.
This decision is in response to a request from the Chief, Personnel
Management Office, Bureau of Reclamation, Department of the Interior.
The question involves the proper crediting of military service time for
civil service annual leave accrual and retirement purposes in the case
of Mr. Edgar K. Epp.
Mr. Epp entered onto active duty in the United States Navy on May 31,
1951. As a result of a service-connected injury, he was transferred to
the Temporary Disability Retired List (TDRL), effective May 1, 1954. At
that time, he had performed 2 years, 11 months and 0 days of active
duty. On December 10, 1954, his name was removed from the TDRL and he
was separated from the Navy with disability severance pay authorized
under 10 U.S.C. Section 1212. His total military time upon separation,
both active and time spent on the TDRL, was 6 years, 6 months and 10
days.
In 1960, Mr. Epp was appointed to a civilian position in the Federal
Government. Shortly after his appointment, he was credited with the
full 6 years, 6 months and 10 days military time and began to accrue
annual leave at the rate of 6 hours a pay period. And, after having
performed approximately 8 years and 6 months of civilian service, he
began to accrue annual leave at the rate of 8 hours a pay period.
The agency contends that the time Mr. Epp spent on the TDRL (3 years,
7 months and 10 days), is not creditable in establishing an employee's
service computation date for annual leave accrual, or for civil service
retirement purposes. Mr. Epp, on the other hand, claims that the
additional service credits he received were credited based on a decision
of this Office which was noticed several years after he entered civilian
service. He brought the decision to the attention of his personnel
officer who agreed that it applied to his situation. He is unable to
locate that decision.
The point made by the submitting official is that if this additional
service time is properly creditable, Mr. Epp will soon be eligible for
optional civil service retirement. If the additional service time is
not properly creditable, then his service computation data would have to
be reestablished. This, in turn, would require an adjustment of and a
reduction in his annual leave balance as well as delaying his
eligibility for optional retirement. The submission goes on to state
that while agency research has failed to uncover a decision by this
Office which would support Mr. Epp's position, a recent decision,
B-212738, February 14, 1984 (published as Daniel F. Cejka, 63 Comp. Gen.
210 (1984)), while not specifically on point, tends to support the
agency's view that time spent on the TDRL is not creditable service for
leave and retirement.
The law governing accrual of annual leave, which was in effect when
Mr. Epp was appointed to a civilian position, was contained in 5 U.S.C.
Section 2062 (1958), and is presently codified as 5 U.S.C. Section 6303
(1982). Since the governing laws have remained virtually unchanged in
substance since then, all reference will be to the current Code.
Section 6303(a) of Title 5, United States Code, provides in part:
(a) * * * In determining years of service, an employee is entitled to
credit for all service creditable under section 8332 of this title * *
*.
Section 8332(c)(1)(A) of Title 5, United States Code, provides in
part:
* * * the service of an individual who first becomes an employee
before October 1, 1982, shall include credit for each period of military
service performed before the date of the separation on which the
entitlement to an annuity under this subchapter is based * * *.
The term "military service" is defined in 5 U.S.C. Section 8331(13)
to mean "honorable active service in the armed forces."
Thus, for the provisions of 5 U.S.C. Section 6303, military service
time which is creditable to establish the rate at which an individual is
authorized to accrue annual leave as a civilian employee is limited to
"honorable active service." In this connection, 10 U.S.C. 101(22) and
(24), when read together, define military active service to mean,
* * * full-time duty in the active military service of the United
States. It includes full-time training dut , annual training duty, and
attendance, while in the active military service, at a school designated
as a service school by law or by the Secretary of the military
department concerned.
These are the governing basic provisions of law. Based on the
sketchy information provided by Mr. Epp, we have researched our
decisions in which the above-quoted provisions or their antecedent
provisions were cited in an effort to locate the decision to which he
referred. We have not found any decision which characterized time spent
in an inactive or military retirement status, such as time spent on the
TDRL, as constituting military active service as that term is defined in
5 U.S.C. Section 8331(13), or in 10 U.S.C. Section 101(22) and (24). In
fact, the decisions which we did find indicated the contrary position.
In 31 Comp. Gen. 213 (1951), we considered, in part, the nature of a
military member's status while his name is on the TDRL. We ruled
therein that, notwithstanding the fact that the presence of his name on
that list did not make his retirement permanent, since, the placement of
his name on that list removes his name from the active duty list,
"temporary retirement" is "retirement." That ruling has been
consistently followed. See 36 Comp. Gen. 628 (1957); 38 Comp. Gen. 268
(1958); and 47 Comp. Gen. 141 (1967). See also, Captain John B.
Turpit, USMCR, Retired, B-206133, February 1, 1983, in which the
language contained in 10 U.S.C. Section 687(b)(4), limiting entitlement
to readjustment pay was similarly construed.
Mr. Epp and the agency official who authorized the crediting of
additional military time may have misread a decision in which the term
"years of service" appeared, since that term is used in 10 U.S.C.
Section 1212, as well as 5 U.S.C. Section 6303. If so, such a reading
was in error. Under 5 U.S.C. Section 6303, "years of service" is
comprised of active military service and service as a civilian employee
of the government. Since there is no provision of law stating that
military retired time on the TDRL qualifies as active service for
section 6303 purposes, it may not be so used. Therefore, since Mr. Epp
had only served on active military duty a total of 2 years, 11 months
and 0 days prior to his appointment as a civilian employee, that is the
maximum military service time creditable to him for annual leave accrual
purposes. Accordingly, his service computation date is to be
reestablished and his annual leave balance adjusted as necessary.
With regard to civil service retirement, matters involving
determinations of years of service creditable for that purpose come
within the exclusive jurisdiction of the Office of Personnel Management
(OPM). However, it is to be observed that since the definition of
"military service" under 5 U.S.C. Section 8331(13) is also used to
establish civil service retirement years of service, we are not aware of
any basis to conclude that OPM would permit the inclusion of TDRL time
for that purpose. See, in this connection, 5 C.F.R. Part 831, Subpart C
(1985).
B-219749.2, 65 Comp. Gen. 457
Matter of: Pacific Sky Supply, Inc. -- Reconsideration, April 2,
1986
The General Accounting Office (GAO) sustains a protest on
reconsideration where the agency failed to provide GAO with a copy of a
memorandum, prepared while the protest was pending, that reversed its
determination that the protester's proposal to provide an aircraft part
could not be evaluated without a final assembly drawing used by the
previous supplier. Since the memorandum establishes that the agency's
initial rejection of the protester's proposal was unreasonable, GAO
recommends resolicitation if delivery schedules permit.
Pacific Sky Supply, Inc. requests reconsideration of our decision
denying its protest in Pacific Sky Supply, Inc., B-219749, Oct. 11,
1985, 85-2 CPD Paragraph 406. Pacific Sky argues that the Department of
the Air Force failed to provide our Office with a September 3, 1985
memorandum that the protester believes would have changed our decision.
We reconsider our prior decision and sustain the protest.
Our decision involved a purchase order issued to Hamilton Standard
Division of United Technologies by the Air Force for 68 base assemblies,
which provide support for C-130 aircraft electronic propeller control
equipment. Pacific Sky submitted a proposal to provide the base
assemblies after the agency announced the planned procurement in the
Commerce Business Daily on March 8, 1985. The firm stated that it would
purchase all components of the assemblies from suppliers to the previous
producer, Hamilton Standard, and would assemble the components in
accordance with a drawing in Hamilton Standard's illustrated parts
catalog for the item.
The Air Force rejected Pacific Sky's offer because it believed that
neither the protester nor the Air Force had sufficient technical data to
ensure proper manufacture and, on June 29, 1985, placed an order under a
basic ordering agreement with Hamilton Standard. Pacific Sky protested
to our Office, contending that since it was going to assemble components
manufactured by Hamilton Standard's suppliers in accord with Hamilton
Standard's own drawing, a requirement for further technical data was not
reasonable. In this connection, the protester submitted a telex message
it had sent to Hamilton Standard asking whether the base assembly
constructed of components listed in Hamilton Standard's parts catalog
"can be used without modification or selection of any kind as stated in
Hamilton Standard publication P-5056-6 pages 6-1 thru 6-17." Hamilton
Standard's reply, dated August 15, 1985, was as follows:
CONFIRM P/N 526005 BASE ASSEMBLY ASSEMBLED IN ACCORDANCE WITH THE
PARTS LIST ON PAGES 6-15 IN MANUAL P5056-6 IS ACCEPTABLE FOR USE.
In its report on the protest, the Air Force stated that "critical
tolerances" and the "essential function" of the base assembly mandated
purchase only from Hamilton Standard in the absence of that firm's
manufacturing data and assembly drawing. The agency's only specific
concern, however, related to the location of certain receptacles on the
base assembly. The Air Force believed that without the Hamilton
Standard final assembly drawing, Pacific Sky could not ensure that
receptacles in the base assembly were placed so that pins on equipment
supported by the base (a syncrophaser), which are plugged into the
receptacles, would not break and disable the equipment. /1/ Pacific Sky
had stated in its proposal that it would use an FAA-certified
syncrophaser to make sure that the receptacles were properly located.
The Air Force contended that, because of the variety of equipment used
by the Air Force, this procedure would be insufficient to establish that
all syncrophasers would properly align with the base assembly
receptacles.
In its response to the Air Force's report, Pacific Sky did not
address or even acknowledge the Air Force's argument concerning
potential alignment problems. Instead, it asserted that the issue was
really one of responsibility, and should be referred to the Small
Business Administration under the certificate of competency program. We
concluded that the issue was one of technical acceptability and not
responsibility. Since Pacific Sky had failed to rebut the agency's
technical position and thereby meet its obligation to prove that
rejection of its proposal had been unreasonable, we denied the protest.
Additional Information
In reaching our decision, we considered the Hamilton Standard telex
quoted above. We concluded that, in itself, the message did not refute
the Air Force's concern that it could not determine whether the
receptacles were properly located on the base assembly without the final
assembly drawing.
Pacific Sky has now obtained a memorandum dated August 25, 1985, from
the contracting office to the Air Force technical evaluators, requesting
reconsideration of Pacific Sky as a qualified source for base assemblies
based upon the exchange of telex messages with Hamilton Standard. The
contracting office requested that the reevaluation be expedited because
of the pending protest. In a memorandum dated September 3, i.e., 5
weeks before we issued our decision on October 11, the Air Force office
that had previously found Pacific Sky not to be a qualified source, and
whose views were responsible for rejection of the protester's proposal
and the Air Force's position in the protest report, reversed its
opinion. The memorandum stated that Hamilton Standard's August 15 telex
had been evaluated and, in view of it, Pacific Sky was considered a
potential source for the base assembly providing the parts were
purchased from Hamilton Standard's suppliers and assembled in accord
with Hamilton Standard's parts catalog. The technical office added that
it would assign the base assembly "a competitive code."
Although the protest was still pending, the Air Force did not provide
our Office with a copy of this memorandum. The Air Force notified us
that Hamilton Standard had agreed to provide its base assembly drawing
so that, whatever our decision on the protest, future procurements would
be competitive. We were not told that the agency had already decided
that the item could be competitively procured without the drawing.
The Competition in Contracting Act of 1984, 31 U.S.C.A. Section
3553(b)(2) (West Supp. 1985), requires agencies to submit a "complete
report (including all relevant documents)" within 25 working days from
receipt of notice of a protest to our Office. The act, 31 U.S.C.A.
Section 3553(f), and our implementing Bid Protest Regulations, 4 CFR
Section 21.3(c) (1985), further require the report and all relevant
documents to be provided to the protester, except for documents that
would give the protester a competitive advantage or that the firm is not
legally authorized to receive. While neither the act nor our
regulations explicitly address documents created while a protest is
pending, we believe that in this case the Air Force should have provided
us with the September 3 memorandum. The document constitutes a reversal
of the agency's technical evaluation upon which it based its position in
the protest report. Moreover, as we discuss below, the technical
reevaluation was clearly relevant to the reasonableness of the agency's
initial determination to reject Pacific Sky's proposal.
The Air Force asserts that its technical reevaluation was based upon
"data and information" unknown to the government at the time of the
protested procurement actions, i.e., rejection of Pacific Sky's proposal
and placement of the delivery order with Hamilton Standard. The agency
argues that its original decision must be viewed in light of
circumstances at the time, and that subsequent determinations based upon
additional information should not be applied retroactively.
The base assembly consists of less than 25 parts bolted together. It
has no moving parts and functions only as a platform upon which to mount
a syncrophaser. The detailed drawing in Hamilton Standard's parts
catalog shows how all the components of the base assembly are to be
connected, and no additional assembly drawing appears clearly to be
required. However, no dimensions are provided on the drawing, so in
considering Pacific Sky's initial protest we accorded some weight to the
Air Force's strongly stated concerns that it could not be assured that
the electrical receptacles on the assembly would be properly located,
even though the agency stated that any risk of syncrophaser pins
breaking because of improperly located receptacles was not a safety
hazard. As discussed above, Pacific Sky did not offer any response to
the Air Force's position.
We believe that the Air Force's reversal of its position that an
additional assembly drawing is required to locate the receptacles
establishes that its initial position was unreasonable. The only new
information apparently considered by the Air Force in its reevaluation
was a one sentence telex to the protester from Hamilton Standard stating
that a base assembly assembled in accordance with the firm's catalog
drawing "is acceptable for use." Hamilton Standard did not indicate what
it meant by "acceptable" or for what uses the assembly would be
acceptable. The statement is clearly incomplete in its failure to
address the location of the electrical receptacles. Pacific Sky
acknowledges that the Hamilton Standard drawing is insufficient for this
purpose and proposed to use an FAA-certified syncrophaser to place the
receptacles. Yet, Hamilton Standard stated that the assembly would be
"acceptable" without any reference to how the receptacles could be
properly located using only the parts catalog drawing.
The brief telex message from Hamilton Standard to Pacific Sky could
not reasonably support the complete alleviation of Air Force concerns
about faulty alignment of syncrophaser pins and base assembly
receptacles unless those concerns were not meaningful in the first
instance. Consequently, on the record before us, we conclude that the
Air Force's rejection of Pacific Sky's offer and its underlying
technical judgment were unreasonable. Indeed, had the September 3
memorandum been included in the procurement record, we would have
sustained the initial protest. Therefore, we reconsider our original
decision and sustain the protest now.
Recommendation
The Air Force states that the lead time for manufacture of base
assemblies is 21 months. The agency reports that it has a sufficient
quantity on hand for only 14 months, so that a termination of Hamilton
Standard's contract and reaward to Pacific Sky will "cause the grounding
of C-130 aircraft and adversely affect the C-130 Programmed Depot
Maintenance Schedule."
According to Pacific Sky, the Air Force has overestimated the lead
time for this equipment. The protester has provided quotations from the
component suppliers showing a maximum lead time of 4 1/2 months for
components and states that it can deliver the items within 6 months
following award.
Pacific Sky's offer was substantially below the price quoted by
Hamilton Standard, and the protester is apparently willing to enter a
contract at its original price for delivery well within the 14 months
required by the Air Force. The proposal was submitted in response to
request for proposals (RFP) No. F09603-85-R-1050, which the Air Force
provided to Hamilton Standard and to other firms responding to a
Commerce Business Daily announcement. We believe that an award to
Pacific Sky in response to its proposal would not comply with the
requirement for full and open competition in government procurement, 10
U.S.C.A. Section 2304(a) (West Supp. 1985), since other firms have not
had an opportunity to submit offers on the basis of the Hamilton
Standard drawing used by Pacific Sky. Consequently, we are recommending
that the Air Force issue a new competitive solicitation and terminate
Hamilton Standard's contract, if time permits. We note that since
Hamilton Standard purchases components and merely assembles the
equipment, termination costs should be relatively low.
If the agency has insufficient time to complete a competitive
procurement, as is apparently the case the Air Force's representations
regarding necessary delivery schedules, the Air Force should negotiate a
contract in response to Pacific Sky's original offer, assuming that it
otherwise finds the firm responsible. Finally, if in negotiating with
Pacific Sky, the Air Force is unable to obtain a satisfactory delivery
schedule at the offered price, continuing Hamilton Standard's contract
would be appropriate. In that case, Pacific Sky would be entitled to
its proposal costs and expenses of pursuing the protest.
We reconsider our prior decision and sustain the protest.
(1) The synchrophaser automatically controls propeller speed by
varying the pitch and angle between the four propellers. Propeller
speed may also be controlled manually.
B-220455, 65 Comp. Gen. 451
Matter of: Standard Manufacturing Company, March 31, 1986
Where, before award, but after the receipt of best and final offers,
an offeror claims a mistake in its proposal, regulatory provisions
governing the correction of a mistake in a negotiated procurement are
not directly applicable although agency can -- but is not required to --
reopen negotiations with offerors to allow the offeror claiming the
mistake to revise its proposal, if the agency determines that it is
clearly in the government's best interests to do so.
Where agency during discussions specifically advised the protester to
review its proposed pricing and thereafter disclosed the relative prices
of the remaining offerors in requesting the protester to verify its
price, agency determination not to reopen negotiations to allow
protester to correct a subsequently discovered error will not be
questioned since, notwithstanding protester's assertion that agency
erred in disclosing relative prices, protester was previously provided
an opportunity to review its proposal and further negotiations would
result in the use of prohibited auction techniques.
Although an agency may utilize a bidder's worksheets or any other
data in a sealed bidding acquisition and permit the upward correction of
a bid based on this evidence where the bid is low with or without the
correction, protest that correction should be allowed in similar
circumstances in a negotiated procurement is without merit since, under
the Federal Acquisition Regulation, correction of a mistake which
requires resort to evidence outside the RFP is appropriate only if the
agency reopens discussions with all competitive range offerors.
Standard Manufacturing Company (Standard) protests the award of a
contract to any other offeror under request for proposals (RFP) No.
N00140-85-R-2652 issued by the Department of the Navy for the
acquisition of 160 hangar deck cranes. After the submission of best and
final offers (BAFOs), but prior to award, Standard, the low technically
acceptable offeror, discovered that it had made a mistake in its
proposed price for a source control winch. Standard contends that its
intended price for this item can be clearly established from the record,
that correction would not change the relative ranking of the offerors
and that, under the circumstances, the Navy had improperly refused to
request another round of BAFOs to allow Standard to correct the mistake.
We deny the protest.
The RFP was issued on March 22, 1985. Award was to be made to the
single responsive offeror whose total offer was most advantageous to the
government; the Navy received 25 responses by the June 13 closing date.
A review of the proposals received showed that no offeror had taken any
exception to the RFP's specifications or delivery requirements, and that
many proposals were priced significantly below the government's estimate
of $6,264,000. The offers ranged from 7 percent to 67 percent below the
estimate and 12 offerors were more than 50 percent below the proposed
price of the previous contractor. A more detailed analysis of each
offeror's proposed labor hours and material costs also showed that most
offerors had proposed far fewer labor hours and far less in material
costs than the government's estimate.
However, since the 10 lowest-price offerors were all well known
producers with a record of knowledgeable pricing, the Navy decided that
its own estimate was inaccurate. A competitive range was established
comprised of the nine lowest priced offerors and the previous
contractor. Thereafter, oral discussions were held and Standard and all
offerors were requested to review specific price areas identified by the
Navy as requiring special care. By letter dated August 16, Standard was
requested to submit a BAFO and was again advised to review its proposed
pricing. BAFOs were received on September 13 and Standard reduced its
already low offer slightly, while all but one of the remaining offerors,
either raised their prices or withdrew from the competition.
Based on the BAFOs submitted, and the price difference between
Standard's offer and the next low offer, the contracting officer
suspected that Standard had made a mistake. On October 4, the
contracting officer sent Standard a wire advising Standard that its " .
. . per unit price was 53 percent lower than the $29,302 per unit price
paid under (the ) prior contract . . . ," that its price of " . . .
$1,981,373 is 25 percent lower than that of the next low offeror . . .
," and that the other " . . . best and final offers ranged from
$2,650,000 to $5,810,000." The contracting officer requested Standard to
review its pricing and verify its price. By wire dated October 8,
Standard responded and advised the Navy that it could find no mistake in
its proposal and that its offer remained as stated.
Prior to the completion of a preaward survey of Standard, Standard
advised the Navy that it had just discovered a mistake in the pricing of
the source control winch, an important component of the hangar deck
crane. Standard advised the Navy that on April 10, 1985, it had
obtained a telephone quotation for the winch in the amount of $1,495 and
relied on the oral quotation in pricing its proposal. A written
quotation, sent by the manufacturer on April 23 in the amount of $4,440,
was not brought to the attention of Standard's estimating or production
departments since there was nothing on the face of the quotation which
indicated that the oral quotation was erroneous. The mistake was
discovered when Standard called the manufacturer to verify the delivery
schedule for the winch. The overall amount of the mistake was
approximately $500,000 and if corrected, Standard's low offer would
still remain low by well over $100,000.
The Navy completed its preaward survey and found that all other
elements of Standard's proposal were satisfactory. Concerning the
alleged mistake, the Navy determined that correction of the error would
require the reopening of discussions with all offerors in the
competitive range since the error was material and reference to
documents outside Standard's proposal would be necessary to establish
the existence of the mistake and the intended offer. The Navy concluded
that meaningful discussions already had been held with Standard that
should have enabled Standard to detect its error. In addition, since
the Navy had revealed the price of Standard's nearest competitor and the
range of other offers in providing Standard notice of the suspected
mistake, the Navy decided it would not be fair to the other offerors or
in the government's best interests to request the submission of a second
round of BAFOs. The Navy requested Standard to either confirm its price
or withdraw its proposal.
Standard contends that the Navy failed to conduct meaningful
discussions with the firm since the contracting officer failed to
adequately advise Standard during discussions of a suspected mistake in
Standard's offer. Standard argues that suspected mistakes are to be
resolved through discussions and the Navy's failure to raise this matter
was clearly prejudicial.
In addition, Standard contends that under the Federal Acquisition
Regulation (FAR), 48 C.F.R. Section 15.607 (1984), additional
discussions are the appropriate vehicle to resolve a suspected mistake
of this nature and that under this provision, the contracting officer
had no choice but to reopen negotiations and request a second round of
BAFOs. Standard contends that there is nothing in the FAR which
indicates that mistakes cannot be corrected after BAFOs have been
received and that, in view of the emphasis placed on resolving suspected
mistakes through discussions, additional discussions should be held.
Also, Standard complains that the Navy's rationale for refusing to
reopen discussions is not proper. Standard contends that the Navy
should not have revealed to Standard the prices of its nearest
competitor when asking the firm to verify its price. Standard asserts
that it should not be penalized for the Navy's actions in this regard,
and also argues that it is in the government's best interest to reopen
negotiations since its price would still be substantially lower than its
nearest competitor. Standard argues that the amount of the mistake is
clearly established by the written quotation the firm subsequently
received and, in similar circumstances, we have allowed the upward
correction of an offeror's proposed price since the offer is low with or
without the correction. Standard contends that it would be unfair to
disallow the correction of the mistake simply because BAFOs have been
received, and that the Navy should be required to reopen negotiations in
this case. Standard argues that public policy favors the correction of
mistakes, and that the Navy should be required to reopen negotiations in
this case.
We find Standard's contention that the Navy failed to conduct
meaningful discussions with the firm clearly without merit. We find no
basis to fault the agency's failure to discover and discuss with
Standard an error that Standard was unable to find even after the firm
was specifically requested to review its pricing in the particular area
of the subsequently alleged mistake. When an agency decides to conduct
discussions, its burden is to furnish those offerors within the
competitive range information concerning the areas of perceived
deficiencies in their proposals and give those offerors the opportunity
to revise those proposals. Barber-Nichols Engineering Co., B-216846,
Mar. 25, 1985, 85-1 CPD Paragraph 343. The mistake in Standard's
proposal was not one that should have been reasonably detected by the
Navy, and Standard does not argue otherwise. Cf. American Management
Systems, Inc., B-215283, Aug. 20, 1984, 84-2 CPD Paragraph 199.
Therefore, the Navy cannot be said to have failed to hold meaningful
discussions, since it could not discuss an error of which it was
unaware.
With respect to the procedures to be followed when a mistake is
suspected or alleged before award in a negotiated procurement, section
15.607 of the FAR contemplates that, in general, the mistake will be
resolved through clarifications or discussions. See also FAR, 48 C.F.R.
Section 15.610(c)(4) (which requires agencies to resolve suspected
mistakes through discussions). We have recognized, however, that the
regulation does not specifically cover the situation, where, as here,
the mistake is not claimed until after the agency has completed
discussions. See American Electronic Laboratories, Inc., B-219582, Nov.
13, 1985, 65 Comp. Gen. 62, 85-2 CPD Paragraph 545; Time-plex, Inc.,
B-220069, Dec. 12, 1985, 85-2 CPD Paragraph 651. Although Standard
argues that the FAR does cover this situation, we note that under
section 15.610(c)(4) of the FAR, agencies are obligated to resolve only
"suspected mistakes." In our view, the contracting agency's
responsibility under this provision is to call to each offeror's
attention during discussion errors which should be reasonably detected
by the agency. Cf. American Management Systems, Inc., supra. When the
mistake is not discovered until after discussions have been completed
and there is no evidence that the agency was on actual or constructive
notice of the claimed mistake, neither section 15.607 nor section
15.610(c)(4) requires the agency to reopen negotiations.
Furthermore, our prior decisions have never required agencies to
reopen negotiations where a mistake is claimed after the receipt of
BAFOs. We think the current situation is analogous to the case where an
offeror first introduces an ambiguity in its BAFO since in both cases
there is nothing in the offeror's initial proposal which should have
alerted the agency to the subsequent problem. It is only because of
subsequent action -- the submission of a BAFO which deviates from the
initial offer, or the offeror's discovery of a mistake after submitting
its BAFO -- that first raises a question as to what the offeror intended
to provide or at what price the offeror intended to perform. Although
our decisions have upheld an agency determination to reopen negotiations
in such a case, agencies may, but are not required to, provide the
offeror with an opportunity to discuss the matter. Electronic
Communications, Inc., 55 Comp. Gen. 636 (1976), 76-1 CPD Paragraph 15;
Varian Assocs., Inc., B-209658, June 15, 1983, 83-1 CPD Paragraph 658.
Consequently, the sole remaining question is whether the Navy abused its
discretion in refusing to reopen negotiations and request a second round
of BAFOs.
Under section 15.611(c) of the FAR, after the receipt of BAFOs, the
contracting officer should not reopen discussions unless it is clearly
in the government's interest to do so. See also Alchemy, Inc.,
B-207338, June 8, 1983, 83-1 CPD Paragraph 621. Since the Navy released
pricing information concerning the other offeror's proposals in
requesting Standard to verify its BAFO, further negotiations would have
resulted in the use of prohibited auction techniques and not been in the
government's best interest. American Electric Laboratories, Inc.,
supra. Given in addition that meaningful discussions had been held, the
refusal to reopen discussions was consistent with the FAR and a
reasonable exercise of the Navy's discretion.
Furthermore, Standard's assertion that it should not be prejudiced by
the Navy's improper disclosure of other offeror's pricing information
ignores the fact that its own error is the cause of the problem.
Although agencies should be encouraged to allow the correction of
errors, offerors also have a responsibility to exercise due care and
diligence in preparing their proposals. The Navy, prior to the
submission of BAFOs, requested Standard on two separate occasions to
thoroughly review its proposal for possible errors, and we see no reason
to require the Navy to afford Standard a third opportunity. Therefore,
we will not object to the Navy's refusal to reopen discussions.
Finally, we note Standard's argument that our decisions have
permitted the upward correction of a proposed price where clear and
convincing evidence establishes both the existence and the amount of the
mistake and where the price would nonetheless remain low. These cases,
however, arise in the context of sealed bidding acquisitions, and
section 14.406-3(a) of the FAR authorizes the agency to utilize a
bidder's worksheets or any other data where the bidder is low with or
without correction. See also S.W. Electronics and Mfg. Corp., B-218842,
Aug. 2, 1985, 85-2 CPD Paragraph 157. On the other hand, in a
negotiated procurement, the thrust of the regulations is that correction
of a mistake, without conducting discussions with all offerors, is
appropriate only where the existence of the mistake and the proposal
actually intended can be clearly and convincingly established from the
RFP and the proposal itself. FAR, 48 C.F.R. Section 15.607(c)(3). When
resort to evidence outside the RFP is required to establish the mistake
or intended price, the mistake is to be corrected only through
discussions. FAR, 48 C.F.R. Section 15.607(c)(5). We find no basis in
the regulations to permit the correction of the mistake alleged here
without reopening discussions, and as previously indicated, we do not
find that the Navy abused its discretion in refusing to do so.
The protest is denied.
B-218535.3, 65 Comp. Gen. 450
Matter of: Dresser Industries, Inc., March 31, 1986
Where Assistant Secretary of the Army clarifies and updates
determination and findings (D&F) to remove any doubt that certain
components of the tractors being procured were subject to restrictions
on place of manufacture, this renders academic a protest that the
restrictions in amended solicitation exceeded the scope of the
restrictions in the original D&F justifying negotiation. Moreover,
since the protester has not only not alleged that the more extensive
production restrictions precluded it from competing for award but in
fact has recently submitted a revised offer, the protester apparently
retains the opportunity to compete for award and therefore the recovery
of the costs of filing and pursuing its protests is inappropriate.
The International-Hough Division of Dresser Industries, Inc.
(Dresser), protests the terms and conditions of request for proposals
No. DAAE07-83-R-H291, issued by the United States Army Tank-Automotive
Command (Army) for the supply of tractors (bulldozers). We dismiss the
protest.
Dresser initially protested that the solicitation was improper
because it had been amended to impose restrictions on the place of
manufacture of certain components which exceeded those contained in the
Secretarial-level determination and findings (D&F) pursuant to which
this procurement was negotiated under the authority of 10 U.S.C. Section
2304(a)(16) (1982). Prior to resolution of the protest, the Assistant
Secretary of the Army for Research, Development and Acquisition
clarified and updated the D&F to remove any doubt that the components in
question were subject to the place of manufacture restrictions. While
the protester's initial ground of protest has become academic because of
the Assistant Secretary's action, the protester nevertheless maintains
that the issuance of the modified D&F amounts to an "admission" that it
was correct all along and that it therefore is entitled to the costs of
filing and pursuing its protest, including attorney's fees.
Our Bid Protest Regulations, however, limit the recovery of the costs
of filing and pursuing a protest to situations where the protester is
unreasonably excluded from the procurement. 4 C.F.R. Section 21.6(e).
We have construed this to mean that where the protester has the
opportunity to compete for award, recovery of the costs of filing and
pursuing the protest is inappropriate. Galveston Houston Co.,
B-219988.4, Nov. 4, 1985, 85-2 C.P.D. Paragraph 519. Since Dresser has
not only not alleged that the more extensive production restrictions
precluded it from competing for award but in fact has recently submitted
a revised offer, it appears that the protester retains the opportunity
to compete for award. Accordingly, the recovery of the costs of filing
and pursuing its protest is inappropriate here.
The protest is dismissed.
B-220756, 65 Comp. Gen. 447
Matter of: Steven C. Krems - Loan Origination Fee, March 28, 1986
A transferred employee claimed a 3 percent loan origination fee but
the agency limited reimbursement to 1 percent, based on HUD's advice
that a 1 percent loan origination fee is customary nationwide. However,
HUD's advice was limited to FHA-insured loans and did not apply to the
employee's conventional mortgage. We hold that the employee is entitled
to reimbursement for a 3 percent loan origination fee because he has
demonstrated by a Federal Home Loan Bank's survey of local lenders that
a 3 percent fee was customary in the locality for the particular type of
conventional financing involved.
Ms. Margaret E. Wenzel, an authorized certifying officer for the
Internal Revenue Service (IRS), has requested our decision on Mr. Steven
C. Krems' claim for a 3 percent loan origination fee he incurred when
purchasing a residence at his new duty station. As explained below, we
hold that Mr. Krems is entitled to reimbursement for a 3 percent loan
origination fee because he has submitted evidence demonstrating that a 3
percent fee was customary in the locality for the type of financing
involved.
Effective October 1, 1984, Mr. Krems was transferred from Washington,
D.C., to Chicago, Illinois. In March 1985, he settled on the purchase
of a new residence in Chicago. Mr. Krems financed the purchase of his
residence by obtaining a conventional adjustable rate mortgage, and paid
a 3 percent loan origination fee in the amount of $1,608.
The IRS limited Mr. Krems' reimbursement for a loan origination fee
to 1 percent of the loan amount, stating that a 1 percent fee is
"customary" and citing our decision in Roger J. Salem, B-214018, June
27, 1984, published at 63 Comp. Gen. 456 (1984), discussed below. Also,
the IRS indicated that it had contacted the Chicago area office of the
Department of Housing and Urban Development (HUD), and was advised that
a 1 percent fee is "customary nation-wide."
Mr. Krems reclaimed the disallowed 2 percent fee, arguing that he is
entitled to reimbursement based on the customary charge for loan
origination fees in the Chicago area. He states that the 1 percent
figure quoted by HUD's Chicago office does not represent the fee
prevailing locally for the type of loan he obtained, and he has
submitted a letter from the HUD office advising him that: (1) the 1
percent figure it quoted to IRS represents the customary loan
origination fee only for loans insured by the Federal Housing
Administration (FHA); (2) the Chicago office of HUD does not maintain
information concerning customary charges for other types of mortgages;
and (3) information concerning loan origination fees for mortgages not
insured by the FHA should be obtained from the Illinois Mortgage Bankers
Association.
Mr. Krems contacted the bankers association and, in turn, was
referred to the Federal Home Loan Bank of Chicago. The Federal Home
Loan Bank provided Mr. Krems with the results of a survey of more than
80 lending institutions in Illinois, conducted during the month of March
1985. The survey results list loan fees customarily charged by local
lenders according to the type of mortgage involved and specific
financing terms (e.g., amount of the downpayment, allowable rate change
over the life of the mortgage). The survey results show that, at the
time Mr. Krems obtained his loan, the average loan origination fee for
the particular type of adjustable rate financing he obtained was
approximately 2.8 percent.
Mr. Krems also submitted a private consulting firm's report
summarizing the results of a survey of mortgage costs in the Chicago
area. However, the only percentage figures listed in the report are
characterized as "points," and the report does not identify the period
of time covered by the survey.
Against this background, the IRS questions whether Mr. Krems may be
reimbursed for a loan origination fee in excess of 1 percent.
Under 5 U.S.C. Section 5724a(a)(4) (1982), an employee may be
reimbursed for the expenses he incurs in selling and purchasing a
residence pursuant to a permanent change of station. Effective October
1, 1982, the implementing regulations in paragraph 2-6.2d(1) of the
Federal Travel Regulations (FTR), incorp. by ref., 41 C.F.R. Section
101-7.003 (1983), were amended to permit reimbursement for loan
origination fees and similar charges which are not specifically
disallowed by FTR para. 2-6.2d(2). See Robert E. Kigerl, 62 Comp. Gen.
534 (1983). Under FTR para. 2-6.2d(1), reimbursement for a loan
origination fee is limited to the amount customarily charged in the
locality of the employee's new residence. See Patricia A. Grablin,
B-211310, October 4, 1983.
Interpreting the "customary charge" limitation stated in FTR para.
2-6.2d(1), we held in Gary A. Clark, B-213740, February 15, 1984, that
an agency may rely on technical assistance provided by the local office
of HUD in determining the customary loan origination fee in a given
locality. We stated that the information supplied by HUD creates a
rebuttable presumption as to the prevailing loan origination fee charged
in the area, and is controlling in the absence of evidence overcoming
that presumption. Applying evidentiary standards developed in the
context of real estate brokers' commissions, we suggested that an
employee may be able to demonstrate through a survey of local lending
institutions that the prevailing loan origination fee is higher than
that quoted by HUD.
In Roger J. Salem, 63 Comp. Gen. 456, supra, cited by IRS, an
employee incurred a 5 percent loan fee which was characterized on the
settlement statement as a "loan origination fee." The agency allowed the
employee reimbursement for 1 percent of the loan amount, based on HUD's
advice that a 1 percent loan origination fee was customary in the
locality. We denied the employee's claim for the additional 4 percent,
determining under the particular circumstances that the bulk of the
lender's 5 percent charge represented a mortgage discount or "points,"
reimbursement for which is specifically prohibited by FTR para.
2-6.2d(2)(b). We concurred with the agency's determination to allow the
employee reimbursement for a 1 percent loan origination fee based on
HUD's advice, but concluded our decision by suggesting that the problem
involved in Salem would be avoided if FTR para. 2-6.2d(1) was amended to
impose a specific percentage limitation on reimbursement for loan
origination fees.
In Egbert H. Thompson and Sam Losoya, B-217603 and B-217584,
September 4, 1985, we declined to read Salem as in itself imposing a 1
percent limitation on reimbursement for loan origination fees. We
explained that, under the existing provisions of FTR para. 2-6.2d(1), a
loan origination fee is reimbursable to the extent it does not exceed
the amount customarily charged in the locality for the type of
transaction involved.
In this case, it appears that the agency's determination to limit Mr.
Krems' reimbursement for a loan origination fee to 1 percent of the loan
amount was based in part on the interpretation of Salem which we
rejected in Thompson and Losoya, above. Furthermore, although the IRS
contacted HUD's office in Chicago for information concerning the
customary loan origination fee in that area, the 1 percent figure quoted
by HUD is not relevant to Mr. Krems' claim because it pertains only to
FHA financing. See William I. Massengale, B-185863, August 25, 1976, in
which we held that the determination whether a charge is "customary" for
purposes of the FTR must be made with reference to the particular type
of financing involved.
Mr. Krems has submitted the results of a comprehensive survey
conducted by the Federal Home Loan Bank of Chicago, a lending
institution established by the Federal Home Loan Bank Board under the
authority of 12 U.S.C. Section 1423 (1982). According to the survey
results, lending institutions offering the particular type of financing
obtained by Mr. Krems charged loan origination fees averaging 2.8
percent. Since the 2.8 percent fee quoted in the survey report
represents an average charge, it is reasonable to presume that some of
the surveyed fees ranged as high or higher than 3 percent. Under these
circumstances, we conclude that the 3 percent loan origination fee Mr.
Krems incurred was within the range of fees customarily charged in the
locality. See generally Thompson and Losoya, cited above.
Accordingly, we hold that Mr. Krems may be reimbursed for the full 3
percent loan origination fee he paid on the purchase of his new
residence in Chicago.
B-219924, 65 Comp. Gen. 444
Matter of: C.I. Whitten Transfer Company, March 24, 1986
A carrier's tariff, offering released value rates to the public
generally, contained a provision increasing line-haul charges by 25
percent where a shipper failed to annotate the Bill of Lading in
specified form declaring the value of the property. Condition 5, now
published at 41 C.F.R. 101-4.302-3(e), among the provisions governing
Government Bill of Lading shipments, substantially complies with the
tariff's formal annotation requirement. Therefore, the General Services
Administration's disallowance of the carrier's claim for an additional
25 percent of original charges is sustained.
Government foreign military sales shipments, for which the Government
is to be reimbursed, were shipped on Government Bills of Lading.
Neither Baggett Transportation Company, Inc., 670 F.2d 1011 (Ct. Cl.
1982), which held that section 22 rates are not applicable to foreign
military sales shipments, nor any other authority prohibits the use of
Government Bills of Lading and the application of their provisions for
such shipments.
C.I. Whitten Transfer Company, a motor carrier, asks for review of
action taken by the General Services Administration (GSA) disallowing
the carrier's claim for additional transportation charges. /1/ We
sustain the action.
In 1983 Government Bills of Lading (GBL) /2/ were issued to Whitten
for the transportation of three so-called foreign military sales
shipments. /3/ The carrier was paid on the basis of rates which apply
when the value of the shipment is agreed to be not in excess of $2.50
per pound, published in the applicable tariff, Whitten's rate tariff,
ICC WITT 300. The carrier presented supplemental bills to GSA which
reflected a 25 percent increase of the original charges on the theory
that the Government had not executed a written declaration of the
property's value on the GBL's, as required by the tariff. The GSA,
however, relied on a blanket declaration of limited valuation contained
in 41 C.F.R. Section 101-41.302-3(e), which is among the terms and
conditions incorporated by reference in the GBL. /4/
Whitten presents two issues in contesting the validity of GSA's
disallowance of its claims: (1) whether the GBL condition concerning
limited valuation satisfies the tariff requirement for a written
declaration on the GBL, and (2) whether the terms and conditions of the
GBL are applicable to foreign military sales shipments.
There is no dispute that the tariff provides for an increase of 25
percent of the basic freight charges if the shipper fails to provide a
written declaration of value. The issue is whether the GBL condition
satisfies that general requirement.
Item 848 of Whitten's tariff, ICC WITT 300, provides:
When any item is made subject to this Item, line haul rates and
charges provided in that Item apply only when the shipper
certifies in writing on the shipping order and bill of lading the
following:
"The agreed or declared value of the property is hereby
specifically stated by the shipper to be not exceeding 250 cents
per pound for each distribution package."
If the shipper fails or declines to execute the above
statement, line haul rates and charges published in an Item made
subject to this Item, will be increased by 25% to determine
appropriate charges.
The GSA contends that the declaration incorporated in the GBL
concerning limited valuation complies in substance with the requirement
of item 848. The declaration, as published in revised form in 41 C.F.R.
Section 101-4.302-3(e), reads as follows:
(e) The shipment is made at the restricted or limited valuation
specified in the tariff or classification or established under
section 10721 of the Revised Interstate Commerce Act (49 U.S.C.
10721), formerly section 22 of the Interstate Commerce Act, or to
another equivalent contract, arrangement, or exemption from
regulation at or under which the lowest rate is available, unless
otherwise indicated on the face of the GBL.
Written disputes that this declaration complies with the tariff
requirement.
In Strickland Transportation Company, Inc. v. United States, 334 F.2d
172 (5th Cir. 1964), a tariff requiring a similar notation as a
condition for application of released value rates was involved. The
court held that the declaration in condition 5 of the GBL demonstrated
the Government's intention to ship at the lowest possible rate. Thus,
where there is a requirement in a tariff for a declaration of limited
value, the Government has satisfied this requirement in the terms of the
Government Bill of Lading even though there is no specific declaration
of limited value. This reflects the Government's policy as a
self-insurer. See also Georgia Highway Express, Inc., 48 Comp. Gen. 446
(1968).
Strickland Transportation Company, Inc., addressed condition 5, which
at that time was among the terms and conditions printed on the reverse
of the GBL. Currently, 41 C.F.R. Section 101-4.302-3(e) contains the
revised version of condition 5. We have held that the change of
language from condition 5 to the regulation, which formally extended its
application to tenders, simply acknowledges previous holdings of this
Office. In American Farm Lines, B-200939, May 28, 1981, we stated that
the regulation, as former condition 5, relieves the Government of a
requirement to declare value as a condition to application of the lowest
available rates when the requirement in the tariff or tender is in
general rather than specific form. See also 38 Comp. Gen. 768 (1959).
Therefore, where a tariff provides released value rates for the public
generally if a declaration of value is on the Bill of Lading or other
shipping document, the declaration in the regulation as incorporated in
the GBL substantially complies with the requirement. Accordingly, we
find that the requirements of item 848 of the tariff were satisfied in
the present case.
Whitten argues that even if the declaration incorporated in the GBL
formally satisfies the tariff requirement for a written certification of
value not exceeding $2.50 per pound, the provision may not be applied to
foreign military sales shipments because they are not "Government
shipments." To support its position Whitten cites Baggett Transportation
Company v. United States, 670 F.2d 1011 (Ct. Cl. 1982).
We agree with the agency's contention that the Baggett decision is
inapposite. The court there considered the different question of
whether reduced rates offered only to the United States by a carrier
pursuant to Section 22 of the Interstate Commerce Act, 49 U.S.C. Section
10721 (1982), were applicable to foreign military sales shipments.
Since the Arms Export Control Act, 22 U.S.C. Section 2792(b), required
reimbursement of transportation costs to the United States, the court
held that the reduced rates were not applicable because the United
States did not receive the benefit of the reduced rates. Although the
shipments were tendered on Government Bills of Lading, the issue of
whether provisions of the Government Bill of Lading were applicable, was
not raised. Here, the applicability of Section 22 rates is not in issue
because generally applicable tariff rates, not Section 22 tender rates,
were applicable.
The shipment of foreign military sales commodities by the Department
of Defense is authorized under the Arms Export Control Act, 22 U.S.C.
Section 2751 et seq., and thus the use of Government Bills of Lading for
such shipments appears proper. Since the shipments moved on Government
Bills of Lading, the provisions of such bills apply to these foreign
military sales shipments. Therefore, we conclude that the terms and
conditions published in 41 C.F.R. Section 101-4.302-3, governing
acceptance and use of Government Bills of Lading, were applicable to
these shipments.
Accordingly, the General Services Administration's action,
disallowing Whitten's claim for additional transportation charges, is
sustained.
(1) Whitten's claim for an additional allowance of $1,000.53 was
disallowed by Settlement Certificate dated August 9, 1985.
(2) Government Bills of Lading M-5147230, S-5779126, and S-5833790
were involved.
(3) These consist of materials sold to foreign countries under the
Arms Export Control Act, 22 U.S.C. Section 2751 et seq. See Baggett
Transportation Company v. United States, 670 F.2d 1011 (Ct. Cl. 1982);
see also Procurements Involving Foreign Military Sales, 58 Comp. Gen. 81
(1978).
(4) The terms of this provision were previously printed on the
reverse of the Government Bill of Lading under "terms and conditions" as
condition number 5.
B-218681, 65 Comp. Gen. 439
Matter of: Bureau of Land Management - Collection of Assessments for
Noncompliance with Requirements for Onshore Federal and Indian Oil and
Gas Lease Activities, March 24, 1986
The Bureau of Land Management of the Department of the Interior
issued an instruction memorandum capping liquidated damages assessments
established by 43 C.F.R. 3163.3 for noncompliance with the Bureau's
requirements for onshore Federal and Indian oil and gas activities.
Change in computation of assessment amounts mandated by regulations is
effective only when instituted by rulemaking under 5 U.S.C. 553.
Accordingly, the instruction memorandum is ineffective to make this
change.
The Chief of the Division of Finance, Bureau of Land Management
(BLM), Department of the Interior, requests an advance decision
regarding monetary assessments of liquidated damages imposed in
connection with onshore Federal and Indian oil and gas lease activities.
He states that formerly specific assessments for noncompliance or
nonabatement by oil and gas operators could be levied at the discretion
of BLM field officials. However, incident to a new statement of policy
effective July 12, 1984 (Instruction Memorandum No. 84-594), the
monetary assessments were made mandatory.
On January 4, 1985, the Director of BLM issued Change 3 to
Instruction Memorandum No. 84-594. It established a maximum limit or
"cap" on the amount to be assessed for multiple violations. According
to the Director, BLM considered instituting the cap through a rule
change, but with the concurrence of Interior's Office of the Solicitor,
concluded that existing regulations contained sufficient discretion to
establish the cap as a policy matter. At any rate, between the
effective date of a regulation issued October 22, 1984, specifying the
amount of penalty for each violation and the effective date of a new
policy issuance setting a cap on assessments (January 4, 1985),
approximately $45,000 was collected in excess of the cap and was paid
into the general fund of the Treasury. Additional excess amounts remain
uncollected. The BLM takes the position that whether or not operators
already have paid these amounts, the operators who have been assessed
amounts in excess of the cap should be treated equally.
In the circumstances, the following questions are asked:
1. Should the BLM decide to apply the cap on assessments
retroactively to October 22, 1984, may the amounts collected
between October 22, 1984, and January 4, 1985, that were in excess
of the maximum limits established on the latter date be refunded
to the payors?
2. If your answer to the above question is affirmative, may
the BLM make refunds on its own initiative without the benefit of
refund claims or applications? The amount, name, and address of
assessed parties are readily available to BLM.
3. May the amounts assessed between October 22, 1984 and
January 4, 1985, in excess of the cap which remain unpaid be
waived?
For the reasons indicated above, it is our opinion that the issuance
of an instruction memorandum capping the amount of monetary assessments
determined to be due under 43 C.F.R. Section 3163.3 (1984) was
ineffective to make this change in the computation of assessments.
Therefore, it is unnecessary to consider specific questions concerning
the implementation of the Instruction Memorandum.
Section 3163.1, Title 43, Code of Federal Regulations (1984), deals
with remedies for noncompliance with requirements incident to onshore
Federal and Indian oil and gas leasing. It provides that in the event
of an act of noncompliance, the designated official is authorized, among
other remedies, to assess liquidated damages. As to assessments,
section 3163.3 provides:
Certain instances of noncompliance result in loss or damage to
the lessor (The United States), the amount of which is difficult
or impracticable to ascertain. Except where actual losses or
damages can be ascertained in an amount larger than that set forth
below, the following amounts shall be deemed to cover loss or
damage to the lessor from specific instances of noncompliance.
Paragraphs (a)-(j) list specific types of noncompliance and the
amount of monetary assessment for each. For example, for failure to
maintain effective seals, $250 would be the amount of liquidated damages
(para. (j)). As indicated above, the final regulations became effective
on October 22, 1984 (49 Fed. Reg. 37356).
The regulation itself authorizes but does not require the assessment
of liquidated damages. If damages are to be assessed, however, it
spells out quite precisely how much must be charged for each violation.
The submission states that the principal purpose of the regulation was
to encourage self-compliance while assuring uniform recovery for
liquidated damages.
It is Instruction Memorandum No. 84-594, issued July 12, 1984, that
established "a Bureau policy for mandatory assessments on finding any
violation specifically covered by 43 C.F.R. Section 3163.3(c) through
(j) and for the failure to abate timely and cited violation * * * ."
This policy requiring mandatory assessments has never been rescinded, to
our knowledge.
Change 3 to the Instruction Memorandum was issued on January 4, 1985.
It makes no attempt to change the policy requirement in the Instruction
for the imposition of a penalty for each violation. Instead, it
attempts to modify the amount that can be charged for violations, as
specified in the Regulations, under certain circumstances. It states
that effective immediately, maximum limits are placed on the amount of
money that may be assessed operators for noncompliance with BLM oil and
gas operating regulations. It explains that the maximums or caps are
imposed so that assessments do not exceed reasonable costs to the BLM
and that assessments are not intended to serve as punitive charges. The
change is explained as follows:
When multiple violations exist from an inspection that are
subject to assessments, an INC (Incident of Non-Compliance) is
issued for each violation but the assessments under each paragraph
(c) through (j) are now capped at two times the assessment amount
which is deemed to be the reasonable cost to cover loss or damage
to the lessor. For example, a lessee who failed to maintain
effective seals on five valves is issued five INC's under
3163.3(j). The assessment for each violation is $250 but the
cumulative assessment for this example is now capped at $500
rather than $1,250. (Emphasis in the original.)
The Chief, Division of Finance of BLM, explains that in a minority of
cases multiple violations resulting from a single inspection exaggerated
the amounts assessed so that these amounts far exceeded any reasonable
estimate of cost either to the resource or to BLM. The imposition of
the cap on assessments "is intended to correct this obvious, but not
intended, judgmental error."
On March 22, 1985, BLM published a notice of intent to propose
further rulemaking regarding the provisions of 43 C.F.R. Part 3160. (50
Fed. Reg. 11517). Comment was invited concerning possible amendments to
the existing regulations. Also, in the notice it was stated that "the
Bureau through the exercise of its delegated discretionary authority is
taking interim actions to * * * (3) delay processing of inspection and
enforcement assessments for the period October 22, 1984, to January 4,
1985, pending a ruling from the Comptroller General regarding the
Bureau's request to retroactively apply a 'cap' on all Bureau
assessments." Id.
The central issue is whether the Instruction Memorandum change of
January 4, 1985 had the legal effect of establishing a maximum limit on
monetary assessments determined under existing regulations, which were
last amended on October 22, 1984.
The Bureau of Land Management in 1984 followed the Administrative
Procedure Act, 5 U.S.C. Section 553 (1982), in issuing revised
regulations covering monetary liquidated damages assessments, as well as
civil and criminal penalties. The schedule of assessments listed a
stated amount for each type of violation. For example, if an inspection
revealed five instances of broken seals, the total assessment was
$1,250, since the regulation permits no reduction for multiple
violations on the basis that they were discovered at the same time.
As explained in section 3163.3 of the regulations, the loss or damage
to the United States from violations is difficult or impossible to
determine. For example, if a contractor fails to maintain effective
seals on oil or gas pumping equipment or pipelines, how much of the
resource was lost prior to discovery? Therefore, the amount specified
in paragraphs (a)-(j) is deemed to cover the losses or damages. Thus,
under current regulations five broken seals result in five separate
assessments.
As explained by BLM, the multiple charge for violations discovered at
one time is "unreasonable" because the result was not intended by the
drafters of the regulations. However, given the difficulties in
establishing the correct amount of damages, we do not think the current
regulations are unreasonable so as to justify questioning their
validity. The Secretary has authority to determine the level of
liquidated damages to be assessed within a relatively wide range, due to
the admitted difficulty in fixing actual damages. While we do not
disagree with BLM's objectives in attempting to effect a change in the
regulatory policy, the imposition of assessments under the current
regulations has not resulted in assessments in amounts that cannot await
correction under proper procedures.
Under 5 U.S.C. Section 551(5), "'rulemaking' means agency process for
formulating, amending or repealing a rule." Therefore, a Federal agency
must comply with the notice and comment requirements of the
Administrative Procedure Act in modifying or repealing its regulations.
See Consumer Energy Council of America, et al. v. Federal Energy
Regulatory Commission, 673 F.2d 425, 446 (1982). An agency may not
waive its administrative regulations, which are binding on the agency.
B-163922, id.; B-184068, August 22, 1975.
Further, the Instruction Memorandum cannot be viewed as a policy
statement excepted from notice and comment rulemaking by 5 U.S.C.
Section 443(b)(A), since it changes the obligation to pay assessments
created by existing regulations. Since Change 3 to the Instruction
Memorandum caps assessments at less than amounts required by the
regulations, "it will be taken for what it is -- a binding rule of
substantive law." American Bus Association v. United States, 627 F.2d
525, 529 (D.C. Cir. 1980) quoting with approval, Guardian Federal
Savings Loan Association v. Federal Savings and Loan Insurance Corp.,
589 F.2d 658 (D.C. Cir. 1978).
The submission also suggests that in the view of Interior's Office of
the Solicitor, "the existing regulations contained sufficient discretion
to establish the cap as a policy matter." We do not agree. It is true
that the only requirement to assess a penalty in all cases is found in
Instruction Memorandum No. 84-594 -- a policy issuance -- and not in the
regulations themselves. Had BLM amended the Instruction to revert to
its pre-July 1984 policy of assessing penalties on a discretionary
basis, it could be argued that since no assessment at all was required
under the regulations, a lesser assessment was equally permissible. We
need not decide that issue, however, since BLM made no attempt to amend
its mandatory assessment policy. Instead, Change 3 modified a
regulatory provision which specifies the precise monetary assessment for
each instance of noncompliance, making no provision for the reduction of
the stated assessment amount. In issuing Change 3 to Instruction
Memorandum No. 84-594, BLM attempted to cap the amount which under the
regulations would have to be paid for certain violations. For example,
five violations with a $250 penalty each will result in a total penalty
of $1,250 under 43 C.F.R. Section 3163.3(j). However, under the
Instruction it would be capped at $500 if the violations were found at
the same inspection. This constitutes an amendment of the regulatory
formula which must be accomplished by rulemaking in accord with 5 U.S.C.
Section 553.
Under the Administrative Procedure Act, public notice and comment are
mandated as part of the procedure for instituting new regulations or
regulatory changes. This provides an orderly process under which an
agency, in this case BLM, may further inform itself concerning the
matters under consideration. The input from individuals, businesses,
trade associations, public interest groups, etc. may effect the
substance of the final regulation, or possibly result in no regulatory
change. Accordingly, BLM's procedural short-coming in amending its
regulations by use of an instruction memorandum may have resulted in an
assessment formula significantly different than one formulated after
public comment under the Administrative Procedure Act.
Apparently, BLM now recognizes the need to effectuate the capping of
assessments by a change in regulations. On January 30, 1986, BLM
published proposed rulemaking for 43 C.F.R. Part 3160 (51 Fed. Reg.
3882). It revises section 3163.3 to include a cap for major violations
which would be automatically assessed on a daily basis. Assessments for
other instances of noncompliance would not exceed $1,000 per day, per
operator, per lease for each inspection.
Finally, we note that where, as here, regulations operate to create
claims on the part of the Government, the agencies are required to
follow the Claims Collection Standards in compromising or terminating
claims unless there is specific authority excepting the agency or
program from coverage, 4 C.F.R. Section 101 et seq., B-163922, February
10, 1978.
Since Change 3 of Instruction Memorandum No. 84-594, dated January 4,
1985, is not a legally appropriate means of changing the rules
establishing the amount of assessments to be paid under 43 C.F.R.
Section 3163.3, it follows that it is not effective to change the
assessment amounts levied either prior to January 4, 1985, or subsequent
to that date. Therefore, it is unnecessary to consider specific
questions concerning the implementation of the Memorandum except to note
that all outstanding assessments made pursuant to the October 22, 1984
regulation should be collected (or compromised or terminated) in
accordance with the Claims Collection Standards, discussed above.
B-215268, 65 Comp. Gen. 434
Matter of: Reconsideration of Voice of America - Limitation on Pay
Increases for Radio Broadcast Technician Foremen, March 24, 1986
Supervisors of prevailing rate employees seek reconsideration of our
prior decision, 64 Comp. Gen. 100 (1984), holding that the supervisors
are subject to the statutorily-imposed pay limitation which does not
apply to their subordinates, who negotiate their pay increases. We
affirm our prior decision since the supervisors are clearly covered by
the pay increase limitation and are not specifically excluded from the
limitation. Prior decisions involving pay linkage between groups of
prevailing rate employees are distinguished since they do not deal with
specific statutory pay limitations. Prior court decisions involving
prevailing rate employees who are not covered by the statutory pay
limitation are also distinguished on the same basis.
The issue in this decision is whether pay increases for Radio
Broadcast Technician Foremen may be excluded from the statutory pay
increase limitation applicable to most prevailing rate employees. We
hold that the Foremen are covered by the terms of the statute limiting
pay increases and may not be excluded based on prior GAO decisions
involving linkage between groups of prevailing rate employees or based
on court decisions involving prevailing rate employees who were not
subject to the statutory pay limitations.
This decision is in response to a request from Janet Cooper, Attorney
at Law, on behalf of Philip Danaher, Michael Ostergard, and all
similarly situated Radio Broadcast Technician Foremen at the Voice of
America, U.S. Information Agency. The Foremen seek reconsideration of
our prior decision in Voice of America, 64 Comp. Gen. 100 (1984),
concerning limitations on their pay increases.
In our prior decision we stated that Radio Broadcast Technicians are
prevailing rate employees who negotiate their wages under section 9(b)
of Public Law 92-392, as amended, and section 704 of Public Law 95-454,
October 13, 1978, 5 U.S.C. Section 5343 note. The supervisors of these
Technicians, Radio Broadcast Technician Foremen, are also prevailing
rate employees, but since the Foremen are supervisors, they are excluded
from the bargaining unit which negotiates wages.
A problem arises from the fact that the Technicians who negotiate
their wages have been exempt from statutory limitations on pay increases
while the Foremen are subject to these statutory pay increase
limitations. Thus, the agency has been unable to maintain the 11.5
percent difference in wages between the Foremen and their subordinates
which was established in 1981. We held in our decision in Voice of
America that both the Technicians and the Foremen were subject to the
express terms of the statutory provisions imposing pay limitations and
that only the Technicians were specifically excluded from the pay
limitation by an exception in the statute for salary increases
negotiated before a certain date.
The Foremen request reconsideration of our decision citing four prior
decisions involving employees whose pay rates are tied to the wages of
other employees. The Foremen point to our decision in B-169686, May 22,
1970, holding that wage supervisors whose pay rates were linked to a
rate under the General Schedule could receive the same retroactive pay
increase provided to General Schedule employees. Next, they cite E.G.
Walters, et al., B-180010.07, June 15, 1977, involving prevailing rate
supervisors whose pay was established at 114 percent of the negotiated
rate for their subordinates and who we held were entitled to the same
retroactive pay increase provided to the subordinate employees. The
Foremen also cite our decision in 59 Comp. Gen. 240 (1980) involving
certain trade and craft employees of the Bureau of Engraving and
Printing whose pay was "tied" to comparable positions at the Government
Printing Office (GPO). The Foremen argue we held in 59 Comp. Gen. 240
that since GPO wages were not subject to a pay cap, the Bureau employees
were excluded from the pay cap imposed on prevailing rate employees.
Finally, they cite Ableidinger and Walters, 60 Comp. Gen. 58 (1980),
involving the payment of double overtime to supervisors of prevailing
rate employees who negotiated a double overtime rate.
The Foremen argue that each of the four above-cited decisions
establishes the practice of linkage between supervisors and subordinates
which has been recognized by our Office. The Foremen also argue that
the Congress neither excluded nor included under the pay limitation
statutes wage supervisors whose salaries are linked to negotiated wages.
Citing two court decisions, the Foremen contend that an agency should
have the discretion to include or exclude a group of employees not
specifically mentioned by a pay freeze statute. /1/ Therefore, the
Foremen conclude that our Voice of America decision should be overturned
based on prior decisions involving the linkage of wage employees and
their supervisors or that, at the least, our decision should be modified
to permit the agency to decide in its discretion whether or not to
include these supervisors within the coverage of the pay freeze.
Our prior decision in Voice of America held that both the Technicians
and the Foremen were prevailing rate employees as described in 5 U.S.C.
section 5342(a)(2)(A) and were thus subject to the express terms of the
pay increase limitation for fiscal year 1984 contained in section 616(a)
of H.R. 4139. /2/ We then examined two exceptions to the subsection
616(b), for section 9(b) employees who negotiate their wages and who
negotiated their salary increases prior to a certain date. However, we
held that the Foremen were not covered by the negotiated contract and
were therefore not covered by the subsection 616(b) exception.
We also held that the Foremen were not excluded from the pay increase
limitation under the second exception, contained in subsection 616(c),
which excluded wage adjustments for prevailing rate supervisors who were
covered by a supervisory pay plan established by the Office of Personnel
Management, since the Foremen were not covered under this supervisory
pay plan. Therefore, we concluded that the Foremen were subject to the
pay increase limitation by the express terms of subsection 616(a) of
H.R. 4139 and were not specifically excluded by either of the two
exceptions in that limitation.
The Foremen contend that the Congress has neither excluded nor
included under the statutory pay increase limitation wage supervisors
whose salaries are linked to negotiated wages (such as Radio Broadcast
Technician Foremen). We disagree since, as we held in our prior
decision, both the Technicians and the Foremen are included within the
scope of the pay increase limitation for prevailing rate employees and
only the Technicians are specifically excluded under the two exceptions
to that limitation.
The Foremen also argue that our decisions have recognized the linkage
between the groups of employees which should prevail even over pay
increase limitations. We disagree since our prior decisions involving
the linkage of two groups of employees are distinguishable.
The Foremen first cite our decision in B-169686 involving a
retroactive pay increase for wage supervisors whose pay rates were
linked to a particular rate for General Schedule employees. We held in
B-169686 that where the General Schedule employees received a
retroactive pay increase, wage supervisors whose rates were based on the
grade GS-14 rate were also entitled to a retroactive pay increase in the
absence of specific statutory provisions to the contrary. This decision
is clearly distinguishable from the present case where a statute limits
all pay increases to prevailing rate employees unless specifically
excluded under the statute.
The next decision cited by the Foremen, E.G. Walters, B-180010.07,
January 15, 1977, involved prevailing rate supervisors who, under a
special wage schedule set forth in the Federal Personnel Manual, were
entitled to a rate of pay set at 114 percent of the rate for their
subordinates who negotiated their wage rates. We held in Walters that,
in the absence of specific language to the contrary, the supervisors
were entitled to the same retroactive pay increase as was provided to
their subordinates. Again, however, our decision in Walters did not
involve any statutes limiting or precluding pay increases and thus our
decision in Walters is distinguishable from the present case.
The Foremen next cite 59 Comp. Gen. 240 (1980) involving the pay of
certain Bureau of Engraving and Printing employees whose pay was linked
to similar positions in the GPO. We held that although GPO wages were
not subject to a pay increase limitation for fiscal year 1979 imposed by
statute or Presidential order, the pay increase to Bureau employees
could be limited under the agency's discretion to set wages consistent
with the President's anti-inflation program. See also B-211956, October
21, 1983, involving the application of the pay increase limitation for
fiscal year 1983 to certain Bureau employees.
Two points should be noted about our decision in 50 Comp. Gen. 240.
First, that decision is distinguishable from the present case since the
pay of the Bureau employees was set under 5 U.S.C. Section 5349(a) and
their pay increases were not subject to the statutory pay increase
limitations which affect other prevailing rate employees. Second, this
decision actually sustained the Bureau's action in limiting the
employees' pay under section 5349(a). Therefore, contrary to the
contention of the Foremen, the decision did not use the linkage between
the Bureau employees and the GPO employees as a mechanism to remove the
Bureau employees from the pay cap.
The last decision cited by the Foremen is Ableidinger and Walters, 60
Comp. Gen. 58, where we held that supervisors of Bureau of Reclamation
employees who negotiate their wages could be paid double overtime since
the supervisors' rates were based on the negotiated rates of their
subordinates. However, our prior decision in Voice of America
distinguished this decision from the situation involving the Radio
Broadcast Technician Foremen on the grounds that policy considerations
for continuing a pre-existing prevailing rate practice could not apply
in the face of the clear terms of a statutory pay increase limitation.
64 Comp. Gen. 100, 102-103. We are not persuaded that our prior
analysis of Ableidinger and Walters is incorrect.
Finally, the Foremen cite two court decisions in support of their
argument that an agency should have the discretion to include or exclude
a group of employees not specifically mentioned by a pay freeze statute.
The first case, National Maritime Union v. United States, involves
civilian employees on Government vessels whose wages are adjusted under
5 U.S.C. Section 5348 based on the prevailing rate in the private
sector. /3/ The court held that the statutory pay increase limitations
for the fiscal years 1979 and 1980 which generally applied to prevailing
rate employees did not apply to these federal mariners but that an
agency could limit pay increases within the discretion set forth in 5
U.S.C. Section 5348 to adjust wages "consistent with the public
interest." The second case, National Federation of Federal Employees v.
Brown, involved the application of pay increase limitations on
nonappropriated fund employees who were not covered by the statutory
limitations. /4/ The Court of Appeals in this case reversed the
decision of the District Court allowing the agency to apply the pay caps
under the "public interest" language in section 5343 dealing with the
pay of prevailing rate employees.
We note that both court cases involve federal employees who were not
mentioned or covered by the statutes limiting pay increases, and both
court decisions involve the agency's application of the pay limitation
through the "public interest" discretion vested in the agency's
pay-setting authority. However, both court decisions are clearly
distinguishable from the present case since, as we stated above, the
Radio Broadcast Technician Foremen are covered by the terms of the
statutes limiting pay increases.
Accordingly, we affirm our prior decision that Radio Broadcast
Technician Foremen are subject to the statutory pay increase limitation.
(1) See National Maritime Union of America v. United States, 682 F.2d
944 (Ct. Cl. 1982); and National Federation of Federal Employees v.
Brown, 645 F.2d 1017 (D.C. Cir. 1981).
(2) See section 101(f) of Public Law 98-151, November 14, 1983, 97
Stat. 973, incorporating the provisions of H.R. 4139, as passed by the
House of Representatives on October 27, 1983.
(3) Cited in footnote 1, above.
(4) Cited in footnote 1, above.
B-222103, 65 Comp. Gen. 433
Matter of: Little People's Productivity Center, Inc., March 21, 1986
Protest, addressed in manner other than that set forth in section
21.1(b) of General Accounting Office (GAO) Bid Protest Regulations, will
not be considered since GAO did not timely receive the protest within 10
working days after initial adverse agency action on the protest to the
contracting agency.
Little People's Productivity Center, Inc. (LPPC), protests the award
of a contract to another bidder under request for proposals No.
F33657-85-R-0276, issued by Wright-Patterson Air Force Base.
The protest is dismissed.
LPPC, on November 18, 1985, initially protested the award of the
contract by addressing its protest as follows:
United States General Accounting Office
C/O ASD/XO
Wright-Patterson AFB
Ohio 45433
Although LPPC apparently believed it had sent its protest to the
General Accounting Office (GAO), the protest in fact was sent to, and
was handled as an agency-level protest by, the Air Force. On December
30, the Air Force denied the protest.
LPPC then mailed its protest to GAO on January 8, 1986, addressing it
to a GAO employee with whom the protester's president apparently had
spoken over the telephone. The employee's name, however, was misspelled
and the protest envelope, addressed to the employee at "GAO, 447 C
Street, N.W. Washington, D.C. 20548," was returned unopened to LPPC.
On February 4, LPPC attempted to file its protest again, but sent its
letter to "ASD/XOP, Wright-Patterson AFB, Ohio, 45433, Attn: GAO." This
envelope was also returned to LPPC with the notation "Return to Sender
individual not in ASD/XOP."
Subsequently, LPPC addressed its protest to the Comptroller General
at the correct address and this protest was finally received at GAO on
February 20, 1986.
Our Bid Protest Regulations provide that if a protest has been filed
initially with the contracting agency, any subsequent protest to GAO
must be filed within 10 days of formal notification of or actual or
constructive knowledge of initial agency action. 4 C.F.R. Section
21.2(a)(3) (1985). The term filed means receipt of the protest
submission in the General Accounting Office. 4 C.F.R. Section 21.2(b).
Since the Air Force denied LPPC's protest on December 30, 1985, its
protest filed at GAO on February 20, 1986, is untimely.
In addition, we have stated that the proper address to which protests
should be sent is set forth in our Bid Protest Regulations, 4 C.F.R.
Section 21.1(b), and the untimely receipt of a protest because it is
misaddressed does not excuse the untimely receipt. ISS Energy Services,
Inc., B-216030, Aug. 27, 1984, 84-2 C.P.D. Paragraph 230, and ISS Energy
Services, Inc., - Reconsideration, B-216030.2, Jan. 7, 1985, 85-1 C.P.D.
Paragraph 23. Section 21.1(b), in part, states that protests must be
addressed as follows: "General Counsel, General Accounting Office,
Washington, D.C. 20548, Attention: Procurement Law Control Group."
Since LPPC incorrectly addressed its protest, thereby causing its
protest to be untimely received in this Office, its protest will not be
considered.
B-220749, 65 Comp. Gen. 430
Matter of: Roberto De La Cruz, March 21, 1986
Federal civilian employees who leave their positions to pursue
military careers are eligible under regulation for a recredit of their
civil service sick leave after their retirement from military service,
if they are reemployed in a civilian capacity by the Government within
the following 3 years. Hence, an individual who left civil service
employment when called to active military duty, and who was subsequently
retired from military service after completing 20 years' active duty,
may be allowed a recredit of his civil service sick leave balance upon
his reemployment as a civilian 1 year later. The fact that he had a
2-month break in service during his military career is immaterial, since
only a break in service in excess of 3 years could have operated to
extinguish his leave restoration rights.
Mr. Roberto De La Cruz requests recredit of civil service sick leave
he earned during his federal civilian employment between 1952 and 1962,
predicated on his retirement from military service in 1979 and his
reemployment in a civilian capacity by the Government in 1980. On the
basis of the facts presented, and the applicable federal regulations, we
conclude that Mr. De La Cruz' application should be approved.
Mr. De La Cruz was a federal civil service employee between 1952 and
1962. He had previously served 3 years of military service, and in 1962
he was recalled to active military duty with the Air Force. He remained
on active duty during the following 17 years until 1979, when he applied
for military retirement based on his completion of 20 years' total
active service.
In 1980, approximately 1 year after his retirement from military
service, Mr. De La Cruz received an appointment to a civil service
position with the Air Force. He then applied for restoration of the
unused civil service sick leave with which he had been credited at the
time of his recall to military duty in 1962.
The concerned Air Force officials recognize that federal civilian
employees who are called to military service may later be eligible for
restoration of their unused civilian leave if they are reemployed in the
civil service within 3 years of their separation from active military
duty. The officials also indicate that while no certification can now
be located showing the number of sick leave hours Mr. De La Cruz had at
the time he returned to military duty in 1962, they will nevertheless be
able to reconstruct his sick leave account and compute the number of
hours to be recredited if his application for a restoration of leave may
properly be approved.
The Air Force officials essentially indicate that their doubts in
this matter arose because Mr. De La Cruz was not required to serve and
did not serve on active military duty continuously between 1962 and
1979. Rather, he was separated from active duty on July 30, 1971, and
he then reentered active duty on his own initiative on October 13, 1971,
after a break in service of more than 2 months. The officials question
whether his separation from military service on July 30, 1971, and his
election not to seek reemployment in the civil service within 3 years of
that date may have operated to extinguish his leave restoration rights.
Chapter 63 of title 5, United States Code, authorizes civil service
employees to accrue sick leave at the rate of one-half day for each
biweekly pay period, and provides that sick leave not used by an
employee may accumulate for use in succeeding years. See 5 U.S.C.
Section 6307(a) and (b). The Office of Personnel Management is assigned
broad responsibility for prescribing regulations necessary for the
administration of annual and sick leave. See 5 U.S.C. Section 6311.
Longstanding implemented regulations adopted by the Office of
Personnel Management to govern the recrediting of leave of employees
following periods of military service, currently contained in Part 630
of title 5, Code of Federal Regulations, provide that:
When an employee leaves his civilian position to enter the
military service, the agency shall certify his leave account for
credit or charge. When the employee is:
(b) Reemployed in a position under Subchapter I of chapter 63
of title 5, United States Code, not more than 3 years after his
deparation from active military duty:
the agency in which he is restored or reemployed shall
reestablish the certified leave account as a credit or charge. 5
C.F.R. Section 630.504.
We have held that under this provision of the regulations, persons
reemployed in a civilian capacity within 3 years of their retirement
from military service may be allowed restoration of the sick leave
credited to them many years earlier at the time they left their civilian
positions to pursue an active duty military career, if surviving records
or other available sources of information provide a sufficient basis for
certification of their prior leave balances. See John H. Adams,
B-209769, March 28, 1983; and B-164220, September 5, 1968.
In the present case, Mr. De La Cruz left his civil service employment
in 1962 and pursued an active duty military career in the Air Force.
During the following 17 years he had an opportunity to leave military
service, and he apparently had to elect whether to continue a military
career, to return to civil service employment, or to turn to some other
endeavor. In our view, however, this did not adversely affect his leave
restoration rights under the provisions of 5 C.F.R. Section 630.504,
quoted above. All members of the armed forces who complete a military
career and are retired on the basis of their years of service are given
opportunities during their careers when they must elect to continue or
to terminate their careers. That is, enlisted service members are
periodically separated from service and discharged upon the expiration
of a term of enlistment, and they must then decide whether to apply for
reenlistment. Also, military officers generally must decide whether to
remain on active duty after they have completed a term of obligated
service. As indicated, however, we have held that civil service
employees who elect to undertake long-term active duty military careers
retain their civil service leave restoration rights under the
regulations and may be allowed a recredit of sick leave if they are
reemployed in the civil service within 3 years of their military
retirement.
Moreover, we view it as immaterial that during his military career
Mr. De La Cruz had a break in service that lasted more than 2 months in
1971. Although the wording of the regulation is not entirely clear in
this regard, our view is that his sick leave restoration rights could
not have been properly extinguished on account of a break in federal
service unless the break in service exceeded a continuous 3-year period.
We have consulted officials of the Office of Personnel Management
having responsibility for the civil service leave regulations, and they
concur in this conclusion.
Accordingly, Mr. De La Cruz should be allowed recredit of the unused
sick leave he had in 1962 at the time he left his civil service
employment when recalled to active military duty.
B-218339.2, 65 Comp. Gen. 429
Matter of: Introl Corp., March 21, 1986
In the absence of any evidence to support a claim for the costs of
bid and proposal preparation and filing and pursuing the protest, the
General Accounting Office agrees that the agency's offer of settlement
is reasonable with the exception that the claimant is also entitled to
be reimbursed for automobile mileage and the time expended to submit its
offer.
Introl Corp. requests that the General Accounting Office determine
the amount it is entitled to recover from the Department of the Navy for
its cost of filing and pursuing its prior protest and its bid and
proposal preparation costs.
In our decision, Introl Corp., B-218339, July 9, 1985, 64 Comp. Gen.
672, 85-2 CPD Paragraph 35, we sustained the firm's protest against the
Navy's award of a contract for a high frequency converter generator
under request for quotations (RFQ) No. N-00123-85-Q-7005. We also
determined in that decision that the firm was entitled to its costs of
preparing its quotation and costs of filing and pursuing the protest.
Introl has filed its request that we determine the amount of entitlement
pursuant to our Bid Protest Regulations, 4 C.F.R. Section 21.6(f)
(1985), because it was unable to reach any agreement with the Navy about
the amount of its claim.
Introl initially requested reimbursement for 29 hours of work at a
rate of $45 per hour. The agency has disputed this amount of time as
excessive. The agency states that the RFQ required offerors to complete
a form by filling in such information as the firm's name and address,
the item's price, weight, delivery terms, place of manufacture and
delivery terms. Introl's quotation also included a photo-copied page
listing all of Introl's generator sets, with an arrow indicating the
applicable model number and two pages with specifications that had been
modified to fit the quotation. In addition to the time spent preparing
the quotation, Introl has claimed reimbursement for time spent on the
telephone and traveling to the contracting facility to submit its
quotation and for the time spent supporting its claim after our decision
was issued.
In response to a written request that it provide documentation to
support the time it claims it expended, Introl advised this Office that
its managerial personnel do not "punch time cards." We assume from the
response that in fact Introl has no specific records of the time spent
to support its claim.
The agency has nonetheless offered to settle the claim in the
following amounts:
In the absence of any further evidence to the contrary, we are of the
opinion that the amount of time claimed is excessive. We also find the
agency's offer to be reasonable, given the effort involved, with the
following exception. It is not disputed that the quotation was
hand-delivered to the agency. Accordingly, we allow the additional two
hours driving and submission time claimed plus automobile mileage at
.205 per mile for a total additional amount of $95.13. /1/
We therefore determine that the amount due for the costs of filing
and pursuing the protest and for bid and proposal preparation to be
$705.13. The time expended in pursuit of this claim is not a
reimbursable expense.
(1) Two hours at $45.00/hr. plus 25 miles at .205/mile (the current
government mileage rate).
B-215635, 65 Comp. Gen. 423
Matter of: Farmers Home Administration - Rural Housing Loans, March
19, 1986
When Pub. L. No. 98-181 was enacted in 1983, it removed specific
statutory authority of the Farmers Home Administration (FmHA) to
establish interest rates within prescribed limits for two types of rural
housing loans, but left intact FmHA's authority to continue to make such
loans. Neither the statutory language nor the legislative history
indicates that Congress intended to terminate these loan programs or to
authorize FmHA to make loans on an interest-free basis. Accordingly,
the Administrator has the discretion to establish whatever interest
rates he believes would be inappropriate for these programs.
In 1983, the Congress deleted a statutory provision which limited
eligibility for loans under section 504 of the Housing Act of 1949 to
individuals who could not qualify for loans under section 502 or 503.
However, FmHA regulations continue to reflect that limitation on
eligibility. General Accounting Office (GAO) recommends, pursuant to 31
U.S.C. 720 that FmHA amend its regulations.
This decision is in response to a request from the Administrator of
the Farmers Home Administration (FmHA) for our opinion concerning the
continued status of and interest rates to be charged under two loan
programs administered by FmHA.
The issue arose with the enactment of the Rural Housing Amendments of
1983, Pub. L. No. 98-181, 97 Stat. 1240, November 30, 1983. This
legislation deleted provisions in FmHA's enabling legislation that
expressly authorized the Secretary of Agriculture to set interest rates
within prescribed limits for loans made under (1) the Rural Housing Loan
and Grant Program, authorized by section 504 of the Housing Act of 1949,
as amended (Housing Act) 42 U.S.C. Section 1474, and (2) the Rural
Housing Disaster loan program, authorized by section 521(a)(1)(G) of the
Housing Act, 42 U.S.C. Section 1490a(a)(1)(G). However, the statutory
provisions authorizing FmHA to continue to make both types of loans
remained in force.
FmHA requests that we "ascertain Congressional intent" and determine
whether authority for the two programs exists, absent interest
rate-setting authority and, if so, what interest rates are authorized.
For the reasons given below, it is our view that the Congress did not
intend to terminate these programs when it enacted Pub. L. No. 98-181,
nor did it authorize FmHA to make these loans on an interest-free basis.
We think that the Administrator of FmHA has the discretion, in the
absence of any existing statutory limitation, to establish such interest
rates for those programs as he determined to be reasonable and
appropriate.
Prior to its being amended by Pub. L. No. 98-181, section 504 of the
Housing Act, 52 U.S.C. Section 1474 (1982), authorized the Administrator
of FmHA to provide financial assistance to low income owner-occupants of
single family rural dwellings who lacked the repayment ability required
to qualify for loans under section 502 of the Housing Act, 42 U.S.C.
Section 1472 (1982). The loans and/or grants the Administrator was
authorized to make under this section were to improve or repair a
dwelling to make it safe and sanitary and to remove health hazards.
Prior to its amendment by Pub. L. No. 98-181, section 502(a) of the
Housing Act authorized the Administrator to set interest rates for
borrowers under the section 504 loan program and other loan programs.
It appeared at 42 U.S.C. Section 1472(a) (1982) as follows:
If the Secretary determines that an applicant is eligible for
assistance as provided in section 1471 (section 501 of the Act)
/1/ of this title and that the applicant has the ability to repay
in full the sum to be loaned, with interest, * * * a loan may be
made by the Secretary to said applicant for a period not to exceed
thirty-three years from the making of the loan with interest, in
the case of applicants described in clauses (1) and (2) of section
1471(a) (section 501(a) of the Act) of this title, at a rate not
to exceed 5 per centum per annum on the unpaid balance of
principal, and, in the case of applicants described in clause (3)
of section 1471(a) (section 501(a) of the Act) of this title and
applicants under sections 1473 (section 503 of the Act) and 1474
(section 504 of the Act) of this title, at a rate not to exceed 4
per centum per annum on such unpaid balance." (Italic supplied.)
In addition to other substantive changes to section 504 of the
Housing Act, section 504 of Pub. L. No. 98-181, 97 Stat. 1242, deleted
the provision limiting eligibility to applicants who could not qualify
for a loan under sections 502 or 503. Section 503(d) of Pub. L. No.
98-181, 97 Stat. 1241, also deleted all references in section 502(a) of
the Housing Act to the Administrator's authority to set interest rates
that had been contained in that section. This was accomplished by
deleting everything after the words "making of the loan with interest"
from section 502(a) as quoted above. As a result of this amendment, the
Administrator lost his specific authority under section 502 to set
interest rates for the programs that had been specified in that section.
This only created a problem with respect to the section 504 program.
The section 503 program apparently is no longer operational (according
to information furnished to us informally by FmHA) and the
Administrator's authority to set interest rates for the other programs
referred to in section 502 had already been superseded by language
contained in section 521(a)(1) of the Housing Act, 42 U.S.C. Section
1490a(a) (1982).
By its terms, section 521(a)(1) covers loans under sections 502 and
517(a) /2/ but it does not authorize the Administrator to set interest
rates for rural housing loans made under section 504. There are no
other provisions of the Housing Act which expressly authorize the
Administrator of FmHA (or the Secretary of Agriculture) to establish
interest rates up to a statutory maximum for section 504 loans. The
absence of such explicit interest rate-setting authority gives rise to
the Administrator's question about whether the Congress intended this
program to continue.
We do not think that the Congress enacted Pub. L. No. 98-181 with the
intent either to terminate the section 504 loan program or to continue
the program on an interest-free basis. In our view, the numerous
substantive amendments made to section 504 are completely consistent
with an intent to continue the 504 loan program. Additional support for
this conclusion is contained in the Act's legislative history which
indicates that the Congress intended to expand and increase the
eligibility of low income applicants for assistance under section 504.
The Senate report on the bill that was the basis for this amendment
stated the following:
Section 504 amends Section 504 of the Housing Act of 1949 which
authorizes the Secretary to make a grant or combined loan and
grant to an eligible borrower, provided they cannot qualify for
Section 502 or 503. The repairs made under this section must make
the dwelling safe and sanitary and remove all health hazards. The
cost of the repairs may not exceed $5,000 if assistance is made in
the form of a grant of $7,500 if a combination loan and grant is
made. The provision amends this section by authorizing the
Secretary to make a loan, grant or combined loan and grant to an
eligible very low income applicant provided that the improvements
make the unit safer, more sanitary or remove health hazards. The
Secretary is authorized to determine a maximum amount which is
appropriate for both loans, grants and combined loans and grants.
The Committee feels that assistance for rehabilitation should be
available to eligible recipients regardless of their ability to
qualify for a Section 502 loan in order to improve their housing
conditions. * * * S. Rep. No. 142, 98th Cong., 1st Sess. 45
(1983).
We also note that since Pub. L. No. 98-181 was enacted, Congress has
continued to provide funds for the section 504 loan program. For
example, Congress approved $24 million in the 1984 fiscal year and $17
million in the 1985 fiscal year to be made available out of the Rural
Housing Insurance Fund for section 504 loans. See S. Rep. No. 566, 98th
Cong., 2nd Sess. 66-68 (1984). (Pub. L. No. 98-473, Section 101(a), 98
Stat. 1837, October 12, 1984, incorporates by reference the bill covered
by this report.)
The question remains as to what interest rate, if any, is now
authorized under the section 504 loan program. We note that after Pub.
L. No. 98-181 was enacted, FmHA did not change the 1 percent interest
rate that was in effect for all section 504 loans when Pub. L. No.
98-181 was passed. See 7 C.F.R. Section 1944.462(a) (1983) and (1985).
Although this was less than the maximum interest rate the Administrator
could have set under the old section 502, which authorized a section 504
interest rate of "not to exceed 4 percent", the Administrator certainly
had statutory authority to establish a 1 percent rate.
While we recognize that FmHA is not legally required to continue to
use the interest rate that was in effect when Pub. L. No. 98-181 was
enacted, we have no objection to FmHA's continued use of a 1 percent
interest rate (or any other rate it wishes to establish) for section 504
loans. First, we do not believe that Congress intended for FmHA to make
interest-free loans under section 504. As a general rule we would be
reluctant to conclude that the Federal Government could make loans to
borrowers on an interest-free basis unless the intent of Congress to
authorize such interest-free loans was clearly indicated. In this case,
there is no such indication in Pub. L. No. 98-181, its legislative
history, or elsewhere in the Housing Act.
Moreover, the legislative history of FmHA's 1985 fiscal year
appropriation demonstrates that Congress knew that FmHA was continuing
to use the 1 percent interest rate for section 504 loans after Pub. L.
No. 98-181 was enacted. See S. Rep. No. 566, id. 68.
Second, in our view, the principal result of the deletions made by
Pub. L. No. 98-181 was to remove all the statutory restrictions on the
maximum rate of interest that the Secretary could charge for new loans
made under section 504 of the Housing Act of 1949. There is case
precedent for upholding an agency's discretionary authority to set
interest rates for a loan program so as to best effectuate the
underlying intent of Congress, even though the interest rate the agency
establishes may not be expressly authorized by the statutory language.
See 53 Comp. Gen. 422 (1973).
Accordingly, we think that the FmHA would not be legally prohibited
from revising its regulations to charge section 504 borrowers a higher
rate of interest (greater than the present 1 percent rate), even if the
new rate exceeds the abolished 4 percent ceiling. We are not here
commenting on the advisability of such a change, but note only that the
decision is legally within the Administrator's discretion.
In connection with the Administrator's authority to make loans and
set interest rates under section 504, a related issue merits
consideration. While the specific limitation that had been contained in
section 504 restricting eligibility to applicants that could not qualify
for loans under section 502 or 503, was deleted by Pub. L. No. 98-181,
FmHA's regulations continue to limit eligibility for section 504 loans
to individuals that could not qualify for a loan under section 502. See
7 C.F.R. Sections 1944.451 and 1944.456 (1985). The legislative history
indicates that Congress amended section 504 with the specific objective
of making assistance under section 504 available to eligible recipients
"regardless of their ability to qualify for section 502 loans in order
to improve their housing conditions." See S. Rep. No. 142, 98th Cong.,
1st Sess. (1983), reprinted in 1983 U.S. Code Cong. and Ad. News 1816.
Accordingly, FmHA should modify these regulations to conform with the
current statutory language and legislative intent.
FmHA's letter to us states that Rural Housing Disaster (RHD) loans
are authorized by section 521(a)(1)(G) of the Housing Act, 42 U.S.C.
Section 1490a(a)(1)(G). This provision, which was not amended by Pub.
L. No. 98-181, reads as follows:
Interest on loans under section 502 or 517(a) to victims of a
natural disaster shall not exceed the rate which would be
applicable to such loans under section 502 without regard to this
section.
Rural Housing Disaster loans are, in fact, one type of loan
authorized by sections 502 and 517(a). Section 521(a)(1)(G) authorizes
a special interest rate for housing loans made under sections 502 or
517(a) to victims of natural disasters.
Since before Pub. L. No. 98-181 was passed, all RHD loans have been
insured loans made under section 517(a) rather than section 502. Prior
to enactment of Pub. L. No. 98-181, section 517(a)(1) authorized the
Administrator to establish an interest rate on insured loans to low or
moderate income borrowers, which includes all insured RHD loans, of "not
to exceed 5 per centum per annum." In accordance with this statutory
authority, FmHA established a 5 percent interest rate for RHD-insured
loans that was not changed after Pub. L. No. 98-181 was enacted. See 7
C.F.R. Section 1944.40(c) (1983) and (1985).
When Pub. L. No. 98-181 was enacted, it deleted subsection 517(a)(1)
which had authorized the Administrator to establish the interest rate on
insured loans of not to exceed 5 percent. This did not create a problem
with respect to other (non-RHD) insured loans since they were already
covered by section 521(a)(1). However, since section 521(a)(1)(G)
exempts RHD loans from the interest rate setting authority in section
521(a)(1), removal of section 517(a)(1) authority eliminated the only
provision in the Housing Act that expressly authorized the Administrator
to set interest rates for RHD-insured loans. /3/
Our conclusion with respect to FmHA's authority to continue to make
RHD loans is essentially the same as our conclusion concerning the
section 504 loan program. That is, there is nothing in the statute or
its legislative history to indicate that Congress enacted Pub. L. No.
98-181 with the intent of terminating FmHA's authority to make RHD loans
and to charge interest on such loans.
While the Administrator's express statutory authority to establish a
special interest rate for RHD-insured loans was deleted, it appears that
this may have been done inadvertently. This is indicated by the fact
that section 511(c) of Pub. L. No. 98-181 amended section 517(a)(1) of
the Housing Act to extend the Administrator's authority under that
subsection, including his authority to set interest rates for insured
RHD loans, from November 30, 1983, when it was due to expire, to
September 30, 1985. Then, inexplicably, section 514(a) of Pub. L. No.
98-181 deleted the "just" extended 517(a)(1) provision in its entirety,
thereby creating the situation we are attempting to resolve.
In addition, we note that even after section 502 of the Housing Act,
42 U.S.C. Section 1472, was amended by Pub. L. No. 98-181 to delete the
authority of the Administrator to set specific rates of interest for
various loan programs, that section continues to refer, as a general
matter, to the assessment of interest on such loans. This supports the
conclusion that FmHA should continue to charge interest for RHD loans
since section 521(a)(1)(G) provides that the interest rate for RHD loans
is to be established under section 502.
Accordingly, we do not believe that Congress intended to terminate
FmHA's authority to make RHD loans and to charge interest thereon. In
the absence of any provision governing the specific interest rate FmHA
can establish for such loans, it is our view that the Administrator has
the discretionary authority to establish whatever interest rate he
believes would be appropriate for RHD-insured loans. This,of course,
includes the authority not to change the current 5 percent interest rate
for such loans that was in effect when Pub. L. No. 98-181 was enacted.
(1) Section 501 of the Housing Act, 42 U.S.C. Section 1471, sets
forth FmHA's basic authority to provide financial assistance to
borrowers for the purpose of farm housing.
(2) Under section 517(a), 42 U.S.C. Section 1487(a), the
Administrator is authorized to insure loans that meet the requirements
for section 502 direct loans.
(3) As explained in the first portion of this decision, any authority
the Administrator might have had under section 502 to set interest rates
for RHD loans within statutorily prescribed limits would also have been
lost due to the amendment of that section by Pub. L. No. 98-181.
B-221661, 65 Comp. Gen. 422
Matter of: K-II Construction, Inc., March 18, 1986
Protester's pre-bid-opening oral complaint to contracting officer
that solicitation estimates were faulty did not constitute timely agency
protest since oral protests are no longer provided for under the Federal
Acquisition Regulation. Therefore, protest to General Accounting Office
(GAO) following bid opening, is dismissed as untimely.
K-II Construction, Inc. (K-II), protests as inaccurate maintenance
service estimates in invitation for bids (IFB) No. F01600-86-B0009
issued by the Air Force for military family housing maintenance services
at Maxwell Air Force Base, Maxwell Air Force Annex and Gunter Air Force
Station in Montgomery, Alabama. Based upon its review of previous
solicitation estimates for maintenance services for these facilities,
K-II asserts that the present estimates are understated.
The record reveals that prior to the January 10, 1985, bid opening
date, a representative from K-II orally advised the contracting officer
that these solicitation estimates were faulty. We received K-II's
protest concerning this matter on January 15, 1986.
Our Bid Protest Regulations, 4 C.F.R. Section 21.2(a)(1) (1985),
require that protests such as this, based on alleged improprieties
apparent in a solicitation, be filed prior to bid opening. Interstate
Court Reporters, B-201350, Apr. 10, 1981, 81-1 C.P.D. Paragraph 279.
K-II's protest was not filed with our Office until after the January 10,
1986, bid opening and, therefore, is untimely.
Although K-II expressed concern that the solicitation estimates were
inaccurate to the contracting agency prior to bid opening, the firm's
oral complaint to the contracting agency did not constitute a protest
such that a subsequent protest to our Office would be timely. Oral
protests are no longer provided for under the Federal Acquisition
Regulation (FAR). FAR, Section 33.101 (Federal Acquisition Circular No.
84-6, Jan. 15, 1985); Anthony R. Teel, B-219052, Oct. 4, 1985, 85-2
C.P.D. Section 379.
Accordingly, the protest is dismissed.
B-221079, 65 Comp. Gen. 418
Matter of: AEG Aktiengesellschaft, March 18, 1986
Descriptive literature clause requirement under Federal Acquisition
Regulation relating to sealed bid invitations for bids is not applicable
to request for proposals under negotiated procurement.
Protest against alleged apparent solicitation impropriety inclusion
of a descriptive -- literature requirement in a solicitation -- is
untimely when filed after the closing date for receipt of initial
proposals.
Blanket offer to supply compliant equipment does not satisfy a
solicitation requirement for descriptive literature sufficient to permit
technical evaluation of the equipment offered.
Awardee's submission of catalogues for standard model accompanied by
cover letter explaining how equipment would be modified to comply with
solicitation specifications satisfies the requirement for descriptive
literature sufficient to permit technical evaluation.
Agency request for technical information which was required under
solicitation but omitted from protester's proposal does not constitute
discussions. Having requested and evaluated such technical material,
the agency properly awarded on the basis of initial proposals without
discussions where the solicitation explicitly provided that award might
be made on the basis of initial proposals.
Allegation of inadequate notice of award is not for consideration
since notice requirement does not apply to contracts outside the United
States.
AEG Aktiengesellschaft (AEG) protests the award of a contract for
solid state frequency converters to Merlin Gerin GmbH under request for
proposals (RFP) No. DAJA37-85-R-0932 issued by the Army.
AEG asserts that its proposal was improperly rejected by the Army for
failure to contain certain descriptive literature, that the awardee
submitted inadequate literature and that the award was based on relaxed
specifications.
We find the protest without merit.
The RFP, section M-1 stated:
AWARD TO LOW OFFERORS (Whether or not negotiations are
conducted). Unless all offers are rejected, award(s) will be made
to the low responsible offeror(s) who submit responsive and
technically acceptable offer(s) conforming to the solicitation.
Section L-7(c) of the RFP stated that:
The Government may award a contract on the basis of initial
offers received without discussion. Therefore, each initial offer
should contain the offeror's best terms from a cost or price and
technical standpoint.
In addition, note A to section B of the RFP provided that the
"offeror is required to submit with his proposal detailed descriptions
and/or illustrations for item offered to enable a technical evaluation
and a current price list."
On August 20, 1985, six offers were received and all except AEG's
included the required descriptive literature. AEG's price was second
low at DM1,309,148. Merlin Gerin's fourth low price was DM1,822,280
($565,925.47; $1 equals DM3.22). Because no descriptive literature was
included with AEG's proposal, the Army states that its evaluating
engineer called AEG on August 21, and requested that the relevant
technical data be delivered by August 22 so that a technical evaluation
could be conducted. On August 22, according to the Army, an AEG
representative submitted the requested technical data; this material
consisted of two catalogues which described AEG's standard products.
AEG disputes this sequence of events and contends that it was not
requested to deliver such data on August 21, and that it did not deliver
any catalogues in response to such a request. In any event, the Army
evaluated AEG's offer on the basis of the two standard model AEG
catalogues. The Army concluded that the lowest price offer from
Invertomatic was technically unacceptable, as were the next two low
priced offers from AEG and Siemens AG. On September 30, 1985, the Army
awarded to Merlin Gerin as the lowest priced, technically acceptable
offeror.
AEG first protested the award to the Army. The Army's denial of the
protest advised that AEG's proposal could have been rejected, without
evaluation, for failing to contain the required descriptive literature
but that an evaluation had been conducted based on the catalogues for
standard AEG models and was found technically unacceptable.
AEG does not dispute the substance of the evaluation since the
standard AEG products will not meet the specifications without certain
modifications. Rather, AEG, notwithstanding the evaluation, asserts
mainly that the Army improperly rejected its proposal for failure to
contain descriptive literature without including the requisite
solicitation provision requiring such literature and warning that
failure to submit same would result in rejection. In support of its
position, AEG cites the Federal Acquisition Regulation (FAR), 48 C.F.R.
Section 14.201-6(P) (1984) which requires inclusion in a solicitation of
language found at FAR, 48 C.F.R. Section 52.214-21, if descriptive
literature is required under an invitation for bids. As the Army
correctly points out, the procurement at issue was negotiated and the
FAR requirement, which pertains only to sealed bid procurement
procedure, is inapposite.
The RFP explicitly required the submission of descriptive literature
sufficient to permit the evaluation of proposal technical acceptability.
To the extent that AEG is protesting the inclusion in the RFP of this
requirement, the protest is untimely under our Bid Protest Regulations
since it relates to an alleged solicitation impropriety which was
apparent prior to the closing date for receipt of initial proposals, but
was not filed until after the closing date. 4 C.F.R. Section 21.2(a)(1)
(1985). Moreover, AEG's assertion that it was not required to submit
descriptive literature because its products had been used by and were
well known to the Army is without foundation. When an RFP requires the
submission of information bearing on technical adequacy, the protester
must demonstrate technical sufficiency in its proposal; there is no
requirement that the government ferret out information with respect to
informationally deficient proposals, nor may the protester assume that
an agency will use documents in its possession to obtain information
regarding a proposal unless these documents are specifically
incorporated by reference in the proposal -- which was not done here.
See Julie Research Laboratories, Inc., 55 Comp. Gen. 374 (1975), 75-2
C.P.D. Paragraph 232; Aqua-Tech, Inc., B-210593, July 14, 1983, 83-2
C.P.D. Paragraph 91; Credit Bureau Reports, Inc., B-209780, June 20,
1983, 83-1 C.P.D. Paragraph 670; C.A. Parshall, Inc., B-200334, Feb.
19, 1981, 81-1 C.P.D. Paragraph 112. A blanket offer of compliance is
not sufficient to comply with a solicitation requirement for the
submission of detailed technical information which an agency deems
necessary for evaluation purposes. McKenna Surgical Supply, Inc., 56
Comp. Gen. 531 (1977), 77-1 C.P.D. Paragraph 261; Cincinnati
Electronics Corp., B-216798.2, July 1, 1985, 85-2 C.P.D. Paragraph 1;
Falcon Systems, Inc., B-214562, Sept. 10, 1984, 84-2 C.P.D. Paragraph
270.
While AEG disputes the Army's version of the manner in which it
obtained the AEG catalogues, we view this as irrelevant to the outcome
of the protest. Without the catalogues, AEG's proposal was clearly
unacceptable since it only contained the blanket offer of compliance
with the specification, which, as noted above, is inadequate when
descriptive literature is requested. Therefore, whether the Army
utilized catalogues that it had on file or received them from AEG is
immaterial as the record is clear none was submitted with the proposal.
Further, since the evaluation based on the catalogues is not disputed,
we cannot object to the Army's finding that the protester's product does
not meet its needs.
AEG alternatively argues that the Army's request for catalogues
constituted discussions which, under the circumstances, were not
meaningful. To the extent that AEG was provided an opportunity to
amplify its offer by submission of required material which it had not
otherwise provided in its proposal, it was given an opportunity that was
not provided to any of the other offerors. Therefore, AEG, if anything,
was given a competitive advantage, not a disadvantage. This provides no
basis for sustaining the protest.
While AEG also asserts that none of the other offerors provided the
requisite technical material, in fact all of the other five offerors did
submit technical information, including brochures and in some cases
cover letters explaining how standard products would be modified to meet
certain requirements contained in the solicitation. Based on this
technical data, two of the other five offerors were found technically
unacceptable. Merlin Gerin's offer included technical literature on its
standard model converters with a cover letter which explained how the
standard converters would be modified to comply with RFP requirements
concerning noise level and overload capability. Merlin Gerin proposed
to add housing cabinets to accomplish the required noise suppression,
and oversized converters to achieve the specified overload capability.
The cover letter provided dimensional specifications for both of these
features. The cover letter also indicated that a surcharge would be
applied to the proposal price for providing these features, or that a
lower price was offered in the event that the agency could utilize the
company's standard units. Based on this information, the Army concluded
that Merlin Gerin's offer, with the housing cabinets and oversized
converters, was technically acceptable.
AEG seems to view Merlin Gerin's technical data submissions as
improper because they were not all contained in a standard catalogue.
While AEG characterizes Merlin Gerin's cover letter as inadequate
because it merely parrots back the RFP specifications, this is incorrect
since the letter provides an explanation of how Merlin Gerin proposed to
modify its standard unit to comply with the requirements.
We find that Merlin Gerin's proposal containing standard product
literature appropriately modified and clarified by a cover letter
provided the Army reasonable technical assurance that the converters
were technically acceptable. See Thermal Reduction Co., Inc., B-211405,
Aug. 8, 1983, 83-2 C.P.D. Paragraph 180. Since the Merlin Gerin cover
letter made it clear that a standard model would be appropriately
modified, specifying the manner in which the modification would be
accomplished, we have no basis to find that the agency determination was
erroneous or arbitrary.
Moreover, the fact that Merlin Gerin included a lower-priced
alternate proposal which did not meet the RFP specifications did not
affect the acceptability of its higher-priced technically acceptable
alternate.
AEG also protests that the award was made to Merlin Gerin on the
basis of relaxed specifications different than those contained in the
solicitation. This is factually incorrect. While the award document
clearly incorporated the Merlin Gerin upgraded specificcations contained
in its cover letter indicating the surcharge for upgraded overload
capacities, description pages contained in the award document also
contained a notation referring to a lower overload capability for three
items. This appears to relate to the alternate offer; however, it is
clear from the award document that award was made for the surcharge
priced in accordance with Merlin Gerin's cover letter. An appropriate
amendment to the award document was subsequently made in the form of an
administrative change to correct the error in the item description.
While AEG makes a lengthy recitation of what it asserts reflect
"suspicious circumstances" in this respect, there is no indication of
any irregularity in the Army's award procedures.
AEG also objects that it received an inadequate notice of award which
lacked certain information required by FAR Section 15.100(c) (Federal
Acquisition Circular 84-7, April 30, 1985). However, under paragraph
(a)(4) of that section, such notice requirements do not apply to a
contract, as here, for supplies or services purchased and used outside
the United States.
Accordingly, we deny the protest in part and dismiss it in part.
B-221208, 65 Comp. Gen. 415
Matter of: Automated Sciences Group, Inc., March 13, 1986
If post-selection discussions have been conducted with the successful
offeror regarding an extension of the proposed term of the contract,
discussions should have been conducted with other offerors in the
competitive range, especially where discussions could potentially affect
the offerors' relative standing.
Automated Sciences Group, Inc., protests the award of a contract for
microfilming and document destruction services to B&B Records Center,
Inc., under request for proposals (RFP) No. BPD-84-3, issued by the
Bureau of the Public Debt, Department of the Treasury. Automated
principally contends that the contract that was awarded by Treasury
materially differs from the contract that was competitively solicited.
Automated states that these differing contractual terms were the result
of post-selection discussions by the agency that were conducted solely
with the successful offeror, without notice to the protester or other
offerors.
We sustain the protest.
By amendment No. 4, with an effective date of May 24, 1985, the
solicitation requested offers for the services from the "date of award
through September 30, 1985," which was designated as the "basic contract
period." /1/ In addition, the solicitation contained option provisions
for a second year (October 1, 1985 through October 30, 1986) and a third
year (October 1, 1986, through October 30, 1987). The solicitation
provided that the total duration of the contract, including option
periods, would not exceed 31 months from the date of initial award. The
solicitation required offerors to submit separate prices for each of the
three performance periods (basic contract period, first option period,
and second option period) which were to be added together by the agency
to arrive at a "total combined amount" for price evaluation purposes.
Four proposals were received by the July 15, 1985, closing date for
receipt of proposals. After technical evaluation, Treasury determined
that all proposals were within the competitive range and thereafter
conducted discussions with each offeror. Treasury states in its agency
report that during discussions, it advised offerors as follows:
Each offeror was advised that there might be very little left
of the base year, and that the starting date could well be the
first option year. They were advised that their internal
calculations should be based pro-rata on approximately ten (10)
million documents; that there was no half year backlog.
However, the record does not contain any written notification by
Treasury advising offerors of any such subsequent change and the
solicitation was never amended to reflect a new starting date.
Best and final offers were received on August 21, 1985, with the
following results and rankings:
It is undisputed that Automated's best and final offer was based on a
truncated base year reflecting the short period remaining under the
solicitation's stated basic contract period of "date of award through
September 30, 1985." Further, while the solicitation contained an
estimated quantity of 5,357,650 images for microfilming services in the
base year and 10,725,300 images in each of the option years, Automated,
following the oral instructions of Treasury, prorated the estimated
quantity to reflect the short period remaining in the base year.
Accordingly, Automated based its offer on only 618,767 images for a
three week period that, in its judgment, realistically remained in the
basic contract performance period without any "half-year backlog."
Nevertheless, after receipt of best and final offers, on October 16,
1985, Treasury awarded a contract to B&B with the base year from the
date of award through September 30, 1986; the first option year,
October 1, 1986, through September 30, 1987, and the second option year,
October 1, 1987, through May 30, 1988. Thus, Treasury solicited a
contract with approximately a 3-5 week "base year"; however, Treasury
awarded a contract with approximately a 12-month "base year" and the
last option period in the solicitation was extended into a subsequent
fiscal year. Further, as stated above, Automated based its offer on
618,767 images for microfilming services in the base year and on
10,725,300 images for each option year. However, B&B's contract was
based on an estimated 5,357,650 images in the base year and 10,725,300
images in each of the option years. Thus, at the time offerors
submitted best and final offers, the maximum estimated quantity for
microfilming services under the solicitation with the truncated base
year was approximately 22,000,000 (based on a 3-5 week performance
period and 2 option years), while the extended contract as awarded by
Treasury to B&B contained an estimated quantity of almost 27,000,000
(based on approximately a 31-month performance period). Treasury has
not explained to our Office when and why it changed the performance
period after receipt of best and final offers or how it negotiated these
changes with B&B.
Based on this record, we are compelled to find that Treasury awarded
a contract to B&B that was materially different in its duration from the
contract that was competitively solicited. It is obvious that Treasury,
after receipt of best and final offers, conducted discussions only with
B&B. In this regard, discussions generally occur if an offeror is
afforded an opportunity to revise or modify its proposal, regardless of
whether such opportunity resulted from action initiated by the
government or the offeror. See 51 Comp. Gen. 479 (1972). Further, if
discussions have been conducted with one offeror, it is required that
discussions be conducted with all offerors within the competitive range,
including an opportunity to submit revised offers. See PRC Information
Sciences Co., 56 Comp. Gen. 768 (1977), 77-2 CPD Paragraph 11. The
competition should generally be reopened, even when the improper
post-selection negotiations do not directly affect the offerors'
relative standing, because all offerors are entitled to equal treatment
and an opportunity to revise their proposals. Id.
Here, Automated argues that it would have submitted a significantly
different price proposal had it been aware of the government's
lengthened contract term. Based on this record, we have no basis to
dispute this assertion. Accordingly, we sustain Automated's protest on
this issue.
The only remaining question involves the choice of corrective action.
In this connection, the record shows that Automated's offered price was
100 percent higher than the awardee's, and in fact increased for the
second option period (the awardee offered a level price throughout).
Thus, the protester had no substantial chance of receiving the award
even if the award was consistent with the solicitation. Nonetheless,
since the total term of the contract, including option periods and the
resulting increase in the estimated quantity was improperly extended, we
believe the most appropriate corrective action would be for the agency
to refrain from exercising the second option (October 1, 1987 through
May 30, 1988), and to let the award stand for the approximate period for
which the competition was actually conducted.
The protest is sustained.
(1) This amendment followed a decision by our Office sustaining a
protest by B&B in which B&B challenged its exclusion from the
procurement for reasons unrelated to this protest. See B&B Records
Center, Inc., B-215232, Mar. 27, 1985, 85-1 CPD Paragraph 354.
B-221463; B-221464, 65 Comp. Gen. 412
Matter of: AT&T Communications, March 12, 1986
When a determination is made by an agency to change, relax, or
otherwise modify its requirements or its selection criteria, the agency
should issue a written amendment to the solicitation so that the
offerors receive notification of the agency's determination.
AT&T Communications protests the selection by the U.S. Geological
Survey, Department of the Interior, Reston, Virginia, of GTE Sprint
Communications Corporation as the primary interexchange carrier (PIC),
under solicitation Nos. B003 and B004, for long-distance telephone
services at two locations. AT&T essentially contends that the agency
relaxed its requirements after receipt of proposals without amending the
solicitations or otherwise notifying the offerors of the changed
criteria for award.
We deny the protest because, while the agency erred in not amending
the solicitations, the protester has failed to demonstrate any prejudice
to its competitive standing that resulted from the agency's error. We
also dismiss one aspect of the protest as untimely.
Effective January 1, 1984, the American Telephone & Telegraph Company
divested itself of its local exchange carriers pursuant to a divestiture
agreement which also requires these local exchange carriers to provide
"equal access" to all interexchange (long-distance) carriers and
information service firms that provide interexchange services equivalent
in quality to the services provided by AT&T. To implement this
requirement, new geographical service areas, called Local Access and
Transport Areas (LATAs) were established. The local exchange carriers
may provide only intra-LATA telecommunications services, while AT&T and
other interexchange carriers may provide inter-LATA telecommunications
services, subject to applicable federal and state regulatory
authorities.
The local exchange carriers must generally notify customers at least
90 days prior to the availability of PIC equal access capability. A
selection of a PIC must be made by each customer; failure to do so
could result in an arbitrary assignment of the customer's account to any
PIC at random. The General Services Administration (GSA) has advised
agencies that it is "imperative" that a proper selection of a PIC be
made. See Federal Information Resources Management Regulation, Appendix
B, Bulletin 11, August 20, 1984; Id., Attachment A, June 4, 1984.
Interior issued two solicitations, which it characterizes as informal
"requests for information," for long-distance telephone services at
Reston, and Menlo Park, California. The general process followed in
making a PIC selection was as follows:
1. Publishing a synopsis in the Commerce Business Daily.
2. Providing respondents with a representative sample of
recent charges for long distance services.
3. Providing the respondents with the agency's technical
requirements.
4. Setting a date for receipt of information from the
respondents.
5. Evaluating the responses and selecting a PIC.
6. Notifying the local exchange carrier and the selectee of
the decision.
With respect to the agency's technical requirements, solicitation No.
B003, as amended, and solicitation No. B004 contained the following
mandatory and desirable technical requirements:
codes
calls
Both solicitations also stated that the agency reserved the right to
make "multiple service agreement awards" under the solicitation.
Specifically, the solicitation stated that it was likely that separate
awards would be made for domestic and international service coverage.
The provision for multiple awards was included in each solicitation
because several offerors questioned the propriety of having all services
obtained from one source since apparently only AT&T could provide all
mandatory combined services.
During evaluation of proposals, Interior states that "in this
informal process," it considered a proposal to meet the requirements of
the solicitation if the carrier offered only a portion of the mandatory
services but also proposed that related mandatory services be obtained
from another carrier. Thus, the PIC carrier chosen for domestic
long-distance service was GTE Sprint although it did not comply with the
mandatory solicitation requirement that the carrier provide a capability
for third party and/or collect calls. The latter services were
separately awarded to AT&T.
AT&T, which is joined in its protest by MCI as an interested party,
contends that Interior improperly changed its award criteria by deciding
to allow offerors to propose services which did not meet all of the
solicitation's mandatory technical requirements for additional mandatory
services such as operator-assisted collect calls. AT&T and MCI state
that they were never informed of this change and that Interior should
have issued an amendment to reflect its relaxed requirements despite the
relative informality of the procedures employed. We agree.
It is a fundamental principle of competitive procurement that
offerors be provided a common basis for submission of proposals. Host
International, Inc., B-187529, May 17, 1977, 77-1 CPD Paragraph 346. It
is equally fundamental that when, either before or after receipt of
proposals, the government changes or relaxes its requirements, it must
issue a written amendment to notify all offerors of the changed
requirements. See Federal Acquisition Regulation, 48 C.F.R. Section
15.606 (1984). Here, it is not disputed that the agency specified
mandatory technical features in its solicitations and that at least two
offerors interpreted these mandatory requirements as prerequisites that
had to be met to be eligible for any award, individual or multiple.
When Interior made a determination to consider proposals as acceptable
even if they only complied with a portion of the mandatory
specifications, the agency should have notified offerors of this
determination by written amendment. The fact that it did not mean that
the competition was conducted on an unequal basis. See Amdahl Corp., et
al., B-212018 et al., July 1, 1983, 83-2 CPD Paragraph 51.
Nevertheless, we must deny this protest because in the final analysis
it does not appear that AT&T was prejudiced by the agency's error. This
is because price negotiation with carriers for PIC selection is not
possible since prices and services are established with the Federal
Communications Commission in filed tariffs. AT&T has not even attempted
to show that there would have been some impact on its price proposal if
the solicitation had been amended to show changes in the evaluation
criteria or to delete, for example, the requirement for third party
calling or collect calls. /1/ Thus, we must conclude that the same
selection result would have occurred if the amendment had been issued.
Accordingly, the record does not disclose that AT&T was prejudiced by
the agency's error. See Fiber Materials, Inc., 57 Comp. Gen. 527
(1978), 78-1 CPD Paragraph 422. To the extent that MCI argues that the
agency's failure to issue an amendment prejudiced MCI as an offeror
under the solicitation, /2/ it should have raised these matters in a
separate timely protest. MCI entered an appearance in the case as an
interested party way of comments to the agency report -- too late to
assert its own substantive protest.
The protester also argues that the procurement methodology employed
by Interior was "ambiguous" inasmuch as it was not clear whether the
solicitations were negotiated request for proposals or some other
informal process. We think this argument is untimely. Protests based
upon alleged improprieties in a solicitation which are apparent prior to
the closing date for receipt of initial proposals must be filed prior to
the closing date for receipt of proposals. 4 CFR Section 21.2(a)(1)
(1985). Here, AT&T waited until after selection of the PIC contractor
to complain about the procurement methodology, including the specific
solicitation, that was employed. We therefore, dismiss this argument as
untimely.
The protest is denied in part and dismissed in part.
(1) Although AT&T's protest letter can be read to imply the
elimination of these features is inappropriate, nothing in the protest
suggests why this would be the case.
(2) MCI asserts it would have offered different service if it had
been aware of the agency's requirements and thus may have been low.
This assertion is presumably based on MCI's filed tariffs.
B-218988, 65 Comp. Gen. 409
Matter of: Harvey P. Wiley - Temporary Quarters Subsistence Expenses
- Reasonableness of Meal Expenses, March 12, 1986
A transferred employee reclaims amount of disallowed meal expenses
incurred while occupying temporary quarters. The agency relied on its
internal guideline stating that meal costs up to 45 percent of the daily
maximum will be considered reasonable without further explanation. The
employing agency has the initial responsibility to determine the
reasonableness of expenditures for expenses claimed by employees while
occupying temporary quarters. Where the agency has exercised that
responsibility, General Accounting Office (GAO) will not substitute its
judgment for that of the agency unless the agency's determination is
clearly erroneous, arbitrary, or capricious. Here, agency's
determination is sustained in the absence of adequate justification by
the employee for additional meal costs.
This decision results from the submission by the Chief, Accounting
Branch, Public Health Service, Department of Health and Human Services
(HHS), of the reclaim voucher of Harvey P. Wiley, an employee of the
Food and Drug Administration, for an additional amount for meal expenses
incurred while occupying temporary quarters. The amount claimed was
deducted from his original voucher on the basis that his meal expenses
were unreasonably high. Under the analysis which follows we uphold the
determination of the Public Health Service.
Mr. Wiley was transferred from Peoria, Illinois, to Jefferson,
Arkansas, on July 28, 1984, and he and his family were authorized
temporary quarters subsistence expenses. When Mr. Wiley sought
reimbursement of his expenses, the agency disallowed $927.65 of his
claimed $2,660.14 for meal expenses for the 34-day period as excessive.
The agency allowed only $1,732.49 /1/ for meal expenses on the basis
that the employee and his family had exceeded the agency's internal
guidelines which provide that 45 percent of the prescribed daily maximum
for the cost of meals and miscellaneous expenses will be considered
reasonable.
Mr. Wiley protested this reduction to the agency on the basis that:
(1) his travel order did not specifically limit the dollar amount below
the applicable per diem rate; (2) he was not informed that his meal
expense reimbursement would be limited as proposed; (3) his meal
expenses were within the bounds of the FTRs and recent cost data
compiled by GSA which designates the Little Rock area as a high rate
geographical area; and (4) he was not aware of and does not believe it
was reasonable to expect him to have known of the agency policy limiting
reimbursement for meals and miscellaneous expenses to 45 percent of the
total subsistence expense claimed.
In response to Mr. Wiley's protest, HHS states that the employee is
entitled to reimbursement only for reasonable expenses for meals and
miscellaneous expenses. This is a reference to the "prudent person"
standard set forth in the Federal Travel Regulations, FPMR 101-7
(September 1981) incorp. by ref., 41 C.F.R. Section 101-7.003 (1984)
(FTR), paragraph 1-1.3a requiring travelers to act prudently in
incurring expenses. The agency also refers to Chapter 5-30 of the HHS
Travel Manual (HHS Transmittal 80.01, October 15, 1980) which states the
following:
B. Limitation on Meals and Miscellaneous Expenses.
Reimbursements claimed under the actual subsistence expense basis
(including travel to designated high-rate geographical areas)
normally will be allowed only to the extent determined to be
reasonable. "The daily cost of meals and miscellaneous expenses
will be considered reasonable if they do not exceed 45% of the
prescribed daily maximum." (Italic supplied.)
Under 5 U.S.C. Section 5724a(a)(3), as amended, and implementing
regulations contained at chapter 2, Part 5, of the FTR, a transferred
employee may be reimbursed subsistence expenses for himself and his
immediate family generally for a period of up to 60 days while occupying
temporary quarters. These regulations authorize reimbursement only for
the actual subsistence expenses incurred, provided they are incident to
the occupancy of temporary quarters and are reasonable as to amount.
FTR para. 2-5.4a. It is the responsibility of the employing agency, in
the first instance, to determine that subsistence expenses are
reasonable. Where the agency has exercised that responsibility, this
Office will generally not substitute its judgment for that of the
agency, in the absence of evidence that the agency's determination was
clearly erroneous, arbitrary, or capricious. Jesse A. Burks, 55 Comp.
Gen. 1107 (1976), affirmed and amplified on reconsideration, 56 Comp.
Gen. 604 (1977). The evaluation of the reasonableness of amounts
claimed must be made on the basis of the facts in each case. 52 Comp.
Gen. 78 (1972).
In Norma J. Kephart, B-186078, October 12, 1976, we suggested that
agencies should consider issuing written guidelines, under the authority
of FTR para. 1-8.3b to serve as a basis for review of an employee's
expenses. In Harry G. Bayne, 61 Comp. Gen. 13 (1971), we approved as
reasonable a guideline setting the maximum amount for meals and
miscellaneous expenses at 46 percent of the statutory maximum, but
stated that such a guideline could not operate as an absolute bar to
payment of additional amounts when justified by the employee on the
basis of unusual circumstances. We have stated that the purpose of
establishing such guidelines is to alert employees to the fact that the
agency has established a maximum amount that might be considered
reasonable for meals. This is essentially what HHS has done in the
present case.
Hence, in this case, it is clear that HHS had authority to issue the
guideline contained in Chapter 5-30 of its Travel Manual dated October
15, 1980, creating a presumption that 45 percent of the prescribed daily
maximum for meals and miscellaneous expenses will be considered
reasonable without further justification. However, we must emphasize
that, while payment may normally be limited to 45 percent of the daily
maximum, amounts in excess of that figure should be paid if adequate
justification is submitted by the employee. The burden of proof is on
the employee to prove the reasonableness of his meal and miscellaneous
expenses exceeding 45 percent of the maximum per diem rate. An employee
who wishes to be paid for meals and miscellaneous expenses above the
limitation in the regulation must submit appropriate evidence. The
employee may establish the reasonableness of the amount claimed through
the use of standard statistical references, copies of menus from
restaurants in the area, or any other means of proof acceptable to the
agency.
In Mr. Wiley's case, no additional justification such as described
above has been offered to provide a basis for payment of the additional
amounts above 45 percent. Accordingly, absent further justification for
the additional amounts, the agency's denial of Mr. Wiley's claim for the
additional amounts spent for meals is sustained.
(1) The agency subsistence expenses allowance of $1,732.49 is based
on the authorized allowance for Mr. Wiley, his wife, and son as set
forth in paragraph 2-5.4c of the Federal Travel Regulations, FPMR 101-7,
GSA Bulletin FPMR A-40, Supp. 10, effective November 14, 1983. These
regulations provide for a per diem rate of $50 for Mr. Wiley, and $33.33
each for his wife and son for each of the first 30 days; and for days
31-34, $37.50 for Mr. Wiley and $25 each for his wife and son. The
agency then applied its 45 percent cap to the total allowable for all
three family members for the 34-day period of temporary quarters.
B-221230.3 et al., 65 Comp. Gen. 405
Matter of: ALM, Incorporated, March 11, 1986
Awardees' teaming arrangements do not violate requirement in
Competition in Contracting Act of 1984 for "full and open competitive
procedures."
Where an agency communication with the offeror selected for award to
correct alleged mistakes in its proposal results in the proposal price
being increased in a significant amount, the communication constitutes
discussion requiring discussions with all offerors within the
competitive range.
ALM, Incorporated (ALM), protests the awards of contracts to VSE
Corporation (VSE), RAIL Company (RAIL) and JWK International Corporation
(JWK) under request for proposals Nos. N68520-85-R-9063, -9064, and
-9065, respectively, by the Naval Aviation Logistics Center, Patuxent
River, Maryland. Each of the three RFP's solicited services for the
Weapons Systems Support Departments of various Naval Air Rework
Facilities. Each RFP contemplated separate awards of three lots of
services. The awards in question here were for Lot II of each RFP,
logistics support services for different Naval Air Rework Facilities.
The awards are indefinite quantity, time and materials contracts with
the "time" portion being fixed unit prices of loaded labor rates for
proposed personnel and the travel and material portions being cost
reimbursements. The work is assigned the contractor by task order.
ALM's protests on the three RFP's are (1) that the RFP's evaluation
criteria, which gave the greatest weight to technical merit, were not
adhered to in making the award to lower priced offerors since ALM
believed it was the highest ranked technically and (2) each awardee
entered into teaming arrangements consisting of six or more firms which
violated the requirement for "full and open competitive procedures"
contained in the Competition in Contracting Act of 1984 (CICA), Pub. L.
98-369, 98 Stat. 1175, 10 U.S.C.A. Section 2301(a)(1) (West Supp. 1985).
Additionally, ALM protests the JWK award under RFP-9065 because price
discussions were improperly held with only JWK, but not the other
offerors within the competitive range.
With regard to RFP's -9063 and -9064, we deny the ALM's protests in
part and dismiss the remainder. We sustain in part ALM's protest under
RFP-9065 and deny or dismiss the remainder.
The Navy argues that the protests should be dismissed since the
protestor has not sufficiently detailed any factual or legal bases for
its protest, but only states generalities. We point out, however, that
ALM has been provided no details as to the award selection bases.
Documentation regarding the technical and cost evaluations and the award
selection bases was first provided with the agency report to our office,
but was not provided ALM. (ALM is pursuing this information under the
Freedom of Information Act). Moreover, although ALM was debriefed by
the Navy after it filed the protests and informed of some evaluated
deficiencies in its proposal, ALM was not told at the debriefing that it
was not the highest ranked offeror technically. ALM was only apprised
of this fact in the agency report on the protest. Under the
circumstances, we believe ALM has sufficiently detailed its protest
bases.
With regard to ALM's first contention that it should receive the
award as the highest ranked offeror, the record indicates that ALM
received a lower technical ranking and proposed a higher cost than the
awardees on each of the protested lots. Also, ALM has not protested the
evaluated deficiencies in its proposal which were communicated to it at
the debriefing. Therefore, this basis for protest is denied.
ALM contends that each of the awardees' teaming arrangements with six
or more firms violates CICA's requirement for "full and open
competition." In this case, the Navy and the awardees believe the
specialized expertise of a number of firms was desirable to most
effectively accomplish the contract requirements. Moreover, as stated
by the Navy, Federal Acquisition Regulation (FAR) 48 C.F.R. Section
9.601 (1984), specifically authorizes and encourages contractor team
arrangements in appropriate circumstances. Nothing in CICA or its
legislative history is inconsistent with this FAR provision.
Furthermore, we are aware of no limitation in the FAR, or any other
provision in law, on the number of firms that can be in a teaming
arrangement. If it is believed that the arrangements may violate the
anti-trust laws, this matter is appropriate for resolution by the
Department of Justice and not under the bid protest function of this
Office. See 10 U.S.C.A. Section 2305(b)(5) (West Supp. 1985); The
National Bank of Fort Sam Houston, B-212719, Feb. 14, 1984, 84-1 C.P.D.
Paragraph 91 at 7.
In any case, we believe "full and open competition" was achieved.
Four offerors submitted proposals on Lot II of RFP-9063; five submitted
proposals on Lot II of RFP-9064; and seven submitted proposals on Lot
II of RFP-9065. Therefore, this protest basis is denied.
At the conference on the protest and the comments submitted
thereafter, ALM supplemented its protest by alleging that discussions
were required to be conducted under the RFP's by the Navy because (1) of
the awardees' teaming arrangements; (2) the solicitation provision
indicating that discussions were contemplated; and (3) the fact that
this was not a sealed bidding procurement. However, we believe this
contention was not within the scope of ALM's initial protest. Nor is
this issue timely raised under our Bid Protest Regulations, since it was
not protested within 10 working days of when ALM should have been aware
of this possible protest basis. 4 C.F.R. Section 21.2(a)(2) (1985). We
cannot permit new protest bases to be raised in an untimely piecemeal
manner because this would unreasonably disrupt the procurement system
and protest process. T.V. Travel Inc., et al. - Request for
Reconsideration, B-218198.6, et al., Dec. 10, 1985, 65 Comp. Gen. 109,
85-2 C.P.D. Paragraph 640 at 9. Therefore, this protest basis is
dismissed.
However, ALM timely contends that improper price discussions were
held with JWK, but not other offerors within the competitive range. The
Navy states that it did not conduct discussions with JAW, as alleged by
ALM, although it did clarify with JWK some apparent mathematical errors
in the extension of JWK's unit prices. The Navy claims that making such
minor clarifications is authorized and does not require opening
discussions with other offerors.
We obtained JWK's initial cost proposal, its revised proposal and the
contract from the Navy. We have been unable to confirm the nature or
the fact of the clerical or mathematical errors that account for the
differences between JWK's revised proposal cost and JWK's initial
proposal cost.
Also, there is no indication that the procuring activity made any
cost or price analysis or verification of JWK's individual items of
labor price or estimated material or travel costs prior to its selection
and that all offerors' proposal costs were evaluated just as they were
proposed. /1/ Some form of analysis was eventually done to JWK's
proposal after award selection, because JWK was asked to submit a
revised cost proposal.
Of more critical importance is the fact that this "clarification"
resulted in JWK's proposal cost being increased by almost 19 percent,
/2/ an undeniably significant amount. Our in camera review of the
technical and cost evaluation reveals that JWK's initial proposed cost
was the figure used in determining the awardee. In selecting the
successful offeror, the contracting officer relied upon a precise
formula integrating technical scores and cost that weighted technical
factors 80 percent and cost 20 percent. See National Capital Medical
Foundation, Inc., B-215303.5, June 4, 1985, 85-1 C.P.D. Paragraph 637.
Our review also reveals that if JWK's revised proposal, which JWK
submitted after selection and prior to award, is used in the
technical/cost evaluation formula, JWK no longer has the best score.
This puts into question the award selection basis.
If discussions are held with any offeror within the competitive range
prior to award, it is required that meaningful discussions be conducted
with all offerors within the competitive range. 10 U.S.C.A. Section
2305(b)(4)(B) (West Supp. 1985); Joint Action in Community Service,
Inc., B-214564, Aug. 27, 1984, 84-2 C.P.D. Paragraph 228. It is true
that under appropriate circumstances, awards can be made on the basis of
initial proposals "as clarified in discussions conducted for the purpose
of minor clarification." 10 U.S.C.A. Sections 2305(b)(4)(A)(ii);
2305(b)(4)(C) (West Supp. 1985). FAR, 48 C.F.R. Section 15.601, states:
"'Clarification,' . . . means communication with an offeror for the
sole purpose of eliminating minor irregularities, informalities, or
apparent clerical mistakes in the proposal." FAR, 48 C.F.R. Section
15.607, permits the correction of mistakes without discussions being
reopened in appropriate but limited circumstances. However, if the
resulting communications correcting a mistake prejudices the interests
of the other offerors or if the correction requires reference to
documents, worksheets or other data outside the solicitation and the
proposal to establish the existence of the mistake, the proposal
intended, or both, an award without discussions is prohibited. FAR, 48
C.F.R. Sections 15.607(a), 15.607(c)(5); American Electronic
Laboratories, Inc., B-219582, Nov. 13, 1985, 65 Comp. Gen. 62, 85-2
C.P.D. Paragraph 545; Engineering and Professional Services, B-219657,
B-219657.2, Dec. 3, 1985, 85-2 C.P.D. Paragraph 621.
In this case, the communications with JWK resulted in its price being
raised almost 19 percent over the amount used in the proposal
evaluation. This is clearly not a minor "clarification" and is
unquestionably prejudicial to the position of the offerors within the
competitive range, even assuming the communications with JWK were only
to correct clerical or mathematical errors -- which we cannot confirm.
Therefore, we believe the nature of the JWK communications must be
considered discussions and that meaningful discussions were therefore
required to be held with all offerors within the competitive range. See
Sperry Corp., B-220521, 65 Comp. Gen. 195, supra; American Electronics
Laboratories, Inc., B-219582, 65 Comp. Gen. 62, supra; Engineering and
Professional Services, B-219657, B-219657.2 supra. From our review,
ALM's proposal was apparently acceptable, and may be within the
competitive range.
Therefore, ALM's protest of the JWK award under RFP-9065 is
sustained. We recommend that discussions be reopened with all firms
that were within the competitive range for the remaining contract work
after an appropriate cost or price analysis is performed on these
proposals. After meaningful discussions, new best and final offers
should be solicited. If JWK is not the highest rated offeror after the
new best and final offers are received and evaluated, we recommend that
JWK's contract be terminated for the convenience of the government and
award made to the highest rated offeror.
As discussed above, the remainder of ALM's protest of RFP-9065 is
denied or dismissed. ALM's protests of RFP-9063 and -9064 are denied in
part and the remainder dismissed.
(1) Complex contracts of this nature, i.e. task order, time and
material contracts resemble in many respects cost reimbursement
contracts. Consequently, we have recognized that it is appropriate to
have a more detailed cost or price analysis on this type of contract,
instead of just relying upon the proposed unit costs, in evaluating
proposals. OAO Corporation, B-211803, July 17, 1984, 84-2 C.P.D.
Paragraph 54; FAR, 48 C.F.R. Section 15.805-1(b).
(2) The Navy apparently has not disclosed to any offeror the proposed
costs, technical scores or relative standing of the offerors. Since we
recommend below that further discussions be conducted, we do not
disclose the proposed costs, technical scores or the technical cost
evaluation in this decision, since this may adversely affect the
competition. See Sperry Corporation, B-220521, Jan. 13, 1986, 65 Comp.
Gen. 195, 86-1 C.P.D. Paragraph 28.
B-220947, 65 Comp. Gen. 401
Matter of: Trans World Maintenance, Inc., March 11, 1986
Where contracting agency did not provide protester/incumbent
contractor with the solicitation, in spite of incumbent contractor's
numerous requests that agency procurement officials do so, incumbent
contractor was improperly excluded from the competition of the
Competition in Contracting Act of 1984, which requires "full and open
competitive procedures."
Claim for costs of filing and pursuing protest is denied where remedy
afforded protester is an opportunity to compete for award under
resolicitation.
Trans World Maintenance, Inc. (TWM) protests the proposed award of a
contract under invitation for bids (IFB) No. N62766-85-B-2159, issued by
the Department of the Navy, Naval Facilities Engineering Command, for
the maintenance of family quarters in Guam, M.I. TWM, the incumbent
contractor for the solicited services, contends that the agency
consciously and deliberately prevented it from competing under the
subject solicitation by refusing to provide it with a copy of the
solicitation.
The protest is sustained.
According to the protester, during the first week of May 1985, the
company's president and the company's contract specialist became aware
through a copy of a solicitation posted in the Guam Navy Public Works
Office that the Navy intended to issue a new solicitation for the
follow-on contract for the maintenance services it then was performing
under contract. However, the posted solicitation contained no bid
opening date. At that time and on at least three subsequent occasions
between May and August 1985, TWM officials requested a copy of the bid
documents. They also requested on at least two occasions that TWM's
name be placed on the bidders mailing list. The protester states that
in response to their requests, Navy contract officials repeatedly told
TWM officials that the bid documents were not available, but that TWM
would be provided a copy of the bid documents when the solicitation was
approved by the San Bruno regional office. Navy contract officials also
assured the protester that its name had been added to the bidders
mailing list. TWM further states that although it received information
from the agency that a synopsis of the solicitation and subsequently a
correction notice were published in the Commerce Business Daily (CBD),
TWM failed to find the synopsis there, and the Navy refused to advise
the protester of the relevant publication dates. /1/ The solicitation
was issued on September 13, and the Navy mailed copies of the
solicitation documents to 31 other contractors, but a copy was never
provided to TWM.
TWM maintains that the agency deliberately prevented it from
competing for the new contract, even though TWM, as the incumbent
contractor, was an interested, prospective bidder. TWM contends that it
was prejudiced by the Navy's actions in this regard in that, through its
inquiries and visits to the Navy Public Works Office, TWM became aware
that the solicitation would be issued, but was prevented from submitting
a bid as a consequence of its reliance on the Navy's assurances that a
copy of the solicitation would be provided to TWM when the documents
became available. Accordingly, the protester requests that the
procurement be resolicited so that it may be afforded an opportunity to
submit a bid. The protester also requests reimbursement of the costs
for filing and pursuing the protest.
In response to TWM's contentions, the Navy states that the
procurement was properly synopsized in the CBD on April 24, 1985, and
that a correction to that synopsis was published in the CBD on August 8,
1984. The Navy takes the position that since "Publication of a proposed
procurement constitutes notice," TWM's protest is untimely and should be
dismissed, because "any alleged impropriety should have (been) raised by
(TWM) prior to bid opening." The Navy also states that it does not
"stand as a guarantor that copies of the solicitation will be sent to
all bidders." Citing our decision Preventive Health Programs, Inc.,
B-195877, Jan. 22, 1980, 80-1 CPD Paragraph 63, the Navy maintains that
its failure to include the name of a prospective bidder, "even an
incumbent contractor," on the bidders mailing list does not warrant
cancellation of the solicitation and resolicitation where the omission
is not shown to be deliberate, where a significant effort is made to
obtain competition, and where award is made at a reasonable price. In
this regard, the Navy states that TWM never filed a Standard Form (SF)
129, Solicitation Mailing List Application, in accordance with the
Federal Acquisition Regulation (FAR), Section 14.205-1(d)(1) (Federal
Acquisition Circular No. 84-5, April 1, 1985). The agency contends that
it did not deliberately fail to provide a copy of the solicitation to
TWM, that it mailed copies of the solicitation to 31 other contractors
in an effort to obtain competition, that it received four bids, and that
the protester has not alleged that award will not be made at a
reasonable price.
We first address the timeliness issue raised by the Navy. The agency
contends that the filing period for TWM's protest commenced on April 23,
1985, at the earliest, or August 8, 1985, at the latest, since the
synopsis and its correction were published -- and thus all prospective
bidders, including TWM, had notice of the procurement -- on those
respective dates. Thus, the Navy argues that, under our Bid Protest
Regulations, 4 C.F.R. Section 21.2(a)(1) (1985), TWM should have
protested any alleged improprieties prior to bid opening.
We do not agree. TWM has not alleged any apparent improprieties in
the solicitation which would require its protest to be filed before bid
opening. Rather, TWM protests the Navy's action in denying it an
opportunity to compete by refusing to provide it with a copy of the
subject solicitation, even though on at least four occasions TWM had
requested a copy of the solicitation documents well in advance of the
Navy's distribution of the solicitation to potential bidders and had
received assurances from Navy contracting officials that its request
would be honored whenever the documents became available.
Under our Bid Protest Regulations, a protest must be filed within 10
days after the basis for the protest is known or should have been known,
whichever is earlier. 4 C.F.R. Section 21.2(a)(2). The record shows
that TWM first became aware that the agency had actually issued the
solicitation on October 16, 1985, the day following bid opening. Since
neither the published synopsis of the procurement nor the posted copy of
the solicitation specified the date on which the bid documents would be
available or the bid opening date, the protester was not unjustified in
relying on the Navy's assurances that its name had been added to the
bidders mailing list, pursuant to its request, and that it would be
provided a copy of the solicitation documents when they became
available. TWM filed its protest with our Office within 10 working days
after October 16, and its protest is, therefore, timely. 4 C.F.R.
Section 21.2(a)(2); see also Culligan, Inc., Cincinnati, Ohio, 56 Comp.
Gen. 1011, 1012 (1977), 77-2 CPD Paragraph 242 at 2.
The Navy issued this solicitation after March 31, 1985, the effective
date of the Competition in Contracting Act of 1984 (CICA), and,
therefore, the Navy was bound to follow the procurement policy of using
"full and open competitive procedures," which is enunciated in several
provisions of the act. See 10 U.S.C.A. Sections 2301(a)(1), 2302(2),
2304(a)(1)(A), and 2305(a)(1)(A)(i) (West Supp. 1985). "Full and open
competition" is defined as meaning that "all responsible sources are
permitted to submit sealed bids or competitive proposals on the
procurement." 10 U.S.C.A. Section 2302(3) (West Supp. 1985). The
legislative history of CICA reveals that Congress established "full and
open" competition as the new required standard for awarding contracts
because of its "strong belie(f) that the procurement process should be
open to all capable contractors who want to do business with the
Government." See House Conference Rep. No. 98-861, 98th Cong., 2d Sess.
1422 (June 23, 1984). In view of this clear statement of the
government's policy and the clear expression of Congress' intent that a
new procurement standard -- "full and open" competition -- govern, our
Office must give careful scrutiny to the allegation that a particular
contractor has not been provided an opportunity to compete for a
particular contract, taking into account all of the circumstances
surrounding the contractor's nonreceipt of the solicitation, as well as
the agency's explanation therefor.
Such scrutiny leads us to conclude that TWM was improperly denied a
copy of the solicitation here in violation of CICA's requirement for
"full and open" competition. TWM was the incumbent contractor
performing the very same services for which this procurement was
conducted and there is nothing in the record to suggest that TWM is
other than a responsible source. As the incumbent contractor, TWM had a
right to expect to be solicited for the follow-on contract. In
addition, TWM specifically requested a copy of the solicitation on at
least four occasions before the solicitation was issued. TWM also
specifically requested that it be placed on the bidders mailing list on
two occasions. The Navy has neither refuted these facts nor offered any
meaningful explanation for its failure to provide a copy of the
solicitation to TWM. While the Navy points to TWM's failure to file an
SF129, in view of TWM's repeated oral requests we do not believe that a
written request in the form of an SF129 was a prerequisite to obtaining
the solicitation. See Metro Medical Downtown, B-220399, Dec. 5, 1985,
85-2 C.P.D. Paragraph 631 at 2. Furthermore, FAR, Section 14.205-1(b)
(Federal Acquisition Circular No. 84-5, April 1, 1985), specifically
directs that all firms which the contracting office knows are capable of
filling the particular requirement shall be placed on the bidders
mailing list regardless of whether they have filed an SF129.
Furthermore, the record shows that the CBD synopsis and its
subsequent correction did not indicate either the date the solicitation
was to be issued or the bid opening date; accordingly, the protester
was not on notice of when bid opening would take place so that it could
again attempt to obtain the solicitation and submit a bill or take other
appropriate action to prevent bid opening before it would bid. We also
do not consider the result in Preventive Health Programs, Inc.,
B-195877, supra, cited by the Navy in support of its position, to be
dispositive of the propriety of the agency's failure to provide the
protester a copy of the solicitation, particularly since that decision
predated the enactment of CICA and the application of its standard for
full and open competition, and also because the protester here, unlike
the protester in Preventive Health Programs, Inc., specifically
requested on at least four occasions that it be provided the
solicitation.
Accordingly, we conclude that the Navy's actions here prevented a
responsible source from competing and that therefore the CICA mandate
for full and open competition was not met.
Having so concluded, we further find that the appropriate course of
action here to remedy this procurement defect is for the Navy to
resolicit. We recognize that rejecting all bids after they have been
publicly opened tends to discourage competition, because it results in
making all bids public without award, which is contrary to the interests
of the low bidder, and because rejection of all bids means that bidders
have expended effort and money to prepare their bids without the
possibility of acceptance. See GAF Corp.; Minnesota Mining and Mfg.
Co., 53 Comp. Gen. 586, 591 (1974), 74-1 C.P.D. Paragraph 68. However,
in view of the congressional mandate for "full and open" competition, we
believe that the government's interests are best served in the present
case by canceling the solicitation and giving all responsible sources a
fair opportunity to compete on the resolicitation. We therefore are
recommending that the Navy cancel the invitation and resolicit bids
using full and open competitive procedures.
The protester's claim for reimbursement of the costs of filing and
pursuing this protest is denied, because the protester will have the
opportunity to compete for the award under a resolicitation. See
Galveston Houston Co., B-219988.4, Nov. 4, 1985, 85-2 C.P.D. Paragraph
519; The Hamilton Tool Co., B-218260.4, Aug. 6, 1985, 85-2 C.P.D.
Paragraph 132.
The protest is sustained.
(1) Both the synopsis and the correction notice appeared in the CBD
under Category Z, "Construction (i.e.) New Construction and major
additions to existing buildings and facilities," not under Category Y,
"Maintenance, Repair and Alteration of Real Property," as the protester
might have expected. We question whether it was appropriate to
synopsize this procurement under Category Z although we recognize that
the line between "construction" and "maintenance, repair and alteration"
is not always easily drawn.
T.V. Travel .............................. 220.5 points
SATO ..................................... 218 points
Corporate Travel International ........... 210.75 points
World Travel Advisors .................... 205 points
Universal Travel ......................... 203.25 points
First-year
Shelter Projected Cost
Offeror Technical and 19.5 Year
Points Maintenance Cost /3/ Point
Rent
North Star 984 $8,139,800 $166,460,887
Fairbanks 862 7,306,871 151,469,409
Fort Wainwright 806 7,363,680 146,735,797
Sadco 856 7,800,000 164,722,946
First-year
Shelter Projected Cost
Offeror Technical and 19.5 Year
Points Maintenance Cost
Rent
North Star 984 $7,730,920 $158,094,253
Fairbanks 862 6,806,871 141,104,417
Fort Wainwright 806 6,838,480 136,494,393
Sadco 856 7,314,019 155,184,943
Quotation preparation -- 5 hrs. at $45/hr $225.00
Protest Costs -- 2 hrs. at $45/hr 90.00
Responding to agency report -- 6 hrs. at $45/hr 270.00
Miscellaneous expenses (postage, telephone calls) 25.00
Total $610.00
Firm Price Technical Price Total
Points Points Points
1. B&B $1,086,859.76 69.7 18.781 88.481
2. Automated $1,703,558.87 70.9 11.98 82.88
3. ADI $1,101,803.31 60.9 18.527 79.427
4. CIM $1,020,632.61 55.3 20.00 75.3
Type Requirement
A. Mandatory A method of providing for third party
calls and/or collect calls either by use of access
credit cards, or other methods.
B. Mandatory A method of providing credits in same
billing month for erroneous calls and poor quality
C. Mandatory Provision for a minimum of 150 account
codes for billing purposes.
D. Desirable Long Distance Directory Assistance.
E. Desirable International Calling and assistance.