Experimental Pathology, Laboratories, Inc. (EPL), protests the award
of a cost-plus-fixed-fee, level-of-effort contract to Pathology
Associate, Inc. (PAI), under request for proposals (RFP) No. CI85-0088,
issued by the Environmental Protection Agency (EPA). The RFP was a
total small business set-aside for providing pathology services in
support of an EPA environmental health research program for a period of
12 months with options for 2 additional years. Although EPA has not
released any detailed information to the protester concerning the
evaluation of proposals, because it believes this information to be
privileged, EPL nevertheless asserts that EPA failed to follow its
announced criteria in evaluating proposals. This contention is based on
EPL's claim to be a highly experienced laboratory with 15 years of
experience in providing pathology services while the awardee is
allegedly a "newcomer" which could not have submitted a substantially
superior technical proposal to justify its selection as the successful
offeror. EPL also maintains that EPA "may" have misevaluated two
elements of cost which flawed EPA's determination of the most
advantageous proposal from a cost standpoint.
We deny the protest in part and dismiss it in part.
The evaluation of proposals was conducted under the provisions of EPA
Source Selection Procedures contained in 48 C.F.R. subpart 1515.6
(1984). Specifically, the responsibilities for the evaluation and
selection process are divided among a Technical Evaluation Panel (TEP),
which evaluates and scores proposals, develops summary facts and
findings, and recommends selection of a source; a Business Evaluation
Panel, which evaluates the business and contractual aspects of
proposals; and the Source Selection Official (SSO), here the
contracting officer, who selects an offeror or contract award. Award to
PAI followed the formal source selection process which resulted in the
decision that selection of PAI's proposal, rather than that submitted by
EPL, would be more advantageous to the government. While our Office has
been furnished the evaluation reports and other relevant exhibits
concerning this protest, the agency, as stated previously, 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
EPA.
For award purposes, the solicitation generally stated that technical
quality was more important than cost in determining the most
advantageous proposal. In descending order of importance, and as
secondary factors, the solicitation listed small business and labor
surplus area concern status and record of past performance as general
evaluation factors for award. The solicitation also specifically listed
the following five evaluation criteria and their respective weights:
1. Offeror's demonstrated understanding of all aspects of the
scope of work and degree that proposal meets project needs. (35
points).
2. Offeror's demonstrated scientific knowledge and experience
in similar projects involving the indicated range of pathology
technical services. (20 points).
3. Offeror's demonstrated experience of proposed personnel.
(20 points).
4. Offeror's demonstrated knowledge and experience in the
exercise of GLP (good laboratory practices) and QA (quality
assurance) principles and methods, and ability to meet QA
documentation and reporting needs. Proposals shall also be
evaluated as to how well they address the QA requirements set
forth in Section C. (15 points).
5. Offeror's demonstrated adequacy of facilities and
management resources that are proposed to be brought to bear in
performing this effort. (10 points).
MAXIMUM SCORE: 100 Points.
Concerning cost, the solicitation cautioned offerors that as
proposals become more equal in technical merit, the evaluated cost
becomes more important.
The solicitation also included precise minimum qualifications and
level-of-effort estimates for certain labor categories -- such as
project leader (professional level 4); project engineer (professional
level 3); senior technician (technical level 3), a technician
(technical level 2). The offeror's proposed labor rate times the
estimated manhours for each category, plus the offeror's proposed fee,
as well as certain other direct costs and travel expenses, basically
provided the basis for cost evaluation.
Four firms submitted proposals. EPA evaluated the initial technical
and cost proposals, and both EPL and PAI were determined to be in the
competitive range.
The best and final offers of the two firms were evaluated with regard
to technical factors and cost reasonableness. The results of the best
and final offers from a cost standpoint were as follows (only the base
year prices are shown since these figures are apparently the only ones
released by EPA to the protester):
Offeror Best and Final Offer
PAI $383,960
EPL 433,991
EPA considered PAI's proposals to be superior technically and also
lowest in cost. Therefore, EPA's technical evaluators recommended that
PAI be awarded the contract, and the SSO, the contracting officer,
followed this recommendation in awarding the contract to PAI.
EPL disputes this EPA determination. We will limit our discussion to
the major findings of the TEP with respect to the proposals of PAI and
EPL.
The TEP found that EPL's proposal demonstrated a "good understanding"
of the nature of the work and included a detailed description of the
scope of work (factor 1). Specifically, the TEP found that EPL's
proposal contained a good and detailed description of the services
required; the proposal lacked detail only in certain work segments,
particularly liver and pulminary pathology. Additionally, EPL's
proposal demonstrated understanding of the potential problems that could
occur during contract performance. With respect to the offeror's
demonstrated scientific knowledge and experience in similar projects
(factor 2), the TEP considered the EPL proposal to have demonstrated "a
high level of scientific knowledge that is well-suited to this
contract." The TEP found that EPL's staff has had experience on at least
10 similar programs, although no recent experience with similar EPA
programs. Concerning experience of proposed personnel (factor 3), the
TEP noted that the experience of EPL's proposed pathologists varied from
7 to 17 years and had extensive experience in long-range carcinogenicity
studies. The TEP report reflects some concern as to the experience of
the individuals which EPL proposed to devote to the work. Concerning
quality assurance and facilities (factors 4 and 5), the TEP stated that
the quality assurance plan, presented by EPL was "very thorough" and
found the proposed facilities "good."
The TEP, in evaluating PAI's proposal with respect to demonstrated
understanding (factor 1), found that PAI's proposal demonstrated a
"thorough understanding" of the scope and work. According to the TEP,
PAI's description of the nature of the proposed work contained superior
features which identified potential problems and offered suggested
solutions. Concerning scientific knowledge and experience in similar
projects (factor 2), the TEP found that the PAI proposal indicated that
the firm had extensive experience with this type of contract work, both
with EPA and other government agencies. From the standpoint of the
experience of the proposal staff (factor 3), the TEP found that PAI's
staff was "above average" and had several years of experience on this
specific type of program. Concerning quality assurance and facilities
(factors 4 and 5), the TEP considered the quality assurance plan
proposed by PAI to be "very thorough" and the facilities proposed were
considered to have superior features, within close proximity to EPA, and
well equipped, including an archives facility.
The SSO, the contracting officer, accepted the finding of the TEP.
In his summary, determination, and rationale, the contracting officer
determined that: 1) PAI's technical proposal indicated a greater
understanding of the scope of work than EPL's proposal; 2) PAI
demonstrated greater experience in government-sponsored pathology
services; 3) PAI's proposed quality assurance was thorough; and 4)
overall, PAI's proposal demonstrated technical superiority at a lower
cost. Therefore, as SSO, the contracting officer made a determination
to award the contract to PAI.
The contracting agency must evaluate proposals in conformance with
the evaluation criteria stated in the solicitation to determine which
technical proposal best meets its needs. GAO will independently
scrutinize the contractor selection process to determine if the
selection was reasonable under the circumstances and in conformity with
the evaluation criteria, applicable statute or regulation. The purpose
of this review, however, is not to substitute our judgment on
essentially discretionary matters for that of the contracting activity.
See METIS Corp., 54 Comp. Gen. 612 (1975), 75-1 CPD Paragraph 44.
Our review of the record provides no legal basis to object to EPA's
decision. The sole factual basis for EPL's allegations concerning
improper evaluation is essentially EPA's decision to select PAI, an
alleged "newcomer," for award despite the submission by EPL, a very
experienced laboratory, of a sound technical proposal at a reasonable
cost. However, we have independently reviewed PAI's technical proposal
and find that PAI, rather than being a "newcomer," is a highly
experienced incumbent with extensive government contract experience. In
addition to its experience as the incumbent for EPA's environmental
health research program, PAI has provided professional and technical
support services for the Food and Drug Administration, a wide range of
pathology support services to the National Toxicology Research and
Testing Program, experimental pathology support services to another
agency's cancer research program, and several other pathology support
services to other government agencies under federal contract, including
the operation of a full-service histopathology laboratory.
Overall, having reviewed both proposals, we find PAI's government
contract experience to be broader and more extensive than EPL's.
Further, while we find both firms to be highly experienced and their
staffs capable, we cannot disagree with EPA's conclusion that PAI
proposed a highly qualified staff which was "above average," since PAI's
proposed staff is represented by 10 Ph.D. degrees and five Master's
degrees, while its overall collective experience in experimental
pathology is 250 years, and it has been responsible for more than 500
publications.
Thus, our review indicates that EPA strictly adhered to the stated
RFP evaluation criteria and that EPL's proposal was simply not evaluated
to be technically equal to PAI's proposal nor were its evaluated costs
lower than those of PAI. It appears to us that the EPA evaluators could
rationally evaluate the proposals as they did. The fact that the
protester objects to the evaluation, and perhaps believes its own
proposal was better than as evaluated by EPA, does not render the
evaluation unreasonable. Honeywell, Inc., B-181170, Aug. 8, 1974, 74-2
CPD Paragraph 87. Thus, since we conclude that PAI was reasonably
evaluated as technically superior and since its price proposal was low,
we believe that award to PAI under the circumstances was not only
reasonable but required. See generally DLI Engineering Corp., B-218335,
June 28, 1985, 85-1 CPD Paragraph 742.
Several minor issues remain.
EPL notes that the solicitation contained instructions pertaining to
certain direct costs and travel expenses. Specifically, the
solicitation included a category described as "other direct costs" which
provided that $100,000 in direct costs would be used for evaluation
purposes for the base year and another $25,000 for travel costs. The
instructions then contained a footnote which stated as follows:
The amounts shown for other direct costs are provided solely
for proposal purposes. If for any reason you believe these
prescribed costs are either too high or too low for your
particular situation or if by proposing these costs as a separate
direct line item your proposal would be in violation of your
prescribed accounting practices and/or the cost accounting
standards, then still include the specified amounts in your
proposal, but in the narrative explain why you feel you can
deviate from these amounts.
EPL, in its initial proposal and subsequently, notified EPA that it
believed the agency's figures for travel and direct costs were
excessive, partly because EPL maintained a Cincinnati, Ohio office at
the site of contract performance. EPL believed it could also reduce
certain other direct costs. EPL complains that EPA disregarded its
recommendations and thereby misevaluated its proposal from a cost
standpoint.
EPA states that its technical expert reexamined the amounts
established by the solicitation for travel and other direct costs. He
indicated to the contracting officer that additional travel beyond the
Cincinnati area would be required during contract performance to support
research under the proposed contracts. Concerning other direct costs,
EPA's technical expert pointed out to the contracting officer that under
the existing contract for these services, the contractor has experienced
a growth of other direct costs during the life of the contract which
required contract modifications to increase reimbursement for other
direct costs. Accordingly, in the expert's best estimate, the amounts
stated in the solicitation for travel and other direct costs were the
most accurate "should cost" projections. The contracting officer
accepted the expert's conclusions and, therefore, both the proposal of
PAI and the proposal of EPL were evaluated using the amounts stated in
the RFP.
We note that PAI also has a Cincinnati office. The contracting
officer therefore states that any legitimate offset offered by EPL would
also have had to be applied to PAI's cost proposal. Since both firms
were evaluated using the solicitation's cost estimates, the contracting
officer states that any adjustments in these two areas would not have
had any effect on the relative cost standings of EPL and PAI. Our
review of the record confirms the contracting officer's conclusions.
Accordingly, we find that EPL has failed to show any prejudice by the
cost methodology employed by EPA in arriving at the lowest cost offeror.
See Centennial Computer Products, Inc., B-211645, May 18, 1984, 84-1
CPD Paragraph 528.
Next, EPL argues that various procedural irregularities occurred or
may have occurred during evaluation of proposals. Specifically, EPL
maintains that, unlike the practice followed by other agencies, EPA's
technical evaluation panel did not contain outside experts; that our
Office should verify that EPA's technical evaluation record contains the
proper documentation and that appropriate supplemental reports were
prepared by the TEP. These allegations are wholly procedural in nature
and, in our view, would not provide a legal basis for disturbing an
otherwise valid award. See generally Dynamic Science, Inc., B-214111,
Oct. 12, 1984, 84-2 CPD Paragraph 402.
Finally, in its comments on the agency report, EPL raises the issue
of whether PAI's proposed costs were generally realistic. The sole
basis for this contention by EPL is its knowledge of the price at which
the contract to PAI was awarded. The agency report does not address
this issue and, in its initial protest, EPL, while aware of the contract
price, did not raise this issue. We therefore will not consider this
matter. Protests must be filed with our Office 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) (1985). Here, EPL, aware of
the contract price, did not protest the issue of the realism of PAI's
costs until it filed its comments on the report. Accordingly, we find
the issue untimely filed and we therefore dismiss it.
The protest is denied in part and dismissed in part.
B-220860, 65 Comp. Gen. 382
Matter of: Major Stephen M. Hartnett, USMC, Retired, March 10, 1986:
Military Personnel - Acceptance of Foreign Presents, Emoluments, etc. -
Foreign Government Employment - Retired Officer - Retired Pay Adjustment
The prohibition against an officer of the United States accepting
emoluments, office, etc., from a foreign government without the consent
of Congress in Article I, section 9, clause 8 of the U.S. Constitution,
and 37 U.S.C. 908, is applicable to a retired member of the U.S. Marine
Corps, who, under an employment agreement with a domestic corporation,
serves as an instructor for, and is subject to the supervision and
control of the Royal Saudi Navy, which is the source of the funds for
his salary and other emoluments. Since he has not received the required
congressional consent, his military retired pay must be withheld.
The question presented in this case is whether a retired military
officer employed under an agreement with a Delaware corporation to be a
Marine Corps Seamanship Instructor for the Royal Saudi Naval Forces of
Saudi Arabia must receive the required approvals under 37 U.S.C. Section
908 or continue to have his military retired pay suspended because of
the constitutional provision prohibiting officers of the United States
from receiving offices, emoluments, etc., from foreign governments
without congressional consent. /1/ Since under the terms of his
employment agreement the officer performs work as an instructor for the
Royal Saudi Naval Forces which supervises and control him, and which is
the source of the salary and other emoluments he receives, we conclude
that without the statutory approvals of the employment the retired pay
must be withheld.
BACKGROUND
Major Stephen M. Hartnett, USMC, Retired, filed with the Marine Corps
a DD Form 1357, "Statement of Employment," in May 1985 in which he
states that he is employed by Frank E. Basil, Inc. (Basil), Washington,
D.C., in the position of "Marine Corps Seamanship Instructor, Royal
Saudi Naval Forces, Jeddah, Saudi Arabia." Additionally, Major Hartnett
supplied a copy of his employment agreement in which he agreed to work
for Basil, a corporation incorporated in Delaware, for 24 months
commencing on May 25, 1985, or when he arrived in Saudi Arabia,
whichever was later.
Of importance to this case are several sections of the employment
agreement. The most important, section 4, provides that:
Section 4 -- ASSIGNMENT OF WORK
(a) The Employee will be assigned during the Term of Employment
to the performance of work for SIBC-BASIL, a joint venture of the
Company and Saudi International Business Centre, a Saudi Arabian
company. While so assigned the Employee will work under the
direction and control of SIBC-BASIL personnel and, as and when
directed to do so, under the direction and control of personnel of
the Royal Saudi Naval Forces (hereinafter called the RSNF),
subject to the provisions of paragraph (b) of Section 14. /2/
(b) Although the Employee will normally be assigned work in his
Job Classification, it is understood that if, in the sole opinion
of the Company or SIBC-BASIL or the RSNF, the nature or volume of
the work or the aptitudes of the Employee make it desirable to do
so, the Company or SIBC-BASIL or the RSNF may reassign the
Employee from time to time to one or more other job
classification. * * * (Italic and footnote supplied.)
Another section of import is "Section 16 -- termination," under
which, among other things, Basil will terminate Major Hartnett's
employment if directed to do so by the Saudi Arabian Government.
Additionally under "Section 6-Training" and "Section 8-Hours of Work,
Overtime and Holidays," the Royal Saudi Naval Forces respectively may
direct the employee to train certain personnel in the work of his job
classification and may schedule overtime for him.
In view of the above, the Marine Corps found that it appeared that
Major Hartnett effectively was an employee of the Saudi Arabian
Government since it could control and direct him. Consequently, the
Marine Corps suspended payment of Major Hartnett's retired pay and
advised him to request approval of his employment under 37 U.S.C.
Section 908, the statute granting conditional congressional consent for
retired members to accept civil employment with a foreign government
without loss of their retired pay.
Major Hartnett declined to seek approval of his employment, asserting
instead that he is not employed by a foreign government. In support of
his position he furnished a statement from the Acting Manager, Personnel
and Administration, Saudi International Business Centre, stating in
part:
This is to certify that Stephen M. Hartnett is employed by
Frank E. Basil, Inc. of Delaware, United States of America. He
receives life support services from the Jeddah Site of SIBC-BASIL,
a Joint Venture Project of the Saudi International Business Centre
and Frank E. Basil, Inc. of Delaware, U.S.A. /3/ All pay and
benefits are received from Frank E. Basil, Inc. of Delaware,
U.S.A.
In no way is Mr. Hartnett employed by either a Saudi controlled
company or an Agency of the Government of Saudi Arabia.
The Disbursing Officer forwarded the matter to us for decision
indicating that there is some doubt in the matter since it appears that
both Basil and the Saudi Navy have power to direct and control Major
Hartnett's employment. Pending our decision, Major Hartnett's retired
pay remains suspended and an indebtedness has been established for him
for compensation he earned between May 25 and August 31, 1985. The
Disbursing Officer also asks whether, if it is determined that Major
Hartnett's employment violates the constitutional provision, the value
of the transportation and other relocation expenses furnished him under
the employment agreement also should be considered emoluments received
from a foreign government.
ANALYSIS
Article I, section 9, clause 8 of the Constitution of the United
States prohibits any person "holding any Office of Profit or Trust"
under the United States from accepting any present, emolument, office or
title, "of any kind whatever," from a foreign government without the
consent of Congress. Because retired members of the uniformed services
retain their status as members of their service, this constitutional
prohibition consistently has been interpreted to apply to them. They
are subject to the withholding of their retired pay in an amount equal
to the emoluments received from a foreign government (or instrumentality
thereof) without the consent of Congress. See e.g., 58 Comp. Gen. 487
(1979); 53 Comp. Gen. 753 (1974). Therefore, it is clear that if Major
Hartnett were employed directly by the Royal Saudi Naval Forces, his
employment would be subject to this constitutional prohibition.
Accordingly, our inquiry is whether Major Hartnett's employment is
with Basil, not the Royal Saudi Navy, so as to make the constitutional
provision inapplicable to him.
In a somewhat similar case, a retired officer was employed and paid
by a domestic corporation which then assigned him to work for Israeli
Aircraft Industries, an instrumentality of the Government of Israel. It
was shown that the domestic corporation was in effect merely an
employment agency and that actually there existed an employee-employer
relationship between the officer and an instrumentality of a foreign
government for which the domestic corporation procured personnel. We,
therefore, looked through the ostensible relationship with the domestic
corporation and held that the officer was actually working for Israeli
Aircraft Industries, an instrumentality of the Government of Israel. 53
Comp. Gen. 753 (1974).
In that case we focused on the nature of the relationship between the
retired member and Israeli Aircraft Industries. We applied
well-established rules to determine whether there was an
employee-employer relationship between the member and that organization
focusing on several aspects including, particularly, who had the
authority to hire, fire, and control the conduct of the employee.
Indeed, we recognized that the critical aspect to establish the
relationship of employee-employer was the right of the employer to
exercise supervision and control, not the means used or the actual
exercise thereof. See 53 Comp. Gen. at 756-757. See also B-165378,
October 25, 1968.
In this case also, while we have no specific information showing that
Basil is merely an employment agency, there is sufficient evidence to
conclude that Major Hartnett is in actuality an employee of the Royal
Saudi Naval Forces since this entity may control and supervise him as
well as terminate his employment. Also, although Major Hartnett does
not receive his salary directly from the Saudi Arabian Government, the
Saudi Arabian Government is apparently the source of the funds Basil
uses to pay Major Hartnett and to provide the "life support" services to
him. Therefore, he is in violation of Article I, section 9, clause 8 of
the Constitution so as to require withholding of his retired pay. See
B-217096, March 11, 1985.
Having determined that Major Hartnett's employment is in violation of
the constitutional provision, we must now answer the question whether
the transportation and other relocation expenses furnished him under his
employment agreement are to be considered emoluments received from a
foreign government. The constitutional provision does not merely
preclude the acceptance of compensation but any presents, emoluments,
office or title, "of any kind whatever" from a foreign state. We,
therefore, have concluded that this provision requires the broadest
possible scope and application, and have held that the transportation
and payment of other expenses, such as received by Major Hartnett, are
presents or emoluments received from a foreign government. See 58 Comp.
Gen. 487, 493 (1979). Accordingly, assuming that the costs of these
benefits furnished Major Hartnett are ultimately being borne by the
Saudi government, similarly to his salary, they too are considered
emoluments received from a foreign government.
Congress has given its consent to retired members of the uniformed
services accepting civil employment by foreign governments and
compensation for that employment provided that the retired members
receive the approval of both the Secretary of State and the Secretary of
the service concerned. See 37 U.S.C. Section 908. Therefore, as the
Marine Corps advised him, Major Hartnett should seek the required
approval if he wishes to have payment of his retired pay resumed.
FOOTNOTES
(1) This decision is issued in response to a request from Lieutenant
Colonel M. K. Chetkovich, USMC, Marine Corps Finance Center. The matter
was forwarded to us after the Department of Defense Military Pay and
Allowance Committee had assigned it control number DO-MC-1457.
(2) Paragraph (b) of Section 14 provides that the employee will
follow the provisions of any applicable U.S. Government approved
security manual insofar as U.S. classified information, materials or
equipment is concerned.
(3) Presumably the "life support services" referred to are medical
services, insurance, housing and meals referred to in Sections 12 and 13
of the Employment Agreement.
B-220512.2, 65 Comp. Gen. 380
Matter of: Chesapeake and Potomac Telephone Company, March 7, 1986:
Contracts - Protests - Allegations - Not Prejudicial
Protest against technical requirement for telephone system to provide
for voice digitization in the telephone is denied where protester states
it could address requirement and there is no evidence that it impaired
protester's ability to compete.
Contracts - Two-Step Procurement - Step - Specifications - Minimum
Needs Requirement - Administrative Determination
Requirement in request for technical proposals for offers to be
submitted on a 5-year lease-to-ownership basis is improper.
Satisfaction of objective of acquiring least cost alternative between
lease or lease-to-ownership arrangements cannot properly be accomplished
without considering alternatives actually submitted in competition,
particularly where failure to do so excludes from the competition the
local telephone company, able to offer only on a lease basis, without
affording it an opportunity to present its best price.
The Chesapeake and Potomac Telephone Company (C&P) protests two
specifications in request for technical proposals (RFTP) No.
W-10-34654/HWD issued by the National Aeronautics and Space
Administration (NASA). The protest is sustained in part and denied in
part.
The RFTP was the first step in a two-step formally advertised
procurement of a telephone system for NASA headquarters, including
installation, operation, maintenance and training. The RFTP requires
that proposals be submitted on a 5-year lease-to-ownership basis and
also requires that the system support digitization of the voice signal
at the telephone rather than at the switch. (Digitization is the
conversion of the analog, or wave-like voice signals that we hear into
the digital signals 1's & 0's, on which the computer (the "switch")
controlling modern telephone systems operates; digitizing may be done
either at the telephone or within the switch.) C&P currently provides to
NASA telephone service known as "Centrex."
NASA justified the ownership requirement in the RFTP on the basis of
a 10-year system life cost study which NASA performed, with the support
of the Mitre Corporation, a not-for-profit consulting organization,
during planning for this procurement. During this study, C&P provided
NASA with information on C&P's current tariffs and projected increases.
NASA contends that this study shows that lease-to-ownership is the least
costly alternative available. NASA also states that it obtained a
delegation of procurement authority (DPA) from the General Services
Administration which approved the acquisition on this basis.
As a local telephone company, C&P may only provide services and is
precluded from selling its equipment. C&P is therefore only able to
participate in these acquisitions on a "lease" basis, which C&P does by
proposing customized individual tariffs. (As a local telephone company,
C&P services are subject to regulation and approval as tariffs.) C&P
states that it advised NASA during the cost study that it could provide
its best pricing only in response to a competition. C&P also states
that it was assured that it would be allowed to participate in this
competition.
C&P contests the validity of NASA's 10-year cost evaluation in view
of the 5-year evaluation provided for in the RFTP, challenges the
assumptions underlying the evaluation, and asserts that the selection of
contract type, e.g., lease or purchase, must be made in a competition.
C&P states that the evaluation was based on existing tariffs and did not
consider that C&P can offer better pricing arrangements only in response
to a competitive solicitation. C&P also contests the requirement for
digitization in the telephones on the basis that it precludes alternate
technical solutions, but states that it could address this requirement.
Initially, since C&P concedes that it can address NASA's requirement
for voice digitization in the telephone and provides no evidence that
this requirement impaired its ability to compete, we can find no basis
upon which we might conclude it prejudiced C&P. This aspect of C&P's
protest is therefore denied.
On the other hand, we find that NASA's lease-to-ownership requirement
was improper. In this respect, the Federal Information Resources
Management Regulation (FIRMR), Section 201-24.304 (Temporary Regulation
4 (TR 4), 50 Fed. Reg. 4406, et seq., January 30, 1985) states, in part,
that "Where applicable, requirements shall be set forth in a manner that
will afford both tariff and nontariff suppliers opportunities to
compete." And, FIRMR Section 201-40.006 (TR 4) provides that:
The method of contracting for telecommunications alternatives
shall be determined after consideration of the relative merits of
the alternative methods available; i.e., purchase, lease, or
lease-with-option-to-purchase. A comparative cost analysis of the
alternative methods shall be performed to determine which method
provides the Government with the lowest overall cost over the
total systems life.
In System Development Corporation and International Business
Machines, B-204672, Mar. 9, 1982, 82-1 CPD Paragraph 218, we considered
the propriety of the Air Force addressing the lease vs. purchase
question during procurement planning, but not in the evaluation of
proposals, under a regulation (then Federal Property Management
Regulation Section 101-35.306(d)) which required that the government
make a determination of least cost alternative. We held that,
consistent with the objective of achieving the lowest cost alternative,
the Air Force was required to consider the alternative methods of
acquisition its evaluation of the proposals actually received. Ibid.,
p. 21.
C&P's challenge in the present case similarly involves purely
financial comparisons with the same objective -- achieving the lowest
overall system cost. We do not think this objective can properly be
accomplished without comparing alternative proposals actually received
in the competition, particularly when the effect of imposing the
purchase requirement is to exclude the local telephone company without
affording it an opportunity to present its best pricing. Moreover, we
do not think the record supports NASA's suggestion that its DPA approved
this method of acquisition since the DPA specifically requires NASA to
comply with the FIRMR, presumably including the requirement to achieve
the lowest overall cost, and fails to provide any specific approval for
NASA's method of evaluation which might be construed as a waiver of this
requirement. In these circumstances, it is our judgment that NASA's
inclusion of only the ownership alternative in the RFTP was improper.
The protest is sustained in part. By separate letter we are advising
the Administrator of NASA to cancel the current procurement and reissue
the solicitation allowing for the submission of offers on alternate
bases.
B-220848.2, 65 Comp. Gen. 377
Matter of: General Electric Company, March 6, 1986
Bids - Responsiveness - Pricing Response Nonresponsive to IFB
Requirements - Failure to Bid Firm, Fixed Price
Where an IFB contemplated the award of a firm, fixed-price
requirements contract, a bid accompanied by a cover letter in which the
bidder stated that its prices were subject to renegotiation if there
were any change in the estimated quantities provided in the IFB was
properly rejected as nonresponsive because the statement could
reasonably be interpreted as indicating the bidder's intent to offer
other than a firm, fixed price.
General Electric Company (GE) protests the award of a contract to
another firm under invitation for bids (IFB) No. N68520-85-B-9130,
issued by the Department of the Navy. The procurement is for the
overhaul and update of the Linkless Ammunition Loading System (LALS)
used on military aircraft. GE complains that the Navy improperly
rejected its apparent low bid as nonresponsive. We deny the protest.
Background
The IFB contemplated the award of a firm, fixed-price requirements
contract for a 1-year base period with four 1-year options.
Accordingly, line item quantities were stated in the IFB as estimates.
The IFB provided that the award would be made to the responsive,
responsible bidder bidding the lowest total extended price and further
provided that bidders were required to submit prices for all line items
in order to be considered for award.
Although GE's bid was apparently low, the Navy rejected the bid as
nonresponsive because it was accompanied by a cover letter in which GE
had placed several conditions on its bid. At principal issue in this
case, the cover letter, in part, stated that "Our price is for the
quantity quoted. Any change in quantities is subject to renegotiation."
The Navy concluded that this language qualified GE's bid and thus
prevented the award of a firm, fixed-price requirements contract as
contemplated by the IFB.
GE argues that the quoted language only served to notify the Navy
that GE was bidding on an "all or none" basis, that is, that it would
only accept an award for the quantities stated in the IFB. GE contends
that both the Federal Acquisition Regulation (FAR) and prior decisions
of this Office generally allow for the submission of bids on an "all or
none basis" and, therefore, that such a qualification did not render its
bid nonresponsive.
Analysis
In order to be deemed responsive, a bid must unequivocally offer to
provide the requested items and meet the material specifications at a
firm, fixed price. Turbine Engine Services - Request for
Reconsideration, 64 Comp. Gen. 639 (1985), 85-1 CPD Paragraph 721.
Thus, a bid that limits the firm's contractual obligations or does not
offer to perform at a firm, fixed price must be rejected. Epcon
Industrial Systems, Inc., B-216725, Dec. 27, 1984, 85-1 CPD Paragraph 2.
Any extraneous documents submitted with the bid, including a cover
letter, must be considered a part of the bid for purposes of determining
the bid's responsiveness. Free-Flow Packaging Corp., B-204482, Feb. 23,
1982, 82-1 CPD Paragraph 162.
In the present matter, we believe that the quoted language in GE's
cover letter can reasonably be interpreted to qualify the firm's bid
because it indicated that GE's offered unit prices were subject to
change if the Navy ordered quantities different from those estimates
provided in the IFB. Where a bidder qualifies its bid for a firm,
fixed-price contract by providing for price adjustments if certain
circumstances occur, the bid is nonresponsive since the bidder has not
offered a firm, fixed price. Computer Terminal Sales, B-200366, Jan.
22, 1981, 81-1 CPD Paragraph 37. Moreover, the quantities stated in the
IFB were only estimates and, therefore, since GE's unit prices were not
firm but rather variable to the extent the quantities should change, the
Navy had no clear way of determining that GE's total extended bid price
was in fact low. It is a fundamental rule of sealed bidding that a
bidder's total bid price must be evident from all the bid documents
submitted at the time of bid opening. Epcon Industrial Systems, Inc.,
B-216725, supra.
Contrary to GE's assertion, we do not regard the language in the
cover letter as indicating a permissible "all or none" bid
qualification. In this regard, where a solicitation permits multiple
awards and does not expressly prohibit "all or none" or similarly
restricted bids, a bidder may properly condition award on receipt of all
or a specified group of items. Walsky Construction Co., B-216737, Jan.
29, 1985, 85-1 CPD Paragraph 117; see also FAR, Section 14.404-5 (FAC
84-5, Apr. 1, 1985). This is reflected in FAR, Section 52.214-10(c)
(FAC 84-5, Apr. 1, 1985), as incorporated into the subject IFB, which
expressly states that:
* * * The Government may accept any item or group of items of a
bid, unless the bidder qualifies the bid by specific limitations.
Unless otherwise provided in the Schedule, bids may be submitted
for quantities less than those specified. The Government reserves
the right to make an award on any item for a quantity less than
the quantity offered, at the unit prices offered, unless the
bidder specifies otherwise in the bid.
However, despite the fact that GE's cover letter referenced this
clause directly preceding the qualifying language at issue here, we do
not accept the firm's argument that this clearly meant that GE was
submitting an "all or none" bid. We point out that the IFB did not
provide for multiple awards, but rather stated in section M-2,
"EVALUATION FACTORS," that "Only one contract will be awarded based on
(the total extended price)." Therefore, we fail to see how the language
in question was meant to refer to the submission of an "all or none" bid
when the IFB in fact provided that only one award would be made for all
of the contract line items.
GE relies upon our decision in General Fire Extinguisher Corp., 54
Comp. Gen. 416 (1974), 74-2 CPD Paragraph 278, to support its argument
that the qualifying language in its cover letter only represented a
permissible "all or none" condition. In that case, a bidder stated in
its bid that "If award is to be made for any lesser quantity, we reserve
the right to quote a revised unit price." We concluded that the
statement was properly to be construed as an "all or none" bid which
reserved the bidder's right to revise its unit prices in the event the
award were made for any quantity less than the stated 11,116 units. GE
believes that the qualifying languaage in its cover letter is equivalent
to that in General Fire Extinguisher and, therefore, that case is
controlling here.
The present factual situation is clearly distinguishable because the
IFB here provided for the award of a requirements contract, where the
agency does not know beforehand exactly what quantities it will
eventually order and solicits bids on the basis of estimated quantities
(which simply must be reasonably accurate representations of anticipated
actual needs). See Richard M. Walsh Associates, Inc., B-216730, May 31,
1985, 85-1 CPD Paragraph 621. Unlike the situation in General Fire
Extinguisher, where there was a definite total quantity of items, the
Navy here could ultimately order lesser quantities than originally
estimated in the IFB. Thus, it is inconsistent with the nature of a
requirements contract for a bidder under an IFB contemplating the award
of such a contract to submit an "all or none" bid and, thus, reserve the
right to revise its unit prices if the award is made for any quantity
less than that estimated, because the government simply has made no
representation that the estimated quantity will be required or ordered.
See FAR, Section 16.503(a)(1).
Furthermore, even if GE actually intended the qualifying language to
notify the Navy that its bid was submitted on an "all or none" basis, we
believe it only served, at best, to render the bid ambiguous. If a bid
is subject to more than one reasonable interpretation, it is ambiguous
and must be rejected as nonresponsive under the rules applicable to
sealed bid procurements. Sabreliner Corp., 64 Comp. Gen. 305, (1985),
85-1 CPD Paragraph 280. Thus, since the Navy could reasonably interpret
the language in the cover letter as indicating that GE's offered unit
prices were not firm but subject to change if the Navy did not order the
estimated quantities provided in the IFB, the bid was properly rejected.
The protest is denied.
B-220871, 65 Comp. Gen. 373
Matter of: Towmotor Corporation, March 4, 1986
Contracts - Small Business Concerns - Awards - Self-Certification -
Indication of Error - Contracting Officer's Duty to Investigate, etc.
Where, before award, information comes to the attention of the
Contracting officer which is inconsistent with the small business
certification of a bidder that would be low if given the benefit of the
12 percent Buy American Act differential applicable to small businesses,
the contracting officer should determine if the bidder's
self-certification is correct.
Towmotor Corporation, a subsidiary of Caterpillar Tractor Company,
protests the award of a contract for a forklift truck to Medley Material
Handling, Inc. under invitation for bids (IFB) No. 15-PI-3708.
UNICOR/Federal Prison Industries, Inc., Federal Correctional
Institution, El Reno, Oklahoma, issued the solicitation on August 12,
1985. Towmotor protests that the forklift offered by Medley does not
qualify as a domestic end product as defined by the Buy American Act, 41
U.S.C. Sections 10a-10d (1982). Therefore, according to Towmotor,
UNICOR improperly added a differential to its own low bid for a forklift
manufactured in Korea, rather than evaluating the bids on an equal
basis. Alternatively, the protester contends that, even if Medley's
forklift qualifies as a domestic end product, Towmotor's bid remains low
if the Buy American Act differential is properly applied.
We sustain the protest.
UNICOR sought bids on an f.o.b. destination basis for a forklift
having a 6,000 pound capacity. The specifications required that it be
propane propelled, with automatic or hydrostatic transmission, power
steering, and various other features; however, bidders were not
required to identify the make or model of the forklift offered.
Of 10 bids submitted, Towmotor's was low at $13,800, and Medley's was
second-low at $14,659. In evaluating Towmotor's bid, UNICOR added 12
percent ($1,656) as a Buy American Act differential and 1.1 percent
($151.80) for import duty, resulting in an evaluated price of $15,607.80
and making Medley the low bidder. UNICOR awarded a contract to Medley
on September 18, 1985, an action that Towmotor protested to the agency
and then to our Office. Performance has been stayed pending our
decision.
UNICOR contends that we should dismiss Towmotor's protest as untimely
because it was filed 18 days after the date of a letter denying
Towmotor's agency-level protest. Towmotor, however, states that it
received the agency's letter of October 4, 1985, on October 8. Its
subsequent protest, filed with our Office on October 22, is therefore
timely under our Bid Protest Regulations, which require that where a
protest has been filed initially with the contracting agency, a
subsequent protest to our Office must be filed within 10 working days of
formal notification of or actual or constructive knowledge of initial
adverse agency action. See 4 C.F.R. Section 21.2(a)(3) (1985).
The Buy American Act establishes a preference for products mined,
produced, or manufactured in the United States to offset partially the
competitive advantages that may be enjoyed by foreign competitors. See
Dawson Construction Co., Inc., B-214070, Feb. 8, 1984, 84-1 CPD
Paragraph 160. This preference is implemented by the addition of a
differential to the price bid for a foreign product. See Autoclave
Engineers, Inc., B-217212, Dec. 14, 1984, 84-2 CPD Paragraph 668.
Applicable regulations provide that 6 percent is to be added to the low
acceptable foreign offer, inclusive of duty, if the low domestic offeror
is a large business. However, the differential increases to 12 percent
if the low domestic offeror is a small business concern. Federal
Acquisition Regulation (FAR), 48 C.F.R. Section 25.105(a) (1984). A
nonmanufacturer is considered small, and therefore eligible for
application of the 12 percent differential, only if it offers to furnish
the domestic product of a small business manufacturer. FAR, 48 C.F.R.
Section 19.102-3(b); see also ASC Associates, B-199706, Feb. 5, 1981,
81-1 CPD Paragraph 67.
In section K of its bid, Medley certified, in accord with the
standard clause set forth in the FAR, 48 C.F.R. Section 52.225, that it
would provide a domestic end product. The clause requires bidders to
list any non-domestic end products to be furnished; Medley listed none.
Medley also represented in its bid (for purposes of the Walsh-Healey
Public Contracts Act) that it was not a manufacturer. In accord with
the standard clause set forth in the FAR, 48 C.F.R. Section 52.219-1,
Medley certified that it was a small business and would furnish a
product manufactured or produced by a small business concern in the
United States.
Domestic End Product
Towmotor first argues that the forklift offered by Medley is not a
domestic end product as defined by the Buy American Act, and therefore
is not entitled to the evaluation preference that UNICOR implemented by
adding a differential to Towmotor's bid. Towmotor states that Medley is
a distributor for and will be supplying a forklift manufactured by Yale
Materials Handling Corporation. Towmotor has submitted documents
purporting to show that in late 1983 the Eaton Corporation, of which
Yale was a subsidiary, and a Japanese firm entered into a joint venture
and agreed to produce all Yale forklifts up to 7.5 tons in Japan.
Following Towmotor's agency-level protest, UNICOR sought verification
of this certification and obtained from Medley a statement that only the
chassis of the Yale forklift, which represents 41.6 percent of the
product's total value, is manufactured in Japan. The remainder of the
forklift components, Medley stated, are manufactured and assembled in
the United States.
Towmotor contests this statement and asserts that the chassis of its
own forklift represents approximately 80 percent of the total cost of
the product. Further, Towmotor argues, the mere domestic installation
of the carriage, mast, and forks does not meet the criteria for
manufacture in the United States.
Where, as here, a bidder does not exclude any end products from its
Buy American Act certification in its bid and does not otherwise
indicate that it is not offering domestic end products, the government's
acceptance of the bid results in a contractual obligation to furnish
domestic end products. The bidder's compliance with that obligation is
a matter of contract administration that has no effect on the validity
of the award. See Autoclave Engineers, Inc., supra; Hybrid Technology
Group, Inc., B-215168, Oct. 3, 1984, 84-2 CPD Paragraph 385. Although
an agency should not automatically rely on the certification where it
has reason to question whether a domestic product will be furnished, see
Designware, Inc., B-221423, Feb. 20, 1986, 86-1 CPD Paragraph 181, there
is no indication in the record before us that the contracting officer
had any basis to question the certification here.
Import Duty and Small Business Status
The protester alternatively contends that UNICOR should not have
added any import duty to its bid, since it was already included in
Towmotor's price. Towmotor also argues that Yale, the manufacturer of
the forklift offered by Medley, is obviously a large business, and that
therefore, even if Medley's forklift is domestic, UNICOR should have
applied only a 6 percent ($828) differential to Towmotor's bid. If
evaluated in this manner, Towmotor's bid would have been $14,628,
compared with Medley's $14,659.
We agree with Towmotor that UNICOR improperly added 1.1 percent to
its bid to account for import duty. By requesting bids on an f.o.b.
destination basis and by incorporating the standard FAR clause covering
federal, state, and local taxes, 48 C.F.R. Section 52.229-3, /1/ UNICOR
required bidders to include this cost in their respective bid. Thus,
there was no need for UNICOR to add import duty to Towmotor's bid.
With respect to Medley's certification regarding Yale's small
business status, we have long recognized that contracting officials are
obligated to question a firm's certification that it is a small business
concern when information inconsistent with that certification comes to
their attention before award. Foam-Flex Inc., 62 Comp. Gen. 300 (1983),
83-1 CPD Paragraph 383; Keco Industries Inc., 56 Comp. Gen. 878 (1977),
77-2 CPD Paragraph 98; see FAR, 48 C.F.R. Section 19.301(b). While
these cases have concerned certifications for purposes of establishing
eligibility for small business set-aside contracts, we believe that the
same standard should apply to certifications of small business status in
connection with Buy American Act differentials. Cf. Designware, Inc.,
supra.
As noted above, the solicitation did not require bidders to identify
the manufacturer of the offered forklift. However, the contracting
officer clearly knew that Medley intended to supply a Yale forklift. On
the abstract of bids, UNICOR listed the make and model of the equipment
offered by each bidder and categorized each bid as either foreign or
domestic. Apparently, UNICOR obtained this information before award for
purposes of determining the bidders' responsibility. On the abstract,
Medley is shown as offering a "Yale GLC060R (Domestic)." The
manufacturer, Yale Materials Handling Corporation, is also listed as a
bidder offering the same model forklift.
Moody's Industrial Manual (1985) reports that in 1984 Eaton
Corporation, formerly named Eaton Yale & Towne Inc. and then majority
owner of Yale Materials Handling Corporation, had sales exceeding $3.5
billion and had 42,709 employees on December 31, 1984. The small
business size standard for manufacturers of industrial trucks is 750
employees. FAR, 48 C.F.R. Section 19.102-2. While the procurement
record does not establish that UNICOR had actual knowledge of the size
of Yale, contracting officials have a wide latitude to exercise business
judgment in performing their duties, see FAR, 48 C.F.R. Section 1.602-2,
and should be expected to have basic knowledge about the products they
procure. In this case, the number of manufacturers of forklift trucks
is relatively limited and, at least in 1984, Yale was a subsidiary of
one of the largest domestic corporations.
We believe that, based upon the information obtained regarding the
manufacturer of the forklift to be supplied by Medley, and the fact that
Towmotor's bid would be low if Yale is not a small business concern,
UNICOR had a duty to question Medley's certification. While we find
that UNICOR failed to meet its obligation to determine if Medley's
certification is correct, and sustain the protest for that reason, we do
not recommend that the contract be terminated and reawarded to Towmotor
without further inquiry. Eaton Corporation advises us that on March 11,
1985, it sold its 59 percent interest in Yale to the North American Coal
Corporation of Cleveland, Ohio. North American in turn advises us that
it now controls 84.6 percent of Yale's stock. Consequently, by letter
of today to the Controller, Federal Prison Industries, Department of
Justice, we are recommending that UNICOR determine whether Yale is
currently a small business concern for the manufacture of forklifts. If
it determines that Yale is not a small business, the Medley contract
should be terminated and reawarded to Towmotor.
The protest is sustained.
FOOTNOTES
(1) The clause provides in pertinent part that the fixed contract
price includes all applicable federal, state, and local taxes and
duties.
B-220172, 65 Comp. Gen. 371
Matter of: Buffalo District, Corps of Engineers - Travel Vouchers -
Compromise of Claim, March 4, 1986
Fraud - False Claims - Referral to Justice - Travel Expenses
Three employees were determined to have filed false travel vouchers
and were criminally prosecuted. The Department of Justice entered into
a compromise plea agreement with each defendant, which permitted them to
enter a guilty plea to a misdemeanor, and in turn they would make
restitution of the fraudulent amounts. In response to the question
concerning disposition of additional amounts withheld from the employees
for those days tainted by fraud, the agency is advised that only the
Department of Justice is authorized to compromise fraud claims and since
it has done so in this case, monies administratively retained are to be
repaid the defendants, without personal pecuniary liability attaching to
the finance and accounting officer by virtue of such payment. 31 U.S.C.
3711(d) (1982).
This decision is in response to a request from an Authorized
Certifying Officer, Army Corps of Engineers, Buffalo District. The
matter involves the personal pecuniary liability of an accountable
officer, in the circumstances described in the submission, in connection
with travel vouchers which were later found to be fraudulent.
BACKGROUND
As a result of an investigation of travel voucher fraud conducted by
the Army Corps of Engineers, several cases involving civilian employees
of its Buffalo District were referred to the Department of Justice for
criminal prosecution. Three of the cases which were accepted for
prosecution involved Mr. Andrew G. Augugliaro, Mr. Michael J. Gruber,
and Mr. James J. Stephens.
Subsequent to the Department of Justice referral, the Buffalo
District began to retain unrelated travel reimbursements funds due the
employees for their then current travel. These funds were placed in
separate accounts, one for Michael J. Gruber and one for James J.
Stephens. No such account was established for Andrew G. Augugliaro
since there were no agency funds otherwise due him. The amounts
currently in the accounts for Gruber and Stephens total $1,671, and
$1,818, respectively.
On February 6, 1985, the U.S. Attorney was informed by the agency as
to the amounts owed as a result of the fraud. For this purpose, the
calculation was divided into two parts for each employee, the fraud
amount and the amount which, but for the fraud, would have been properly
paid, but which was deemed to be forfeited for each day the expenses
claimed where tainted by the fraud. See 59 Comp. Gen. 99 (1979).
On April 22, 1985, the Assistant U.S. Attorney handling these cases
entered into plea agreements with Messrs. Augugliaro, Gruber and
Stephens. These agreements provided that as an inducement to be
permitted to enter a plea of guilty to a single count of violating 18
U.S.C. Section 641 (1982), a misdemeanor, in lieu of more serious felony
charges which could have been brought, each defendant agreed to repay
the amount obtained by fraud (Augugliaro -- $6,702.13; Gruber --
$3,784.69; and Stephens -- $2,892.22). Additionally, each of them
specifically acknowledged and admitted that "he wrongfully, willfully,
knowingly and fraudulently submitted phony travel vouchers to the United
States Government" to obtain these monies. We understand that the full
amounts agreed to were paid through the U.S. Attorney's office to the
Corps of Engineers.
By letter dated April 30, 1985, from the U.S. Attorney's office to
the Corps of Engineers, Buffalo District, which transmitted copies of
these plea agreements, the District was advised that the monies held in
the retained accounts for Messrs. Gruber and Stephens were to be
refunded to them. That letter further stated that if the money was not
refunded, the U.S. Attorney's office would not be able to defend the
Corps of Engineers in the event of a lawsuit on the issue.
Based on the above, the following questions are asked:
1. Is the Finance and Accounting Officer precluded from taking
administrative action to collect additional amounts from the three
defendants, based on the Plea Agreements?
2. May the Finance and Accounting Officer refund the monies retained
without suffering personal pecuniary liability as a result of paying
such money?
The answer to both questions is yes.
Section 3711 of Title 31, United States Code, provides in subsection
(a) that the head of an executive agency "may compromise a claim of the
Government of not more than $20,000," and in subsection (d) that "(a)
compromise under this section is final and conclusive unless gotten by
fraud, misrepresentation, presenting a false claim, or mutual mistake of
fact."
The Federal Claims Collection Standards implementing the above Code
provisions are contained in chapter II of Title 4, Code of Federal
Regulations (1985). Section 101.3(a) thereof provides that the
Department of Justice has exclusive authority to compromise, suspend, or
terminate collection action on claims involving fraud.
It is noted in the present case that the U.S. Attorney's office was
given a detailed accounting by the agency's finance and accounting
office of the amounts found due. That accounting included a listing of
all monies obtained by fraud as well as that which was deemed to be
appropriately forfeited since it represented other travel expense
payments for days for which a fraudulent claim was made.
Notwithstanding that, the U.S. Attorney's office chose not to attempt to
recover those other amounts, limiting recovery to the specific amount
fraudulently obtained in exchange for a guilty plea to a lesser charge,
presumably, at least in part, to avoid a lengthy and costly trial. In
fact, the Department of Justice has recommended that the additional
amounts withheld be refunded.
While the compromise in question involved an admixture of criminal
charges and restitution, it is our view that it was an appropriate
method of disposing of the matter, since it did establish an appropriate
quid pro quo. Further, it is our view that since payment has been made
under the compromise, that action has terminated all claims of the
government against the individuals arising out of the admitted fraud
during the period in question.
Since the amount recovered under the agreement is representative of
all sums due, then such sums administratively retained from Messrs.
Gruber and Stephens are to be repaid to them. Further, an accountable
officer is not liable for an amount paid if the amount is not recovered
because of a compromise. Therefore, personal pecuniary liability will
not attach to the finance and accounting officer by virtue of such
repayment. See 31 U.S.C. Section 3711(d) (1982).
B-221421, 65 Comp. Gen. 366
To: The Honorable John D. Dingell, Chairman, Subcommittee on
Oversight and Investigations, Committee on Energy and Commerce, House of
Representatives, Feb. 28, 1986
Environmental Protection and Improvement - Clean Air Act -
Environmental Protection Agency Authority - State Implementation Plans -
Revisions - Failure to Revise
General Accounting Office (GAO) disagrees with Environmental
Protection Agency (EPA) tentative legal conclusion that the highway fund
sanction in Part D of the Clean Air Act (42 U.S.C. 7506(a)) can be
invoked to penalize either (1) nonattainment areas that refuse to comply
with EPA's call for additional SIP revisions requested per 42 U.S.C.
7410(a)(2)(H) and EPA's Nov. 1983 policy statement; or 2) areas with
approved July 1, 1982, SIP revisions (42 U.S.C. 7502(a)(2) and (b)(11)
that revoke statutorily required elements of those SIP revisions. The
Highway fund sanction applies only when EPA finds that the Governor of a
nonattainment state has not submitted or at least is not making
reasonable efforts to submit a Part D SIP revision containing
transportation controls. B-208593, Dec. 30, 1982, Apr. 21, 1983, and
Jan. 7, 1986, affirmed.
Your letter of December 2, 1985, requested our views on the
Environmental Protection Agency's (EPA) tentative legal conclusions
supporting liberal use of the highway funding sanction in section 176 of
the Clean Air Act to promote cooperation with EPA's post Part D
enforcement efforts. Our view is that, at this time, use of the
sanction is confined to continuing major deficiencies in the July 1,
1982, extension state Implementation Plan (SIP) revisions.
BACKGROUND
When Congress amended the Clean Air Act in 1977, it backed up
extended attainment deadlines with explicit requirements to revise SIPs
and new sanctions for failure to comply with the Act's requirements.
Pub. L. No. 95-95, 91 Stat. 685, 746-51 (adding new Sections 171-78 to
the Act of July 14, 1955, ch. 360, 69 Stat. 322). Sections 171-78
(codified at 42 U.S.C. Sections 7501-08) are also known as Part D of the
Act.
Specifically, the 1977 Amendments required preparation of additional
SIP revisions as a condition of extending attainment dates for the
national primary ambient air quality standards (NAAQSs) until December
31, 1982. In the case of carbon monoxide and ozone an extra extension
to December 31, 1987, was allowed if a state showed earlier attainment
was not possible and it submitted an additional SIP revision. Due July
1, 1982, this additional SIP revision was required by law to contain (1)
an analysis of alternatives to construction at major emitting
facilities; (2) a specific schedule for implementing a vehicle
inspection and maintenance program; and (3) "other measures" needed for
attainment by December 31, 1987. Moreover, the above requirements of
the July 1, 1982, SIP revisions were to be adopted in the form of
"enforceable measures." Section 172, 42 U.S.C. Section 7502 (1982).
In addition to introducing stiff new planning requirements, Part D
also added new penalties intended to promote planning, implementation
and ultimate attainment. Of particular concern to EPA at present is
section 176(a), the highway fund sanction. This section reads as
follows:
The Administrator shall not approve any projects or award any
grants authorized by this chapter and the Secretary of
Transportation shall not approve any projects or award any grants
under title 23, other than for safety, mass transit, or
transportation improvement projects related to air quality
improvement or maintenance, in any air quality control region --
(1) in which any national primary ambient air quality standard
has not been attained,
(2) where transportation control measures are necessary for the
attainment of such standard, and
(3) where the Administrator finds after July 1, 1979, that the
Governor has not submitted an implementation plan which considers
each of the elements required by section 7502 of this title or
that reasonable efforts toward submitting such an implementation
plan are not being made (or, after July 1, 1982, in the case of an
implementation plan revision required under section 7502 of this
title to be submitted before July 1, 1982). 42 U.S.C. Section
7506(a).
This penalty is probably the most potent sanction in the Act. For
this reason it is a very useful tool to motivate the full performance of
the Act's requirements. However, as discussed in detail below, it is
strictly limited in its application.
GAO has already issued opinions concerning the requirements of the
extension SIPs, due July 1, 1982, on the appropriate use of penalties
contained in the Act, and on EPA's enforcement posture. (B-208593, Dec.
30, 1982; Apr. 21, 1983; and Jan. 7, 1986.) We stand by the analysis
in these opinions. They are pertinent to the questions at hand.
EPA MEMORANDUM
The draft memorandum you asked us to review takes the position that
the highway fund sanction is currently available to induce compliance
with the additional round of SIP revisions EPA requested in lieu of
enforcing sanctions against nonattainment areas after December 31, 1982,
and also that the sanction can be used to punish states that revoke a
part of their July 1, 1982 SIP revisions after EPA approved them. The
memorandum makes three arguments in favor of its conclusions, which we
will comment on in turn.
(1) Using the sanction is not inconsistent with EPA's current policy
The memorandum recognizes a possible conflict between the EPA
November 1983 statement which announced EPA's policy to forego
application of sanctions and a decision to invoke the highway fund
penalty for failure to cooperate in submitting a post Part D SIP
revision. However, it dismisses the conflict as minor and/or curable.
We disagree generally with the November 1983 policy (B-208593, Jan.
7, 1986), but when EPA found that the highway fund sanction was
inappropriate to enforce the post Part D SIP revisions, it made the
right decision. 48 Fed. Reg. 50691. The policy statement identified
the SIP revisions being called for as revisions under section
110(a)(2)(H) of the statute. In that case, section 110(c)(10)(C)
dictates the proper agency response to a failure to comply with a
requested SIP revision. The statute prescribes prompt Federal issuance
of regulations promulgating the SIP material the state has failed to
revise on its own as requested.
Moreover, section 176(a) itself specifies the circumstances in which
it is to be used. The sanction is triggered by the Administrator's
finding that the state has not submitted a SIP revision that considers
all the elements of section 172. It follows from this language that the
sanction only applies to Part D SIP revisions, not to revisions under
section 110. It is true as the memorandum suggests, that the highway
fund sanction was only a secondary consideration in the November 1983
policy and also that the agency can change that policy if it wishes, but
the statute seems to contradict such action.
(2) Extra SIP revisions are under Part D
The memorandum explains that because section 110(a)(2)(H) allowed the
Administrator to request SIP revisions for the purpose of compliance
with requirements of the 1977 Amendments to the Clean Air Act (which
Amendments added Part D), the post Part D SIP revisions are actually
revisions "under Part D." It goes on to conclude that the highway fund
penalty is available to promote all Part D planning, including the post
Part D SIP revisions.
We do not agree with that analysis for two reasons. First, the
Administrator did not call for SIP revisions to comply with the 1977
Amendments. Rather. the reason stated in the November 1983 policy was
that existing plans were "substantially inadequate to achieve
attainment." Secondly, we note that the post Part D SIP revisions were
only available to promote the section 172(a)(1) and (2) SIP revisions
which are referenced both by section number and by due date. We do not
think the penalty applies to any other SIP revisions, even if they are
revisions "under Part D."
The memorandum argues that Part D created a "renewable planning
obligation," and therefore, the post Part D SIP revisions relate back to
the original section 172 submission, and fall under the highway fund
penalty in that way. Whatever renewable obligations Part D imposes,
section 176(a) is triggered only by the failure to submit a complete
plan on the proper dates, and submission is clearly a one-time, not a
"renewable" event.
(3) Congress would have allowed the highway fund sanction to be used
The memorandum argues that Congress did not anticipate continued
nonattainment or the necessity to call for more SIP revisions. If it
had, it would have allowed the highway fund penalty to be used to
sanction noncooperation with a call for post Part D SIP revisions under
section 110(a)(2)(H).
Several of our past opinions to you on this matter have stated our
view that the post-deadline action required by the Act is enforcement of
the construction ban in section 110(a)(2)(I). Since the Act
specifically provides a post-deadline response to nonattainment, we do
not agree that the Congress would have done something else if it had
anticipated the need to apply sanctions for failure to submit adequate
post Part D SIP revisions.
EPA is also considering using the highway fund sanction against
regions that submitted Part D SIP revisions, but revoked some part of
the SIP after EPA approved it. Unpopular inspection and maintenance
(I&M) programs that had required state legislative action to create
would be prime targets for repeal or indefinite postponement.
In B-208593, Dec. 30, 1982, we said that enforcable vehicle I&M was a
statutory requirement of the July 1, 1982, SIP revisions. A state
legislature's repeal of vehicle I&M authority therefore could not form
the basis for a SIP revision, because a state may not revoke statutory
elements of its SIP. (Section 110(a)(3)(A). Such a case is obviously
an implementation failure, not a SIP revision or approval problem. Part
D contains a specific penalty for nonimplementation; cut-off of all
Clean Air grants.
Section 176(b) provides for the halting of all Clean Air Act grants
as a penalty for nonimplementation of a SIP. But because these funds
arguably have a less immediate and less visible impact on the public,
their cut off may be perceived as a less serious threat than is the
highway funds sanction for failure to submit a plan. As a matter of
policy, we think nonimplementation is just as serious as nonsubmission.
Nonetheless, Congress specified different penalties for the two types of
failures and EPA must abide by the statutory plan.
Furthermore, the legislative history of the 1977 Amendments makes it
clear that the highway funds sanction was not to be used to penalize
nonimplementation. Senator Gravel, who authored the sanction, confirmed
this interpretation of his amendment in a colloquy with Senator Stevens:
Mr. STEVENS. (I)f you have an implementation plan, whether you
implement it or not, there will be no loss of highway funds.
Mr. GRAVEL. That is right. * * * " 123 Cong. Rec. 18476
(1977).
We discussed the meaning of EPA approval of Part D SIP revisions as
related to section 176(a) in B-208593, Apr. 21, 1983. Addressing the
question of whether EPA approval of a Part D SIP would constitute an
estoppel against the imposition of the highway funding sanction in the
future, we said:
* * * As we indicated in our December 30, 1982, letter
(B-208593), EPA approval may not mean that the SIP revision
absolutely complies with all the statutory requirements, including
transportation controls. Moreover, if challenged, the
Administrator's approval of SIPs is subject to judicial review.
Act, section 307; see Connecticut Fund for the Environment v.
EPA, 612 F.2d 998 (2d Cir. 1982). Therefore, EPA approval does
not absolutely guarantee immunity from highway fund restrictions.
We are satisfied, however, that EPA approval or conditional
approval must mean at least that the Administrator has determined
that reasonable efforts were made to submit an acceptable SIP
revision. Thus, EPA approval or conditional approval would,
absent either a finding of changed circumstances (where EPA
approval was based not on an actual submission but on reasonable
efforts to submit which were subsequently abandoned) or subsequent
judicial action, preclude the later application of this sanction.
Moreover, we note that the minimum requirement to stay the sanction
is reasonable effort to submit an approvable Part D SIP revision.
Approval itself has never been required to stay the sanction.
PROPER USE OF THE HIGHWAY FUND SANCTION
Having ruled out use of the highway fund sanction to induce states to
submit post Part D SIP revisions and for punishment of states that
revoke parts of their Part D SIPs, the question arises whether there is
any remaining use for this sanction. A finding of no reasonable efforts
to submit could still trigger the sanction if it followed either a
disapproved initial submission or nonsubmission. However, the passage
of time and the approaching expiration of even the extended attainment
deadline makes it less and less likely that the sanction can be used in
a way that helps achieve healthful air.
CONCLUSION
In our view, EPA's proposal to invoke the highway fund sanction to
promote cooperation with its post Part D SIP revisions and to penalize
nonimplementation is not authorized by the statute. EPA should instead
use the construction moratorium, Federal promulgation of SIPs, and
section 176(b) Clean Air grants sanctions to achieve the goal of
expeditious post-deadline attainment. If in EPA's judgment these
methods are too economically or administratively burdensome, it should
seek either legislative relief from enforcement responsibility or new
statutory penalties as warranted.
We hope the foregoing is helpful to you. Under our usual agreement,
this opinion will be available to the public 30 days from its date,
unless you release it sooner.
B-220113, 65 Comp. Gen. 360
To: The Honorable Roy Dyson, House of Representatives, Feb. 28, 1986
Appropriations - Defense Department - Research and Development Projects
- Merger of Accounts
Air Force awarded contract for prototype strategic weapons loaders
(munitions lift trailers) to Pacific Car and Foundry Company, despite
House Armed Services Committee denial of reprogramming within RDT&E
appropriation account from another program element to the
Armament/Ordnance program element. Instead, funding was obtained from
other projects with the Armament Ordnance program element. DOD
reprogramming procedures were not violated since neither DOD Directive
7250.5, nor DOD Instruction 7250.10 cover this type of transaction.
Appropriations - Defense Department - Research and Development Projects
- Merger of Accounts
Air Force awarded contract for prototype strategic weapons loaders
(munitions lift trailers) to Pacific Car and Foundry Company.
Conference Committee on DOD Authorization Act, 1986, Pub. L. No. 99-145,
deleted provision in Senate bill which specifically authorized use of
prior year funds for this purpose. The Act made no reference to the
contract. Failure to specifically authorize funds did not constitute
denial of funding which might otherwise be available.
In a letter dated August 22, 1985, you were joined by Representative
Helen Delich Bentley and Representative Marjorie S. Holt in requesting
that this Office investigate the Department of the Air Force's award of
a $3.8 million contract to Pacific Car and Foundry (PACCAR) on August
16, 1985. The contract is for the design, fabrication, and testing of
three prototype strategic weapons loaders (SWL), also called munitions
lift trailers (MLT), to support B-1B aircraft.
You indicate that the Air Force reprogrammed funds for this project
in direct defiance of the Congress' repeated refusal to authorize such a
reprogramming. You refer to the Joint Senate-House Conference Committee
on the 1986 Defense Authorization bill which you say expressly denied
the Air Force permission to proceed with the new SWL development. In
view of the foregoing, you are of the opinion that the Air Force ignored
the intent of the Congress and violated the mutual trust which is vital
to the passage of defense-related legislation. Also, you view the Air
Force's contract award as raising serious constitutional questions
regarding the separation of powers between the Congress and the
Executive branches of the Federal Government.
In addition to investigating this matter, you asked that we request
the Secretary of Defense to cease all activity relating to the
development and production of a new lift trailer.
For the reasons stated below, we do not agree that the Air Force's
award of a contract to PACCAR for the development, design, and testing
of prototype strategic weapons loaders violated any appropriation act or
other law or the Department of Defense reprogramming procedures.
Although the Air Force's actions were certainly not consistent with the
wishes of the House Committee on Armed Services, the Committee's views
were never enacted into law. Moreover, the Air Force did not reprogram
in order to fund the contract. Instead, it used funds available within
the same program element. Absent an unauthorized expenditure, we see no
indication of any violation of the separation of powers between the
Congress and the Department of the Air Force.
The Air Force entered into a contract with PACCAR on August 16, 1985.
The company's duties include the design of a strategic weapons loader
and the fabrication and testing of three prototype units. The total
amount to be paid to PACCAR is $3,826,138.04. The contract provides
that $1,300,000 is presently available for payment and allotted to the
contract. It further states that it is anticipated that from time to
time additional funds will be allotted to the contract until the total
price allotted.
On August 28, 1985, we wrote to the Secretary of the Air Force,
explaining that we had a congressional request for a legal opinion on
the propriety of the contract award to PACCAR and noting that the
requestor asked that he halt all research, development, and testing
under the contract until our opinion was rendered. Also, in accordance
with our usual practice, we requested the Air Force's views on the
contract award. In reply, we received a letter dated September 30,
1985, from the cognizant Assistant General Counsel of the Air Force. He
indicated that performance of the recently awarded contract would
continue. The Air Force letter explained that the contract was funded
by reprioritization with the Armament/Ordinance program element and not
by reprogramming funds from the Air Launched Cruise Missile program
element, which had been objected to by the House Committee on Armed
Services.
We have provided a chronological summary of the key congressional
elements pertaining to this request as an appendix to this letter.
Discussion
At least since 1983, the issue of which model is the best loader for
the newest strategic bombers has been before both houses of the
Congress. The FY 1985 and 1986 Air Force budget submissions referred to
the development of a "simplified" loader. In brief, the Senate
Committee on Armed Services generally has favored a new loader while the
House Committee on Armed Services has supported the use of the modified
MHU-173 lift trailer. The House Committee believed that development of
a new trailer was unwarranted and not cost effective. After the Senate
Committee requested the Air Force to explain its plans for the
sole-source acquisition of a modified MHU-173, the Air Force undertook a
competition for a new simplified loader. Despite opposition to this
competition from the House Committee on Armed Services, section 112 of
the DOD Authorization Act for FY 1985 provided that no funds could be
used for procurement of a new loader until a contractor had been
determined by competition. Subsequently, PACCAR was selected as the
winner of such competition.
The Air Force's request for the reprogramming of $3.8 million for the
PACCAR contract was rejected by the House Committee on Armed Services.
Under the proposed reprogramming, the necessary funds would have been
shifted within the FY 1985 RDT&E account from the Air Launched Cruise
Missile program element to the Armament/Ordnance program element, but,
in accordance with DOD Directive 7250.5, the planned reprogramming was
dropped in view of the disapproval of the House Committee on Armed
Services. Subsequently, the Air Force provided $1.3 million in FY 1985
funds for the PACCAR contract by shifting priorities and funds within
the Armament/Ordnance program element itself. The balance needed to
complete the project was expected to be paid from FY 1986 funds.
While certain increases in RDT&E program elements totals are
considered "reprogramming" under DOD Instruction 7250.10, funding
charges within program elements are not regarded as "reprogramming."
Funding changes within program elements are often necessitated by delays
in contract performance, or increases due to changed priorities. These
changes usually are considered to be minor and uncontroversial although
this was not true in this case.
When funding was denied by means of reprogramming from another
program element to Armament/Ordnance, an alternate way of using funds
within the Armament/Ordnance program element was found. The applicable
DOD Directive and Instruction do not require approval or notice
concerning this kind of action.
The Air Force action, while not subject to reprogramming controls and
not legally impermissible, was nevertheless taken in spite of the
reprogramming denial by the House Committee on Armed Services. However,
we cannot say that the Air Force award of a contract to PACCAR was
contrary to the will of the Congress, as expressed in prior legislation.
(See earlier discussion of section 112 of the DOD Authorization Act for
FY 1985.) It is true that the Conference Committee on the FY 1986 DOD
Authorization Act, on July 29, 1985, deleted a provision authorizing the
release of prior year funds for the competition winner's development of
an MLT. A similar action was taken earlier in the month, on July 2, by
the Conference Committee on the supplemental appropriations bill for FY
1985. However, the reason given for deletion of the funds was not
disapproval of the MLT program. The conferees explained that the
proposed language was unneeded since adequate funds already were
available for this program. In any event, no prohibition was placed in
either Act to restrict funding of the PACCAR contract. Absent a
statutory restriction, there is no legal bar to funding the contract
from available RDT&E funds. Further, the use of previously designated
funds from the Armament/Ordnance program element was not in violation of
DOD procedures.
Conclusion
In our opinion the Air Force's award of a contract to Pacific Car &
Foundry Company for the development, design, and testing of prototype
strategic weapons loaders did not violate any appropriation act or other
law nor was it contrary to Department of Defense reprogramming
procedures. Absent an unauthorized expenditure, we see no indication of
any violation of the separation of powers between the Congress and the
Department of the Air Force.
With the approval of your staff, a copy of this opinion is being sent
to the Chairman of the House Armed Services Committee, the Chairman of
the Committee's Subcommittee on Research and Development, the Chairman
of the Senate Armed Services Committee, and to the Air Force.
APPENDIX
Chronological Summary of Congressional Events
On July 5, 1983, the Senate Committee on Armed Services in its report
on S. 675, The Omnibus Defense Authorization Act, 1984 (S. Rep. No. 174,
98th Cong., 1st Sess. 96), referred to Air Force plans to convert the
loader used for B-52 aircraft to use for the B-1B bomber. It requested
a report explaining the reason for a sole-source acquisition for this
purpose, as compared to the operational, maintenance and cost factors of
a competitive design and procurement.
On January 30, 1984, the Director of Legislative Liaison for the Air
Force wrote to the Chairman of the House Committee on Armed Services
about the planned release of a Request for Proposal for the development
and testing of a new simplified MLT for B-1B aircraft. He indicated
that this was being done because of less than satisfactory field
experience with the MHU-173 trailer currently deployed with B-52G
aircraft. About $4 million of Fiscal Year 1984 Research, Development,
Test and Evaluation (RDT&E) funds would be internally reprogrammed to
the Armament/Ordnance Development Program for the development of an
alternative lift trailer. It was anticipated that a modified MHU-173
MLT or a design derivative would figure prominently in the competition
and evaluation.
On February 7, 1984, the Chairman and the Ranking Minority Member of
the House Committee on Armed Services responded by requesting a deferral
of the obligation or expenditure of any funds for this purpose, pending
the completion of the Committee's evaluation of the MHU-173 system. It
was explained that it was not the Committee's policy to initiate new
programs through reprogramming actions, absent an urgent requirement.
On April 19, 1984, the House Committee on Armed Services reported on
H.R. 5167 the Department of Defense (DOD) Authorization Act, 1985. The
Report (H.R. Rep. No. 691, 98th Cong., 2d Sess. 167-8) stated that a
competitive program to develop a new trailer was unwarranted and not
cost effective, and directed that no funds authorized for appropriation
by this bill be used for the design, development or procurement of a new
lift trailer. Nevertheless, section 112 of H.R. 5167 as finally
enacted, Pub. L. No. 98-525, 98 Stat. 2492, 2507, October 19, 1984, did
not put that prohibition into the law. Instead, it provided that:
None of the funds appropriated to the Department of of Defense
may be obligated or expended for procurement of a new strategic
weapons loader to meet the performance requirements for the B-1B
bomber aircraft or the Advanced Technology Bomber aircraft until a
contractor for such weapons has been determined after a
competition. (Italic supplied.)
In the Conference Report on Pub. L. No. 98-525, H.R. Rep. No. 1080,
98th Cong., 2d Sess. 246 (1984), the conferees stated their
understanding that the winning design for the new SWL would be evaluated
against the modified MHU-173 design to determine which would be best.
According to the report, "The results of this evaluation, and the
rationale for the selected approach, will be reported to the Senate and
House Armed Services Committees prior to the initiation of MLT
procurements."
On December 7, 1984, the Air Force's Director of Legislative Liaison
wrote to the Chairman of the Committee on Armed Services of the House of
Representatives. He stated:
The Air Force has completed its competition for the new MLT,
and Pacific Car & Foundry Company of Seattle, Washington was
selected as the winner. The Air Force has also completed its
evaluation of the winning design for the MLT against the modified
MHU-173 design, with the result that the design for the new MLT
was determined to best accommodate the long term needs of the
strategic bomber force.
The letter explained the rationale for selecting the new MLT over the
modified MHU-173 design. It also stated that the Air Force was
reprogramming $3.8 million as indicated in its letter to the House Armed
Services Committee of January 30, 1984, and that the Air Force intended
to award a contract to PACCAR by December 14, 1984.
On December 10, 1984, the Chairman of the House Armed Services
Committee responded by advising that the Committee did not concur with
the planned reprogramming of $3.8 million to initiate the new program
because its concerns had not been fully addressed in the December 7
letter.
On May 13, 1985, the Deputy Secretary of Defense again submitted
reprogramming action FY 85-67PA for the Air Force's Research,
Development, Test and Evaluation Appropriation Account for Fiscal Year
1985. Under the proposed action, $3.8 million was to be deducted from
Air Launched Cruise Missile funds, and added to Armament/Ordnance
Development for the new MLT. It was explained that the reprogramming
action was submitted for prior approval because it affected an item that
had been designated as a matter of special interest to one or more
congressional committees.
On May 23, 1985, the Chairman of the House Committee on Armed
Services notified the Deputy Secretary of Defense that the Committee had
disapproved the reprogramming request.
The Conference Report on H.R. 2577, making supplemental
appropriations for FY 1985, H.R. Rep. No. 236, 99th Cong., 1st Sess. 30
(July 2, 1985) deleted a Senate provision which would have made $3.8
million available for the simplified MLT program. The report stated:
The conferees agree the proposed language is not required since
adequate funding is available for this program for which
competitive selection was mandated by section 112 of the
Department of Defense Authorization Act, 1985 * * * .
Consequently, the Supplemental Appropriations Act, 1985, PUB. L. No.
99-88, 99 Stat. 293, enacted on August 15, 1985, contained no reference
to the simplified MLT program.
The Conference Report on S. 1160, the DOD Authorization Act, 1986,
H.R. rep. No. 235, 99th Cong., 1st Sess. 402 (July 29, 1985), deleted a
provision in the Senate bill that authorized the release of prior year
funds still available for obligation, for the development of the MLT by
the winner of the competition mandated by section 112 of the FY 1985 DOD
Authorization Act. The House amendment of the bill did not contain this
provision. As enacted, the authorization bill, Pub. L. No. 99-145, 99
Stat. 583, November 8, 1985, contains no reference to the use of prior
year unobligated balances for the development of a simplified MLT.
B-218578, 65 Comp. Gen. 357
Matter of: Saint Lawrence Seaway Development Corporation - Paid
Lunch Period, Feb. 27, 1986
Saint Lawrence Seaway Development Corporation - Employees - Work
Schedules
The Saint Lawrence Seaway Development Corporation proposes an 8-hour
shift for its maintenance and marine employees including a 15-minute
rest break at 9 a.m. and a paid 20-minute combination rest/meal period
at 1 p.m. A noncompensable lunch period may not be extended or
shortened by a paid rest period because there exists a legal distinction
in both origin and effect between a rest and a meal period. Time for a
meal period is not compensable if the employees are not required to
perform substantial duties. On the other hand, time for brief rest
periods may be authorized without decrease in compensation.
Saint Lawrence Seaway Development Corporation - Employees - Work
Schedule
A proposal to establish an 8-hour shift with a paid 20-minute
combination rest/meal period may not be implemented. It is clear that
the purpose of this period is to provide the employees with a duty-free
period for the purpose of eating, and there is no indication of any need
for a change from the current situation in which the employees are not
required to perform substantial duties during the meal period.
Accordingly, the employees may not be compensated for the rest/meal
period.
The Saint Lawrence Seaway Development Corporation (Seaway
Corporation) asks whether it may agree to provide its wage maintenance
and marine employees with an 8-hour workday which includes a paid
15-minute rest break at 9 a.m. and a paid 20-minute combination
rest/meal break at 1 p.m. We conclude that the Seaway Corporation may
provide a brief paid rest break, but may not provide a paid lunch
period. /1/
Background
The issues involved in this case arose out of labor contract
negotiations between the employees' exclusive bargaining representative,
the American Federation of Government Employees, Local 1968, and the
Seaway Corporation. During these negotiations, Local 1968 proposed that
wage grade maintenance and marine personnel work an 8-hour day with a
paid 15-minute rest break at 9 a.m. and a paid 20-minute rest/meal
period at 1 p.m. The parties agreed to submit the matter to us for a
decision concerning the legality of the proposal. See Article 13b of
the "Memorandum of Agreement, Saint Lawrence Seaway Development
Corporation and Local No. 1968, American Federation of Government
Employees," approved by the parties on September 7, 1984.
Currently, the maintenance and marine employees' basic workweek is
Monday through Friday, 7:30 a.m. to 4 p.m. Included is a 10-minute rest
break in the morning, an unpaid 30-minute meal break from 12 to 12:30
p.m., and a 10-minute rest break in the afternoon. The Seaway
Corporation states that due to the nature of the work done by these
employees, rest and meal periods can be scheduled. The proposal would
establish an 8-hour workday from 7:30 a.m. to 3:30 p.m. Employees would
be provided a 15-minute rest break between 9 and 9:30 a.m. and a
20-minute combination rest/meal period between 1 and 1:30 p.m. Both of
these periods would be included as hours of work.
The Seaway Corporation asks whether such periods would be
compensable, thus enabling the maintenance and marine personnel to work
an 8-hour shift. If the answer to this question is in the affirmative,
the Seaway Corporation asks whether this same arrangement may be
extended to General Schedule personnel.
Analysis
Although the authority of the head of an agency to schedule a basic
40-hour workweek and to establish lunch breaks and rest periods is well
established, /2/ that authority is not unlimited, and such schedules may
be reviewed by this Office where the expenditure of public funds is
involved. B-1900611, December 30, 1977. Also, see Federal Personnel
Manual, chapter 610, paragraph 1-1c.
There is a clear distinction between lunch breaks and rest periods.
A lunch break is a period of time set aside for the purpose of eating.
Unless required by the work performed an employee is off duty and in a
nonpay status during an authorized lunch period. Generally he is free
to depart his place of work and use such time as he or she desires. A
lunch period may be compensable work time only if the employee is
required to perform substantial official duties during that period. 42
Comp. Gen. 195 (1969); B-190011, supra; see also B-166304, April 7,
1969, and the cases cited therein. Under 5 U.S.C. Section 6101(a)(3),
such breaks in working hours in excess of 1 hour may be scheduled only
if the agency head determines that a longer break is necessary for the
limited reasons specified therein.
On the other hand, an employee may be compensated for authorized rest
periods. The purpose of a rest period is to provide a brief period of
time for a respite from the work routine, perhaps in order for the
employees to recharge themselves before continuing with their duties.
It has been recognized that rest breaks promote the efficiency of the
employee. See 29 C.F.R. Section 785.18 (1985). An agency head may
grant brief rest periods when he or she determines that this would be
beneficial or essential to the efficiency of the Federal service.
B-166304, April 7, 1969. Hence, such rest periods are considered to be
part of the employee's day and are compensated.
The general authority of heads of agencies to regulate the conduct of
employees, as contained in 5 U.S.C. Section 301, has been cited as the
basic authority for the allowance of brief lunch periods. A primary
test for establishing a bona fide meal period is whether the employees
are required to perform substantial duties and thus are not completely
relieved from duty for the purpose of eating. 25 Comp. Gen. 315 (1945);
B-190011, December 30, 1977; and B-56940, May 1, 1946. This rule
holds true for employees covered by the Fair Labor Standards Act, 29
U.S.C. Sections 201-219 (1982), and is applied even though the break is
shorter than 30 minutes. Blain v. General Electric Co., 371 F. Supp. 857
(W.D. Ky. 1971).
It appears to us that the proposal presented by the Seaway
Corporation attempts to avoid the prohibition against compensating
employees for lunch breaks by shortening the lunch break, attaching the
afternoon rest period to it, and renaming the result a "combination
rest/meal period." It is clear that since this period is scheduled near
the normal lunch period and is described as a "combination rest/meal
period," its primary purpose is to provide time for employees to eat.
To permit employees to be compensated for this time would be to ignore
not only the legal distinction between lunch and rest periods, but also
the purpose underlying each.
Conclusion
Since the purpose of the 20-minute rest/meal break is to permit
employees to take their noonday meal and since it is stated that the
employees are not required to work during work breaks, the rule
applicable to meal periods rather than rest breaks must be applied.
That is, any period set aside for the purpose of permitting employees to
eat where the employees are not required to do substantial duties is not
compensable, regardless of the name used to describe it. As indicated
above, the fact that the employee is free from job requirements to take
a meal, not the length of time involved, governs the treatment of such a
period. Blain v. General Electric Co., supra.
Accordingly, since there is no requirement that work be performed
during the meal/rest break proposed there is no authority to include
that break as compensable time. This conclusion applies equally to
General Schedule employees and wage grade employees.
FOOTNOTES
(1) This is a request for a decision concerning the legality of an
expenditure of appropriated funds on a matter of mutual concern to an
agency and to a labor organization. Jurisdiction arises under 4 C.F.R.
Part 22 (1985). The American Federation of Government Employees, Local
1968 was furnished a copy of the request for a Comptroller General
decision on February 6, 1985, as required by 4 C.F.R. Section 22.4
(1985) and has not objected to the submission of this matter to this
Office. Although the Seaway Corporation pays all its expenses,
including employee salaries, out of the tolls it collects, these funds
are considered appropriated funds. See B-193573, January 8, 1978.
(2) National Broiler Council, Inc. v. Federal Labor Relations
Council, 382 F. Supp. 322 (E.D. Va. 1974); B-166304, April 7, 1969.
B-200923, 65 Comp. Gen. 352
Matter of: Federal Judges IV - Reexamination of Appropriations Rider
Limitation on Pay Increases, Feb. 27, 1986
Courts - Judges - Compensation - Increases - Comparability Pay
Adjustment - Precluded Under Pub. L. 97-92
Federal judge requests reexamination of prior decisions concerning
effect of section 140 of Public Law 97-92, and amendment which bars pay
increases for federal judges except as specifically authorized by
Congress. Although the sponsor of section 140 now says that the
amendment was not intended to be permanent legislation but was to expire
with the appropriation act to which it was attached, we hold that
section 140 is permanent legislation in view of congressional intent
expressed at the time of passage of section 140 and subsequently. Prior
decisions are affirmed.
ISSUE
The issue presented is whether section 140 of Public Law 97-92,
December 15, 1981, 95 Stat. 1183, 1200, which precludes pay increases
for federal judges unless specifically authorized by Congress, shall
continue to be construed as permanent legislation. We hold that,
despite newly presented evidence of intent by the sponsor of section 140
that the amendment was not intended to be permanent legislation, section
140 is permanent legislation and federal judges are not entitled to
retroactive pay increases unless specifically authorized by an Act of
Congress.
BACKGROUND
This decision is in response to a request from the Honorable Frank M.
Coffin, United States Circuit Judge, United States Court of Appeals for
the First Circuit, /1/ seeking our reexamination of prior decisions
concerning pay increases for federal judges.
Pay adjustments for federal judges
The salaries of federal judges are subject to adjustment by two
mechanisms: (1) the Federal Salary Act of 1967 provides for a
quadrennial review of executive, legislative, and judicial salaries (2
U.S.C. Sections 351-361 (1982)); and (2) the Executive Salary
Cost-of-Living Adjustment Act provides that salaries covered by the
Federal Salary Act of 1967 will receive the same comparability
adjustment as is made to the General Schedule under the provisions of 5
U.S.C. Section 5305. See 5 U.S.C. Section 5318 and 28 U.S.C. Section
461 (1982).
Section 140 and prior decisions
In prior decisions we considered the effect of section 140 of Public
Law 97-92 on the laws providing pay increases for federal judges.
Section 140 was added to a continuing resolution appropriations act and
it provides, in essence, that the salaries of federal judges may not be
increased except as specifically authorized by an Act of Congress. We
held in the Federal Judges I, 62 Comp. Gen. 54 (1982), that section 140
was permanent legislation and that federal judges were not entitled to a
comparability increase on October 1, 1982, in the absence of specific
congressional authorization. /2/
Subsequently, we ruled in Federal Judges II, 62 Comp. Gen. 358
(1983), that federal judges were entitled to the December 1982
comparability pay increase in view of a specific congressional
authorization for such a pay increase. Finally, we held in Federal
Judges III, 63 Comp. Gen. 141 (1983), that federal judges were not
entitled to the January 1984 comparability pay increase, again in the
absence of specific congressional authorization for a pay increase.
We note that federal judges later received the 1984 comparability pay
increase of 4 percent pursuant to section 2207 of the Deficit Reduction
Act of 1984, Public Law 98-369, July 18, 1984, 98 Stat. 494, 1060. In
addition, federal judges have received the 3.5 percent comparability
increase effective January 1985. See Public Law 99-88, August 15, 1985,
99 Stat. 293, 310.
Arguments of the judges
In requesting reexamination of our decisions, Judge Coffin refers to
newly obtained information revealing the legislative intent as to the
meaning and duration of section 140 of Public Law 97-92. Specifically,
he points to a letter from the Honorable Bob Dole, Majority Leader of
the United States Senate, clarifying his intent with respect to section
140, which he introduced as an amendment to the continuing
appropriations resolution.
Senator Dole, in his letter of March 18, 1985, to our Office, notes
that the amendment was offered as an accommodation to another Senator
and that it was prepared by that Senator's staff. He states further
that the intent was to limit the application of this amendment to the
fiscal year in which it was enacted, and he points out that the Senate
rule and practice is not to attach permanent legislation to continuing
resolutions.
Judge Coffin also points out that in a discussion during a hearing in
1982, /3/ Senator Dole stated that the amendment (section 140) would be
in effect for only 1 year. Thus, Judge Coffin argues that these
clarifying remarks help identify the legislative intent behind section
140.
Finally, Judge Coffin concedes that the effect of section 140 was
discussed during the debate on the Deficit Reduction Act of 1984 when
the Congress granted federal judges the 4 percent comparability increase
for 1984. However, he contends that the debate centered on how our
Office had ruled on section 140, not on what was the intent of Congress
in enacting section 140 several years earlier. /4/
Opinion
The key question in this decision is whether section 140 of Public
Law 97-92 shall be construed to be permanent legislation or whether it
expired at the end of fiscal year 1982 with the continuing resolution
appropriations act. In our analysis in Federal Judges I, we stated that
a provision contained in an annual appropriations act may not be
construed to be permanent legislation unless the language or the nature
of the provision makes it clear that such was the intent of the
Congress. 62 Comp. Gen. at 56. However, in that decision we held that
both the language (words indicating futurity) and the nature of the
provision (no direct relation to the object of the appropriations Act)
indicated intent by the Congress to make this provision permanent
legislation, and that such intent was supported by the legislative
history before us at that time.
We note that at the time Senator Dole introduced the amendment, the
stated purpose was "to put an end to the automatic, backdoor pay raises
for federal judges." He continued by explaining that about 2 months
earlier, Congress has failed to enact a pay cap on or before October 1,
and that, although it was not the intent of Congress, federal judges had
received a pay increase on October 1, 1981, which could not subsequently
be altered or repealed. Senator Dole then concluded that his amendment
"would remedy this situation by prohibiting judicial pay increases
unless they were specifically authorized by Congress." Cong. Rec. S13890
(daily ed. November 19, 1981).
Although it may be argued that section 140 was not intended to be
permanent legislation, such an interpretation would strip the section of
any legal effect. As we pointed out in Federal Judges I, the next
applicable pay increase under existing law for federal judges would have
been effective October 1, 1982, and if section 140 were not permanent
legislation, the section would expire with the continuing resolution on
September 30, 1982. Thus, under this interpretation section 140 would
have no legal effect since it would have been enacted to prevent pay
increases during a period when no increases were authorized to be made.
As we stated in Federal Judges I, there is a presumption against
interpreting a statute in a way which renders it ineffective.
In our opinion, there is a conflict in interpreting Senator Dole's
remarks at the time of passage of section 140 and his remarks after
passage of section 140. We note that under principles of statutory
construction, statements of the sponsor of a bill during deliberations
on the bill are given consideration by the courts since other
legislators look to the sponsor to be particularly well informed about
the bill's purpose, meaning, and intended effect. /5/ However,
post-passage remarks by legislators, even explicit remarks, cannot
change the legislative intent expressed prior to passage of the act.
/6/ We believe that despite the post-passage expressions of intent by
Senator Dole, it was the intent of the Congress that section 140 be
permanent legislation.
Although the post-passage remarks of legislators are of little
assistance in interpreting congressional intent, subsequent actions by
the Congress with regard to the same legislation are very useful in such
interpretation. We note that our interpretation of congressional intent
with respect to section 140 is clearly supported by the subsequent
legislative actions by the Congress. For example, as we noted in
Federal Judges II, Congress enacted a pay increase for "senior
executive, judicial, and legislative positions" in December 1982. /7/
The conference report to that legislation specifically referred to
section 140 of Public Law 97-92 and stated that section 140 would not
prevent this pay increase for federal judges since the conference
agreement provided a specific congressional authorization for such an
increase. Conference Report quoted in part in Federal Judges II, 62
Comp. Gen. 358, 360.
Furthermore, we note that a bill was introduced by the Honorable
George J. Mitchell in 1984 to specifically repeal section 140 and to
provide federal judges with the 1984 comparability pay increase. S.
2224, 98th Cong., 2d Sess. (1984). No action was taken on that bill.
Senator Mitchell later introduced an amendment during consideration of
another bill to authorize the 1984 comparability pay increase for
federal judges, without repealing section 140, Cong. Rec. S5027-28
(daily ed. April 30, 1984). This section bill was incorporated into the
Deficit Reduction Act of 1984, and federal judges received the 1984
comparability increase without any further attempt to repeal section
140.
Judge Coffin argues that in enacting the 1984 pay increase the
Congress was not reflecting upon the original intent of section 140, but
rather upon the way our Office had interpreted the effect of section
140. We disagree, although we are cognizant of the principles that
Congress is not required to act each time a statute is interpreted
erroneously, and that legislation inaction following such an
interpretation is not strong evidence of legislative intent. /8/ On the
other hand, where it can be shown that a consistent administrative
interpretation has been clearly brought to the attention of Congress and
it has not been changed, that is "almost conclusive evidence that the
interpretation has congressional approval." Kay, at 646-47.
Therefore, we conclude that, despite the newly presented evidence of
intent to the contrary, section 140 of Public Law 97-92 is permanent
legislation and federal judges are not entitled to pay increases except
as specifically authorized by Congress. Our prior decisions are
affirmed.
Finally, we note that the principal concern of the Congress in
enacting section 140 appears to have been to bar the so-called
"back-door" pay increases which judges received by operation of law but
which were delayed or denied to other high-level federal officials.
However, the effect of section 140 as enacted by the Congress is that
federal judges do not receive the same comparability increases provided
to other federal employees by operation of law except upon specific
congressional authorization. We are constrained to follow the language
of section 140 even though it extends beyond the problem Congress was
trying to cure.
We also note that it is doubtful Congress intended to deny federal
judges the same comparability increases provided to other federal
employees. As noted above, Congress has enacted legislation in both 1984
and 1985 to grant federal judges the comparability increases
retroactively. Therefore, we strongly urge that the Congress clarify
this situation by amending the statutes governing pay for federal judges
and repeal section 140 to permit federal judges to receive the same
increases provided to other high-level executive and legislative
officials. The so-called backdoor increases could be prevented by
delaying increases for federal judges until 30 days following the
effective date of pay increases for other high-level officials, but
making the judges' pay increases retroactive to that effective date. To
assist the Congress in consideration of such an amendment, we are
submitting proposed language to the Chairmen of the Appropriations and
Judiciary Committees of the Senate and House of Representatives.
FOOTNOTES
(1) Judge Coffin has written in his capacity as the Chairman of the
Judicial Conference Committee on the Judicial Branch.
(2) See also B-200923, October 1, 1982, interpreting section 140 as
permanent legislation.
(3) Hearing on S. 1847 before the Subcomms. on Courts and Agency
Administration of the Senate Comm. on the Judiciary, 97th Cong., 2d
Sess. 104 (1982).
(4) Cong. Rec. S5027-30, S5102-04 (daily eds. April 30, 1984, and May
1, 1984) (statements of Senators Mitchell, Thurmond, Domenici, and
Bentsen).
(5) Sutherland Stat. Const. Section 48.15 (4th Ed.); and National
Woodwork Manufacturers Association v. National Labor Relations Board,
386 U.S. 612, 640 (1967).
(6) Sutherland Stat. Const. Section 48.15 (4th Ed.); and Regional
Rail Reorganization Act Cases, 419 U.S. 102 (1974).
(7) Section 129(b) of Public Law 97-377, December 21, 1977, 96 Stat.
1830, 1914.
(8) Kay v. Federal Communications Commission, 443 F.2d 638 (D.C. Cir.
1970); and Sutherland Stat. Const. Section 49.10 (4th ed.).
B-221306, 65 Comp. Gen. 347
Matter of: TSCO, Inc., Feb. 26, 1986
Contracts - Protests - General Accounting Office Procedures -
Timeliness of Protest - Adverse Agency Action Effect
Protest filed with General Accounting Office (GAO) within 10 working
days after adverse agency action on protest at that level (contracting
agency proceeded to accept best and final offers) is timely and, thus,
will be considered.
Contracts - Awards - Procedures Leading to Award - General Accounting
Office Review
Where the contracting agency did not transmit any written notice of
award to offeror, and informed the offeror that a contract would not be
signed until a date when the contracting officer would be available, it
should have been clear to the offeror that award had not been made;
meetings between the offeror and agency and ancillary unsigned contract
documents prepared by the agency indicated only that the agency planned
to make an award to the offeror, and were not substitutes for a proper
award by the contracting officer.
Contracts - Default - Reprocurement - Government Procurement Statutes -
Applicability
A reprocurement for the account of a defaulted contractor is not
subject to the strict terms of the regulations that govern regular
federal procurement and will not be disturbed where the agency's actions
are reasonable; reopening negotiations to permit an additional offeror
to submit a proposal, thereby avoiding a sole-source award, is not
unreasonable, since it promotes competition and helps assure that the
government will receive the most reasonable price.
Contracts - Protests - Allegations - Unsubstantiated
Protest that the contracting agency disclosed the protester's offered
price to another offeror, resulting in that offeror submitting the
lowest cost proposal, is denied where the allegation is unsupported in
the record, and where the record discloses other reasons for the
competitor's low offer.
Contracts - Protests - Preparation - Costs - Noncompensable
Protester's procurement costs, including reasonable attorneys' fees
for pursuit of protest, will not be awarded where the contracting agency
did not act improperly and the protest is denied.
TSCO, Inc. (TSCO), protests the award of a contract to Bill McCann,
Inc., under the reprocurement to replace the defaulted contractor under
invitation for bids (IFB) No. DACA27-85-B-0050, issued by the United
States Army Corps of Engineers. We deny the protest.
The IFB, originally issued June 14, 1985, called for construction to
install air conditioning at dependent schools at Fort Knox, Kentucky.
Two bids -- those of TSCO and Webb Mechanical Enterprises, Inc. -- were
received by the bid opening date. One bid, McCann's, was received 4
minutes after the time specified for bid opening and thus was rejected
and returned to McCann unopened. Award was made to Webb on September 26
based on its low bid price of $6,925,538. Webb experienced difficulties
obtaining required payment and performance bonds, however, and, on
November 4, the Corps terminated Webb's contract for default.
Following the termination, the Corps undertook to reprocure the work
against Webb's account by initiating negotiations with TSCO, the only
other timely bidder. At a November 18 meeting, the Corps advised TSCO
that its goal was to minimize Webb's liability. In response, TSCO
proposed a lump-sum price of $6,988,956 which, although lower than its
original bid price, still was higher than the defaulted contract price.
By letter dated November 19, TSCO furnished the Corps a breakdown of its
prices for each of seven schools. The next day, the Corps gave TSCO a
contract number the firm had requested for securing bonds. The Corps
advised TSCO that the dates on the bonds should be left blank, and would
be completed when the Corps signed the contract. The signing would not
take place until November 22, the Corps further advised, since the
contracting officer would be unavailable before then. On November
20-21, TSCO met with Corps construction representatives and Fort Knox
school officials to discuss, and ultimately agree to, a construction
schedule.
By letter to the Corps dated November 19, McCann insisted on being
afforded an opportunity to compete for the procurement, and stated that
it would offer a price below the defaulted contract price. The Corps
determined it would be in the government's interest to include McCann in
a competition and, by telegrams received November 26, requested that
TSCO and McCann submit best and final offers by noon on November 27.
Both firms submitted timely offers. TSCO submitted its offer at 10
a.m., along with a separate letter complaining that opening the
procurement to McCann was improper since TSCO already had an oral
contract with the Corps; the Corps should not have disclosed the
scheduling plan TSCO developed with the Corps; and McCann unfairly had
access to TSCO's original bid price. The Corps awarded McCann the
contract on December 2, based on its low price of $6,620,000.
TSCO contends that the award to McCann was improper since it already
had been awarded a contract; the Corps violated procurement regulations
in conducting the procurement; and the Corps engaged in auction
techniques.
Timeliness
Preliminarily, the Corps argues that TSCO's protest is untimely and
thus should not be considered because TSCO did not file it with our
Office within 10 days after becoming aware that the Corps intended to
reopen the competition. We find that TSCO's protest is timely.
The Corps' position fails to take into account the fact that TSCO
filed a protest with the Corps shortly before the deadline for
submitting final offers. Under our Bid Protest Regulations, a protest
based on alleged solicitation improprieties must be filed with the
contracting agency or our Office before the next closing date for
receipt of proposals after the impropriety arises. 4 C.F.R. Section
21.2(a)(1) (1985). The record shows that TSCO became aware on November
22 or November 26 that the Corps intended to reopen the solicitation to
another firm, and filed a protest with the Corps challenging this action
at 10 a.m., on November 27, 2 hours prior to the deadline for submission
of best and final offers. This protest was timely.
Where a timely protest has been filed initially with the contracting
agency, any subsequent protest to our Office will be considered if filed
within 10 working days after the protester receives notice of adverse
agency action. 4 C.F.R. Section 21.2(a)(3). The Corps' continued
receipt of best and final offers on November 27 constituted initial
adverse agency action, i.e., notice that the Corps planned to proceed
with the reopening of the solicitation. December 12 was the tenth
working day after November 27 (accounting for the November 28
Thanksgiving holiday), so TSCO's protest filed in our Office on December
11 was timely and, thus, will be considered on the merits.
Oral Award
TSCO takes the position that it was awarded a contract orally on
November 20 when the CORPS gave TSCO a contract number. As additional
evidence of the award, TSCO points to the Corps' request for funds for
the contract, preconstruction meetings between TSCO and the Corps, and
the Corps' preparation of documents including an unsigned notice to
proceed.
The Competition in Contracting Act of 1984, 10 U.S.C.A. Section
2305(b) (West Supp. 1985), and Federal Acquisition Regulation (FAR), 48
C.F.R. Section 15.1002 (1984), provide that the contracting officer
shall award a contract by transmitting written notice of award to the
offeror. There was no such written notice here. See Kunert Electric,
B-204439, June 8, 1982, 82-1 C.P.D. Paragraph 551. In any case,
acceptance of a prospective contractor's offer by the government must be
clear and unconditional, and a contract does not come into existence
when the purported acceptance is conditioned on future actions by the
offeror or the procuring agency. Sevcik-Thomas Builders and Engineers
Corp., B-215678, July 30, 1984, 84-2 C.P.D. Paragraph 128. As
discussed, although TSCO was given a contract number to use in securing
its bonds, the Corps specifically advised TSCO that the contracting
officer -- the government official with authority to bind the Corps
contractually -- would not sign and date the contract until November 22.
While TSCO apparently views the signing as a formality, we think the
Corps' advice in this regard clearly indicated that the Corps did not
intend to award a contract earlier than November 22.
The Corps' issuance of a contract number for bonding purposes;
conducting construction planning meetings; and preparation of contract
documents, indicated only that the Corps anticipated an award to TSCO,
not that an award had been made. We have specifically held that
informing an offeror of the contract number assigned to the solicitation
falls short of indicating the contracting agency's clear, unconditional
acceptance of the offer. Mil-Base Industries, B-218015, Apr. 12, 1985,
85-1 C.P.D. Paragraph 421.
We note, finally, that the government can be stopped from denying a
contract only to the extent that the offeror was injured by its reliance
on the government's actions. Family Service of Burlington County,
B-215956, Sept. 4, 1984, 84-2 C.P.D. Paragraph 250. TSCO has not
asserted, and the record contains no evidence, that it has suffered any
specific financial or other harm as a result of reliance on the Corps'
actions. In any case, remedites with respect to an estoppel argument,
such as a claim for expenses incurred in anticipation of contract
performance, must be pursued under the Contract Disputes Act of 1978, 41
U.S.C. Section 601 et seq. See Lunn Industries, Inc., B-210747, Oct.
25, 1983, 83-2 C.P.D. Paragraph 491.
Violation of Regulations
TSCO alleges that the Corps violated several procurement regulations
in conducting this procurement, and that the award to McCann thus should
be overturned. TSCO principally argues that the Corps' reopening of
discussions and requesting a best and final offer from McCann, when
McCann had not submitted an initial proposal, violated FAR, 48 C.F.R.
Section 15.611, which sets forth general principles governing negotiated
procurements.
The FAR provisions cited by TSCO are not controlling here. We long
have held that where, as here, a reprocurement is for the account of a
defaulted contractor, the statutes and regulations governing regular
federal procurements are not strictly applicable. Douglas County
Aviation, Inc., B-208311, June 8, 1983, 83-1 C.P.D. Paragraph 623.
Under FAR, 48 C.F.R. Section 49.402-6, entitled "Repurchase against
contractor's account," the contracting officer may use any terms and
acquisition method he deems appropriate for repurchase of the same
requirement (as the standard default clause similarly provides), but
must repurchase at as reasonable a price as practicable and obtain
competition to the maximum extent practicable. /1/ We will review a
reprocurement to determine whether the contracting agency proceeded
reasonably under the circumstances. Id. We find the Corps' actions
were reasonable.
The record shows that the Corps' primary concern in the reprocurement
was obtaining the lowest price possible, in accordance with the
repurchase regulations. Although the Corps initially planned to
contract with TSCO without competition, the agency decided that a
competition, in fact, would be preferable once McCann informed the Corps
that it was interested in competing and that it would offer a price
below the defaulted contract price. We believe it was reasonable for
the Corps, at this juncture, to request a final offer from TSCO and
McCann by a common deadline: such action allowed for competition among
the two firms that expressed interest in the original procurement, and
presented the Corps with the opportunity to make award at less than the
defaulted contract price. Permitting McCann to compete also was
consistent with the FAR requirement that competition be maximized.
We also point out that, as it is the objective of our bid protest
function to promote full and free competition for government contracts,
we generally do not look favorably upon protests that a contracting
agency should procure supplies or services from a particular firm on a
sole-source basis. Ingersoll-Rand, B-206066, Feb. 3, 1982, 82-1 C.P.D.
Paragraph 83.
Auction
TSCO maintains that, in the course of including McCann in the
reprocurement, the Corps engaged in prohibited auction techniques.
Specifically, TSCO argues that the Corps must have disclosed TSCO's
offered price when advising McCann that it would be permitted to
compete. TSCO urges that we sustain its argument based on the Corps'
failure to deny in its report that it revealed TSCO's price.
The record contains no evidence that TSCO's price was revealed to
McCann, and a protester's unsubstantiated statements are not sufficient
to establish otherwise. Andrews Tool Co., B-214344, July 24, 1984, 84-2
C.P.D. Paragraph 101. It is relevant that the record shows McCann's
late bid on the original procurement was lower than either TSCO's or
Webb's bid. We thus do not consider it surprising that McCann's offered
price on the reprocurement, although somewhat above its original bid
(due, McCann explains, to a mistake in its original calculations),
remained below Webb's defaulted contract price. That is, we find no
reason to assume, as TSCO argues, that McCann's low price must have
resulted from a disclosure of TSCO's price.
We believe the apparent absence of an express denial by the Corps can
be traced to the manner in which TSCO raised this allegation. TSCO's
original protest letter asserts that the Corps "engag(ed) in auction
techniques," without specifying the actions to which the allegation
referred. The Corps did specifically reply to the allegation in its
report, under the heading "Allegation of 'Auction Technique,'" but
apparently read the allegation as an objection to the fact that TSCO's
bid on the original procurement had been disclosed to McCann at the
public bid opening, a complaint TSCO raised in its agency-level protest.
The Corps' response, therefore, was along the lines that such a
disclosure does not constitute auctioning just because a reprocurement
is conducted. The Corps' response was a reasonable attempt to answer
TSCO's allegation and will not be deemed an admission by the Corps that
it acted improperly.
TSCO also claims it was improper for the Corps to disclose to McCann
the construction schedule TSCO developed during meetings with Corps
personnel and Fort Knox school officials; the Corps advised McCann of
the schedule when informing McCann that it would be permitted to submit
an offer. Disclosure of the schedule is unobjectionable. TSCO has no
apparent proprietary rights in the construction schedule, and the Corps
properly determined that both TSCO's and McCann's offers should be based
on the same schedule to assure that competition would be on an equal
basis.
TSCO has requested reimbursement of its procurement and protest
costs, including reasonable attorneys' fees. There is no basis for
awarding such costs where, as here, the contracting agency did not act
improperly, and we deny the protest. Polaris, Inc., B-218008, Apr. 8,
1985, 85-1 C.P.D. Paragraph 401.
The protest and request for costs are denied.
FOOTNOTES
(1) TSCO asserts that FAR, 48 C.F.R. Section 49.402-6, requires the
contracting officer to comply with generally applicable procurement
regulations in conducting reprocurements. The cited provisions, in
fact, contain no such requirement and TSCO's position is untenable in
light of our prior decisions.
B-215408, 65 Comp. Gen. 342
Matter of: George L. Daves - Temporary Quarters Subsistence Expenses
- Househunting Expenses, Feb. 26, 1986
Officers and Employees - Transfers - Temporary Quarters - Entitlement
A transferred employee's immediate family joined him at his new duty
station several months after he reported for duty, remained there for 26
days, and then returned to their residence at the old duty station. The
employee's claim for family travel and temporary quarters subsistence
expense is denied since the record does not provide any objective
evidence that the family intended to vacate the residence at the old
station so as to entitle the employee to be reimbursed.
Officers and Employees - Transfers - Temporary Quarters - Entitlement
A transferred employee may be deemed to have disestablished his
residence at his old duty station effective the date he reported to his
new duty station, even though his family did not disestablish their
residence at the old station. Thus, under para. 2-5.2a of the Federal
Travel Regulations (May 1973 ed.), he is entitled to TQSE for himself,
not to exceed 30 days.
Officers and Employees - Transfers - Transportation for House Hunting -
Authorization
A transferred employee who was authorized a househunting trip, which
he had not performed before he reported to duty, may be reimbursed for
travel expenses and 6 days per diem for his wife's subsequent
househunting trip where the record indicates that she performed such
duties prior to her return to the old duty station.
This decision is in response to a request from the Director, Office
of Comptroller, United States Merit Systems Protection Board (MSPB). It
concerns the entitlement of one of its employees to be reimbursed
certain relocation expenses incurred incident to a permanent change of
station in April 1980.
BACKGROUND
Mr. George L. Daves, who had been an employee with the United States
Department of Housing and Urban Development, stationed in Washington,
D.C., became employed by the MSPB on April 6, 1980, in the position of
Supervisory Attorney Examiner in its Atlanta Field Office. By Travel
Authorization dated April 11, 1980, the MSPB authorized his permanent
change of station from Washington, D.C., to Atlanta, Georgia. He was
also authorized reimbursement for the transportation of his immediate
family (spouse and two children), the use of a privately owned vehicle
(POV) as their approved mode of travel; transportation and storage of
household goods; the expense of sale and purchase of residences; an
advance househunting trip; temporary quarters subsistence expenses
(TQSE); and miscellaneous expenses.
On April 12, 1980, Mr. Daves traveled by POV from Washington, D.C.,
to Atlanta, Georgia, and arrived there the following day. While not
specifically stated in the submission, we presume that he reported for
duty at the Atlanta Field Office on April 14, 1980.
Mr. Daves' wife and two children did not accompany him at that time.
However, on June 30, 1980, they traveled by POV from Washington, D.C.,
to Atlanta, and arrived there on July 1, 1980. They remained there
until July 26, 1980. At that time, Mrs. Daves and the two children
returned to their Washington, D.C., residence, where they continue to
reside.
In 1981, Mr. Daves filed a travel voucher for his transfer, claiming
expenses totaling $1,009.18. Having already received a travel advance
of $800, he requested reimbursement of an additional $209.18. His
expense voucher contained the following claim items:
TABLE OMITTED
Mr. Daves was allowed $81.79 for his personal travel and travel
subsistence. However, his family's travel and the total TQSE claim were
disallowed. Thus, the MSPB established that Mr. Daves owed $718.21,
against the $800 travel advance.
The basis for the disallowance by MSPB was that the travel by the
family could not be deemed relocation travel, incident to his permanent
change of station, since they remained in Atlanta only 26 days, and then
returned to their Washington residence. Further, TQSE payments were not
authorized since they resumed occupancy of their fully furnished
Washington residence, and there was no other demonstrable evidence that
they had vacated the residence.
Mr. Daves states in support of his claim that during the period
immediately following his transfer and before his family's move to
Atlanta, they had been informed by a Washington real estate agent that
because of a soft housing market in the Washington area they should not
attempt to sell that residence at that time. It was suggested by the
real estate agency that they rent the Washington house and wait for the
market to improve. Based on that information, they decided to locate
aresidence in Atlanta, return to Washington to arrange to move their
furniture, and then lease the Washington house or sell it if the market
had improved by that time. Mr. Daves contends that his family's travel
to Atlanta on June 30-July 1, 1980, represents their decision to
completely vacate the Washington residence and to permanently relocate
in Atlanta. He also contends that his wife brought personal items,
their childrens' school transcripts, and all medical records, when she
traveled to Atlanta on June 30, 1980.
Mr. Daves also contends that the fact that his family returned to
Washington on July 26 and remained there was occasioned by circumstances
totally unrelated to their actual move to Atlanta and arose after they
had arrived. Mr. Daves states that on July 3, 1980, several days after
his family arrived, the MSPB issued a vacancy announcement for Chief
Appeals Officers at the SES level for seven offices, including the
Atlanta Field Office. He considered the announcement as creating
uncertainty regarding his future in Atlanta. As a result, he was
reluctant to finalize the purchase of a home in the Atlanta area until
his position in that office was clarified, which he attempted to do
through a series of memoranda. Mr. Daves goes on to state that he was
eventually selected for the position of Chief Appeals Officer in the
Atlanta Field Office (January 11, 1981), but by that time mortgage
interest rates had escalated to nearly 18 percent and he could no longer
afford to purchase or rent a home in the Atlanta area.
DECISION
Section 5724a of Title 5, United States Code, authorizes the
reimbursement of certain expenses, under regulations, incurred by an
employee for whom the government pays travel and transportation expenses
incident to a permanent change of station (5 U.S.C. Section 5724(a)).
Among those expenses authorized are temporary quarters subsistence
expenses for the employee and his immediate family, and a househunting
trip. The regulations governing these matters, which were in effect at
the time of Mr. Daves' permanent change of station, are contained in
chapter 2, Part 5 of the Federal Travel Regulations, FPMR 101-7 (May
1973) (FTR).
Paragraph 2-5.2c of the FTR provides:
c. What constitutes temporary quarters. The term "temporary
quarters" refers to any lodging obtained from private or
commercial sources to be occupied temporarily by the employee or
members of his immediate family who have vacated the residence
quarters in which they were residing at the time the transfer was
authorized.
In our decisions, we have generally considered a residence to have
been vacated when an employee's family ceases to occupy it for the
purposes intended. See Charles C. Werner, B-185696, May 28, 1976; Erle
B. Odekirk, B-187519, January 26, 1977; and Luther S. Clemmer,
B-199347, February 18, 1981. In determining whether the family has
ceased to occupy a residence at his former duty station, we examine the
action taken by an employee and his family before and after departure
from that residence. The focus of our inquiry, generally, has been
whether the employee, in light of all the facts and circumstances, has
manifested by objective evidence the intent to vacate the former
residence.
Conversely, when evidence to support the employee's intent to cease
occupancy of the residence at a particular time is not present, we have
not authorized payment. In decision John M. Mankat, B-195866, April 2,
1980, we denied reimbursement of TQSE for an employee's family where
they returned to the old duty station after 1 week at the new duty
station in order to prevent vandalism at the residence at the former
station. In that case, the family returned to a residence which was
left fully furnished, unsure of when it would be sold, or when they
could move into a residence at the new duty station. In decision John
O. Randall, B-206169, June 16, 1982, a similar factual situation was
presented. In that case, an employee's family joined him at his new
duty station several months after he transferred, remained approximately
1 month and returned to their fully furnished residence at the former
station. Some months later, the family actually moved to the new
station. We allowed TQSE following their actual move based on a finding
that they vacated the former residence at that later time. However, we
ruled that his family could not be considered as having vacated the
residence during the earlier period since there was no objective
evidence of that fact.
The focus of these decisions is that reimbursement for TQSE is based
on whether the residence at the former station has been disestablished.
In the present case, Mr. Daves contends that his family's travel on June
30, 1980, was to effect their relocation. We cannot so conclude. The
facts are that when his wife and children traveled to Atlanta their
residence in Washington remained fully furnished, ready for occupancy,
and had not been put up for sale or rent. Further, the family actually
returned to their old residence after 26 days absence and have continued
to reside there.
Accordingly, it is our view that the decisions in Mankat and Randall
are controlling. Therefore, Mr. Daves is not entitled to TQSE for his
family incident to his transfer to Atlanta.
This conclusion, however, does not entirely defeat Mr. Daves'
entitlement to be reimbursed for other expenses in addition to those
already approved. Even though we have concluded that his family is not
entitled to relocation travel and TQSE due to lack of evidence that they
disestablished their residence in Washington, D.C., Mr. Daves, himself,
may be deemed to have disestablished his residence in Washington,
effective the date he reported for duty at his new station in Atlanta.
Since it appears that he was in temporary quarters at least until July
1, 1980, when his family arrived in Atlanta, he would be entitled to
TQSE for himself for part of that time. In this regard, it is noted
that his Travel Authorization provided for TQSE not to exceed 54 days.
Such authorization was erroneous. Under the provisions of paragraph
2-5.2a of the May 1973 edition of the FTR, TQSE entitlements are limited
to a 30-day period. Therefore, since Mr. Daves' period in temporary
quarters exceeded that limit, he may receive TQSE in his own right for
the full 30 days. This would be in addition to his cost of change of
station travel and travel per diem.
Also, it is our view that under the circumstances of this case Mr.
Daves may be reimbursed for his wife's househunting trip. Under the
FTR, an employee's roundtrip househunting travel must be fully
accomplished before he reports for duty in order to be reimbursed.
However, a similar requirement is not imposed on an employee's spouse.
Paragraph 2-4.1a of the FTR provides, in part:
a. * * * Such a round trip by the spouse * * * may be
accomplished at any time before relocation of the family to the
new official station but not beyond the maximum time for beginning
allowable travel and transportation.
The record shows that one of Mrs. Daves activities in Atlanta was
househunting. Although the permissible period for househunting was not
specifically designated in Mr. Daves' travel authorization, FTR,
paragraph 2-4.2 authorized a maximum of 6 days, including traveltime (47
Comp. Gen. 189 (1967)), and that period may be deemed appropriate here.
Therefore, Mr. Daves may also be reimbursed the cost of his spouse's
roundtrip travel by POV, and her househunting per diem for 6 days.
B-221011, 65 Comp. Gen. 339
Matter of: Immigration and Naturalization Service - Leaseback
arrangement to pay for renovations to detention facility, Feb. 25, 1986
Real Property - Disposition - Authority
Proposal by the Immigration and Naturalization Service (INS) to
renovate Government-owned facility at Terminal Island in San Pedro,
Cal., to provide space for detaining aliens by means of a long-term
lease-back arrangement raises a fundamental legal problem. In order to
lease the facility, which is presently wholly owned by the Government,
back from the contractor performing the renovation work, INS must
somehow sell or otherwise transfer the facility to the contractor.
Nothing in INS's authorizing statute at 8 U.S.C. 1252(c) provides it
with authority to dispose of Government-owned property.
Real Property - Disposition - Authority
Property owned by the Government which was once used as a detention
facility but is currently being used by INS as its Western Regional
Office and which INS admittedly needs for use once again as a detention
facility does not qualify as property which is "excess" to the needs of
the INS or "surplus" to the needs of the INS or "surplus" to the needs
of the United States so as to warrant its disposal under the Federal
Property and Administrative Services Act of 1949, as amended, either by
the General Services Administration or by INS upon a delegation of
authority from GSA. There is no other authority of which we are aware
which would enable INS to divest itself of a building it now owns under
these circumstances.
Leases - Propriety
INS needs to find a way to pay for renovating a facility it now owns
over a long period of time because it does not have or expect to have
sufficient appropriations to support a contract for the full cost of the
repairs, in a single fiscal year. It is no solution for INS to lease
its facility to the contractor on a long-term basis in return for
repairs and improvements or management of the detention services. In
the absence of specific statutory authority, rentals paid to the
Government must be in the form of money consideration only. 40 U.S.C.
303b (1982).
This decision is in response to an inquiry from James A. Kennedy,
Assistant Commissioner, Office of Administration, Immigration and
Naturalization Service (INS), U.S. Department of Justice, asking whether
it may enter into what it has termed a lease-back agreement in order to
have a facility already owned by the Government remodeled to serve as a
detention center for aliens awaiting deportation.
The inquiry discloses that the INS Western Regional Office (WRO) is
currently located at Terminal Island in San Pedro, California, and is
scheduled to be relocated by approximately April 1, 1986. Mr. Kennedy
states that the facility is "wholly owned by INS and is situated in a
U.S. Coast Guard compound, and some years ago was in fact a detention
facility." INS would like to again utilize this facility as a detention
facility but it will require some extensive remodeling, for which it
intends to contract in accordance with the Federal Acquisition
Regulation (FAR). The problem, as explained to us during an informal
conference with the Assistant Commissioner, is that INS does not have
available appropriated funds to support a contract for the remodeling
project this year, although the need for suitable space is very urgent.
Thus, the Assistant Commissioner proposes a lease-back arrangement,
which he feels will enable INS to pay for the work "over a multi-year
period even though the work will have been completed in the first year
of the arrangement." INS indicates that it is working with the General
Services Administration (GSA) to ensure that it may proceed with such a
lease-back arrangement. However, it directs our attention to the
Attorney General's broad powers under 8 U.S.C. Section 1252(c) and
suggests that perhaps INS has sufficient authority to enter into a
leaseback contract without the need for a GSA delegation.
We have studied the Attorney General's authority under 8 U.S.C.
Section 1252(c) and agree with the INS characterization that it provides
"broad independent authority to acquire detention space." If, as the
statute provides, "no Federal buildings are available" and no suitable
non-Federal facilities are available for rental, the Attorney General
may utilize his lump sum appropriation for the "administration and
enforcement of the immigration laws to acquire land and a suitable
building on the land."
As mentioned earlier, the INS's proposed solution is a lease-back
arrangement. A "lease-back" is generally defined as a transaction
whereby a transferor sells his own property and later leases it back
from the buyer. As we understand it, /1/ INS would sell or otherwise
transfer its building at Terminal Island to the contractor selected to
perform the renovation work. He would then enter into a long-term
arrangement which, he says, is "essentially no different, in a
procedural sense, from any other lease-purchase arrangement for real
property." We agree that once the INS no longer owns the property, the
arrangement to buy it back in the manner proposed amounts to a
lease-purchase contract. Our problem is with the first step of the INS
proposal -- the sale or transfer of its wholly owned Government facility
to the contractor in order to buy it back for the price of the
renovations, with payments spread out over a long period of time.
DISPOSAL OF GOVERNMENT-OWNED PROPERTY
It has uniformly been held in the decision of the courts and in the
opinions of the Comptroller General and the Attorney General that
Article IV, section 3, clause 2 of the Constitution of the United States
confers on the Congress executive jurisdiction to dispose of real or
other property of the United States. Therefore, without express or
reasonably implied statutory authorization, the head of a department or
agency of the Government is powerless to dispose of the property of the
United States. /2/
INS does not itself have express statutory authorization to dispose
of property owned by the United States, either by sale or by lease.
Even the broad authority of 8 U.S.C. Section 1252(c), discussed earlier,
is concerned only with the acquisition of space used for detention of
aliens, but not with the disposal of such space.
There is statutory authorization for the Administrator of General
Services (and by delegation of authority from the Administrator, the
head of a department or agency) to dispose of surplus property of the
United States. Under the provisions of the Federal Property and
Administrative Services Act of 1949, as amended, the head of a Federal
agency may declare property under the control of that agency which is
not needed for the discharge of agency responsibilities to be "excess
property." 40 U.S.C. Section 472(e). Such property thereby becomes
available for transfer to and use by another Federal agency. See 42
C.F.R. Section 101-47.201 through 101-47.203. If the Administrator of
General Services determines that excess property is not required for the
needs of any Federal agency, he may declare it "surplus property." 40
U.S.C. Section 472(g). The Administrator of General Services is the
designated agency to supervise and direct the disposition of all
Government-owned surplus real property. The Administrator may designate
or authorize any executive agency to dispose of surplus property by
sale, exchange, lease, permit or transfer, for cash, credit, or other
property. 40 U.S.C. Section 484(c). However, these disposals whether
made directly or by delegation, must conform to statutory and regulatory
requirements.
Based upon the facts as presented in the INS submission, neither the
GSA nor the INS (pursuant to a delegation of authority from GSA) would
be authorized under the authority of the Federal Property and
Administrative Services Act of 1949 as amended (discussed above) to
dispose of the facility located at Terminal Island on the grounds that
it was excess to INS's needs and surplus to the needs of the Government
as a whole. On the contrary, INS is suggesting the lease-back method of
renovation primarily because of its great need to obtain space for
detention purposes. Thus the facility could not be characterized as
either surplus or excess, and we know of no other authority to transfer
title to the property in order to lease it back.
CONCLUSION
We do not think that a lease-back arrangement involving INS's own
property at Terminal Island is a feasible solution to its funding
dilemma. Before the property can be "leased-back" from the contractor
performing renovation work, it must first transfer title to the facility
to the contractor. There is no authority to make such a disposal of
Government property since it is neither excess to INS's needs or surplus
to the needs of the Government as a whole.
Our only suggestion is that INS secure legislative approval to enter
into a lease-purchase contract for some other suitable property, or
otherwise secure supplemental funding on an emergency basis to support a
contract for the entire cost of renovations.
FOOTNOTES
(1) The Assistant Administrator did not really state that the INS
plans to divest the Government of ownership of the Terminal Island
facility. However, unless it does so, we do not see how it can lease
the facility back.
(2) See e.g., United States v. Nicoll, 27 Fed. Cas. 149 No. 15,879
(C.C.D. N.Y., 1826); Irvine v. Marshall, 61 U.S. (20 How.) 558 (1857);
Wisconsin R. Co. v. Price County, 133 U.S. 496 (1890); Light v. United
States, 220 U.S. 523 (1911); Royal Indemnity Co. v. United States, 313
U.S. 289 (1941); 34 Op. Atty. Gen. 320 (1924) and opinions cited
therein; and B-191943, October 16, 1978; 50 Comp. Gen. 63 (1970); 44
id. 824 (1965); 38 id. 36 (1958); 25 id. 909 (1946); 22 id. 563
(1942); 15 id. 96 (1935); and 14 id. 169 (1934).
B-221183, 65 Comp. Gen. 336
Matter of: The Latta Co., Feb. 24, 1986
General Accounting Office - Jurisdiction - Contracts - Walsh-Healey Act
GAO will not consider whether a bidder satisfies the requirements of
the Walsh-Healey Act since such matters, by law, are for the contracting
agency's determination (where a small business is involved) and the
Department of Labor.
Contracts - Protest - General Accounting Office Procedures - Timeliness
of Protest - Solicitation Improprieties - Apparent Prior to Bid
Opening/Closing Date for Proposals
Post-bid opening protest that the Davis-Bacon Act, rather than the
Walsh-Healey Act, should have applied to the solicitation is dismissed
as untimely filed where the solicitation contained only the clauses
mandated by the Federal Acquisition Regulation for referencing the
requirements of the Walsh-Healty Act and made no reference to any other
labor statute.
Contracts - Awards - Multiple - Propriety
Where solicitation permitted multiple awards on the line items in the
bid schedule and did not prohibit bids which restricted award to
combinations of line items, award properly was made to bidder submitting
low total bid even though bid was conditioned on award of certain
combination of line items.
The Latta Co. protests the award of a contract to Niedermeyer-Martin
Co. under invitation for bids (IFB) No. DACA85-85-B-0060, issued by the
Alaska District of the United States Army Corps of Engineers for the
supply of six pre-engineered, prefabricated buildings and connecting
corridor structures to be utilized as National Guard armories in Alaskan
rural communities. We dismiss the protest in part and deny it in part.
The IFB provided for bidding on the basis of three alternates.
Alternate No. 1, which contained twelve line items, called for prices on
the buildings, the destination shipping costs to each of the six
communities where the buildings were to be constructed, and construction
work at the sites. Alternate Nos. 2 and 3 were the same with the
exception that Alternate No. 2 called for pricing for destination
shipping of the buildings to certain specified staging areas instead of
the six communities, and Alternate No. 3 called for pricing for shipping
of the buildings to Seattle, Washington. The Corps of Engineers
received bids from four bidders. The joint venture of Latta and The
Olday Company was the apparent low total bidder on all three
alternatives, but the agency eliminated the joint venture from
consideration for award based on its determination that Latta was
neither a regular dealer nor a manufacturer under the Walsh-Healey Act,
41 U.S.C. Sections 35-45 (1982). Award was made instead of
Niedermeyer-Martin, the second low bidder, for its total bid on
Alternate No. 3.
The Corps of Engineers explains that it rejected the Olday-Latta bid
as provided under the Federal Acquisition Regulation (FAR), 48 C.F.R.
Section 22.608-2(e) (1984), which permits rejection of bids from bidders
whose Walsh-Healey Act representations indicate they are not
manufacturers or regular dealers of the supplies they offer. The agency
states that Olday-Latta, in its bid package, checked the portion of the
IFB's Walsh-Healey Act self-certification clause that provided that the
bidder was not a regular dealer of the supplies covered by the
solicitation. The Corps of Engineers further states that while
Olday-Latta did not indicate in the IFB's self-certification provision
whether or not it was a manufacturer, the joint venture did represent
that it was neither a regular dealer nor manufacturer in a bid package
on a prior canceled solicitation for the same prefabricated buildings.
Latta does not dispute the Corps' determination that Latta is not a
regular dealer or manufacturer. Rather Latta contends that the
Walsh-Healey Act was in applicable to the contract work to be performed;
according to Latta, only 15 percent of this work involves actual
manufacturing. It is Latta's view that if the act applies at all, it
should cover only the portion of the contract relating to manufacturing,
leaving Latta's bid to be considered for the nonmanufacturing portion of
the contract. Latta finally argues that, even if the Walsh-Healey Act
is deemed applicable to the entire contract, because the purpose of the
act is to ensure payment of minimum wages, the act's purpose is
fulfilled by a construction contractor such as Olday-Latta, which pays
union scale and employee benefits in accordance with the Davis-Bacon
Act, 40 U.S.C. Section 276a (1982).
Latta's protest as to the applicability of the Walsh-Healey Act to
this contract is untimely. Our Bid Protest Regulations, 4 C.F.R.
Section 21.2(a)(1) (1985), require that protests based on alleged
improprieties in a solicitation which are apparent prior to the bid
opening date be filed before that time. The IFB contained only the
clauses, mandated by the FAR, referencing the requirements of the
Walsh-Healey Act, and made no mention of the Davis-Bacon Act. The IFB
also did not indicate that the Walsh-Healey Act requirements applied
only to certain portions of the work under the IFB. Consequently,
Latta's protest against the applicability of the Walsh-Healey Act to all
or part of the procurement, filed after bid opening, will not be
considered on the merits. See generally Gunnison County Communication
Inc., B-219748, Sept. 19, 1985, 85-2 C.P.D. Paragraph 310.
Latta's argument that its compliance with the Davis-Bacon Act should
be viewed as satisfying the purpose of the Walsh-Healey Act also is not
for consideration here. Our Office does not consider issues as to
whether a bidder meets the requirements of the Walsh-Healey Act. Such
matters, by law, are for the contracting agency's determination,
subject, in appropriate cases, to final review by the Small Business
Administration (SBA) (if a small business is involved) and the
Department of Labor. Churchill Corp., B-217377, Jan. 24, 1985, 85-1
C.P.D. Paragraph 96. Although Latta apparently is a small business,
FAR, 48 C.F.R. Section 22.608-2(e) (1984), does not require SBA review
of a rejected offer where the offeror's representation indicates it is
not a manufacturer or regular dealer. /1/ Considering Latta's prior
certification that it was not a manufacturer or regular dealer; Latta's
failure to certify in its bid here that it is a manufacturer; and the
fact that Latta does not now dispute the Corps' finding that it is not a
manufacturer, the Corps properly did not refer the matter to SBA.
We do note that Latta states in its protest that it intended to
subcontract the portion of the contract covering manufacture of the
prefabricated buildings. We have stated that the clear intent of the
manufacturer or regular dealer requirement in the Walsh-Healey Act is to
eliminate bid brokering, the practice whereby a person who is not a
legitimate dealer or manufacturer of the supplies submits a bid so low
that established firms cannot successfully compete for the contract.
The broker then could subcontract the work to substandard factories,
thus overriding the federal government's desire to promote fair and safe
labor conditions. Stellar Industries, Inc. -- Request for
Reconsideration, B-218287.2, Aug. 5, 1985, 64 Comp. Gen. 748, 85-2
C.P.D. Paragraph 127. Thus, Latta's payment of benefits in accordance
with the Davis-Bacon Act for the work it would perform under the
contract would not satisfy the purpose of the Walsh-Healey Act with
regard to insuring that the actual manufacturer or dealer of the
prefabricated buildings has fair and safe labor conditions.
Latta further contends that the bid package of Niedermeyer-Martin
should have been found nonresponsive because the cover letter the
company submitted with its bids clearly shows that they improperly were
made conditional. It is Latta's position that any conditioning of a bid
is impermissible and renders the bid nonresponsive. We disagree.
Latta is correct that Niedermeyer-Martin qualified its bid; the
company indicated in the cover letter accompanying its bid package that
it would accept the award of the line items in all three bid
alternatives for shipping and site construction of the prefabricated
buildings only if it also received the award for the supply of the
buildings themselves. Niedermeyer-Martin also indicated that it would
accept an award for the supply of the buildings even if it were not
awarded the line items for the shipping and site construction. Such
conditions by bidders on the acceptance of line items in a bid schedule
are not unusual, however. We consistently have held that limitations in
a bid to various combinations of line items are effective in the absence
of a specific provision in the solicitation to the contrary. See Walsky
Construction Co., B-216737, Jan. 29, 1985, 85-1 C.P.D. Paragraph 117.
In all such cases where award on a restricted combination of schedule
items is provided for by the bidder, it is the low overall cost to the
government that is the relevant award criterion, as is required under
the procurement statutes. See 10 U.S.C.A. Section 2305(b) (West Supp.
1985).
Here, the IFB permitted multiple awards and contained no prohibition
against a bidder limiting its award to certain line item combinations.
Niedermeyer-Martin thus did not render its bid nonresponsive by
conditioning it in this manner. Because award based on
Niedermeyer-Martin's total bid resulted in the lowest overall cost to
the government, the award was proper.
The protest is dismissed in part and denied in part.
FOOTNOTES
(1) Under FAR, 48 C.F.R. Section 22.608-2(f), referral to SBA is
required where the contracting officer's determination of Walsh-Healey
Act ineligibility contradicts the offeror's certification.
B-219971, 65 Comp. Gen. 332
Matter of: Gordon W. Kennedy, Feb. 21, 1986
Officers and Employees - Transfers - Break in Service - Reemployed by
Another Agency - Liability for Relocation Expenses
Where an employee, separated by one agency as the result of a
reduction in force, is subsequently hired within the following year by
another agency, both the gaining and the losing agency have discretion
to pay all, any or none of the individual's relocation expenses. Since
it is the Department of Defense's policy for the losing agency to pay
these costs, the determination by the Defense Logistics Agency as the
gaining agency not to pay these expenses was proper. Where the gaining
agency has declined to pay any of such expenses, the losing agency's
payment of portion of the employee's relocation expenses is not
contingent upon any agreement between the heads of the two agencies
involved.
This action is in response to a request from Gordon W. Kennedy for
reconsideration of our Claims Group's settlement of April 19, 1985,
advising the Soil Conservation Service and the Defense Logistics Agency
that each has the discretion to pay all, some or none of the employee's
relocation and travel expenses. /1/ We affirm that position. Thus, the
Soil Conservation Service may reimburse the employee for all or any
portion of his otherwise allowable relocation expenses.
BACKGROUND
Mr. Kennedy was employed as a supply clerk, GS-4, step 10, in
Spokane, Washington, by the Soil Conservation Service, U.S. Department
of Agriculture (hereinafter referred to as Conservation Service). Due to
a reduction-in-force, Mr. Kennedy's position was abolished and he was
separated from Government service on June 23, 1984.
In seeking other Federal employment, Mr. Kennedy participated in the
Displaced Employee Program provided by the Conservation Service and the
Office of Personnel Management. See 5 C.F.R. Section 330.301 (1984) et
seq. and the Federal Personnel Manual, Chapter 330, Subchapter 3. On
his application for placement assistance Mr. Kennedy indicated that in
addition to the Spokane, Washington area, he would accept employment in
a number of areas throughout the United States. In October 1984 Mr.
Kennedy was offered and accepted a position with the Defense Logistics
Agency as a supply clerk, GS-4, in Columbia, South Carolina.
At that time the Defense Logistics Agency advised Mr. Kennedy that it
would not pay any of his relocation expenses. Mr. Kennedy accepted the
position with this knowledge. On October 12, 1984, Mr. Kennedy had a
meeting with officials of the Conservation Service in which he explained
that it was his understanding that the Conservation Service was required
to pay his relocation expenses. The administrative officer who
participated in that meeting advised Mr. Kennedy that he would look into
the matter and indicated that the Conservation Service would pay any
relocation expenses it was required to pay.
During the week of October 15, 1984, Mr. Kennedy kept in contact with
the Conservation Service regarding his relocation expense entitlement.
The Conservation Service was apparently in the process of determining
whether or not it was required to pay Mr. Kennedy's expenses, for on
October 19, 1984, Mr. Kennedy went to the Conservation Service to
complete several forms that would be necessary if the agency were to pay
his expenses. When Mr. Kennedy visited the Conservation Service again
on October 26, 1984, he was reassured that his request for relocation
expenses was being processed. However, no travel authorization was ever
issued.
In November 1984, after reporting for duty in Columbia, South
Carolina, Mr. Kennedy learned that the State Conservationist had denied
his request for relocation expenses. In response to inquiries made by
Mr. Kennedy's Congressman, the Conservation Service advised that it is
their policy to pay transfer expenses only when the Conservation Service
is the gaining agency and the Defense Logistics Agency advised that
under Department of Defense policy it is not required to pay relocation
expenses when it hires an employee who has been separated by reduction
in force. The Conservation Service advised the Congressman that it had
offered to pay 25 percent of Mr. Kennedy's relocation costs but that the
Defense Logistics Agency had not been willing to negotiate concerning
payment of the remaining 75 percent.
By letters dated April 19, 1985, our Claims Group issued a settlement
notifying the Defense Logistics Agency and the Soil Conservation Service
that each had the discretion to pay all, some or none of Mr. Kennedy's
expenses if such a decision was based upon a consistent application of
that discretion and was not arbitrary or capricious. Mr. Kennedy has
not been reimbursed by either agency for any of the expenses he claims
in connection with his relocation to South Carolina.
ANALYSIS
The basic authority for payment of relocation expenses is found in 5
U.S.C. Sections 5724 and 5724a (1982). The entitlements of employees
involved in reductions in force are specifically addressed in 5 U.S.C.
Section 5724(e) and Section 5724a(c). The latter provides:
(c) Under such regulations as the President may prescribe, a
former employee separated by reason of reduction in force or
transfer of function who within 1 year after separation is
reemployed by a nontemporary appointment at a different
geographical location from that where the separation occurred may
be allowed and paid the expenses authorized by sections 5724,
5725, 5726(b), and 5727 of this title, and may receive the
benefits authorized by subsections (a) and (b) of this section, in
the same manner as though he had been transferred in the interest
of the Government without a break in service to the location of
reemployment from the location where separated.
Section 5724(e) provides that when an employee transfers from one
agency to another, the gaining agency pays the employee's expenses. It
specifically provides, however, that when the transfer is due to a
reduction in force, relocation expenses may be paid in whole or in part
by the gaining agency or the losing agency as may be agreed upon by the
heads of the agencies concerned. We have held that this latter
provision applies regardless of whether the employee subject to
reduction in force is transferred between agencies without a break in
service or is reemployed by a different agency within 1 year following
his separation 53 Comp. Gen. 99 (1973).
The regulation implementing 5 U.S.C. Section 5724a(c) is found in the
Federal Travel Regulations, para. 2-1.5d(2) (Supp. 10, March 13, 1984)
incorp. by ref. 41 C.F.R. 101-7.003 (1984). Under this regulation a
former employee separated by reason of a reduction in force who is
reemployed within 1 year of the date of separation at a different
permanent duty station may be paid relocation expenses as though he had
been transferred in the interest of the Government without a break in
service. The allocation of such expenses when two agencies are involved
is addressed by FTR, para. 2-1.6b which provides, as does 5 U.S.C.
Section 5724(e), that these expenses may be paid in whole or in part by
the gaining or the losing agency.
Under the authorities cited above there is no question that either
the Defense Logistics Agency or the Conservation Service may pay Mr.
Kennedy's expenses of relocating to South Carolina. The issue presented
is whether either agency is required to pay any or all of these costs.
We have held that the losing agency -- the agency from which an
employee was separated by reduction in force -- is not required to pay
any of the relocation expenses incurred incident to his reemployment
within a 1-year period by a different agency. Patricia C. Reed, 55
Comp. Gen. 1339 (1976). In that case we sustained the policy of the
Selective Service System not to approve payment of relocation expenses
when its former employee is hired by a different agency. In sustaining
that policy, we stated:
* * * The language of section 5724(e), as well as the Federal
Travel Regulations, is permissive and vests broad discretion to
the individual agencies involved in determining whether or not a
reimbursement of relocation expenses may be made to an employee
who is separated by a RIF and reemployed within 1 year at another
geographical location.
The gaining agency -- the agency that hires the former employee
within 1 year of his separation by reduction in force by a different
agency -- has the same degree of discretion. Russell F. Gober,
B-209085, March 22, 1983. In that case the gaining agency, the Federal
Railroad Administration, refused to issue travel orders to individuals
it hired who earlier had been separated through reduction in force by
the National Transportation Safety Board. Its refusal was based on the
implications relocation expense payments would have with respect to the
agency's position in an on-going labor relations matter. In response to
the National Transportation Safety Board's offer to pay up to $5,000 in
relocation expenses we recognized that the losing agency has authority
to pay any, all or none of the employee's relocation expenses regardless
of the determination by the gaining agency to pay none of those
expenses.
In Mr. Kennedy's case, the determination by the Defense Logistics
Agency, the gaining agency, not to allow relocation expenses is based on
the underlying Department of Defense policy set forth in Volume 2 of the
Joint Travel Regulations. Under this policy, the Department of Defense
component may pay relocation expenses only when it is the losing agency.
Thus, it appears that the Defense Logistics Agency's refusal to pay
relocation expenses in Mr. Kennedy's case is consistent with the
Department of Defense policy and in accordance with our holding in
Russell F. Gober, B-209085, supra.
Consistent with our holding in Patricia C. Reed, 55 Comp. Gen. 1339,
supra, the Conservation Service, as the losing agency, also has
discretion to refuse to pay any or all of Mr. Kennedy's relocation
expenses. Its discretion is not diminished by the Defense Logistics
Agency's refusal to pay any or all of the expense in issue. While the
Conservation Service has stated that it has never paid relocation
expenses except when it is the gaining agency, the record reflects that
in this case an offer was made by the State Conservationist to pay 25
percent of Mr. Kennedy's relocation expenses. The Conservation Service
has not paid even this amount, apparently based on the erroneous
assumption that it has authority to pay this amount only if the Defense
Logistics Agency will bear the remaining 75 percent of Mr. Kennedy's
relocation expenses.
While 5 U.S.C. Section 5724(e) states that relocation expenses may be
paid in whole or in part by either agency "as may be agreed upon by the
heads of the agencies concerned," this provision does not limit either
agency's authority to pay any or all of an employee's expenses where the
other agency has declined to pay any such costs. The language
concerning agreement by the heads of the agencies concerned is intended
to prevent duplicate payments, not, to limit an individual agency's
discretion.
Accordingly we sustain the settlement issued by our Claims Group
insofar as it holds that the statute permits the gaining or losing
agency to pay all, any or none of the relocation expenses in a case such
as this. On the facts presented it is not clear whether the
Conservation Service has finally determined that it would pay 25 percent
of Mr. Kennedy's relocation expenses. In view of this decision,
however, the Conservation Service should now determine whether this part
of the expenses, or any greater or lesser amount, will be paid.
FOOTNOTES
(1) The request for reconsideration was made through the Office of
the Honorable Strom Thurmond, United States Senator, by letter of June
28, 1985.
B-220988.3, 65 Comp. Gen. 330
Matter of: Harrell-Patterson Contracting, Inc. - Request for
Reconsideration, Feb. 20, 1986
Contracts - Protests - General Accounting Office Procedures -
Timeliness of Comments on Agency's Report
Dismissal of original protest, for failure to timely comment on
agency report, is affirmed, despite protester's assertion that it
received the report late (after the due date of the report). The
protester was on notice of obligation to notify General Accounting
Office (GAO) that it had not received the report by the due date, but
failed to advise GAO timely that it received the report late.
Harrell-Patterson Contracting, Inc. (HPC), requests reconsideration
of our decision, Harrell-Patterson Contracting, Inc. - Request for
Reconsideration, B-220988.2, Jan. 24, 1986, 86-1 C.P.D. Paragraph 87.
That decision affirmed our dismissal of HPC's protest, B-220988, under
invitation for bids (IFB) No. N62470-85-B-4084, issued by the Department
of the Navy. We dismissed HPC's protect on December 23, 1985, because
HPC failed to file its written comments on the Navy's report 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).
We affirm the dismissal.
In its initial request for reconsideration, HPC's counsel asserted
that it did not receive the Navy report until December 13, 1985, and
filed its comments on December 24, 1985, within 7 working days of HPC's
receipt of the report. However, we stated that our receipt of HPC's
comments within 7 working days of HPC's actual receipt of the Navy's
report did not warrant reopening of the file, since HPC was required to
either file its comments or advise GAO that it had not received the
report within 7 working days from the December 10, 1985, due date for
delivery of the Navy report to GAO and to HPC.
HPC contends that our Bid Protest Regulations do not justify a
dismissal in these circumstances and alleges that, in any event, we had
HPC's comments to the agency report before we dismissed HPC's protest
because it had failed to file its comments timely.
GAO's Bid Protest Regulations, 4 C.F.R. Section 21.3(e), provide that
the protester's failure to file comments within the 7-day period, or to
file a statement requesting that the protest be decided on the existing
record, or to request an extension of the period for submitting
comments, will result in the dismissal of the protest. Obviously, GAO
has no means of determining the precise date that a protester received
the report. At the same time, the Competition in Contracting Act of
1984 (CICA) generally requires our Office to issue a final decision
within 90 working days after the protest is filed. 31 U.S.C.A. Section
3554 (West Supp. 1985).
In order to meet the statutory time constraints for issuing a
decision, and since we have no way of knowing when a protester receives
the report, we needed to establish a date for receipt of the agency
report by the protester upon which we could rely, in the absence of
information to the contrary. Otherwise, the protester could idly await
the report for an indefinite time to the detriment of the protest
system, generally, as well as our ability to resolve protests
expeditiously as required by CICA. Accordingly, our acknowledgment
notice, sent to HPC shortly after the protest was filed, advised HPC of
the report due date of December 10, 1985, and that HPC should promptly
notify our Office if it did not receive the report on that date. It
further advised that unless we heard from HPC, we would assume it
received a copy of the report when we received ours. This notice made
clear to the protester that the 7-day comment period commenced, at the
latest, on December 10, 1985, the due date listed for the report, unless
we were notified that the protester had not received the report by the
stated date. Del-Jen, Inc. -- Reconsideration, B-218136.3, June 10,
1985, 85-1 C.P.D. Paragraph 659.
Thus, HPC clearly was on notice that, if we did not hear from the
firm by December 19, 1985, the protest would be dismissed. HPC contends
if HPC had sent a letter to our Office on December 11, a day after the
due date, stating it had not received the report timely, we would not
have received it until after it received the report on December 13 and
it would have been "a waste of everyones' time." However, under our
procedures, HPC merely was required to promptly notify us that it had
not received the report. HPC could have satisfied this obligation by
telephoning this Office. A letter was not required for this purpose.
Furthermore, while HPC claims that the notice was unclear as to when
the protester should notify GAO of late delivery of the report, we think
a reasonable reading of the language should have placed the protester on
notice that, unless we were timely advised to the contrary, we would
assume that the protester received a copy of the report on the date we
received it and that the 7-day period for filing comments began on that
date. Thus, HPC was required to notify us timely if our assumption was
incorrect which meant within the 7-day period from the report due date.
Finally, HPC asserts that HPC's comments were filed before the
protest was dismissed. This is incorrect. Our records show that HPC's
comments were filed (hand delivered) on December 24, although the letter
is dated December 23, 1985. Our dismissal notice was dated December 23,
1985, and thus HPC's protest was closed before our receipt of HPC's
comments. The last correspondence from HPC prior to our closing of the
file is a letter dated November 8, which was approximately 1 month
before the agency report was filed.
We affirm the decision not to reopen the file.
B-220902, 65 Comp. Gen. 328
Matter of: Petchem Inc., Feb. 20, 1986
Contracts - Protests - Authority to Consider
Protest concerning NASA request for carriers' rate tenders for marine
transportation services is dismissed since the request was issued under
authority of the Transportation Act of 1940, as amended, 49 U.S.C. 10721
(1982), and the agency did not obtain such services under the
government's procurement system so that a government bill of lading will
serve as the basis for payment.
Petchem Inc. (Petchem) protests the National Aeronautics and Space
Administration's (NASA) selection of Dravo Mechling Corporation (Dravo)
for transportation services of an ocean tugboat for the towing of a
government-owned barge.
The protest is dismissed.
On September 9, 1985, the NASA transportation office at the Marshall
Space Flight Center, requested "a uniform tender of rates and/or
charges" for the furnishing of an ocean towboat and equipment, as well
as services and personnel not furnished by the government, necessary to
tow a government-owned barge between Michoud Harbor, New Orleans,
Louisiana, and the Kennedy Space Center in Florida. The barge in
question is used to transport external main engine fuel tanks for the
space shuttle from the place of manufacture to the Kennedy Space Center.
The request for rates and/or charges advised that these uniform tenders
of rates would be for the delivery of the next 10 external tanks to the
Kennedy Space Center.
Only Petchem and Dravo submitted rates in response to NASA's
September 9 request. Dravo's offer incorporated by reference all other
terms of prior tenders of rates and/or charges which it had filed with
the Interstate Commerce Commission. NASA accepted the rate tender
submitted by Dravo since it determined that Dravo had proposed the
lowest overall price.
NASA advises that it requested these rate tenders for the marine
transportation services under authority provided in the applicable
provisions of the Transportation Act of 1940. See 49 U.S.C. Section
10721 (1982). NASA states that its request for rate quotations for the
marine transportation services will be followed by issuance of a
government bill of lading (Standard Form 1103) which becomes the
document upon which payment is based. Accordingly, NASA argues that
this protest should be dismissed because the transportation services are
to be obtained under a government bill of lading pursuant to the
pertinent statutory authority set forth in the Transportation Act of
1940 rather than pursuant to the procurement statutes and regulations
which are subject to our bid protest authority.
A government bill of lading is the basic procurement document used by
the government for acquiring freight transportation services from common
carriers under section 321 of the Transportation services, at published
rates, from any common carrier lawfully operating in the territory where
such services are to be performed. 49 U.S.C. Section 10721 (1982); see
also Department of Agriculture -- Request for Advance Decision, 62 Comp.
Gen. 203 (1983) 83-1 C.P.D. Paragraph 201.
Transportation obtained through the use of a government bill of
lading is not subject to the procurement laws. Federal Acquisition
Regulation (FAR), 48 C.F.R. Sections 47.000(a)(2) and 47.200(b)(2)
(1984); see also T.V. Travel, Inc., et al., B-221526.2, Feb. 18, 1986,
65 Comp. Gen. 323 (1985) 85-2 C.P.D. Paragraph 640 at 5,6. Furthermore,
the rate tenders were obtained pursuant to the Transportation Act of
1940 and, therefore, the agency has not used the government's
procurement procedures to obtain these transportation services. NASA
has not used a solicitation which contains the ordinary clauses
contained in procurement solicitations and we are advised by the agency
that payment will be based upon a government bill of lading rather than
the contractual documents ordinarily used for government procurement
contracts. Accordingly, we conclude that this matter falls outside the
government's procurement system and thus will not be considered by our
Office under our Bid Protest Regulations, 4 C.F.R. part 21 (1985), which
deal with the filing of protests of alleged violations of procurement
statutes and regulations. 31 U.S.C.A. Section 3552 (1985).
The protest is dismissed.
B-220228, 65 Comp. Gen. 326
Matter of: Laurence R. Sanders, Feb. 19, 1986
Officers and Employees - Transfers - Temporary Quarters - Entitlement
Employee of the Department of Energy was transferred incident to a
permanent change of station from Colorado to Washington, D.C. Employee
was authorized temporary quarters allowance for family including
authorization for dependent mother to stay in Ada, Oklahoma, until she
joined the family in Washington. Due to illness, dependent mother was
placed in a nursing home in New Mexico until she joined the family in
Washington a few months later. Since nursing home expenses incurred
would not have been incurred absent the transfer, the occupancy of such
quarters may be regarded as "reasonably related and incident to the
transfer" and, therefore, may be paid pursuant to FTR para. 2-5.2(d).
This action is in response to a request for an advance decision from
the Department of Energy regarding whether an employee may be reimbursed
for temporary quarters for his dependent mother who lived temporarily in
a nursing home when he underwent a permanent change-of-station transfer.
/1/ For the reasons stated hereafter, we conclude that reimbursement
may be allowed.
Mr. Laurence R. Sanders, an employee of the Department of Energy, was
authorized travel expenses pursuant to a permanent change of station to
Washington, D.C., from Grand Junction, Colorado. Mr. Sanders was
authorized temporary quarters for himself and his family and he was
authorized temporary quarters for his mother in Ada, Oklahoma. Mr.
Sanders' mother-in-law lived in Ada, Oklahoma, and was to have given his
mother the requisite care needed, until Mr. Sanders' mother could join
the family in Washington.
Mr. Sanders' mother became ill while in Ada, Oklahoma, and had to be
hospitalized. Mr. Sanders' mother-in-law also became ill and was
therefore unable to care for Mr. Sanders' mother as originally planned.
Since Mr. Sanders' mother needed care and was unable to travel to join
the family, Mr. Sanders arranged to have her flown to Albuquerque, New
Mexico, where other relatives had her put in a nursing home until she
was able to join the family in Washington.
The issue presented by the Department of Energy is whether the
nursing home may be considered temporary living quarters in view of the
regulations in effect at the time of Mr. Sanders' transfer. It is our
view that it may.
Authority for payment of temporary quarters allowances is found at 5
U.S.C. Section 5724a (1982 and Supp. I, 1983). Regulations implementing
that provision are found in the Federal Travel Regulations. On the
effective date of Mr. Sanders' transfer, the applicable regulations
provided:
d. Temporary quarters located at other than official station.
As a general rule the location of the temporary quarters must be
within reasonable proximity of the old and/or new official
station. Payment of subsistence expenses for occupancy of
temporary quarters in other locations shall not be allowed unless
justified by circumstances unique to the individual employee or
the employee's family that are reasonably related and incident to
the transfer. * * * Occupancy of temporary quarters shall not be
approved for vacation purposes or other reasons unrelated to the
transfer.
Federal Travel Regulations, para. 2-5.2(d) (Supp. 10, November 14,
1983), incorp. by ref., 41 C.F.R. Section 101-7.003 (1985).
This regulation became effective after the issuance of Mr. Sanders'
travel authorization but prior to his effective date of transfer. The
issue which concerns the Department of Energy is whether the reasons for
the expenses under these circumstances are reasonably related to the
transfer in this case, as required by the regulation. Before the
addition of the above-quoted provision, the Federal Travel Regulations
did not specifically address the treatment of temporary quarters located
away from the old or new duty station. However, we believe that the
allowability of expenses for such temporary quarters may be analogized
to other provisions of the regulations and our decisions thereunder.
Paragraph 2-5.1 of the Federal Travel Regulations provides for the
exercise of administrative discretion in approving temporary quarters
expenses but requires generally that such expenditures be justified and
made in connection with the employee's transfer. We have held that
before a payment may be made there must be an administrative
determination that the use of temporary quarters was incident and
necessary to the transfer. See, e.g., Eligibility for Temporary
Quarters Subsistence, B-184024, January 21, 1976.
In B-179556, May 14, 1974, we held that an employee was entitled to
temporary quarters expenses for his wife and child who remained in
separate lodgings at the old duty station when the employee resided at
his new duty station. In that case, the employee's wife gave birth to a
child and was advised by her doctor to remain in the area for further
treatment. She was placed in a boarding house and the child was placed
in the care of relatives. Since it appeared that absent the transfer
neither of those expenses would have been incurred, the expenses were
related to the transfer. See also Ronald L. Vallarian, B-195509,
January 25, 1980, in which we allowed temporary quarters for a mother
and premature child because remaining in their old duty station
residence would have caused a delay in selling the house and the mother
and child were required to remain at the old duty station for treatment
of the child.
The test in these cases is whether the temporary quarters expenses
would have been incurred by the employee absent the transfer to a new
duty station. If the expenses arose due to the transfer, they have been
considered incident to the transfer. It is our view that the same test
can be applied under the new provision in the current regulations
dealing with temporary quarters away from the old or new duty station.
In the current case, it appears that temporary quarters expenses were
approved for Mr. Sanders' mother. Due to the transfer, Mr. Sanders
placed her in Ada, Oklahoma, and subsequently in the nursing home in New
mexico until January 18, 1984, when she joined the Sanders family in
Washington. He points out that his wife had been providing in Colorado
and has been providing in Washington home nursing care such that
placement in a nursing home is not necessary. Mr. Sanders states that
had the transfer not occured, the expense of a nursing home would not
have been necessary. We find no basis in the record to dispute this
statement.
In conclusion, it appears that the nursing home expenses were
incurred due to the transfer of Mr. Sanders and therefore may be
regarded as reasonably related and incident to the transfer, rather than
as being "for vacation purposes or other reasons unrelated to the
transfer." Accordingly, temporary quarters allowance may be paid to Mr.
Sanders for the temporary lodging expenses of his dependent mother to
the extent otherwise appropriate.
FOOTNOTES
(1) The request was made by V. Joseph Startari, Authorized Certifying
Officer, Department of Energy, Washington, D.C.
B-221526.2, 65 Comp. Gen. 323
Matter of: T.V. Travel, Inc., et al. - Reconsideration, Feb. 18,
1986
Contracts - Negotiations - Offers or Proposals - Evaluation - Criteria
- Application of Criteria
General Accounting Office (GAO) affirms previous decision sustaining
protest on basis that the awardee's proposal was not properly evaluated,
since it received a maximum score, even though it proposed less than the
optimum staffing preference indicated in the solicitation evaluation
criteria and in the rating plan used by the agency in scoring proposals.
The General Services Administration (GSA) requests reconsideration of
one aspect of our decision in T.V. Travel, Inc., et al. -
Reconsideration, B-218198.6, et al, Dec. 10, 1985, 65 Comp. Gen. 109,
85-2 C.P.D. Paragraph 640. We affirm our previous decision sustaining
the protest.
In the previous decision, we considered protests against various GSA
awards for the arrangement of travel services for official government
travel. /1/ We sustained protests by T.V. Travel, Inc., and World
Travel Advisors, Inc., against GSA's selection of a Scheduled Airline
Ticket Office (SATO) to be the travel management center for civilian
agencies in the Atlanta, Georgia area. The protests were sustained
because the record indicated that the SATO proposal was not properly
evaluated in three areas, those being: (1) the number of travel agents
proposed; (2) Diners Club Account reconciliation; and (3) electronic
transmission of summary reports. We recommend that GSA reevaluate the
proposals in the competitive range in these areas and determine which
offeror is the highest ranked. If the SATO is not the highest ranked,
then its contract should be terminated for the convenience of the
government and award made to the highest rated offeror.
GSA only requests reconsideration of the portion of our decision as
it concerns the evaluation of the number of travel agents proposed by
the SATO. GSA claims our decision is erroneous in this regard for two
reasons. First, GSA disagrees with our conclusion that the evaluation
criteria set forth in the solicitation indicate that offerors which
proposed one travel counselor per $500,000 in anticipated travel will be
rated higher than those who propose fewer travel counselors. GSA argues
that any offeror, such as the SATO, which proposes a travel counselor
for every $500,000 to $750,000 in anticipated travel was fully
acceptable and should receive full credit in this area. Second, GSA
claims that our finding that SATO proposed only 14 travel counselors is
erroneous. GSA claims SATO proposed 15 travel counselors since SATO's
onsite travel manager should also be counted.
GSA claims the evaluation criteria indicated that full credit would
be given any travel agency offeror which proposed one travel counselor
or reservation agent per $500,000 to $750,000 in annual air sales. GSA
states that the solicitation indicates that "an average reservation
agent can book between $500,000 to $750,000 in annual air sales."
However, the subcriteria referenced by GSA that is contained in the
project management evaluation criteria actually state:
The Offeror's organization and staffing plan will be assessed
to ensure that the Project Manager has adequate authority to
direct the Government project, sufficient resources are committed
to the project, and the firm is organized for efficient delivery
of services. The Government will take into consideration that the
industry standard for staffing assumes an average reservation
agent can book $500,000 in annual air sales and that few can book
above $750,000 annually. . . . (Italic supplied.)
In its reconsideration request, GSA does not mention the rating plan
which it said it utilized in scoring the proposals, even though our
previous decision relies in part on this plan. The pertinent paragraph
of the rating plan states that offerors would receive a maximum three
points for this subcriteria of the project management criteria if "the
offeror proposed to staff to meet the industry average of $500,000
annual sales per commercial agent." (Italic supplied.) The rating plan
implementation is consistent with an objective interpretation of the
above-quoted evaluation subcriteria that indicate that offerors which
propose one travel counselor per $500,000 in anticipated travel will be
rated higher for this subcriteria than those proposing fewer travel
counselors. These subcriteria reasonably encourage offerors to offer
more travel counselors to achieve a better ratio and, thus, maximize
their technical score and chance for award.
GSA also states that this matter was rated under the "personnel
qualifications" evaluation criteria which state "the number of
reservation agents (travel counselors) will be measured against the
industry standard noted in (the project management subcriteria quoted
above.)" Under the rating plan, the subcriteria of the "personnel
qualifications" criteria which address this matter provide for a maximum
one point if "a sufficient number of reservation agents (travel
counselors) will be assigned to the government so that their average
sales fall between $500,000-$750,000 per year." However, this does not
in any way belie the reasonable implication of the project management
evaluation subcriteria that offerors proposing one travel counselor per
$500,000 will be rated higher than those who propose fewer counselors.
GSA also states that we incorrectly concluded the SATO proposed 14
travel counselors rather than 15 travel counselors because SATO's onsite
travel manager should also be counted. GSA references pages 15 and 22
of SATO, proposal as establishing that "in addition to his managerial
duties, the onsite travel manager is available and expected to handle
federal employee travel needs also with the other travel agents at the
site." However, our review of SATO's proposal does not lead to this same
conclusion. In regard to the onsite manager, the proposal only notes
that he will assist the project manager in administering the operation
of those offices and services. Therefore, we are unconvinced that our
previous decision is erroneous in this regard. In any case, GSA
concedes that 15 reservation agents would make the reservation agent
ratio one for every $666,000 in anticipated travel rather than the one
for $719,000 ratio for 14 travel counselors. Consequently, this issue
does not seem particularly significant to the ultimate proposal
evaluation.
GSA also references the "obvious flexibility" of the SATO because of
the number of SATO offices in the close proximity to and the member
airline carrier offices in the Atlanta area. GSA speculates that the
SATO is inherently superior to other offerors for this factor and "the
SATO could quite conceivably have been rated much higher."
As indicated in our previous decision, GSA has not been able to find
the detailed scoresheets for the proposal. Assuming GSA followed the
values set forth in the rating plan as it claimed, it seems clear that
the SATO received the maximum three points in the project management
subcriteria and one point in the personnel qualifications criteria for
its proposed number of travel agents. Therefore, we are unable to
ascertain how SATO could have been rated "much higher" than the perfect
score it apparently achieved in this area.
Since GSA has not established that our decision was erroneous, we
affirm our previous decision.
FOOTNOTES
(1) This decision overruled our decision in T.V. Travel, Inc., et
al., B-218198, et al., June 25, 1985, 85-1 C.P.D. Paragraph 720, which
dismissed the protests because we believe the selections were not
subject to our bid protest jurisdiction. GSA and the protesters
requested reconsideration of this initial decision since they believed
we had jurisdiction over these selections. Upon reconsideration, we
agreed and reinstated the protests.
B-221031; B-220409, 65 Comp. Gen. 318
Matter of: Lite Industries, Inc.; Magline, Inc., Feb. 18, 1986
Appropriations - Continuing Resolutions - Authorizing Legislation
Absent
Where statutory test program permitting the Defense Logistics Agency
to apply a price differential of up to 2.2 percent in favor of bids
submitted by labor surplus area concerns expired at the end of fiscal
year 1985 and was not extended by the House Joint Resolution making
continuing appropriations for fiscal year 1986, agency properly declined
to apply price differential where bids were solicited and opened during
fiscal year 1985 but where contract was not "made" -- awarded -- until
after fiscal year 1985's expiration when continuing resolution was in
effect.
Contracts - Labor Surplus Areas - Evaluation Preference
Agency's refusal to apply a percentage differential in evaluating
price offered by labor surplus area concern was proper where statutory
authority to do so had expired as of time of award, and was consistent
with the provisions of the solicitation relating to evaluation of bids,
which specifically warned bidders that "if no legislation is in effect
at time of award which authorizes the payment of a price differential,
no evaluation factor will be added to the offers submitted."
Lite Industries, Inc., and Magline, Inc., have filed similar
protests, predicated on the same issue of statutory interpretation,
concerning two separate Defense Logistics Agency (DLA) solicitations.
We have combined the protests in one decision to facilitate
comprehensive treatment of the issue raised.
THE LITE INDUSTRIES PROTEST
Lite Industries, Inc., protests the award to Hialeah Industries,
Inc., of a firm fixed price contract for wet weather poncho liners under
invitation for bids (IFB) No. DLA100-85-B-1078 issued by the DLA's
Defense Personnel Support Center. The solicitation was a total small
business set-aside with price differential for Labor Surplus Area (LSA)
concerns. The solicitation was issued on August 8, 1985; bids were
opened on September 10, 1985; and the contract was awarded to Hialeah
on October 29, 1985. Lite argues that the agency erred in failing to
apply the 2.2 percent price differential for LSA concerns in the
evaluation of bids under the solicitation, as a result of the agency's
allegedly erroneous determination that the legislation authorizing the
payment of a price differential for the purpose of relieving economic
dislocations had expired. We deny this protest.
Lite protested to the agency upon being advised of the award to
Hialeah. Lite maintained that Hialeah ($13.45 per unit) did not qualify
as an LSA concern, but that Lite ($13.48 per unit), did. /1/ Since its
bid was within 2.2 percent of Hialeah's, Lite argued, the application of
the differential in favor of LSA concerns should have resulted in award
to it. The agency advised Lite that the 2.2 percent price differential
permitted under section 1254 of the Department of Defense (DOD)
Authorization Act, 1985, expired at the end of fiscal year 1985 on
September 30, 1985, and that the preference for LSA firms was not
applicable to the contract made for this DLA procurement on October 29,
1985. Lite then protested to this Office that the the continuing
resolution /2/ passed by Congress on September 30, 1985, extended the
preference for LSA firms because the purpose of the continuing
resolution was to continue government spending in the same manner and at
the previous level existing at the end of the fiscal year on September
30, 1985. Therefore, according to the protester, the agency was
obligated to spend money on a continuing basis for programs under the
same terms and conditions as existed under the DOD Authorization Act,
1985, until the continuing resolution expired on November 14, 1985.
Moreover, in Lite's view, if Congress had wanted to end the LSA
preference or limit spending for the test program it would have
specifically said so in the continuing resolution.
The DLA rejects the protester's statutory interpretation, concluding
instead that the test program authority found in the DOD Authorization
Act, 1985, which permitted payment of price differentials to relieve
economic dislocations, expired at the end of the 1985 fiscal year. DLA
further contends that since the DOD Authorization Act, 1986, was enacted
on November 8, 1985, without providing in any way for the test program,
it evidences Congress' intent to end the test program in accordance with
the statutory term of September 30, 1985, provided in the DOD
Authorization Act, 1985. In DLA's view, to the extent that the
continuing resolution continued programs under their current terms and
conditions, the current terms and conditions for the LSA preference test
program required its expiration on September 30, 1985, the end of the
1985 fiscal year. Thus DLA concludes that to require it to apply the
LSA preference price differential as an evaluation factor under the
protested solicitation would result in the application of public funds
under a program that has not been authorized by law.
Under section 1109 of Pub. L. No. 97-252, 96 Stat. 746 (September 8,
1982), as amended by section 1205 of Pub. L. No. 98-94, 97 Stat. 683
(September 24, 1983), the Secretary of Defense was authorized to conduct
a test program during fiscal years 1983 and 1984 and pay up to a 2.2
percent price differential under contracts awarded to a qualifying Labor
Surplus Area concern. Section 1254 of Pub. L. No. 98-525, 98 Stat. 2611
(October 19, 1984), popularly known as the DOD Authorization Act, 1985,
specifically extended the test program for one additional year through
the end of fiscal year 1985. House Joint Resolution 388 (Pub. L. No.
99-103, 99 Stat. 471 (September 30, 1985)) /3/ making continuing
appropriations for fiscal year 1986, was the funding authority in effect
and applicable to this procurement on the date of the award of this
contract on October 29, 1985. On November 8, 1985, Congress passed the
DOD Authorization Act, 1986 (Pub. L. No. 99-145, 99 Stat. 583 (November
8, 1985)), without authorizing, funding, or otherwise addressing the LSA
preference test program.
Although we recognize that a continuing resolution is a temporary
appropriations act to keep existing programs functioning after the
expiration of previous budget authority, the issue in this case involves
the expiration of the program authorization itself as well as the
expiration of funding. In similar circumstances, we have held that the
specific inclusion of a program in a continuing resolution will provide
both authorization and funding to continue the program despite the
expiration of the appropriation authorization legislation. Similarly,
if it is clear from the legislative history that Congress intends
certain programs to continue under the resolution despite the lack or
expiration of authorizing legislation, the resolution will act both as
authorization and appropriation. For example, in 55 Comp. Gen. 289
(1975) we found that the continuing resolution specifically stated that
the program under consideration was to be continued under the
resolution. This clear intent on the part of the Congress supported our
determination that the program could be continued although authorization
legislation for the program expired prior to or during the period the
resolution was in effect. Id., at 292.
In the present case, however, the test program was not specifically
included in the continuing resolution, and we find no evidence to
support the protester's contention that Congress intended the test
program to be extended by the continuing resolution beyond the end of
the 1985 fiscal year. We are unconvinced by protester's general
contention that Congress intended the very specific end of the fiscal
year 1985 expiration for the test program -- which appears under the
equally specific statutory rubric "ONE-YEAR EXTENSION OF TEST PROGRAM TO
AUTHORIZE PRICE DIFFERENTIALS TO RELIEVE ECONOMIC DISLOCATIONS" in the
DOD Authorization Act, 1985 -- to be submerged in and extended by the
very general provision of the continuing resolution in this case. Nor
do we find any indication or direction in committee reports, floor
debates and hearings, or statements in budget projections or
justifications that would support protester's contention that the agency
was bound to continue operation of the test program during the period of
the continuing resolution until enactment of the DOD Authorization Act,
1986.
Lite's protest was filed with this Office on November 8, 1985, at a
time when the protester believed that Congress would act to further
extend the test program in the DOD Authorization Act, 1986. However,
Congress did not specifically extend, provide funds, or address the test
program in any way. In the absence of any indication that Congress
intended to extend the test program beyond its September 30, 1985
expiration date, we will not object to the DLA's determination that
applying the test program evaluation factor and paying a 2.2 percent
price differential under this solicitation would violate 10 U.S.C.
Section 2392 (1982), which prohibits the use of Department of Defense
funds to pay a price differential for the purpose of relieving economic
dislocations.
Lite's protest is therefore denied.
THE MAGLINE PROTEST
Magline, Inc., protests the award to Doninger Metal Products
Corporation of a firm fixed price contract for expandable aluminum tent
frames under DLA's Defense Personnel Support Center invitation for bids
(IFB) No. DLA100-85-B-1118, another total small business set-aside with
price differentials for LSA concerns. As in the case of Lite
Industries, the solicitation was issued and bids were opened in fiscal
year 1985; award was made in fiscal year 1986. Magline, too, protests
DLA's failure to apply the 2.2 percent price differential for LSA
concerns in the evaluation of bids, arguing that the agency erroneously
determined that the legislation authorizing the payment of a price
differential for the purpose of relieving economic dislocations had
expired.
For the reasons stated above, in conjunction with the protest of Lite
Industries, Magline's protest on this basis is denied.
Magline further contends that since section 1254 of the DOD
authorization Act, 1985, was in effect at the date of bid opening on
September 25, 1985 -- prior to the Act's expiration on September 30,
1985 -- the solicitation was "funded" before the test program expired,
and the 2.2 percent differential should apply to the evaluation of bids
in this case. We disagree.
The legislation set out at 10 U.S.C. section 2392 Note, as amended,
states that the Secretary of Defense may exempt from the restrictive
provisions of that statute:
any contract (other than a contract for the purchase of fuel)
made by the Defense Logistics Agency during fiscal years 1983,
1984 and 1985 if the contract is to be awarded to an individual of
firm located in a Labor Surplus Area.
The legislation specifically refers to contracts "made" by DLA by the
end of the 1985 fiscal year. Since the contract here was formed, or
"made," within the meaning of the statute when the contract was awarded
to Doninger on October 24, 1985, it follows that the contract was made
after the DOD Authorization Act, 1985, and the test program had expired
with the end of the 1985 fiscal year on September 30, 1985.
Magline further contends that, even if the test program authorization
and funding had expired on September 30, 1985, it should still receive
the benefit of the test program's price differential because the
solicitation specifies that bids would be evaluated on the basis of
price differentials for LSA concerns. Noting that the purpose of a
solicitation is to apprise bidders, prior to bid opening, of the
specific factors on which bids will be evaluated, and to ensure that
bidders compete on the same basis, Magline contends that because the IFB
contained standard LSA price differential clauses, bids must be
evaluated on the basis of this differential. Here again, we disagree.
Paragraph (e) of the clause entitled, "NOTICE OF TOTAL SMALL BUSINESS
SET-ASIDE WITH PRICE DIFFERENTIAL FOR LABOR SURPLUS AREA CONCERNS (APR.
1985)" which is incorporated by reference in the solicitation in
accordance with Defense Logistics Acquisition Regulation Section
52.220-9000 (July 1985), states as follows:
(e) The evaluation factor described in subparagraph (a) above
is authorized by legislation in effect at the time of solicitation
issuance. If the authorized percentage factor is changed by
legislation which takes effect before award, offers will be
evaluated using the percentage factor so authorized. If no
legislation is in effect at the time of award which authorizes the
payment of a price differential, no evaluation factor will be
added to the offers submitted. Offerors are cautioned that this
solicitation will not be amended solely to advise of a change in
the applicable percentage to be used as an evaluation factor.
(Italic supplied.)
This provision adequately notifies bidders that legislative changes,
such as the expiration of the test program in this case, may preclude
the use of the price differential as an evaluation factor. The award to
Doninger, therefore, was not inconsistent with the solicitation.
Magline also asserts that the solicitation clause quoted above is
prejudicial to LSA concerns because a qualifying bidder must speculate
as to whether legislation in effect at bid opening will still be in
effect at the time the contract is awarded.
Calculating a bid to be submitted near the end of a fiscal year based
on assumptions as to whether Congress will continue a program may well
involve the perception of risk. If so, it must necessarily be a risk
one assumes in doing busines with the government. To hold otherwise
would require the DLA to apply an evaluation factor and pay a price
differential for a contract made on October 24, 1985, under program
authority which expired on September 30, 1985, and is no longer
authorized by law. Moreover, with the expiration of the test program
authority, the remaining provisions of 10 U.S.C. Section 2392 strictly
prohibit the use of Department of Defense funds to relieve economic
dislocations, and any action by DLA to pay a price differential in these
circumstances would violate that statute. Accordingly, Magline's
protest on this basis is denied.
FOOTNOTES
(1) Hialeah, which in its bid claimed eligibility as an LSA concern,
contends that it, also, was a fully qualifying LSA concern entitled to
the 2.2 percent differential. DLA did not address this contention in
its administrative report. In view of our finding that the 2.2 percent
differential was not applicable to this procurement, however, we need
not address Hialeah's LSA status.
(2) The term "continuing resolution" refers to legislation enacted by
Congress to provide budget authority for federal agencies and specific
activities to continue in operation until the regular appropriations are
enacted. See generally 58 Comp. Gen. 530, 532 (1979).
(3) Continuing resolutions are enacted as joint resolutions making
continuing appropriations for a certain fiscal year. Although enacted
in this form rather than as an act, once passed by both Houses of the
Congress and approved by the President, a continuing resolution is a
public law and has the same force and effect as any other law.
B-220752, 65 Comp. Gen. 313
Matter of: Cable Antenna Systems, Feb. 18, 1986
Contracts - Protests - Authority to Consider
Since General Accounting Office (GAO) decides protests that involve
procurements of property or services by a federal agency, the award by a
federal agency of a franchise contract for cable television services is
subject to GAO's bid protest jurisdiction.
Contracts - Protests - Administrative Actions - Outside Scope of
Protest Procedures
General Accounting Office (GAO) will not consider under its bid
protest jurisdiction allegations that an agency has not complied with
the renewal provisions of the Cable Communications Policy Act of 1984,
47 U.S.C.A. 521, et seq. (West Supp. 1985), because that act expressly
provides for judicial resolution of such disputes.
Contracts - Protests - Interested Party Requirement - Protester Not in
Line for Award
Incumbent cable television franchisee is not an interested party to
contest provisions in a solicitation issued by an agency for a second
franchise where the agency has determined properly that the incumbent
franchisee is not eligible for award under the solicitation.
Cable Antenna Systems (CAS) protests the issuance by Vandenberg Air
Force Base, California, of a request for proposals (RFP) for a
nonexclusive franchise to provide cable television services to
subscribers at the base. CAS contends that the RFP violates its rights
as an incumbent franchisee under the Cable Communications Policy Act of
1984, 47 U.S.C.A. Section 521, et seq. (West Supp. 1985) (Cable Act),
and complains about other alleged improprieties regarding the issuance
of the solicitation.
The arguments in this case have focused almost exclusively on the
jurisdiction of this Office to decide the protest. As discussed below,
we conclude that although the protest is of the type that generally we
will consider, the specific issues raised and the protester's peculiar
status as an incumbent franchisee are such that we will not do so here.
We dismiss the protest.
Background
In 1974, the agency awarded CAS an exclusive, 10-year franchise to
provide cable television services to subscribers at Vandenberg. Prior
to the expiration of that franchise, the agency issued a solicitation on
December 11, 1984, seeking proposals from offerors wishing to provide
the same services when the CAS franchise expired on August 31, 1985.
CAS filed a protest with this Office (B-218212.2) contending that some
of the provisions of the solicitation were inconsistent with the
recently passed Cable Act, but withdrew the protest when the agency
canceled the solicitation and agreed to consider renewing CAS' existing
franchise under the renewal provisions of that act.
In February 1985, CAS submitted to the agency a proposal to renew its
franchise. In addition, CAS and the agency discussed transferring the
franchise to a third party. When CAS' negotiations with the third party
were not concluded by August, however, the agency extended CAS'
franchise on a nonexclusive basis through September 30. (The agency
subsequently issued another short-term extension.) By letter dated
September 20, CAS notified the agency that it had terminated
unsuccessfully the transfer negotiations with the third party and
requested renewal of its franchise for its own account. On September
24, the agency issued the solicitation that is the subject of this
protest.
Basis for Protest
The protester contends, first, that by failing either to renew its
existing franchise or to initiate proper renewal proceedings, the agency
has not complied with the requirements of the Cable Act, the directive
the agency issued to implement the act, or the statements the agency
made to this Office that led CAS to withdraw its earlier protest. The
solicitation further violates the Cable Act, says the protester, because
it allegedly provides for evaluating an incumbent cable operator's
renewal proposal on a competitive basis. CAS contends also that the
solicitation is defective because it does not contain evaluation
criteria. Finally, CAS contends the agency acted improperly with
respect to soliciting offers in that it did not cause a timely synopsis
of the solicitation to be published in the Commerce Business Daily, did
not allow the required 30 days for offerors to prepare their proposals,
and attempted to prevent CAS from submitting a proposal.
Jurisdictional Arguments
The position of the Air Force regarding CAS' protest is that this
Office has no jurisdiction to consider it. The agency takes this
position basically for two reasons. First, the agency maintains that
the contemplated award of a cable franchise will not involve the
expenditure of appropriated funds. The Air Force explains that this
solicitation is not for cable service for the government, but is merely
intended to result in a second cable franchise at Vandenburg in order to
introduce competition between cable franchisees. Should the agency
desire to acquire cable services for an appropriated fund activity, it
will procure such services through a competition between the two
franchisees.
The Air Force acknowledges that, under limited circumstances, this
Office in the past has considered protests of franchise awards not
involving appropriated funds. Those circumstances are where the
franchise provides a direct benefit to the government or services to an
appropriated fund activity or where the government would receive a share
of the income generated by the franchise. See West End Associates,
B-215536, Jan. 14, 1985, 85-1 CPD Paragraph 36. We have cited the
government's potential liability for termination costs as another factor
to be considered in deciding whether we would take jurisdiction, but
have indicated that potential termination liability alone is not enough
to invoke our review. Id. The agency contends, however, that none of
these circumstances exist in this case.
The agency's second basis for contending that this Office lacks
jurisdiction is that CAS' objections to the solicitation largely involve
alleged violations of the Cable Act. Such matters are not for us to
consider, says the Air Force, because under 31 U.S.C.A. Section 3552
(West Supp. 1985) we decide protests alleging violations of procurement
statutes or regulations, and the Cable Act is not a procurement statute.
Finally, the agency notes that the Cable Act provides that cable
operators adversely affected by a final decision of a franchising
authority regarding franchise renewal may file an action in a state
court or a United States district court. 47 U.S.C.A. Section 555.
The protester contends that our Office has jurisdiction over this
protest pursuant to the precedent established by prior cases and that
nothing in the Cable Act precludes us from exercising that jurisdiction.
The protester argues that the franchise will involve services to the
government under both franchise paragraph 25, which requires the
franchisee to construct or modify its system to allow for a temporary
emergency bradcasting capability, and paragraph 26, which requires the
franchisee to reserve one cable channel for agency programming viewable
only by government subscribers. Also, the protester notes that the
government is liable for termination costs under franchise paragraph 38.
In any event, says CAS, appropriated funds in fact are involved in this
case since the agency already has decided to purchase cable services for
appropriated fund activities and the operator who receives a franchise
under this solicitation will be one of the two sources from whom such
services may be obtained.
Analysis
Prior to January 15, 1985, the effective date of the bid protest
provisions of the Competition in Contracting Act of 1984 (CICA), 31
U.S.C.A. Section 3551, et seq., our bid protest authority was based on
our authority to adjust and settle government accounts and to certify
balances in the accounts of accountable officers. See Monarch Water
Systems, Inc., B-218441, Aug. 8, 1985, 64 Comp. Gen. 756, 85-2 CPD
Paragraph 146. Thus, we generally would decline to consider protests
concerning contracts that did not involve the expenditure of
appropriated funds. Conusstan Products, West Germany, B-210846, Mar.
14, 1983, 83-1 CPD Paragraph 253 (award of rug concession for
nonappropriated fund activity). With respect to protests involving
cable television franchises, our jurisdiction was based on the fact that
at least a portion of the subscription fees would be paid by the
government for cable services provided to appropriated fund activities.
See Teleprompter of San Bernadino, Inc., B-191336, July 30, 1979, 79-2
CPD Paragraph 61. In some cases in which the franchising agency argued
that the direct expenditure of appropriated funds was not involved,
however, we cited the provision of services to the government and the
government's potential liability for termination costs as factors
underlying our decision to assume jurisdiction. See, e.g., B.M.I.,
Inc., B-212286, Nov. 2, 1983, 83-2 CPD Paragraph 524; Group W. Cable,
Inc., B-212597, Oct. 25, 1983, 83-2 CPD Paragraph 496.
CICA expressly defines the bid protest authority of this Office.
Monarch Water Systems, Inc., 64 Comp. Gen. 756, supra. Under that act,
our bid protest jurisdiction is based on whether the protest concerns a
procurement contract for property or services by a federal agency. T.V.
Travel, Inc., et al. -- Request for Reconsideration, B-218198.6, et al.,
Dec. 10, 1985, 65 Comp. Gen. 109, 85-2 CPD Paragraph 640 (protest
jurisdiction exists where agency contracts for travel management
services on a no-cost, no-fee basis). In other words, it is no longer
necessary to find a direct or indirect expenditure of appropriated funds
in order for us to exercise bid protest jurisdiction. Rather, we will
decide a protest if it involves the procurement of property or services
by a federal agency. Artisan Builders, B-220804, Jan. 24, 1986, 65
Comp. Gen. 240, 86-1 CPD Paragraph 85. Clearly the instant solicitation
represents a procurement of services by a federal agency.
Although this Office has jurisdiction to consider protests involving
the award of cable television franchises, we will not do so in this
case. The principal complaint raised by the protester is that the
agency has violated its rights under the Cable Act as an incumbent
franchisee. Section 626 of the act, 47 U.S.C.A. Section 546, contains
detailed procedural requirements and criteria applicable to the renewal
of a cable franchise. Unlike complaints concerning initial awards of
cable franchises, however, the Cable Act expressly provides that a cable
operator adversely affected by a failure of a franchising authority to
act in accordance with the procedural requirements of section 626 may
file an appeal in a United States district court or any state court of
general jurisdiction having jurisdiction over the parties. The act sets
forth the circumstances under which a court may grant relief. From our
reading of the Cable Act and its legislative history, it appears to us
that Congress has specified the forums where disputes over franchise
renewals may be resolved; it did not contemplate further administrative
appeals, such as review by this Office of the renewal process. To the
extent this protest concerns alleged violations of the renewal
provisions of the Cable Act, we will not consider it. See Wynn
Baxter/Educational Training Concepts, B-197713, May 20, 1980, 80-1 CPD
Paragraph 349.
The remainder of the issues raised in this protest are not related to
the renewal of CAS' existing franchise, but rather involve alleged
deficiencies with respect to the issuance of the RFP. We need not reach
the merits of these issues, however, since it is clear that CAS is not
an interested party under our Bid Protest Regulations, 4 C.F.R. Section
21.0(a) (1985).
The agency issued the solicitation for the purpose of selecting a
second cable operator to provide services to subscribers at Vandenberg.
This action was consistent with the revised policy of the Air Force to
award more than one franchise at each installation in order to promote
competition as a means of ensuring quality cable services at the lowest
price to subscribers. Although the solicitation did not state that the
incumbent franchisee, CAS, would not be permitted to compete for the
second franchise, the exclusion of the incumbent was necessary in order
to achieve the objective of awarding a franchise to a second cable
operator. While we believe the solicitation should have advised all
potential offerors, including CAS, that the incumbent would not be
permitted to compete, we can find no reason to object to the exclusion.
/1/
Since CAS is not eligible at this time to compete for the second
cable franchise to be awarded under the protested solicitation, CAS is
not the proper party to pursue whatever defects the solicitation might
contain. We dismiss this aspect of the protest because CAS is not an
interested party under our regulations. 4 C.F.R. Section 21.0(a);
Prospect Associates, Ltd. -- Reconsideration, B-218602.2, Aug. 23, 1985,
85-2 CPD Paragraph 218.
The protest is dismissed.
FOOTNOTES
(1) The Air Force states that should it not renew CAS' current
franchise, it will issue a new RFP to obtain a second franchisee. CAS,
of course, would be eligible to compete under such an RFP.
B-220665, 65 Comp. Gen. 309
Matter of: Wespercorp, Inc., Feb. 18, 1986
Contracts - Protests - Interested Party Requirement - Small Business
Set-Asides
A small business concern that does not participate in the Small
Business Administration's program under section 8(a) of the Small
Business Act is an interested party to protest another firm's
eligibility where the 8(a) subcontract was awarded on a sole-source
basis and the protester will be able to compete if its protest is
sustained and the reprocurement is not restricted to participants in the
8(a) program.
Contract - Protests - General Accounting Office Procedures - Timeliness
of Protest - Date Basis of Protest Made Known to Protester
Protest issues based upon the terms of a contract are untimely where
the protester received a copy of the contract more than 10 days before
the protest was filed.
Small Business Administration - Contracts - Contracting With Other
Government Agencies - Procurement Under 8(a) Program - Award Validity -
Review by GAO
The General Accounting Office (GAO) does not consider protests
concerning awards under section 8(a) of the Small Business Act absent a
showing of possible fraud or bad faith on the part of government
officials or an allegation that the Small Business Administration
violated its own regulations.
Small Business Administration - Contracts - Contracting With Other
Government Agencies - Procurement Under 8(a) Program - Fraud or Bad
Faith Alleged - Evidence Sufficiency
Protester has not established that a subcontract awarded to a section
8(a) firm was fraudulent or made in bad faith where, more than 5 months
after award, the firm was found to have been ineligible at the time of
award and no evidence is presented to show that agency officials were or
should have been aware of the ineligibility at that time.
Wespercorp, Inc. protests the award of letter contract No.
DTFA01-85-Y-01001 by the Small Business Administration (SBA) to Amex
Systems, Inc. The contract, for the design, development, production,
and installation of 372 automated weather observing systems required by
the Federal Aviation Administration (FAA), was awarded under section
8(a) of the Small Business Act, 15 U.S.C. Section 637(a) (1982). Under
this section, government agencies contract with the SBA, which in turn
subcontracts for performance by socially and economically disadvantaged
small businesses. Wespercorp contends that Amex was not eligible for
the 8(a) program at the time of award and that there were a number of
other irregularities in the procurement.
We dismiss the protest in part and deny it in part.
Background
The contract, awarded on October 15, 1984, provided for the work to
be performed in three phases. The first phase is for design and
development on a cost-plus-fixed-fee basis. The remaining two phases
are to be definitized on a fixed-price basis through negotiations
between the FAA and Amex. On October 16, 1984, Amex "graduated" from
the section 8(a) program, and on November 27, Allied Bendix Corporation
acquired the firm.
On April 24, 1985, the SBA Acting Associate Administrator for
Minority Small Business and Capital Ownership Development rconsidered
the previous eligibility of Amex to receive section 8(a) contracts in
light of an August 19, 1984 Memorandum of Understanding between Amex and
Allied. The agreement provided for Amex, its shareholders, and Allied
to negotiate in good faith toward a merger of the firms. The SBA
concluded that the Memorandum of Understanding constituted an "agreement
in principle" to merge, and that subsequently Amex was not independently
operated and was affiliated with Allied. As a result, on the date of
the agreement, Amex exceeded the applicable size limit for its type of
business, and thereafter it was not eligible for participation in the
section 8(a) program. See 13 C.F.R. Section 124.1-1(c)(1) (1985).
The Acting Associate Administrator held that all section 8(a)
contract awards to Amex after August 19, 1984 were improper. SBA wrote
each agency with which it had section 8(a) contracts that had been
subcontracted to Amex, stating that those executed after August 19 were
voidable at the agency's discretion and that any further contract
actions involving Amex (such as definitizing letter contracts, executing
modifications, and exercising options) would have to be made under the
agency's own contracting authority.
Amex appealed the Acting Associated Administrator's finding to the
SBA Office of Hearings and Appeals. The firm withdrew the appeal on
October 29, 1985, pursuant to an agreement with the SBA that stated that
the SBA found no evidence the Amex had acted in other than good faith.
The SBA also withdrew a number of contracts, including the FAA contract
at issue here, from the list of those that it considered voidable.
Wespercorp initially protested to our Office on grounds that the
award to Amex was a subterfuge to avoid competition and constituted
fraud or bad faith on behalf of the FAA. In support of its allegation
of bad faith, Wespercorp asserted that (1) the contract was awarded less
than a day before Amex "graduated" from the section 8(a) program and
shortly before purchase of the company by Allied, and (2) although the
SBA found that Amex had not been eligible for the contract at the time
of award, FAA rather than terminating the contract, doubled the funds
available for performance of the first phase. The protester also stated
that it had been informed that the Federal Bureau of Investigation was
investigating the award to Amex and that an FAA post-award survey had
determined that Amex could not adequately perform the contract. At a
bid protest conference on December 4, 1985, Wespercorp raised a number
of additional issues based upon the provisions of the Amex contract,
contending that the award to Amex violated procurement regulations
governing the use of letter contracts, multi-year contracts, and the
acquisition of major systems.
Preliminary Issues.
The FAA raises several preliminary matters. Under our Bid Protest
Regulations, a party must be "interested" before we will consider its
protest. 4 C.F.R. Section 21.1(a) (1985). The agency contends that
while Wespercorp is a small business concern, the firm does not
participate in the section 8(a) program and, consequently, is not an
interested party. In support of its argument, the FAA cites Kentucky
Building Maintenance, Inc., B-196368, Jan. 16, 1980, 80-1 CPD Paragraph
49, in which we held that a large business was not an interested party
to protest the cancellation of a solicitation that had been set aside
exclusively for competition among small business concerns.
An interested party is an actual or prospective bidder or offeror
whose direct economic interest would be affected by the award of a
contract or by the failure to award a contract. 4 C.F.R. Section
21.0(a). Wespercorp believes that it will be able to compete for the
contract if we sustain its protest and if the reprocurement is either
unrestricted or set aside for small business. We cannot say that
Wespercorp is wrong. The SBA did not seek competition from section 8(a)
concerns; it negotiated a contract exclusively with Amex. Thus, unlike
the large business protester in Kentucky Building Maintenance, whose
complaint concerned a procurement set aside for competition among small
businesses, Wespercorp here is not outside a class of prospective
competitors, since it is not clear that the FAA would continue to seek
performance from a section 8(a) concern if we find the contract with
Amex improper. Consequently, we consider Wespercorp to be an interested
party for purposes of questioning whether the contract was properly
awarded to Amex as a section 8(a) concern. See ABC Management Services,
Inc., 55 Comp. Gen. 397 (1975), 75-2 CPD Paragraph 245.
The FAA also argues that the protest is untimely because the Amex
contract and the SBA's April 24, 1985 size determination are public
documents that were available to Wespercorp when issued. Wespercorp
contends that it did not learn that the SBA had found Amex to be other
than a small business until a few days before its protest to our Office.
We resolve doubt about the timeliness of a protest in favor of the
protester. Weardco Constr. Corp., B-210259, Sept. 2, 1983, 83-2 CPD
Paragraph 296. While the SBA finding may have been available to a
requesting party, we are not aware of any notification such as
publication in the Federal Register by which Wespercorp should have
known of the SBA's finding. We consider the protest regarding the
section 8(a) eligibility of Amex to be timely.
We agree with FAA that the protest issues that Wespercorp first
raised during the bid protest conference are untimely. The procurement
record contains a letter from the FAA to counsel for Wespercorp stating
that, in response to a Freedom of Information Act request, a copy of the
Amex contract was furnished on October 18, 1985. Wespercorp did not
raise the issues based upon the terms of the contract until more than 6
weeks later, well beyond the 10 days required by our Bid Protest
Regulations, 4 C.F.R. Section 21.2(a)(2). Wespercorp argues that the
issues based upon the terms of the Amex contract should be considered
under the significant issue provision of our timeliness rules. 4 C.F.R.
Section 21.2(c). However, these bases for protest concern only one
contract and, in our opinion, do not warrant involving the significant
issue provision. See Professional Review of Florida, Inc., et al.,
B-215303.3 et al., Apr. 5, 1985, 85-1 CPD Paragraph 394. Consequently,
we dismiss the additional bases of protest.
Eligibility of Amex
As noted above, section 8(a) of the Small Business Act authorizes the
SBA to enter into contracts with any government agency and to arrange
for the performance of the contracts by letting subcontracts to socially
and economically disadvantaged small business concerns. The contracting
officer is authorized "in his discretion" to contract with the SBA upon
such terms and conditions as may be agreed upon. Hence, we do not
review decisions to effect procurements under the 8(a) program, and we
do not consider protests of 8(a) awards absent a showing of possible
fraud or bad faith on the part of government officials or an allegation
that regulations have been violated. Atlantic Petroleum Corp.,
B-215472.2, Apr. 12, 1985, 85-1 CPD Paragraph 417. Because Wespercorp's
initial submission to this Office made a showing of possible bad faith,
we considered the protest on the merits. However, we find that the firm
has not substantiated its charge.
Wespercorp generally alleges that the award to Amex resulted from
fraud and bad faith, but the firm cites as evidence only the SBA finding
that Amex was not a small business concern after August 19, 1984. There
is no evidence that the Amex agreement with Allied was known to either
the SBA or the FAA before contract award. The procurement record
contradicts any assertion that the decision to contract with Amex was
based upon plans for an Amex merger with Allied. The SBA reported to
the FAA on April 26, 1984, long before the August 19 agreement with
Allied, that it had selected Amex for the FAA's requirement for
automated weather observing systems. In a letter to the SBA dated
August 8, again before the Amex-Allied agreement, the FAA stated that it
planned to contract with Amex and inquired as to the effect of the
firm's forthcoming graduation from the section 8(a) program on the
proposed contract.
Further, we do not consider the FAA's failure to terminate the
contract with Amex to be evidence of bad faith. The general rule is
that an SBA determination that a firm was not small at the time of award
has only prospective application. See Computer Data Systems, Inc., 61
Comp. Gen. 79 (1981), 81-2 CPD Paragraph 393. Here the SBA concluded
that the Amex contract could be terminated by the FAA, but that the
agency was not required to terminate. Thus, the FAA had the discretion
to continue the contract, and we cannot say that its determination to do
so was unreasonable.
In sum, we find no evidence in the procurement record filed in this
protest to substantiate Wespercorp's allegations that the award to Amex
resulted from fraud or bad faith.
We deny the protest in part and dismiss it in part.
B-220633, 65 Comp. Gen. 305
Matter of: Daniel H. Wagner, Associates, Inc., Feb. 18, 1986
Contracts - Negotiation - Requests for Proposals - Specifications -
Restrictive - General Accounting Office Recommendation of Less
Restriction
Solicitation requirement that ADP service contractor's proposed
personnel combine recent battle group experience and experience with
"JOTS II Plus" software is unduly restrictive of competition. The
restriction limits competition to a sole source of supply, and the
agency has not shown convincingly that its needs cannot be met by firms
possessing other than the exact experience specified.
Daniel H. Wagner, Associates, Inc., protests the provisions of
request for proposals (RFP) No. N00189-85-R-0514, issued by the Naval
Supply Center, Norfolk, Virginia. The solicitation contemplates a fixed
level of effort contract for training, maintenance and other systems to
support the Navy's Joint Operational Tactical System (JOTS) II Plus
program. The protester contends that the solicitation is unnecessarily
restrictive of competition and results in an improper sole-source award
to InterNational Research Institute (INRI). We sustain the protest.
Background
JOTS is a shipboard command and control system designed to assist
aircraft carrier group commanders in battle management. The system
consists of a network of microcomputers integrated with the imbedded
shipboard combat systems. JOTS software permits the system to function
as a tactical decision aid.
The protester developed the initial JOTS software and provided
training on its use under a 1983 contract with the Navy. With further
development, also under contract with the protester, the system came to
be known as JOTS II. In April 1984, two of the protester's personnel
who had been involved in supporting JOTS II resigned to work for INRI.
The Navy then awarded a contract for JOTS support services to INRI.
Under this latter contract, the JOTS software evolved to become JOTS II
Plus.
Through an August 5, 1985, notice in the Commerce Business Daily
(CBD), the Navy announced its intention to issue a sole-source
solicitation to INRI for JOTS II Plus training and maintenance for 1
year, with 1 additional option year. The notice stated that in-depth
knowledge of JOTS II Plus software was required, as was specific
knowledge of other JOTS features. The agency prepared a justification
for use of other than competitive procedures, as required by 10 U.S.C.A.
Section 2304(f) (West Supp. 1985), as amended by the Competition in
Contracting Act of 1984 (CICA), Pub. L. No. 98-369, 98 Stat. 1175, 1187,
indicating that the required property or services were available from
only one responsible source and no other type of property or services
would satisfy its needs. See 10 U.S.C.A. Section 2304(c)(1).
The protester responded to the CBD synopsis by asserting that it was
qualified to perform the required JOTS II Plus services. It described
in some detail the qualifications of two subcontractors that it proposed
to use in this effort and objected to the sole-source nature of the
procurement.
After consulting with the using activity, the contracting officer
concluded that the requirements in the solicitation issued to INRI
reflected the Navy's needs, and thus, were not overly restrictive. The
requirements in question, to which the protester objects, specify that
the offeror's project manager have previous experience in the
installation of JOTS II Plus and in training battle group staff in its
use. The solicitation also requires the project manager to have at
least 3 years of first-hand experience with carrier group staff across
all warfare areas, and states that the experience "must be recent,
within the last 6 months preceding this solicitation." In addition, the
solicitation requires both the project manager and the project
analyst/computer programmer to have "detailed knowledge of the JOTS II
Plus program, including system architecture, program code, tactical
applications, and documentation." Finally, the solicitation requires the
project analyst/computer programmer to have experience within the last 6
months with aircraft carrier battle group staff.
According to the protester, carrier group operations do not change so
rapidly that personnel with experience within the last 2 years, rather
than the last 6 months, could not meet the agency's training needs. In
addition, the protester says the Navy has restricted the procurement to
INRI by requiring detailed knowledge of JOTS II Plus. The protester
argues that JOTS II Plus is not significantly different from JOTS II,
the system it designed and with which it is familiar.
There appears to be no question but that the experience requirements
were intended to describe the qualification of the two employees who,
having once worked for the protester, are now employed by INRI. The
Navy justifies the restriction on the basis that the rapidly changing
threat it faces has meant that battle group operations are constantly
changing. Specifically, the Navy says that operational plans as well as
fighting instructions changed significantly during the 6 to 8 months
prior to issuance of the solicitation. The Navy says that integration
of current tactics with the JOTS II Plus network is considered the
"heart" of its requirement. It argues therefore that it is reasonable
to require the successful contractor to have a complete and up-to-date
understanding of battle group responses and tactics.
In addition, the agency defends its requirement that the contractor's
personnel have detailed knowledge of JOTS II Plus as opposed to JOTS or
JOTS II on the basis that JOTS II Plus includes an entirely new
operating system, new decoders, and a new communications system
permitting automatic transmission of data throughout the network of
combat centers and manual data transmission from station to station.
The agency says that given the scope of the changes, familiarity with
JOTS II cannot be substituted for detailed knowledge of JOTS II Plus.
Analysis
Generally, when a solicitation provision is challenged as unduly
restrictive of competition, the initial burden is on the procuring
activity to establish prima facie support for its contention that the
restriction is justified. The adequacy of a justification is determined
by examining whether the agency's explanation can withstand logical
scrutiny. R.R. Mongeau Engineers, Inc., B-218356, B-218357, July 8,
1985, 85-2 CPD Paragraph 29. Once this prima facie support is
established, however, the burden shifts to the protester, to show that
the allegedly restrictive provision is unreasonable. Logistical Support
Inc., B-208763, Apr. 22, 1983, 83-1 CPD Paragraph 436.
A stricter rule is appropriate, however, when the effect of a
restriction is to limit the procurement to a sole source of supply. To
justify a sole-source award, an agency must establish convincingly that
there is (or that at the time of award it reasonably believed there was)
clearly but one possible contractor. ROLM Corp., and Fisk Telephone
Systems, Inc., B-202031, Aug. 26, 1981, 81-2 CPD Paragraph 180, aff'd
Oct. 9, 1981, 81-2 CPD Paragraph 291; Lear Siegler Inc., B-209524,
Sept. 1, 1983, 83-2 CPD Paragraph 285. Moreover, under the CICA
provision the Navy cites, a sole-source award is justifiable only if the
services are available from but one source and no other type of services
will satisfy the agency's need. 10 U.S.C.A. Section 2304(c)(1).
Sole-source procurements under CICA are subject to close scrutiny by our
Office. WSI Corp., B-220025, Dec. 4, 1985, 85-2 CPD Paragraph 626.
As indicated, it is clear from the record that the Navy at all times
contemplated a sole-source award to INRI and drafted the disputed
requirements with only INRI in mind. The Navy has not shown
convincingly, however, that its needs can be satisfied only by the two
employees of the incumbent on whose background the requirements are
based. It has not justified the exclusion of firms such as the
protester whose JOTS II and carrier battle group experience may be less
recent, but who nevertheless possess substantial, relevant
communications, programming, training, and similar support service
expertise.
While the Navy has identified differences between JOTS II and JOTS II
Plus -- for example, a change in operating systems, migration to a
real-time design, and support of a number of interfaces to permit the
computers to communicate with peripheral systems -- it has not explained
any of the changes in sufficient technical detail to show that the work
is of a nature that would preclude competition by experienced computer
personnel with access to the program code and documentation and with
experience with similar, related tactical decision support systems. We
are told that the changes to JOTS and JOTS II Plus have been extensive.
We have been provided with little documentation of this claim. The
agency says that a change in the operating system was made, but we are
not told what it was. It argues that the system now includes enhanced
communications capabilities, but does not describe these changes in
detail or explain why only the two individuals who implemented the new
system are capable of understanding it. Moreover, the Navy has offered
no detailed evidence to illustrate or otherwise support its contention
that recent changes in carrier group operations are so extensive that it
would be impossible for someone who has not been involved in the work
during the past 6 months to perform the contract.
On the other hand, the Navy concedes that the changes made between
JOTS II and NOTS II Plus involved changes to warfare-specific decision
aid modules (the heart of the system) only to the extent that they were
restructured to permit them to interact properly with the new operating
system. The protester was familiar with JOTS II. Additionally, the
record shows the protester and its two proposed subcontractors (Data
Systems and EDO Corporation) have extensive experience with data
link/computer communications, including substantial experience with the
systems the Navy cites as significant in the evaluation of JOTS II Plus.
They also have had extensive experience with Naval operations, as well
as with Naval warfare models, tactics and training.
In the circumstances, we find no convincing substantiation for the
Navy's position that JOTS II Plus is so complex that it would be
impossible for any firm except one employing the two individuals who
currently work for INRI to perform the contract. Similarly, we find
that the Navy has not established that the magnitude of recent changes
in carrier group operations has been so extensive as to preclude
satisfactory performance by otherwise qualified individuals whose
experience may have been acquired more than 6 months ago, assuming those
individuals are briefed on recent developments before they begin
performance.
For the reasons stated, we are recommending that the Navy revised its
solicitation to permit competition by eliminating the protested
provisions that, as they stand, preclude consideration of proposals
submitted by any firm other than INRI. Of course, nothing in our
decision is intended to prevent the Navy from giving relevant experience
reasonable weight in selecting an awardee under an appropriately revised
solicitation.
By separate letter, we are bringing our recommendations to the
attention of the Secretary of the Navy.
The protest is sustained.
B-217884, 65 Comp. Gen. 302
Matter of: Federal Aviation Administration - Limits on Rent
Payments, Feb. 18, 1986
Leases - Rent - Limitation - Economy Act Restriction
Provision in a lease between the Federal Aviation Administration and
the lessor incorporating section 322 of the Economy Act, which limits
the amount of rent the Government is authorized to pay and which was
suspended on Oct. 1, 1981, is not applicable to rental adjustment period
beginning Oct. 1, 1983.
Leases - Rent - Adjustment - Cost of Living Indices
Language of a rental adjustment provision in a lease between the
lessor and the Federal Aviation Administration allowed but did not
require the FAA to deny a rental adjustment because the request for the
adjustment was not timely filed. The FAA's denial of the rent
adjustment was proper for the 1-year period following the year in which
the adjustment was to be made, but not for the entire period before the
next adjustment is to be considered.
A Federal Aviation Administration (FAA) contracting officer asks us
the following questions about a lease between the FAA and Mr. James N.
Routh, the lessor, for space for an FAA Airway Facilities Sector and
General Aviation District Office at Riverside Municipal Airport,
Riverside, California: (1) Whether the denial of the lessor's request
for a rental adjustment, because of the limitation in section 322 of the
Economy Act, was proper; (2) whether the FAA contracting officer was
bound to deny the request for a rental adjustment because it was not
timely filed; and (3) assuming application of the Economy Act and our
decision that a rental adjustment should be made, whether the award date
of the lease or the date of the rental adjustment would be the
appropriate date to use for establishing the fair market value of the
property and fair annual rent.
For the reasons given below, we find that section 322 of the Economy
Act no longer applies to the lease. We also find that while the FAA was
legally permitted to refuse a rental adjustment for the rental period
beginning October 1, 1983 because the request was not timely filed, it
was not bound to do so. On the other hand, the FAA was only permitted
to deny a rent increase for the 1-year period beginning October 1, 1983,
not for the entire 5-year adjustment period. As we find section 322 no
longer applies to the lease, there is no need to answer the third
question.
Background
In September 1978, the FAA Western Region entered into a new
construction lease providing space for an Airway Facilities Sector
Office and a General Aviation District Office at Riverside, California.
The lease provided that the United States pay the lessor $72,049.68 per
year.
Paragraph 2 of the lease provides that the rental term was to begin
on February 1, 1979 and run through September 30, 1979. Thereafter the
lease is renewable at the Government's option from year to year until
September 30, 1998 at the annual rental of $72,049.68 subject to
adjustment as set forth in the lease. The Government's option is deemed
to be exercised and the lease renewed unless the Government gives 30
days' notice that it will not exercise its option. The lease also
permits the Government to terminate by giving at least 1 year's notice
in writing to the lessor.
Paragraph 14 of attachment No. 1 to the lease provides for adjustment
of rent upward or downward beginning October 1, 1983, and for each
succeeding 5-year period, so long as the lease is in effect, consistent
with the changes in the consumer price index described in paragraph 14.
Requests for adjustment of the rent must be made in writing at least 60
days prior to expiration of the adjustment term. Failure to make a
timely request is good cause for refusal to adjust the rental for the
succeeding rental term.
The lease also contains various standard provisions including General
Provision 14, which made the limitation in section 322 of the Economy
Act applicable to the lease. Section 322, codified at 40 U.S.C. Section
278a, prohibited appropriations from being obligated or expended for
rent of any building occupied for Government purposes at a rental
exceeding the annual rate of 15 percent of the fair market value of the
rented premises, computed as of the date of the lease under which the
premises are to be occupied by the Government.
The 15 percent limitation, however, was suspended for fiscal year
1982 by Pub. L. No. 97-51, 95 Stat. 958. /1/ The suspension was
repeated for fiscal year 1983, Pub. L. No. 97-377, 96 Stat. 830; and
was made permanent in fiscal year 1984, Pub. L. No. 98-151, 97 Stat.
964, 982. /2/ The legislative history of the suspension provides no
substantive discussion but states only that it saves the Government
money. H.R. Rep. No. 417, 98th Cong., 1st Sess. 64 (1984).
On August 20, 1983, the FAA received a letter from Mr. Routh,
apparently postmarked August 18, 1983, requesting an adjustment in rent
consistent with paragraph 14 of Attachment No. 1. The request was
denied, however, because the request letter was not timely filed and the
lease had reached the limits of section 322 of the Economy Act at the
time it first was concluded. FAA's position was that the award date of
the lease, in this case September 11, 1978, controlled applicability of
the lease provision which incorporated section 322, notwithstanding the
suspension.
Mr. Routh renewed his request by letter of July 11, 1984. The FAA
again denied the rent adjustment, by letter of July 23, 1984, on the
ground that the 15 percent limitation was to be applied to the
building's fair market value as of the date the lease commenced.
However, this action was in conflict with a later memorandum, dated
August 2, 1984, of the FAA's Office of Chief Counsel. That memorandum
concluded that the Economy Act did not prohibit a rental adjustment so
long as the increase in rent did not exceed 15 percent of the fair
market value of the leased premises at the time an adjustment is made.
It also found that paragraph 14 did not preclude the contracting officer
from adjusting the rental in cases where 60 days' notice was not given.
Legal Discussion
There is nothing in the legislative history of the provision
suspending section 322 of the Economy Act that shows whether it was
intended to apply to leases entered into prior to its enactment.
Nevertheless, in this instance, we think it is crucial that the period
of rental adjustment in question was to begin on October 1, 1983,
several years after the Economy Act limitation was suspended.
Moreover, consistent with the plain language of the limitation and
the statute suspending the limitation, we think the better view is that
section 322 was a limitation on appropriations that could be spent on
rent rather than a limitation on rent per se. Thus, the language of
section 322 begins "(n)o appropriation shall be obligated or expended
for the rent of any building * * * "; and the statute suspending the
limitation begins "(f)unds made available * * * for the payment of rent
* * * ". As there no longer was a limitation on the amount of
appropriated funds available for leases when adjustment was to be made
in October, 1983, we see no reason why the adjustment called for could
not have been made.
The holding of the General Services Board of Contract Appeals, 84-1
BCA Paragraph 17,059 (1984) that suspension of section 322 does not
apply to leases entered into before October 1, 1981, is distinguishable
from this case. That decision involved rental for an adjustment period
in a lease that was to commence in September 1980, a year before the
Economy Act limitation was suspended. Since section 322 still was in
effect when the rental adjustment was to be made, clearly the limitation
applied. Conversely, in this instance the limitation had been suspended
several years before the first request adjustment was to be made.
Further, the Board of Contract Appeals decision stressed that the
Economy Act limitation had only been suspended, not repealed. As stated
above, however, the suspension was subsequently extended for an
additional fiscal year and ultimately it was made permanent. Pub. L.
No. 98-151, supra, which made the suspension permanent, became effective
on November 14, 1983, some 9 months before Mr. Routh's request for a
rental adjustment as of October 1, 1984.
Concerning the lessor's failure to make a timely request for the
rental adjustment, we think the language of paragraph 14 of Attachment
No. 1 clearly shows that this failure did not bar the Government from
making an adjustment but merely constituted good cause for not doing so.
Although the FAA's refusal to make an adjustment for the rental period
beginning October 1, 1983 was therefore proper, we see nothing in the
lease or in the law which would preclude the FAA from reconsidering the
matter of an adjustment in the rent particularly now that it knows that
an adjustment would not be otherwise barred by the section 322 ceiling.
Moreover, we think the phrase in the lease describing the period for
which an adjustment may be denied because it was not requested on time
-- "the succeeding rental term" -- means the 1-year period following the
Government's exercise of its option to renew the lease rather than for
the entire period before the next 5-year adjustment interval begins. We
see nothing in the lease or otherwise in the law indicating that the
succeeding rental term is equivalent to the full 5-year adjustment
period. The effect of such an interpretation would be to preclude the
lessor from obtaining the adjustment provided for in the lease because
of a minor procedural failure. We note that the request was received
some 40 days before the adjustment was to take place.
Consistent with our conclusions, there is no need to determine
whether the value of the property at the time the lease was concluded,
or the current market value, is the appropriate date to use for
computing the amount of the adjustment. The adjustment is not limited
by the 15 percent limitation formerly provided by section 322 of the
Economy Act.
FOOTNOTES
(1) The suspension was part of the law continuing appropriations for
fiscal year 1982. The law incorporated the Treasury, Postal Service,
and General Government Appropriations Act, 1982, H.R. 4121, 97th Cong.,
1st Sess. (1981). That bill contained the suspension.
(2) For fiscal years 1983 and 1984, the laws continuing
appropriations incorporated the Treasury, Postal Service, and General
Government Appropriation Acts for the specific appropriations. S. 2916,
97th Cong., 2d Sess. (1982); H.R. 4139, 98th Cong., 1st Sess. (1983).
B-218228.4, 65 Comp. Gen. 300
Matter of: Colbar, Inc. - Reconsideration, Feb. 13, 1986
Contracts - Protests - General Accounting Office Procedures -
Reconsideration Requests - Error of Fact or Law - Not Established
The General Accounting Office (GAO) denies a request for
reconsideration of a decision and affirms that decision recommending
termination of an incumbent's contract because the agency should have
allowed waiver of the protester's mistake claim, where the incumbent's
request fails to establish convincingly that the prior decision contains
errors of law or of fact that warrant its reversal or modification.
Colbar, Inc., requests reconsideration of our decision United Food
Services, Inc., B-218228.3, Dec. 30, 1985, 65 Comp. Gen. 167, 85-2 CPD
Paragraph 727, in which we sustained United's protest challenging the
rejection of its bid as nonresponsive and recommended termination of a
contract awarded to Colbar for full food and dining services at Fort
Knox, Kentucky.
We deny the request for reconsideration.
In making our recommendation, we found that the Army should have
allowed United to waive the omission of option year prices for an item
(covering one of a total of 123 buildings) added to the bid schedule by
an acknowledged amendment. Since United's intended price within an
extremely narrow range was determinable from the pricing pattern of the
bid itself and since its intended bid would have been the lowest, we
sustained United's protest. This, we stated, prevented an obvious
clerical error of omission from being converted to a matter of
responsiveness where the bidder clearly intended to obligate itself to
provide the services in question.
In its reconsideration request, Colbar contends that United's bid was
not responsive because the solicitation specifically required bidders to
include prices for each line item in the bid schedule. According to
Colbar, we failed to apply established precedent of this Office
concerning such a requirement. Colbar further alleges that we should
not have applied the mistake in bid procedures in this case because
United did not present clear and convincing evidence that it had
formulated a price for the omitted item and its intended price could not
be determined from the bid itself.
In order to prevail in a request for reconsideration, the requesting
party must convincingly show either errors of law or of fact that
warrant reversal or modification of our prior decision. DLI Engineering
Corp. - Reconsideration, B-218335.2 et al., Oct. 28, 1985, 85-2 CPD
Paragraph 468. Colbar has not done so here.
First, in our decision, we did not ignore established precedent
concerning responsiveness. We specifically recognized the general rule,
relied on by Colbar and supported in cases cited by that firm, that a
bid must be rejected as nonresponsive if it does not include a price for
every item requested by the IFB. However, we relied on a limited
exception to that rule under which a bidder may be permitted to correct
an omitted price where a pattern of pricing, determinable from the bid
itself, indicates the possibility of error, the nature of the error, and
the intended bid price. Moreover, we noted that where the intended bid
would have been the lowest, even though the amount of the intended bid
cannot be precisely proven, we have long recognized an exception to the
general rule that a bidder may not waive a mistake claim after opening
and stand on is original bid price. Bruce Anderson Co., Inc., 61 Comp.
Gen. 30 (1981), 81-2 CPD Paragraph 310.
Our application of mistake in bid procedures to United's bid was
based on our review of the firm's base and option year prices for
buildings in the same category of dining facility as the omitted item.
The pattern of pricing that was discernible from the bid itself
established the existence and nature of United's error within an
extremely narrow range. No external evidence of United's price for the
option years was required. The firm's prices were identical for all 4
option years, the increase in option years over base year prices for the
omitted building was ascertainable within a $4 range, and United's
intended price would have been the lowest by 11 percent. We concluded
that even though the amount of the intended bid could not be precisely
proven for the purpose of bid correction, the firm clearly had intended
to obligate itself to provide the services in question. Pursuant to the
rule in Bruce Anderson Co., Inc., supra, since United's intended bid
would have been lowest, we sustained the protest, allowing United to
waive its mistake claim and stand on its original bid price.
Colbar has not shown that our prior decision contains errors of law
or of fact. We therefore deny the request for reconsideration of our
decision, with its recommendation that corrective action be taken.
B-221667, 65 Comp. Gen. 299
To: Deputy Assistant Secretary, Accounting and Audit, Department of
the Air Force, Feb. 12, 1986
Disbursing Officers - Relief - Eligibility Determination
If a disbursing officer complies with appropriate Department of
Treasury and service regulations, request for relief will not be denied
solely on the ground that the amount of a check is not written in words.
In your letter of December 30, 1985, to our Office, you ask whether
we intend to deny relief for military disbursing officers found liable
for altered paper checks if the checks do not bear the amount of the
check written in words. You note that a prior decision by our Office
suggested that accountable officers might be denied relief from
liability for altered card checks which do not spell out the amount in
words. 62 Comp. Gen. 576 (1983). If a disbursing officer complies with
appropriate Treasury and service regulations, relief will not be denied
solely on the ground that the amount of a check does not appear in
written words.
An accountable officer is liable for any erroneous payments made by
him or by those under his control. 54 Comp. Gen. 114 (1974). As you
know, the GAO is statutorily authorized to relieve military disbursing
officers from liability for a loss or deficiency resulting from an
illegal or incorrect payment when the loss was not caused by the
official's fault or negligence. 31 U.S.C. Section 3527(c) (1982).
In the cited decision, in which we relieved accountable officers
liable for altered card checks, we cited the absence of the inscription
of the amount spelled out in words on the face of the check, alongside
the amount represented in numbers. We did not say that we would deny
relief on this basis at that time. We suggested that adoption of this
inscription would be a prudent deterrent to check alteration.
While applicable U.S. Department of Treasury regulations recommend
writing amounts out in words, they also provide that --
* * * if it is determined by the disbursing office that a
substantial saving in the cost of issuing checks would result from
the writing of the medial amount in figures, either of the
following forms may be used: "$50and75 cents or $50and 75/100.
Treasury Financial Manual for Guidance of Departments and
Agencies, (TFM), 4-5050.45c.
As you noted, last year the Department of Treasury began switching
from card checks to paper checks, and the Air Force plans to convert to
paper checks this year. Because the paper checks contain chemical
properties designed to deter alteration, the Department of Treasury is
currently reviewing existing regulations regarding printing the amount
of the check in words. Only numbers are presently written on Treasury
paper checks.
We have long held that an accountable officer who conforms to Federal
regulations does not act negligently, and may be relieved of liability.
See, e.g., B-193380, Sept. 25, 1979. Because applicable Treasury
Department regulations permit use of figures without words to indicate
check amounts upon a finding that savings will result, an Air Force
disbursing officer may not be denied relief solely for using numbers if
Air Force regulations conform to this standard. If numbers, alone, are
printed on checks, no spaces should appear between numbers and letters.
TFM 4-5050.45c
B-220518, 65 Comp. Gen. 290
Matter of: Dynalectron Corporation, Feb. 11, 1986
Contracts - Labor Stipulations - Davis-Bacon Act - Minimum Wage
Determinations
Under a solicitation for base operations and maintenance, job
assignments ordinarily should be categorized in accord with the basic
nature of the resulting contract, i.e., service work, and laborers
performing those assignments classified as Service Contract Act workers.
It is not proper to categorize all job assignments in a given area of
activity as covered by the Davis-Bacon Act's minimum wage requirements
applicable to construction workers without regard to that Act's $2,000
threshold for each severable construction, reconstruction, renovation,
or repair project.
Contracts - Labor Stipulations - Davis-Bacon Act - Applicability -
Criteria
In a contract for base operations and maintenance covered by the
Service Contract Act, agency procedures for managing "project" work,
including the use of written work orders and payment only upon
inspection and acceptance of the final product, do not establish that
the minimum wage requirements of the Davis-Bacon Act for construction
workers should apply. Other criteria, such as the $2,000 Davis-Bacon
Act threshold for severable projects and whether the service is
incidental to maintenance, also must be considered.
Contracts - Labor Stipulations - Davis-Bacon Act - Applicability -
Criteria
Where solicitation for base operations and maintenance services
covered by the Service Contract Act includes routine maintenance of
railroad tracks at the installation, such maintenance work should be
considered service work covered by the Service Contract Act, rather than
construction work under the Davis-Bacon Act.
Contracts - Negotiation - Requests for Proposals - Evaluation Criteria
- Cost
Protest that solicitation fails to specify the relative importance of
cost in the procuring agency's evaluation is denied where provisions of
the request for proposals regarding the extent to which cost will be
independently considered in the evaluation are unambiguous.
Contracts - Negotiation - Requests for Proposals - Quantity Estimates -
Best Available Information Requirement
Protest that solicitation contains insufficient information for
offers intelligently to estimate material costs is denied where the
record shows that offerors have been given access to all information
reasonably available to the agency and that the information, together
with the offeror's business knowledge and experience, should permit them
to prepare proposals intelligently and on an equal basis. The mere
presence of risk in a solicitation does not make the solicitation
inappropriate, and specifications are not rendered materially deficient
because the agency's prior cost experience cannot be fully determined
from the solicitation.
Dynalectron Corporation protests the terms of request for proposals
(RFP) No. DAKF06-85-R-0052, issued by the Department of the Army in
connection with a cost comparison under Office of Management and Budget
Circular A-76, to determine whether it should continue performing base
maintenance services at Fort Carson, Colorado, with government personnel
or have them performed by a commercial firm. The protester alleges that
the RFP contains terms that unfairly favor continued government
performance over commercial performance. Dynalectron contends that the
Army cannot justify the Davis-Bacon Act staffing levels imposed upon
offerors; that the solicitation fails to indicate clearly the relative
importance of cost in the evaluation; and that the solicitation should
stipulate the amount of materials and supplies needed to operate the
base, rather than require each offeror to estimate that amount.
We sustain Dynalectron's protest on the first ground and deny it on
the last two grounds.
The Contracting Division, Fort Carson, issued the solicitation on
February 1, 1985, seeking offers to perform base operations and
maintenance services. These include such services as operation of the
water system, the wastewater treatment plant, and the landfill;
maintenance and repair of buildings, roads, kitchen equipment, and other
items; and minor construction, alteration, repair, and renovation
projects. The contractor will be required to operate its own supply
system incident to performance of the work. If performance of the work
by contract is found to be more economical than performance by
government employees, the solicitation contemplates a
cost-plus-award-fee contract for a base year, with 4 option years.
Davis-Bacon Act
Dynalectron contends that the solicitation improperly requires
offerors to estimate their labor costs for certain categories of work
using wage levels required under the Davis-Bacon Act, 40 U.S.C. Section
276(a) (1982). Dynalectron argues that the Army has classified
approximately 40 percent of the work under that act, an amount that is
appreciably greater than the 5 to 15 percent under comparable contracts
at other Army installations.
According to Dynalectron, this misclassification means that a
disproportionate amount of the offerors' estimated labor costs must
reflect Davis-Bacon Act wages, which are generally applicable to
construction workers, rather than wages that the offerors will actually
be required to pay under provisions of the Service Contract Act, 41
U.S.C. 351, et seq. (1982). Dynalectron states that Davis-Bacon Act
wages are appreciably higher than those for comparable skills under
either the Service Contract Act or the government salary schedule. The
firm argues that the government has an unfair competitive advantage in
the cost comparison, since it has artificially inflated the wage rates
private firms must propose.
The Army explains that in developing the solicitation, it divided the
work into three categories: (1) "project" work; (2) maintenance, plant
operations, and service (including maintenance of the railroad); and
(3) repair work. The Army classified both the "project" work and the
maintenance of the railroad at Fort Carson as subject to the Davis-Bacon
Act. The Army states that in making this determination, it has taken
care to comply with a consent decree that resolved a suit alleging that
Fort Carson had evaded the requirements of the Davis-Bacon Act by
improperly categorizing contracts as nonconstruction and by dividing
projects into a series of contracts to place them below the $2,000
minimum for Davis-Bacon Act applicability. Carpet, Linoleum and
Resilient Tile Layers, Local Union No. 419 v. Carmen, No. 77-F-1197 (D.
Colo. Apr. 19, 1982) (consent decree). /1/
The responsibility for determining whether the Davis-Bacon Act
provisions should be included in a particular contract rests primarily
with the contracting agency, which must award, administer, and enforce
the contract. Yamas Construction Co., Inc., B-217459, May 24, 1988,
85-1 CPD Paragraph 599. It follows that the determination of whether
items of work fall within the coverage of the Service Contract Act, or
within the scope of the Davis-Bacon Act, is fundamentally a matter of
agency judgment. In challenging the Army's estimate of work subject to
the Davis-Bacon Act, Dynalectron must show that the Army did not use the
appropriate statutory and regulatory criteria, D.E. Clarke, B-146824,
May 28, 1975, 75-1 CPD Paragraph 317, or that the estimates are not
based on the best information available, or otherwise misrepresent the
agency's needs, or result from fraud or bad faith. Yamas Construction
Co., Inc., B-217459, supra.
Regulations of the Department of Labor provide that, where contracts
principally for services also involve substantial construction work, the
provisions of both the Davis-Bacon Act and the Service Contract Act
apply. 29 C.F.R. Section 4.116(c)(2) (1985). Nonprofessional work
under service contracts should be classified under the Service Contract
Act except for construction, reconstruction, alteration, or repair work
that is "physically or functionally separate from, and as a practical
matter is capable of being performed on a segregated basis from, the
other work called for by the contract." 29 C.F.R. Section
4.116(c)(2)(ii). Consequently, to be covered by the Davis-Bacon Act in
a service contract, each work project must individually satisfy the
requirements of that act. In other words, the work must involve
construction activity as distinguished from servicing or maintenance
work, 29 C.F.R. Section 5.2(i), and it must include all work done in the
construction or development of a project, including, without limitation,
altering, remodeling, and installation work. 29 C.F.R. Section 5.2(j).
Further, each minor project is subject to the statutory threshold of
$2,000 applicable to the Davis-Bacon Act work. D.E. Clarke, B-146824,
Oct. 17, 1974, 74-2 CPD Paragraph 212; modified on other grounds,
B-146824, May 28, 1975, 75-1 CPD Paragraph 317. /2/
The Fort Carson solicitation is primarily for installation support
and maintenance work covered by the Service Contract Act, with
incidental minor construction, reconstruction, alteration, or repair
work covered by the Davis-Bacon Act. See 29 C.F.R. Section 4.116(c)(2).
Since the construction work is performed as part of a service contract,
the Davis-Bacon Act will only apply to work that is physically and
functionally separate from the service work called for by the contract.
Id. In this context, a job assignment must satisfy both the test of
severability from the Service Contract Act work and the $2,000 threshold
in order to fall under the Davis-Bacon Act.
A. "Project" Work
Based upon provisions of the solicitation, we conclude that the Army
did not properly apply the threshold in estimating the amount of the
Davis-Bacon Act work to be performed. In modification No. 3 to the RFP,
the Army responded to a question from a prospective offeror by stating
that it applied the $2,000 threshold to the line item representing
"project" work rather than to anticipated work orders to be issued under
the line item. In modification No. 5, the Army stated that as long as
the total contract exceeded $2,000, no individual repair task had to
exceed the threshold to be subject to the Davis-Bacon Act. This means,
for instance, that all "project" work, involving hundreds of unrelated
activities, is classified under the Davis-Bacon Act irrespective of
whether each "project" independently meets the statutory $2,000
threshold.
Another example of this improper classification is found in Technical
Exhibit 29, incorporated into the solicitation by modification No. 7.
It indicates that all exterior electrical work on street lights, area
lights, and traffic lights is outside of the Service Contract Act, as is
all interior plumbing work on piping and fixtures, as well as unstopping
drains. This would mean that the simple replacement of a lamp in a
street light, or the unclogging of a difficult drain beyond the
capabilities of the building occupants' capabilities, would be covered
by the Davis-Bacon Act. All air-conditioning repair work and all work on
heating systems, hot water heaters, piping systems, and controls under
the contract are included within the Davis-Bacon Act coverage, even
though at least some failures of these systems must involve very minor
adjustments or repairs well below the $2,000 threshold.
In addition to failing to apply the $2,000 threshold, it appears that
the Army also did not properly distinguish between construction,
reconstruction, alteration, and repair work that is subject to the
Davis-Bacon Act and maintenance or repair that is subject to the Service
Contract Act. Technical Exhibit 26 lists typical "projects" performed
during 1981-1983. Large numbers of these appear clearly to be services
in the nature of maintenance or repair work related to maintenance, or
to be below the $2,000 Davis-Bacon Act threshold. The Army states that
some Service Contract Act work was included in the exhibit because of
the difficulty of classifying work from its historical data, and some,
such as changing light bulbs, will be performed in the future by
building occupants. However, the number of minor projects described in
Technical Exhibit 26 that appear clearly to be maintenance in nature --
from rebuilding a meat slicer to replacing a garbage disposal -- leads
us to conclude that the Army did not properly differentiate the
Davis-Bacon Act work from other work to be performed.
This improper classification appears to have resulted from the Army's
belief that Fort Carson's procedures for ordering, directing, and
approving the "projects" establish their Davis-Bacon character. We
agree that these procedures -- employing written orders, specifications,
specified completion date, staffing estimates, and separate inspection
and acceptance before payment -- are appropriate for Davis-Bacon Act
work. However, such procedures can also be appropriate for Service
Contract Act work. Moreover, it may be appropriate to give oral
directions for Service Contract Act work as well as Davis-Bacon Act work
in many instances. The employment of more complex, written procedures,
therefore, does not convert Service Contract Act work into Davis-Bacon
Act work, or vice versa. In the case of a plumber assigned to unclog a
stopped drain, it is the nature of the work assignment, not the
procedure used for directing the plumber to carry out that assignment,
that determines whether the Davis-Bacon Act or the Service Contract Act
applies.
B. Railroad Maintenance
The other major contract item that the Army believes should be
covered by the Davis-Bacon Act is railroad maintenance. This item
includes periodic inspection of the 7 miles of track at Fort Carson;
realigning and regauging track; replacing washed-out ballast;
replacing and resetting spikes, oiling and tightening track bolts; and
replacing deteriorated equipment, such as an estimated 2 switches, 100
ties, and 240 linear feet of rail a year.
Paragraph C.5.2.1.1.2 of the performance work statement lists
railroad maintenance as "service-type" work, along with other work items
normally covered by Service Contract Act, i.e., landfill operations,
grounds maintenance and show removal. Much of the railroad maintenance
work appears consistent with this classification, in that it involves
continuing inspection and minor maintenance (such as tightening bolts)
of the railroad tracks throughout the year. Even for those aspects
which entail more significant activity, such as the replacing of
switches, the work is of a continuing nature, with replacement performed
as needed to maintain the line, rather than as a separate project
directed by the government. Moreover, Fort Carson proposes to supervise
railroad maintenance work with methods that, it argues elsewhere, apply
to Service Contract Act work. The contractor is to schedule its own
railroad maintenance work, without benefit of written orders, cost
estimates, or specifications issued by Fort Carson. Similarly, there is
no inspection and acceptance of a completed product; rather, the
contract objective is the continued functioning of the railroad line
throughout the period of performance. Again, payment for railroad
maintenance is made periodically and not upon the accomplishment of
identified work items or projects.
Fort Carson's classification of railroad maintenance as Davis-Bacon
Act work is inconsistent with our decision in 40 Comp. Gen. 565 (1961),
in which we held that the Davis-Bacon Act did not apply to the railroad
maintenance subcontract issued under a contract for the operation of a
government-owned ammunition plant. In that case, the track was badly
deteriorated due to past failures to perform periodic maintenance.
Hence, it was necessary to perform by subcontract a relatively
significant amount of repair work to bring the line up to standards. We
held that the track repair work was incidental to the purpose of the
prime contract, which was the operation of the plant, and thus the
Davis-Bacon Act was not applicable.
We believe that the Army's classification of all "project" work and
all railroad maintenance as covered by the Davis-Bacon Act is
unreasonable. We sustain this portion of Dynalectron's protest. By
separate letter to the Secretary of the Army, we are recommending that
the agency reevaluate the amount of services that should be classified
as the Davis-Bacon Act work in accordance with the criteria discussed
above and revise the solicitation to reflect the reevaluation.
Cost Evaluation Criteria
Dynalectron also contends that the solicitation fails to indicate the
relative importance of cost, as opposed to other considerations, in the
evaluation of proposals. /3/ The RFP lists four evaluation factors in
their order of importance: technical, management, quality control, and
cost. Dynalectron argues that a subsequent modification made the
relative importance of cost ambiguous. In modification No. 14, the Army
added a provision regarding relative order of importance of evaluation
factors, stating that the "technical" factor was twice as important as
any other factor; management was more important than quality control;
and cost would not be weighted or scored. The modification stated that
cost would be fully evaluated and considered in relation to each
offeror's technical, management and quality control approach without
stating that it was more or less important than any other factor.
Dynalectron argues that the failure to restate the relative importance
of cost leaves the solicitation ambiguous.
The protester also states that how significant cost will be is
further confused by another provision, "Basis of Award." That provision
states that "the selection of the proposal for cost comparison will be
based upon both scores and a subjective analysis of the relative merits
of the proposals."
The Army argues that the solicitation satisfactorily conveys the
relative importance of cost in evaluation, since it did not directly
modify the list of four evaluation factors, in which cost came last in
order of importance. The agency also states that the other provisions
merely reflect the discretion accorded procuring agencies in assessing
the role of cost in a cost-type contract, where the agency considers
precise numerical scoring to be inappropriate.
Solicitations must be drafted to inform all offerors in clear and
unambiguous terms what is required of them so that they can compete on
an equal basis. Dynalectron Corp., B-198679, Aug. 11, 1981, 81-2 CPD
Paragraph 115. The Federal Acquisition Regulation (FAR) requires that
the relative importance of all factors be stated, including cost or
price. 48 C.F.R. Section 15.406-5(c) (1984). It is particularly
important that offerors be informed of the relative significance of cost
in procurements used in the cost comparison process, since the evaluated
cost of the most advantageous offer will determine whether the work will
be performed by contract or continue to be performed by the Army itself.
We do not believe that modification No. 14 introduced an ambiguity by
stating the relative importance of all factors except cost. The
original RFP provisions stating that cost was the least important factor
remained unchanged, and modification No. 14 is consistent with that
provision. Also, while the statement that cost will not be weighted is
not as clear as it might be, the Army reports that it intended to
indicate that cost will not be "numerically weighted," and we believe
that this is the only reasonable interpretation of the provision.
The FAR requires that agencies select the offer that is most
advantageous to the government, and they must consider price in this
determination. 48 C.F.R. Section 15.611. In view of this obligation on
procuring agencies, we do not think that the statement in this case,
that award will be based on scores and a "subjective analysis" of
relative merit, establishes an ambiguity or misleads offerors so as to
warrant sustaining the protest on this ground.
We recognize, however, that the meaning of the term "subjective
analysis" in the context of a procurement is not clear. In view of the
fact that we are recommending that the solicitation be revised for other
reasons, we are also recommending that the Army consider revising the
solicitation language to state that cost will not be "numerically"
weighted or scored if this remains the Army's intention and to define
"subjective analysis" or omit the use of the term.
Estimated Supply Costs
Finally, Dynalectron contends that offerors should not be required to
estimate the quantities of supplies and materials to be used by the
contractor to perform the contract, excluding project work. Instead,
Dynalectron states that Fort Carson should estimate the quantities of
supplies and materials required and apply that estimate to the
evaluation of all proposals, including the government's proposal for
in-house performance.
In this regard, Dynalectron complains that the information the Army
has supplied on material usage is inadequate for offerors to prepare a
realistic cost proposal, and that this informational deficiency was not
cured by the 2-day inspection of Fort Carson permitted during the
procurement process. Dynalectron points out that much of the historical
information Fort Carson has provided fails to identify either the
particular work required or the supplies and materials needed to
accomplish the work. For example, the documents simply list "repair
doors." In these circumstances, Dynalectron complains, any estimate of
the cost of supplies prepared by an offeror can amount to no more than
"guesstimating," which could very well cause its proposal to be viewed
as unreasonably high (or low) in cost. For these reasons, Dynalectron
urges that Fort Carson follow the example of numerous other military
installations conducting similar cost comparisons and treat the cost of
supplies and materials as a "wash" item, established by the agency in
advance for all proposals.
The Army responds by pointing out the numerous instances where the
solicitation and its accompanying documents indicate estimated
quantities of supplies. Examples of such estimates include the number
of railroad switches to re replaced; the square footage of pot holes to
be patched; the acres of ground to be fertilized; and the number of
telephone poles to be replaced each year.
For those instances where estimated quantities have not been
indicated, the Army notes that offerors have been given access to a
complete computer printout which lists all repair jobs performed at Fort
Carson during 1981, 1982 and 1983. While this printout does not list
the supplies used to perform each item of work, it does identify the
nature of the work in general terms. The Army contends that with this
information, an offeror should be able to prepare realistic cost
estimates for supplies based on its own knowledge of the industry and
experience performing comparable work elsewhere. The Army further notes
that because those records which have not been released do not segregate
the costs of supplies in the same manner as the contract work is
organized, they would be of no use to offerors in any event.
The Army also argues that its performance-oriented work statement
encourages offerors to propose the best possible means for satisfying
its requirements. Offerors should be free to propose alternate means of
satisfying their supply needs, such as bulk purchasing, which would
result in differing supply costs. The Army believes that offerors may
propose differing methods for performing base operations and maintenance
functions that could affect both the frequency of the need for supplies
and the nature of the supplies needed. Moreover, the Army argues, Fort
Carson has no preferential position in this regard. When developing the
government's in-house cost proposal under A-76, the agency is required
to use only the information available to the offerors.
As noted above, a solicitation must contain sufficient information to
allow offerors to compete intelligently and on equal terms. Analytics
Inc., B-215092, Dec. 31, 1984, 85-1 CPD Paragraph 3. Specifications
should be free allow ambiguity and should describe the agency's minimum
needs accurately. Klein-Seib Advertising and Public Relations, Inc.,
B-200399, Sept. 28, 1981, 81-2 CPD Paragraph 251. There is no legal
requirement, however, that a competition be based on specifications
drafted in 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 offeror. Security Assistance Forces &
Equipment International, Inc., B-199366, Feb. 6, 1981, 81-1 CPD
Paragraph 71.
While we recognize areas of uncertainty in the information available
to offerors here, particularly with respect to the actual quantities of
materials consumed in base operations, maintenance and minor repair
work, we cannot say that the information that was provided does not give
offerors an adequate basis for preparing intelligent proposals on equal
terms. Further, since Fort Carson's historical records and accounts do
not segregate its use of supplies in a manner consistent with the
structure of this contract, it is not clear that any greater precision
is possible.
The protest is sustained in part and denied in part.
FOOTNOTES
(1) The consent decree imposes a number of obligations on Fort
Carson, including a good-faith obligation to assure that contractors
performing work under service contracts are properly classifying work
under those contracts that is governed by the Davis-Bacon Act.
(2) On September 9, 1985, the Department of Defense promulgated a
uniform policy specifically limiting the application of the Davis-Bacon
Act in contracts for installation support, maintenance, and repair
calling for Davis-Bacon Act services performed in response to a service
call or work order to those service calls and work orders in excess of
$2,000. Memorandum for Secretaries of the Military Departments from the
Assistant Secretary of Defense for Acquisition and Logistics (Sept. 9,
1985); see also Memorandum for Director of the Army Staff from the
Deputy Assistant Secretary of the Army for Programs and Commercial
Activities (October 1, 1985).
The parties here differ on the application of the policy because it
was issued after the procurement was initiated. Since we previously
held in D.E. Clarke that the Davis-Bacon Act applies to work orders for
construction that exceed $2,000 in operation and maintenance contracts,
we consider the Defense Department policy statement to merely restate a
preexisting requirement.
(3) One of the interested parties to the protest asserts that when
comparing the government's cost of in-house performance to that of a
commercial firm, only the lowest cost, technically acceptable proposal
may be used. Although this issue was not protested in a timely manner,
we note that Circular A-76 (Aug. 1983), part IV, para. B.2.d, provides
that where, as here, an award fee is proposed, the contract price for
cost comparison purposes is "the most advantageous offer to the
government," not the "low negotiated estimated cost plus fee" used
otherwise.
B-219477, 65 Comp. Gen. 287
Matter of: Jerome R. Serie, February 11, 1986
Officers and Employees - Transfers - Temporary Quarters - Subsistence
Expenses - Computation of Allowable Amount
Employee of the Department of Interior requests reimbursement of
temporary quarters subsistence expenses incurred in connection with his
occupancy of lodgings furnished by a coworker. Although the employee
claims that the lodgings were not furnished on the basis of a friendship
between the two, applicability of the rules for reimbursement for
temporary quarters does not depend upon the relationship between the
employee and the person supplying the lodgings. When the lodgings are
provided in a personal residence by a host who does not have a history
or make a practice of renting out accommodations in his private home,
the employee's claim should be supported by information indicating that
the lodging charges reflect expenses incurred by the host.
This action is in response to a request for an advance decision from
the U.S. Department of the Interior, Fish and Wildlife Service,
regarding the claim of Jerome R. Serie for temporary quarters
subsistence expenses in conjunction with his change of permanent duty
station. /1/ Upon transferring to a new duty station, Mr. Serie entered
into an agreement under which he was provided temporary lodgings and
meals in the home of a fellow employee.
The issue presented is whether the agency, in reliance on receipts
presented by the employee, may pay him a temporary quarters subsistence
expense allowance based on lodging costs of $22.50 per day and meal
costs totaling as much as $15.10 per day. The agency's doubt in this
matter relates to whether the standards of reasonableness applied by
this Office in cases involving temporary lodgings and meals furnished by
friends and relatives are applicable to noncommercial lodgings and meals
which the employee claims were not furnished on the basis of a
friendship. It is our view that, regardless of the nature of the
relationship between the employee and the host, claims involving
noncommercial lodgings and meals must meet the standards of
reasonableness applied to lodgings and meals furnished by friends or
relatives unless the host has a history or makes a practice of providing
accommodations in his residence on a fee basis consistent with the
charges for which reimbursement is claimed.
Mr. Jerome R. Serie, an employee of the Fish and Wildlife Service,
U.S. Department of the Interior, was transferred from Jamestown, North
Dakota, to Laurel, Maryland. After arriving in Maryland on April 25,
1984, and exploring costs of commercial lodgings in the Laurel area, Mr.
Serie states that he approached Mr. Matthew C. Perry, a fellow employee
at the Fish and Wildlife Service, about renting out part of Mr. Perry's
private residence as temporary lodgings.
After Mr. Perry discussed the matter with his family, he and Mr.
Serie agreed to an arrangement whereby Mr. Serie would pay $22.50 per
day for lodgings. In addition he agreed to pay for meals based on the
direct cost of food plus preparation.
Mr. Serie provided hand-written receipts for lodging and meal
expenses with his claim. The Department of the Interior paid the
claimed amounts for the first two 30-day periods that Mr. Serie occupied
temporary quarters. However, upon discovering that Mr. Serie was
residing in the home of a fellow employee, rather than a commercial
establishment, the agency withheld payment of his claim for yet a third
period and has requested an advance decision from us on the propriety of
paying these expenses.
Pursuant to 5 U.S.C. 5724a(a)(3) (1982), a transferred employee may
be authorized subsistence expenses for himself and his family while
occupying temporary quarters at the new station. Applicable regulations
are found in the Federal Travel Regulations (FTR), para. 2-5-1, et seq.,
FPMR 101-7, September 1981, as amended, Supp. 4, August 23, 1982,
incorp. by ref., 41 C.F.R. Section 101.7003 (1984). Under these
regulations, temporary quarters may be obtained from either private or
commercial sources. Employees may be reimbursed for temporary quarters
and subsistence expenses which are actually incurred and are reasonable
as to amount. See FTR para. 2-5.2c and 2-5.4.
In cases where an employee occupies temporary quarters in a private
residence we have allowed reimbursement for rental or lodging charges
where they are considerably less than charges for commercial
accommodations and reflect additional costs actually incurred by the
host. More often than not, these cases have involved accommodations and
meals furnished by friends or relatives. In 52 Comp. Gen. 78, 82 (1972)
we pointed out that it does not seem reasonable or necessary for
employees to agree to pay friends and relatives the same amounts they
would pay for lodging in motels or meals in restaurants or to base
payments to friends or relatives on the maximum amounts that may be paid
as temporary quarters subsistence expenses.
The types of expenses incurred by one who provides lodging in his
private home are not the same as those incurred by a commercial
establishment. In general, the expenses incurred by an individual in
accommodating another in his private home are similar to those he incurs
in maintaining that home for his and his family's use. The presence of
a guest might increase his use of utilities and the wear and tear on
household furnishings. However, the host does not incur many of the
expenses incurred by a commercial establishment, such as license fees,
salaries of reservation personnel, advertising, etc. Therefore, while a
private host may be inconvenienced and may incur some additional
expenses in providing lodgings, we are unable to agree with the view
that the cost of commercial lodging reflects a fair standard of
compensation. Allen W. Rotz, B-190508, May 8, 1978.
Regardless of the character of the relationship between the employee
and his host we have consistently held that claims involving
noncommercial lodgings should be supported by information indicating
that the lodging charges are the result of expenses incurred by the
party providing the lodging. 55 Comp. Gen. 856 and Constance A.
Hackathorn, B-205579, June 21, 1982. In Constance A. Hackathorn, an
employee rented a room in the private residence of an acquaintance of a
friend. We found that the applicability of the rules for reimbursement
did not depend upon the relationship between the employee and the person
supplying the lodgings, but upon whether the quarters were furnished as
a business proposition or whether they were furnished as a personal
accommodation to the employee. We noted that the best evidence that a
purely business arrangement is involved would be evidence of a
continuing practice of the homeowner renting out the room for an
established price.
Stating this rule in terms of obtaining lodgings from friends or
relatives is misleading. As held in Hackathorn we do not consider that
such relationship will govern. In fact it would be impossible for us to
determine whether a friendship exists in any given case. Thus, this
rule has been applied when employees occupy quarters in private
residences, not in commercial establishments.
In this case, there is no evidence that Mr. Serie's coworker and host
made a practice of renting out space in his private residence or, in
fact, that he did so prior to or after this arrangement with Mr. Serie.
In the absence of such evidence the charges must be considerably less
than for commercial accommodations and supported by information
indicating that they were the result of expenses incurred by Mr. Perry
in providing the lodging. In this case we note that the daily rental
rate of $22.50 claimed by Mr. Serie is only a few cents a day less than
the rental rate for a furnished apartment which Mr. Serie has indicated
he could have rented without signing a 1-year lease. This fact alone
raises a serious question about the reasonableness of the amount claimed
since there is no indication that $22.50 a day reflects additional costs
occasioned by Mr. Serie's occupancy.
With regard to the meals purchased, Mr. Serie states that meals were
to be charged at direct cost plus preparation. On a daily basis he has
claimed amounts totaling as much as $15.10 for breakfast, lunch and
dinner. There is no explanation of how these costs were calculated
which would provide the agency with information to make a determination
that the meal costs were reasonable under the circumstances.
In conclusion, we find that the agency was correct to question
whether payment was proper. It is our view that there is insufficient
information in the record to allow payment of the claim since the record
shows that lodgings were provided to the employee in a private residence
and not as a continuing business of the individual whose residence was
occupied. Accordingly, Mr. Serie's claim is denied.
FOOTNOTES
(1) The request was made by Edward L. Davis, Assistant Director, Fish
and Wildlife Service, U.S. Department of the Interior, Washington, D.C.
B-217904, 65 Comp. Gen. 285
Matter of: John F. Manfredi and Delewis A. Gudgel, Feb. 11, 1986
Officers and Employees - Transfers - Miscellaneous Expenses - Auto
Registration, etc. Expenses
Use taxes, excise taxes, license fees, and related registration costs
imposed on boats and trailers brought into the state where the
transferred employee's new duty station is located may be reimbursed as
part of the miscellaneous expenses allowance. These items are
reimbursable because they are substantially the same as those expressly
authorized for automobiles and are directly related to the relocation of
the employee's residence. They may be reimbursed regardless of the fact
the boats and trailers were not transported to the new duty station at
Government expense.
Mr. John F. Manfredi and Mr. DeLewis A. Gudgel, employees of the
Bureau of Reclamation, paid taxes and related fees on boats and trailers
they brought into the State of Washington when they were transferred
from locations outside the State to Yakima, Washington. The amounts
they were assessed as use taxes, as well as initially assessed excise
taxes, license fees, and related registration costs for the boats and
trailers may be reimbursed as part of the miscellaneous expenses
allowance. /1/
Mr. Manfredi was transferred from Klamath Falls, Oregon, to Yakima,
Washington, in November 1984. He transported two boats and two boat
trailers to his new duty station. Upon registering the boats and boat
trailers in the State of Washington he was assessed use taxes of $787.80
as well as registration and licensing related fees totaling $58.90. In
addition, he paid $10.35 for boat numbers.
Mr. Gudgel was transferred from Ashton, Idaho, to Yakima, Washington,
in December 1984. He brought his camping trailer with him to Yakima.
Upon registering his trailer at his new duty station he was assessed a
Washington State use tax of $573.38 together with an excise tax and
other fees totaling $85.50.
Applicable Regulation
The issue is whether the above items are reimbursable relocation
costs within the category of miscellaneous expenses. Distinguishing
between the items covered and not covered by the miscellaneous expenses
allowance, Federal Travel Regulations, paras. 2-3.1(b)-(c) (Supp. 4,
August 23, 1982), Incorp. by ref., 41 C.F.R. Section 101-7.003 (1984),
provide in part:
b. Types of cost covered. The allowance (miscellaneous
expenses) is related to expenses that are common to living
quarters, furnishings, household appliances, and to other general
types of costs inherent in relocation of a place of residence.
The types of costs intended to be reimbursed under the allowance
include but are not limited to the following:
(6) Costs of automobile registration, driver's license, and use
taxes imposed when bringing automobiles into certain
jurisdictions.
(c). Types of costs not covered. This allowance shall not be
used to reimburse the employee for costs or expenses incurred
which exceed maximums provided by statute or in these regulations;
costs or expenses that the employee incurred but which are
disallowed elsewhere in these regulations * * * costs or expenses
incurred for reasons of personal taste or preference and not
required because of the move * * * or any other expenses brought
about by circumstances, factors, or actions in which the move to
the new duty station was not the proximate cause. * * *
Discussion
A use tax is imposed on the value of tangible property, including
boats and trailers, transported into the State of Washington for use
there. It is paid only once in lieu of the state sales tax. Revised
Code of Washington Annotated, Chapter 82.12. The State of Washington
also imposes an annual excise tax on boats, trailers, travel trailers,
and campers in connection with their registration and licensing.
Revised Code of Washington Annotated, Chapters 82.44 (motor vehicles
defined to include ordinary trailers), 82.49 (watercraft), and 82.50
(travel trailers and campers).
Use taxes, excise taxes, license fees, and related registration costs
imposed by the State of Washington on the boats and trailers in this
case are reimbursable because they are substantially the same as those
expressly allowed for automobiles under FTR, para. 2-3.1b(6). They are
expenses directly related to the relocation of the employee's residence
since payment of the State-imposed fees is a condition to use of the
boats and trailers in the vicinity of the employee's new residence. On
this same basis we have allowed reimbursement as a miscellaneous expense
of use taxes paid upon a mobile home transported to the new duty
station. See 47 Comp. Gen. 687 (1968).
Concerning the employees' claim for excise taxes, license fees, and
related registration costs, we point out that only the initial payment
due upon relocating the boats and trailers to Yakima, is reimbursable.
Accrual of these items in subsequent years is a part of the employee's
everyday cost of living unrelated to the change of residence. Thomas A.
Shaver, B-195851, October 29, 1980. In Mr. Malfredi's case, the $10.35
amount he paid for boat numbers also may be reimbursed. Upon
registering the boat, the registration number issued by the state is
required to be displayed on the vessel. As an integral part of that
process the purchase of boat numbers may be regarded as a cost
associated with registration of the boat. The expenses here in issue
may be allowed even though the trailers and boats were not transported
to the employee's new duty station at Government expense. B-174665,
January 20, 1972.
The claims submitted by Messrs. Manfredi and Gudgel may be paid to
the extent they are otherwise allowable under FTR para. 2-3.3.
FOOTNOTES
(1) Florence K. Entwistle, Authorized Certifying Officer, requested
this advance decision.
B-217484, 65 Comp. Gen. 282
Matter of: Joel O. Brende - Real Estate Title Requirements, Feb. 11,
1986
Officers and Employees - Transfers - Real Estate Expenses - House Title
in Name of Another
An employee, between the time he received notice of his transfer and
the date he reported to his new duty station, married the woman whose
home had been his residence at the time he received notice of his
transfer. He may not be reimbursed for real estate expenses associated
with the sale of that residence since he did not acquire his interest in
the residence prior to the date he was definitely informed of his
transfer. At that time he had neither a direct nor a derivative
interest in the property and, thus, did not satisfy the requirements of
Federal Travel Regulations paragraph 2-6.1c. 53 Comp. Gen. 90 (1973) is
overruled.
The Veterans Administration has requested a decision concerning the
claim of a transferred employee, Dr. Joe. O. Brende, for reimbursement
of real estate associated with the sale of a residence at his old
official duty station. The residence in question was originally owned
solely by the woman Dr. Brende married after he received notification of
his transfer. We hold that Dr. Brende may not be reimbursed for any of
the real estate expenses associated with the sale of that residence
since he did not acquire his interest in the residence prior to the date
he was definitely informed of his transfer, as required by paragraph
2-6.1c of the Federal Travel Regulations (Supp. 4, August 23, 1983),
incorp. by ref., 41 C.F.R. Section 101-7.003 (1984) (FTR).
Dr. Brende was transferred from the Veterans Administration Medical
Center in Topeka, Kansas, to the Veterans Administration Medical Center
in Montrose, New York, with a reporting date of September 18, 1983. Dr.
Brende signed the service agreement required by 5 U.S.C. Section 5724(i)
on September 7, 1983, and, on his application for reimbursement, listed
that date as the date he was notified of his impending transfer. His
travel authorization was issued on September 9, 1983. Dr. Brende
married Jacqueline Kershner on September 16, 1983.
On August 29, 1983, prior to her marriage to Dr. Brende, Jacqueline
Kershner entered into an agreement to sell her Topeka, Kansas,
residence. At that time, title to the property was in her name alone.
On September 9, 1983, the date Dr. Brende's travel orders were issued,
she transferred title to Dr. Brende and herself as tenants-in-common.
Dr. Brende has furnished a sworn statement that the property had been
his residence for several months prior to September 9, 1983, and that he
was residing there when he was first notified of his transfer.
The statutory authority for reimbursement of real estate expenses is
found at 5 U.S.C. Section 5724a(a)(4) (1982), which provides for
reimbursement of the expenses for the sale of an employee's residence at
the old duty station and the purchase of a residence at the new duty
station. The regulations which implement that statute are found in
Chapter 2, Part 6, of the FTR, paragraph 2-6.1 of which provides 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:
b. Location and type of residence. The residence or dwelling
is the residence as described in 2-1.4i, * * * .
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 in the joint names of the employee and one 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 of his/her transfer to the new official station.
d. Occupancy requirements. The dwelling for which
reimbursement of selling expenses is claimed was the employee's
residence at the time he/she was first definitely informed by
competent authority of his/her transfer to the new official
station.
Paragraph 2-1.4i of the FTR defines official station or post of duty,
including an employee's residence at that post of duty, as follows:
Official station or post of duty. The building or other place
where the officer or employee regularly reports for duty. * * *
With respect to entitlement under these regulations relating to
the residence and the household goods and personal effects of an
employee, official station or post of duty also means the
residence or other quarters from which the employee regularly
commutes to and from work. * * * .
Thus, the prerequisites for reimbursement of house sale expenses are
listed above, and all must be met before reimbursement may be allowed.
First of all, the house the employee sells must be located at the
employee's old duty station and, as provided in FTR para. 2-1.4i, it
must be the one from which the employee regularly commutes to and from
his worksite. Secondly, the employee must have been residing in the
house for which he claims reimbursement of selling expenses at the time
he was notified of his transfer. Finally, title to the house must be in
the name of the employee 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. This provision is qualified by the requirement that
the employee must have acquired his interest in the property prior to
the date he was definitely informed of his transfer.
Although the residence in question was located at Dr. Brende's old
duty station and although it appears that he was residing there at the
time he was notified of his transfer and regularly commuted from that
residence, he did not acquire his interest in that residence prior to
notification of his transfer. Dr. Brende's future wife transferred
title to him on September 9, 2 days after the date he says he received
transfer notification. Their marriage took place 7 days later, on
September 16.
We held in a similar case that it was not sufficient for purposes of
FTR para. 2-6.1e that an employee's future wife owned the residence at
the time the employee was notified of his transfer. Ellis Slater,
B-216577, March 11, 1985. We stated that to hold that such ownership
was sufficient would render the requirement that an employee must have
an interest in the property meaningless since in such situations the
employee's interest is derivative of the spouse's interest. Thus, an
employee must have an interest in the property either direct, that is in
his own name, or derivative, that is in the name of a member of his
immediate family at the time he was first notified of his transfer.
Since the owner of the residence here was not a member of Dr. Brende's
immediate family when he was first notified of his transfer, he had
neither a direct nor a derivative interest in the property at that time.
As stated in the Veterans Administration's submission, we held in 53
Comp. Gen. 90 (1973) that an employee is not precluded from receiving
reimbursement for the expenses of a sale of residence where the
employee, subsequent to receiving notice of a transfer but prior to the
actual date of transfer, marries and thereafter establishes a residence
in a dwelling which had been owned and occupied by his wife at the time
he was first officially informed of the transfer. In that case, the
employee and his wife actually occupied the dwelling at the time of
transfer. Dr. Brende's situation does not fall squarely within the
purview of this case because he did not reside in the Topeka property
after the date of his marriage. More fundamentally, however, we believe
that 53 Comp. Gen. 90 should be overruled.
In 53 Comp. Gen. 90 we did not apply the regulatory requirements that
an employee must have an interest and reside in the property at the time
he is notified of his transfer because of the particular set of facts
involved in that case. The agency had delayed the employee's transfer
for six months; it was clear that the employee did not acquire the
dwelling he sold for the purpose of obtaining financial gain; and he
had in fact established a bona fide residence in his wife's home after
their marriage and prior to transfer. Although these facts did make
this employee's case a sympathetic one, upon reexamination of this
decision, we now believe that the requirement that the employee have an
interest in the property when he is first notified of his transfer must
be strictly applied. As a result, we have decided to overrule 53 Comp.
Gen. 90 (1973).
For the reasons stated above, we conclude that Dr. Brende's case does
not meet the applicable regulatory requirements and, therefore, he is
not entitled to the real estate expenses he seeks.
B-212699, 65 Comp. Gen. 273
Matter of: John Nyberg, et al., - Computation of Overtime Under
Title 5, United States Code - Comparison With FLSA Overtime, Feb. 10,
1986
Compensation - Overtime - Uncommon Tours of Duty
Where General Schedule employees' basic workweek contains hours of
work in excess of 8 in a day payable at an overtime rate these overtime
hours may not be counted in determining whether the employees have
worked hours in excess of 40 hours in an administrative workweek for
purposes of computing "title 5" overtime compensation under 5 U.S.C.
5542 and the implementing regulation, 5 C.F.R. 550.111(a).
Compensation - Overtime - Fair Labor Standards Act - Fair Labor
Standards Act v. Other Pay Laws
An employee who is "nonexempt" under the Fair Labor Standards Act
(FLSA), 29 U.S.C. 201 et seq., must have overtime compensation computed
under both title 5 of the United States Code and the FLSA. The employee
is then entitled to whichever computation results in the greater total
compensation. The claimants here are entitled to payment under the FLSA
since their total compensation computed under that Act is greater than
under title 5, United States Code.
This decision responds to a request by Ms. Margaret Rhine, Authorized
Certifying Officer, Bonneville Power Administration (BPA), that we
resolve a disagreement between BPA and the Office of Personnel
Management (OPM) concerning the overtime pay entitlements of certain
General Schedule employees. The issues are: (1) the proper method of
calculating "title 5" overtime for the employees under 5 U.S.C. Section
5542 (1982); and (2) the basis for comparing title 5 overtime to the
employees' entitlements under the Fair Labor Standards Act, 29 U.S.
Sections 201 et seq. (1982), in order to determine which of these two
overtime authorities should be applied.
For the reasons set forth herein, we hold that:
(1) For purposes of calculating title 5 overtime for General Schedule
employees, hours worked in excess of 8 hours in a day may not be counted
in determining whether an employee worked in excess of 40 hours in an
administrative workweek. See 5 U.S.C. Section 5542(a) and 5 C.F.R.
Section 550.111(a) (1985).
(2) These "nonexempt" employees are entitled to be paid for overtime
work under the method which gives them the greater total compensation;
that is, under either title 5, United States Code, or the Fair Labor
Standards Act. Since the Fair Labor Standards Act (FLSA) yields the
greater total compensation under the facts of this case, the BPA
employees are entitled to payment under that Act.
BACKGROUND
On November 17, 1981, Mr. John Nyberg, a BPA control systems monitor,
filed an FLSA complaint with OPM's Northwest Region on behalf of himself
and other "nonexempt" (i.e. subject to FLSA) control systems monitors.
These employees questioned the method used by BPA to compare their
overtime entitlements under title 5 and the FLSA, as well as the
resulting determination that title 5 rather than FLSA applied to them.
Additionally, the employees questioned whether the comparisons should be
made on a pay period or on an administrative workweek basis.
Mr. Nyberg and the other control systems monitors are General
Schedule employees who were assigned a 40-hour basic workweek consisting
of four 10-hour shifts to be worked within 3 days (Sunday through
Tuesday), plus a scheduled 8-hour overtime shift on the fourth day
(Wednesday), for a total of 40 hours of work each week. The employees'
work schedules looked like this:
TABLE OMITTED
There is no dispute in the present case as to the proper FLSA
calculations for the employees. At the time in question, these weekly
amounts were $174.40 in FLSA overtime compensation and $804.44 in total
remuneration. The computation of title 5 overtime is disputed.
For purposes of title 5, BPA calculated the employees' entitlements
as follows:
TABLE OMITTED
Based on the above calculations, BPA determined that the employees'
weekly overtime compensation under title 5 ($236.16) was more than it
would be under FLSA ($174.40). While the employees' total weekly
remuneration was more if FLSA applied ($804.44) than if title 5 applied
($753.72), BPA concluded that the comparison between title 5 and FLSA
should be based only on overtime compensation, not total remuneration.
Therefore, BPA applied title 5 to fix the employees' overtime
entitlements.
The Northwest Region of OPM issued its FLSA decision on May 31, 1983.
The OPM agreed with BPA that, contrary to the employees' assertion,
overtime comparisons should be based on the workweek, not the pay
period. However, OPM rejected BPA's method of calculating title 5
overtime. As discussed in detail hereafter, OPM arrived at an alternate
method that resulted in a greater overtime entitlement for the employees
under FLSA than under title 5. In any event, OPM also opined that the
title 5-FLSA comparison should be based on total remuneration, not just
overtime pay. Since total remuneration was greater by application of
FLSA, OPM concluded that the employees in question should be compensated
under FLSA.
The OPM directed BPA to identify all current and former employees
affected by its decision and to compute their backpay entitlements in
accordance with its decision. The BPA disagreed with the OPM decision
and submitted the matter to us for resolution.
ARGUMENTS OF BPA AND OPM
As noted above, BPA and OPM agree on the proper FLSA computations in
this case. They also agree that all computations are to be made on a
workweek basis. The two agencies disagree on the method to be used in
calculating title 5 overtime and on the basis for comparing title 5 and
FLSA entitlements.
BPA's Position
With reference to the calculation of title 5 overtime, BPA contends
that under the governing statutory provisions and implementing
regulations, as well as Comptroller General decisions, title 5 overtime
consists of hours of work which are either in excess of 8 in a day or 40
in a week -- not both. Work hours that already have been counted as
overtime since they exceeded 8 hours in a day are not counted again
toward hours worked in excess of 40 for the week. Accordingly, BPA
treated the 16 hours worked by the employees which were in excess of 8
hours on the 3 days of their basic workweek -- i.e., 6 on Sunday, 6 on
Monday and 4 on Tuesday -- as overtime hours payable at the employees'
full title 5 overtime rate. Since under BPA's approach these 16 hours do
not count toward hours worked in excess of 40 in a week, BPA did not
allow the employees any title 5 overtime for the 8-hour shift on
Wednesday.
In sum, BPA calculated the employees' title 5 entitlements for their
48-hour workweek based on 32 hours of basic pay and 16 hours of
overtime, plus the applicable night and Sunday premium payments which
remain constant in all the comparisons. The BPA recognizes that this
method yields weekly overtime compensation that is greater under title 5
than FLSA but total weekly remuneration that is greater under FLSA.
However, it contends that title 5 must prevail over FLSA because the
applicable OPM regulations specifically require the comparison to be
made on the basis of the greater overtime entitlement.
OPM's Position
The OPM disputes two fundamental aspects of BPA's approach. First,
OPM argues that the general rule against counting title 5 overtime hours
in excess of 8 in a day toward hours in excess of 40 in a week should
not apply where the hours over 8 in a day make up part of the employees'
basic 40-hour workweek. The OPM points out that 5 U.S.C. Section 6101
(1982) requires agencies to schedule a basic 40-hour workweek. It
follows, according to OPM, that employees are entitled to at least 40
hours of basic pay for each week. /1/ The BPA's approach grants
employees only 24 hours of basic pay for their basic 40-hour workweek;
the remaining 16 hours are treated as overtime. In OPM's view, this
approach incorrectly understates the employees' basic pay and overstates
their title 5 overtime compensation.
OPM's alternative method of calculating title 5 overtime in this case
consists of the following three steps:
1. Allow the employees basic pay ($14.06 per hour) for all 40 hours
that make up their basic workweek.
2. Allow the employees an additional amount ($.70 per hour) over
their basic pay for the 16 hours of their basic workweek that constitute
hours in excess of 8 in a day. This additional amount represents the
difference between the employees' basic rate of pay and their full title
5 overtime rate.
3. Pay the employees the full title 5 overtime rate ($14.76) for the
8 hours worked on Wednesday, which represents 8 hours worked in excess
of 40 in the week.
This method of calculation yields the following results:
TABLE OMITTED
Under the OPM method, title 5 overtime ($129.28) now is less than
FLSA overtime ($174.40) and total remuneration using title 5 ($759.32)
still remains less than FLSA ($804.44). Thus, FLSA would apply
regardless of whether the comparison is made between overtime
compensation or total remuneration. However, OPM does assert that total
remuneration is the proper basis for comparison, citing as support for
this approach example 3 and 4 in Attachment 5 to FPM Letter 551-1 (May
15, 1974).
ANALYSIS AND CONCLUSIONS
1. Computation of Overtime Pay under title 5
The statutory basis for the title 5 calculation of overtime for
General Schedule employees in 5 U.S.C. Section 5542(a) (1982), which
provides in part:
"For full-time, part-time and intermittent tours of duty, hours
of work officially ordered or approved in excess of 40 hours in an
administrative workweek, or (with exceptions not relevant here) in
excess of 8 hours in a day, performed by an employee are overtime
work and shall be paid for, except as otherwise provided by this
subchapter, at the following rates:
"(1) For an employee whose basic pay is at a rate which does
not exceed the minimum rate of basic pay for GS-10, the overtime
hourly rate of pay is an amount equal to one and one-half times
the hourly rate of basic pay of the employee, and all that amount
is premium pay.
"(2) For an employee whose basic pay is at a rate which exceeds
the minimum rate of basic pay for GS-10, the overtime hourly rate
of pay is an amount equal to one and one-half times the hourly
rate of the minimum rate of basic pay for GS-10, and all that
amount is premium pay."
The implementing OPM regulations provide, at 5 C.F.R. Section
550.111(a) and (b) (1985):
(a) Except as provided by paragraph (d) of this section,
overtime work means work in excess of 8 hours in a day or in
excess of 40 hours in an administrative workweek that is:
"(1) Officially ordered or approved; and
"(2) Performed by an employee. Hours of work in excess of
eight in a day are not included in computing hours in an
administrative workweek.
"(b) Except as otherwise provided in this subpart, a department
shall pay for overtime work at the rates provided in Section
550.113." (Italic supplied.)
Section 550.113 of 5 C.F.R. tracks the language of 5 U.S.C. Section
5542(a)(1) and (2) in generally fixing the overtime rate as the lower of
1 1/2 times an employee's basic hourly rate of pay or 1 1/2 times the
minimum basic rate for GS-10.
The language of 5 U.S.C. Section 5542(a) strongly implies, and the
OPM regulation explicitly provides, that hours of work in excess of 8 in
a day are not included in computing hours in excess of 40 in a week. We
adopted the same interpretation of substantively identical statutory
language in 42 Comp. Gen. 329 (1962). OPM's method of computing title 5
overtime in the present case clearly is inconsistent with this
interpretation. OPM counts a total of 24 hours of the employees'
48-hour workweek as overtime hours for purposes of title 5. This
includes both the 16 hours worked in excess of 8 in a day for Sunday
through Tuesday and the full 8-hour shift worked on Wednesday. We
disagree with OPM for the following reasons.
Under the provisions of the 5 U.S.C. Section 6101 (1982), the head of
an agency is required to establish a basic administrative workweek of 40
hours for each full-time employee in his organization, and provide that
the hours of work within that workweek be performed within a period of
not more than 6 of any 7 consecutive days. This requirement has been
upheld by the Court of Claims. In Acuna v. United States, 479 F.2d
1356, 202 Ct. Cl. 206 (1973), cert. denied, 416 U.S. 905 (1974); and by
this office in James E. Sommerhauser, 58 Comp. Gen. 536 (1979).
Neither the statute nor the OPM regulations provide for an exception
to the above rules when an employee's basic 40-hour workweek includes
some hours that qualify for overtime compensation. Nothing in the
statute precludes an agency from making hours in excess of 8 in a day
part of the basic workweek. However, since an employee is entitled to
basic pay for work performed during the 40-hour basic workweek, /2/ the
actual overtime pay is the difference between the basic rate of pay and
the overtime rate for those hours. In this context, we believe that 40
hours of basic pay represents nothing more than a floor on an employee's
entitlement for the basic workweek; it does not prevent an agency from
paying additional compensation for hours within the basic workweek that
qualify as overtime work under title 5. Thus, BPA's structuring of the
employee's basic workweek in the present case does not detract from
their entitlements under 5 U.S.C. Section 6101. /3/
Thus, the rule as properly applied to these BPA employees with
uncommon tours of duty may be stated as follows: Hours that are both
included in the basic workweek and are in excess of 8 hours in a day may
not be counted in determining whether or not an employee has exceeded 40
hours in an administrative workweek. Applying this rule to the facts
here, the BPA employees are entitled to title 5 overtime pay for the 16
hours worked in excess of 8 hours in a day during the tours of duty
worked Sunday through Tuesday. However, since those overtime hours may
not be counted twice, only 24 of the hours worked during that period may
be counted in determining whether the employees exceeded 40 hours of
work during the administrative workweek. Therefore, they may receive
only basic pay for the 8 hours worked on Wednesday.
Comparison of Overtime Entitlements under Title 5 and under FLSA
The second issue is whether overtime compensation or total
remuneration provides the correct basis for deciding which of the
statutory authorities applies.
As far as we can determine, this is the first case to directly
present the issue. Shortly after enactment of the 1974 amendments which
made FLSA applicable to Federal employees, the Civil Service Commission
issued FPM Letter 551-1, supra, which instructed agencies to calculate
Federal employee overtime entitlements under both title 5 and FLSA and
to apply the authority that provided the greater benefit. Our decision
in 54 Comp. Gen. 371 (1974) endorsed the concept of comparing FLSA and
title 5 entitlements and applying the more beneficial; however, we did
not address how this comparison should be made. /4/
As OPM points out, two examples in Attachment 5 to FPM Letter 551-1
indicate that the FLSA-title 5 comparison should be made on the basis of
total weekly remuneration. In fact, BPA states that it also compared
overtime on this basis until OPM issued final regulations on Federal pay
administration under FLSA in December 1980. /5/ According to BPA,
however, these regulations now require that the comparison be made on
the basis of overtime compensation alone. The BPA points to 5 C.F.R.
Section 551.513, which provides:
Section 551.513 Payment of greater overtime pay entitlement.
An employee entitled to overtime pay under this subpart and
overtime pay under Section 550.113 of this chapter (title 5
overtime), or under any other authority, shall be paid under
whichever authority provides the greater overtime entitlement in
the workweek. This overtime pay shall be paid in addition to all
pay, other than overtime pay, to which the employee is entitled
under title 5, United States Code, or any other authority.
The OPM's position, notwithstanding the provisions of section
551.513, is that the basic principle in applying title 5 and the FLSA is
that employees are to be paid by whichever method provides the greater
total remuneration. The OPM also found that, under proper methods of
computation, both overtime entitlement and total remuneration for these
claimants are less under title 5 than under FLSA. We agree that whether
overtime pay or total pay under title 5 and FLSA are compared, the
results of the comparisons should be the same if both types of overtime
are properly computed. Additionally, as set out in 5 C.F.R. Section
551.513, quoted above, the comparison is to be made on a workweek basis,
not a pay period basis as contended by Mr. Nyberg.
However, because it is not safe to say that comparing overtime will
always achieve the same result as comparing total compensation, and
because the plain language of 5 C.F.R. Section 551.513 is at variance
with the OPM position stated above, we believe that the regulation is
inconsistent with the intent of Congress in applying FLSA to Federal
employees and may be confusing to employing agencies as illustrated by
this case. Therefore, we strongly recommend that OPM revise the
regulation to make it clear that the greater total benefit is to be
controlling.
In applying our above-stated interpretation to the instant case, the
correct computation of title 5 overtime compensation is set out below.
Since there is no dispute as to the computation of FLSA overtime, we
will not reproduce the entire calculation, merely the result. Repeating
the work schedule, it consists of four 10-hour shifts worked within
Sunday, Monday and Tuesday, resulting in total hours worked of 14 on
Sunday, 14 on Monday and 12 on Tuesday, with an additional 8-hour shift
worked on Wednesday. For Mr. Nyberg (grade GS-11, step 10), at the then
current October 1980 pay rates, the computation is as follows:
Hourly rate of pay
Basic pay...........................$14.06
Night pay.............................1.41
Sunday pay............................3.52
Overtime pay (GS-10/1 times 1 1/2)...14.76
Title 5 Overtime Pay Computation
Basic pay (for Sun., Mon., and Tues.)
40 hours $14.06 @.........................$562.40
Night pay 28 hours 1.41 @...................39.48
Sunday pay 8 hours 3.52 @...................28.16
Straight time 8 hours
for Wed. /6/ 14.06 @.....................112.48
Overtime pay 16 hours $.70 /7/ @..........11.20
Total Pay.................................$753.72
FLSA Overtime Pay Computation
Basic pay........................$562.40
Night pay..........................39.48
Sunday pay.........................28.16
FLSA overtime /8/ ..............174.40
Total Pay........................$804.44
PAY COMPARISON
Total Compensation
FLSA..........$804.44
Title 5........753.72
Overtime Compensation
FLSA...........174.40
Title 5.........11.20
Accordingly, the computation of overtime entitlement under title 5,
United States Code, should be made based upon the rules and principles
set forth in this decision. Inasmuch as the computation of overtime
under the Fair Labor Standards Act results in greater total
compensation, Mr. Nyberg and other control systems monitors are entitled
to the payment of overtime compensation under the Fair Labor Standards
Act.
FOOTNOTES
(1) See also, in this regard, Appendix H to Book 550, FPM Supp. 990-2
(Inst. 68, March 7, 1983) at para. b(1)(a), which states that "(a)n
employee is entitled to basic pay for work performed during his or her
40-hour basic workweek."
(2) See Footnote 1 above.
(3) We have been informally advised that BPA reports 40 hours of work
each week for these employees for retirement purposes. Therefore, the
employees are not receiving proper retirement credit.
(4) The issue in 54 Comp. Gen. 371 was whether FLSA applied at all to
the overtime entitlements of Federal employees or whether, as one agency
maintained, the existing title 5 overtime provisions preempted FLSA.
(5) See 5 C.F.R. Part 551, published at 45 Fed. Reg. 85659 (December
30, 1980). The overtime provisions of the current regulations, 5 C.F.R.
Sections 551.501-551.541 (1985), are the same as the December 1980
version for purposes here relevant.
(6) Since only 24 of the hours worked Sunday through Tuesday are
counted toward 40 hours for title 5 overtime purposes (see p. 9 above),
the 8 hours worked Wednesday are paid at the regular rate.
(7) With respect to the hours of work included in the 40-hour basic
workweek which are in excess of 8 in a day, the only compensation
included as overtime is the difference between the rate of basic pay and
the overtime rate.
(8) Only the employees' hours of work in excess of 40 in the week
count as FLSA overtime hours. Thus, while the employees in this case
have 16 hours of title 5 overtime, they have only 8 overtime hours for
purposes of FLSA.
B-220446, 65 Comp. Gen. 270
Matter of: Anchor Continental, Inc., Feb. 6, 1986
Contracts - Small Business Concerns - Awards - Set-Asides -
Administrative Determination - Reasonable Expectation of Competition
Contracting agency reasonably concluded that adequate small business
competition could be expected so as to justify setting aside certain
line items in the solicitation exclusively for small business
participation where bids from four responsible small businesses were
received on identical line items in the prior year's procurement.
Contracts - Small Business Concerns - Awards - Set-Asides -
Administrative Determination - Reasonable Expectation of Competition
The contracting agency need not make determinations tantamount to
affirmative determinations of responsibility on expected small business
bidders before deciding to set IFB line items aside for small business.
The agency is only obligated to make an informed business judgment that
at least two responsible small business bidders will compete and will
offer reasonable prices.
Anchor Continental, Inc. (Anchor), a large business manufacturer of
fiberglass-reinforced tape, protests the restriction in invitation for
bids (IFB) No. 2FC-EAF-A-A3421-S, setting aside certain line items for
small business. We deny the protest.
The IFB was issued by the General Services Administration (GSA) as a
requirements contract for the supply of various types of tape. The IFB
contained 64 line items, of which 1 through 12 and 20 through 62 were
set aside solely for small businesses. Within the set-aside portion,
line items 1 through 12 were for quantities of aluminum-backed,
pressure-sensitive tape; line items 20 through 36 were for tapes for
various specified applications; line items 37 through 47 were for
polyester filament reinforced tape; and line items 48 through 62 were
for fiberglass filament reinforced tape.
Anchor contends that the set-aside of these line items for small
business was improper because at the time GSA made its set-aside
decision the agency could not have had a reasonable expectation that
bids on these line items would be submitted by at least two responsible
businesses as required by the Federal Acquisition Regulation (FAR), 48
C.F.R. Section 19.502 (1984). With respect to line items 48 through 62
in particular, Anchor alleges that there are only two small business
manufacturers of fiberglass filament tape in the United States to start
with, and that one of the two, RJM Manufacturing, Inc., does not have
the requisite resources and production facilities to perform a contract
of the magnitude called for by the IFB. According to Anchor, RJM has
only 52 employees and its fiscal year 1984 sales were only $10 million;
Anchor estimates that the awarded contract for the supply of the
government's fiberglass filament tape requirements will be worth
approximately $3.5 million. In addition, Anchor points out that RJM had
been awarded a large contract for the supply of polyester tape in GSA's
prior fiscal year procurement for similar estimated quantities of tape
and argues that GSA should have taken into account the fact that RJM
would likely also be competing in the instant procurement for the award
of a contract for polyester tape when deciding whether to set aside the
fiberglass filament tape portion of it.
GSA takes the position that the decision to set aside a significant
portion of the IFB for small business was based on ample information
which reasonably led the agency to conclude that bids at reasonable
prices would be received from a sufficient number of small businesses.
With respect to line items 48 through 62, specifically, GSA states that
of the eight bids in the prior procurement, GSA determined that such
tape should be set aside for small business; GSA adds that its decision
to set aside was concurred in by its Small Business Administrative
representative.
For a total small business set-aside, the regulations require that
there be a reasonable expectation that offers will be obtained from at
least two responsible small business concerns and that awards will be
made at reasonable prices. FAR, 48 C.F.R. Section 19.502-2. The
decision to set aside a procurement for small business is basically a
business judgment within the broad discretion of the contracting agency,
so that we will not question a decision to set aside unless as a clear
showing is made that the agency abused its discretion. Burrelle's Press
Clipping Service, B-199945, Mar. 2, 1981, 81-1 C.P.D. Paragraph 152.
We see no abuse of destruction by GSA in its decision to restrict the
protested line items to small businesses. At the outset, we note that
while Anchor objects to all the line item set-asides, the company only
gives specific reasons with regard to why it believes the set-aside of
line items 48 through 62 was inappropriate. In this regard, the types
of tapes covered by line items 1 through 12 and 30 through 47 had been
set aside by GSA in the prior fiscal year procurement and the agency had
successfully received bids on these tapes from several responsible small
businesses. Once a product has been acquired successfully by an agency
on the basis of a small business set-aside, the procurement regulations
provide that in subsequent procurements, the product should be acquired
on the basis of a repetitive set-aside, unless the agency cannot expect
reasonably priced offers from at least two responsible small business
concerns. FAR, 48 C.F.R. Section 19.501(g). Since Anchor gives us no
basis to question GSA's decision to continue the set-aside of these
items, or to set aside line items 20 through 29, we will not review this
aspect of the protest further. See Multinational Business Services,
Inc., B-221362, Jan. 9, 1986, 86-1 C.P.D. Paragraph 25.
Turning to Anchor's protest against the set-aside of line items 48
through 62, prior acquisition history is an important factor in
determining whether a reasonable expectation of small business
competition exists to justify a set-aside. FAR, 48 C.F.R. Section
19.502-2. The record shows that in the prior fiscal year's procurement
of fiberglass tape, GSA actually received bids from four responsible
small businesses. Although two of those firms were regular dealers
instead of manufacturers -- Anchor's complaint is based in large part on
its contention that there are only two small business manufacturers of
fiberglass tape in the United States -- responsible small business
dealers are eligible for award under a small business set-aside. The
Small Business Administration regulations at 13 C.F.R. Section 121.3-8
(1985), which provide that a nonmanufacturer bidding on a small business
set-aside is considered to be small when it meets the applicable size
standard for number of employees and offers the products of a small
business manufacturer.
With regard to the responsibility of RJM for purposes of restricting
of fiberglass-reinforced tape items 48 through 62, a contracting agency
need not make determinations tantamount to affirmative determinations of
responsibility before determining to set aside a procurement for
exclusive small business participation. Fermont Division, Dynamics
Corp. of America; Onan Corp., 59 Comp. Gen. 533 (1980), 80-1 C.P.D.
Paragraph 438. While the standards of responsibility enunciated in the
FAR may be relevant in making a set-aside determination, the agency is
only obligated to make an informed business judgment that there is a
reasonable expectation of acceptably priced offers from a sufficient
number of responsible small businesses. Id.
Here, the record reveals that RJM was the low bidder on the line
items for polyester tape in the prior procurement. An award was made to
RJM following a favorable preaward survey of the company, and RJM
successfully performed the contract. Irrespective of the fact that GSA
received bids on those items from a total of four eligible firms on that
procurement, we see nothing wrong with GSA, in determining whether a
set-aside for fiberglass tape was appropriate, relying on its past
experience with RJM and its finding that RJM was responsible for award
in the prior procurement, even though the award was for polyester tape
rather than fiberglass tape. In addition, we note that in comments on
the protest RJM advises that Anchor's description of RJM's size,
capacity, and finances is wrong, and that RJM in fact can produce
substantially more tape than called for by the solicitation.
In view of GSA's experience in procuring fiberglass-reinforced tape,
the agency's expectation of small business competition adequate to
satisfy the set-aside regulations was not unreasonable. The protest is
denied.
B-219667.2, 65 Comp. Gen. 268
Matter of: Koehring Company, Speedstar Division, Feb. 6, 1986
Contracts - Termination - Resolicitation - Original Evaluation Improper
Agency decision to resolicit after termination of a contract due to
procurement irregularities, rather than make an award under the original
solicitation, is not objectionable where the agency intends to revise
the evaluation scheme and possibly the purchase description for the
equipment being procured.
Contracts - Protests - Preparation - Costs - Noncompensable
Recovery of proposal preparation costs and the costs of pursuing a
protest is inappropriate when the protester is afforded an opportunity
to compete in a reprocurement.
The Speedstar Division of Koehring Company protests actions of the
United States Army Troop Support Command in regard to the procurement of
truck-mounted water well drilling systems. Koehring originally
protested a July 30, 1985 award to the George E. Failing Company under
request for proposals (RFP) No. DAAJ10-85-R-A023. Before resolution of
this protest, the Army terminated the contract with Failing on grounds
that deficiencies in the statement of evaluation factors in the RFP and
application of those factors during proposal evaluation made any award
under the RFP improper.
The Army states that it is revising the evaluation scheme for the
well drilling systems and may also revise the purchase description to
reflect its needs more accurately; it then expects to resolicit.
Koehring now alleges that the Army should instead reinstate the original
solicitation and award a contract to Koehring under it.
We deny the protest.
The RFP, issued November 23, 1984, indicated the Army would award a
requirements contract for between 6 and 20 well drilling systems. The
solicitation listed four factors for evaluation of proposals: technical
understanding and compliance, management, logistics, and cost.
Technical understanding and compliance, the most important factor, was
accorded half the total weight of all evaluation factors. It was
divided into a number of subfactors, of which one, "evaluation of system
components," was in turn divided into three components (well drilling
machine, support vehicle, and well completion kit) and 35 subcomponents.
While the solicitation stated that within each factor subfactors were
listed in order of importance, it did not provide any order of
importance or evaluation weight for the components and subcomponents.
The Army received three proposals and found those of Koehring and
Failing to be technically acceptable. On July 25, 1985, after
evaluation of best and final offers, the contracting officer determined
that an award should be made to Failing. While Failing's evaluated
price was approximately 6 percent more than Koehring's, the contracting
officer concluded that Failing's offer was most advantageous to the
government for two reasons. First, Failing proposed to provide drilling
and support vehicles with "roll on/roll off" capability, i.e., a well
drilling system that could be driven on and off transport aircraft
without disassembly. The Army believed this would not only reduce the
number of aircraft required to transport the well drilling systems but
also enhance rapid deployment, lower maintenance, and increase safety in
loading and unloading. Second, the contracting officer found that the
Koehring system did not have the required capability of being loaded
onto transport aircraft and unloaded using only equipment provided with
the system. Accordingly, the Army awarded the contract to Failing, and
Koehring submitted a protest shortly thereafter.
During consideration of Koehring's protest, the Army concluded that
its evaluation of proposals had not been in accord with the evaluation
scheme set forth in the solicitation. The agency states that the
evaluation factors did not specifically include air transportability or
otherwise support the emphasis placed upon "roll on/roll off"
capability. The Army also states that it should have indicated the
relative weights to be given system components in evaluating technical
understanding and compliance.
The agency issued a stop-work order to Failing on August 22 and
terminated the contract on September 17, 1985. /1/ As noted above, the
Army states that it intends to revise the RFP evaluation scheme and
possibly the purchase description for the well drilling system in order
better to reflect its actual needs before resoliciting.
Koehring argues that it is in the government's best interest to
reinstate the original solicitation and to award Koehring a contract
under it, rather than to resolicit. The protester asserts that its well
drilling systems is reasonably priced and meets the Army's actual needs;
that the aspects of Failing's system that the Army is considering for
inclusion in the RFP requirements are developmental and unproven; and
that a resolicitation would inevitably delay meeting an urgent Army
requirement.
The record does not support Koehring's position. As the Army points
out, air transportability was a requirement of the purchase description
and in fact was considered by some of the evaluators in the award
selection even though it was not listed as a factor in the evaluation.
In addition, the solicitation did not disclose the relative importance
in proposal evaluation of systems components, although assignment of
points ranged from 3 to 30 points per component in the actual
evaluation. As a result, the Army concluded that the offerors were not
sufficiently on notice of the award factors and their relative
importance. To remedy the situation, the Army plans to revise the
solicitation evaluation provisions and to resolicit offers. This is
consistent with prior decisions of this Office, see e.g., Hemford Co.,
B-216811, Feb. 8, 1985, 85-1 CPD Paragraph 167, and therefore we see no
reason to object.
As an alternative to award, Koehring requests proposal preparation
costs and the costs of filing and pursuing its protest on grounds that
the contract was improperly awarded to Failing in the first instance.
The Competition in Contracting Act of 1984, 31 U.S.C.A. Section 3554
(West Supp. 1985), and our Bid Protest Regulations, 4 C.F.R. Section
21.6 (1985), provide authority for our Office to grant such costs. In
view of our above conclusions, and since Koehring at a minimum will be
given an opportunity to compete when the Army resolicits, recovery of
either proposal preparation costs or the costs of filing and pursuing
the protest is inappropriate here. See 4 C.F.R. Section 21.6;
Galveston Houston Co., B-219998.4, Nov. 4, 1985, 85-2 CPD Paragraph 519.
The protest is denied.
FOOTNOTES
(1) Failing did not protest the termination of its contract. In a
letter to our Office dated November 18, filed as a party interested in
Koehring's protest, the firm stated its beliefs that the initial award
was proper and that the contract should be reinstated. Since Failing
did not indicate that it intended to submit a separate protest, we have
considered its views only to the extent they are relevant to issues
raised by Koehring.
B-220436, 65 Comp. Gen. 265
Matter of: N.B. Kenney Company, Inc., Feb. 4, 1986
Bid - Invitation for Bids - Amendments - Failure to Acknowledge - Bid
Nonresponsive
Bidder's failure formally to acknowledge a material amendment that,
among other things, changes bid opening to an earlier date, may not be
waived as a minor informality when the only evidence that the bidder
received the amendment is the fact that its bid and bid bond include the
earlier date. Bidders may be expected to prepare their bids before the
actual due date, and thus an earlier-dated bid does not clearly show
that the bidder is aware of and bound to the other changes required by
the amendment.
Bids - Invitation for Bids - Amendments - Acknowledgment - Constructive
Acknowledgment
Constructive acknowledgment exception to the general rule requiring
bidders formally to acknowledge solicitation amendments may not be
invoked when there is substantial doubt that the bidder is aware of the
entire amendment and the changes required by it.
N.B. Kenney Company, Inc., protests the proposed award of a contract
to MacDonald Plumbing and Heating, Inc., under invitation for bids (IFB)
No. OARM-85-014-JC, issued September 12, 1985 by the Department of
Labor. The IFB called for the replacement of the central heating plant
at the Grafton, Massachusetts, Job Corps Center. Kenney contends that
the agency should reject MacDonald's bid for failure to acknowledge
receipt of amendment No. 1 and failure to include required
representations and certifications.
We sustain the protest on the first basis.
The amendment in question changed both the bid opening date and the
scope of work at the Job Corps Center. Bid opening was moved up 2 days,
from October 19, 1985 to October 17, 1985. In addition, the amendment
required removal of additional asbestos and replacement of fan coil
heaters. It also changed previously-announced Davis-Bacon wage rates.
In rejecting Kenney's agency-level protest, Labor stated that
MacDonald's failure formally to acknowledge receipt of amendment No. 1
might be waived as a minor informality because Kenney's bid and bid bond
both reflected the amended bid opening date. The agency states that in
granting the waiver, it relied upon our decisions in Pioneer Fluid Power
Co., B-214779, Sept. 4, 1984, 84-2 CPD Paragraph 246, and Protimex
Corp., B-204821, Mar. 16, 1982, 82-1 CPD Paragraph 247. In Pioneer, we
held that the bidder's inclusion in its bid of the amended opening date
clearly established that the bidder had received the amendment and
constituted an implied acknowledgment, binding the bidder to the terms
of the amendment at its bid price. /1/ In Protimex, we held that the
inclusion of an amended bid opening date in a bid bond similarly
constituted an implied acknowledgment. Labor argues that MacDonald also
has impliedly acknowledged the amendment. We disagree because in
MacDonald's case, the amended bid opening date was earlier, rather than
later, than the original opening date.
Our constructive acknowledgment decisions are based on an exception
to the general rule that a bidder's failure to acknowledge a material
amendment requires the agency to reject the bid as nonresponsive. The
general rule is based on the fact that acceptance of a bid when an
amendment has not been acknowledged would afford the bidder the
opportunity to decide, after bid opening, whether to furnish extraneous
evidence showing that it had considered the amendment in formulating its
price or to avoid award by remaining silent. 51 Comp. Gen. 500 (1972).
Moreover, if such a bid were accepted, the bidder would not legally be
bound to perform in accord with the terms of the amendment, and the
government would bear the risk that performance would not meed its
needs. See Doyon Construction Co., Inc., 63 Comp. Gen. 214 (1984), 84-1
CPD Paragraph 194; 42 Comp. Gen. 490 (1963).
The constructive acknowledgment exception applies when the bid itself
includes one of the essential items appearing only in the amendment.
Thus, we have found that a bidder's failure to acknowledge an amendment
could be waived when, for example, the bid included a price for an item
that was added by amendment, 34 Comp. Gen. 581 (1955), or for quantities
reduced by an amendment. Nuclear Research Corp. et al., B-200793 et
al., June 2, 1981, 81-1 CPD Paragraph 437. We also have found
constructive acknowledgment when the bidder agreed to use materials
other than those required by the original solicitation, W. A. Apple
Mfg., Inc., B-183791, Sept. 23, 1975, 75-2 CPD Paragraph 170, aff'd on
reconsideration, Mar. 2, 1976, 76-1 CPD Paragraph 143, or when the bid
included an acceptance period that was different from that imposed by
the original solicitation. Shelby-Skipwith, Inc., B-193676, May 11,
1979, 79-1 CPD Paragraph 336.
These decisions, in our opinion, are consistent with the regulatory
provision that permits a bidder's failure to return an amendment to be
waived as a minor informality or irregularity if the bid "clearly
indicates that the bidder received the amendment." Federal Acquisition
Regulation (FAR), 48 C.F.R. Section 14.405(d)(1) (1984). In permitting
constructive acknowledgment, only the bidder's failure to acknowledge
the amendment is waived, not the bidder's compliance with the amended
solicitation. Shelby-Skipwith, Inc., supra.
As the Department of Labor points out, we have applied the
constructive acknowledgment exception, in numerous cases where bid
opening was extended by amendment, holding that submission of a bid
either between the original opening date and the extended opening date
or on the extended opening date itself is sufficient to charge the
bidder with knowledge of the amendment in its entirety. These decisions
are based on the theory that no bidder would deliberately submit a late
bid. See, for example, Inscom Electronics Corp., 53 Comp. Gen. 569
(1974), 74-1 CPD Paragraph 56; Lear Siegler, Inc., B-212465, Oct. 19,
1983, 83-2 CPD Paragraph 465; B-176462, Oct. 20, 1972.
On the other hand, we have recognized that a bidder's use of the new
opening date may not, in itself, be sufficient to indicate clearly that
the bidder is aware of other aspects of the amendment or committed to
performing in accord with its material terms. In Kinross Manufacturing
Corp., B-219937, Dec. 26, 1985, 65 Comp. Gen. 160, 85-2 CPD Paragraph
716, we held that the bidder's handwritten insertion of the new bid
opening date, along with a notation that it had been advised of this
date by an agency official, in the space on the bid form where it should
have acknowledged the amendment indicated that the bidder's knowledge
was limited to the new bid opening date. We therefore found that the
agency had acted properly in rejecting the bid as nonresponsive. As
noted in the footnote on page 2, we also found upon reconsideration of
Pioneer Fluid Power Co., supra, that despite inclusion of the new
opening date in one section of the bid, the use of the original date on
the cover sheet of the bid created doubt as to the bidder's intent to be
bound by all the material changes in the unacknowledged amendment.
Similarly, we think this case falls under the general rule requiring
the agency to reject the bid as nonresponsive, rather than under the
constructive acknowledgment exception. The constructive acknowledgment
decisions, as indicated above, all involve submission of bids after the
original opening date. In this case, however, in amendment No. 1, Labor
announced a bid opening date (October 17, 1985, instead of October 19,
1985). In our opinion, the October 17 date on MacDonald's bid and bid
bond may be explained by circumstances other than the actual receipt of
the amendment, since bidders may be expected to date and prepare their
bids before the final date for submitting them. They may, for example,
allow for time in transit, either in the mail or between the agency's
point of receipt and the place designated for bid opening. Therefore,
MacDonald's inclusion of the earlier opening date on the bid and bid
bond does not, of itself, clearly indicate that MacDonald received the
amendment. The additional work, required by the amendment, removal of
asbestos and replacement of fan coil heaters, and the change in
Davis-Bacon wage rates, in our opinion clearly are material, since they
will affect the contract price and the quality and quantity of
performance. In the absence of any evidence of MacDonald's actual
receipt of the amendment, we do not believe that the firm could be
legally required to provide these changes at its original bid price.
Accordingly, by separate letter to the Secretary of Labor, we are
recommending that the agency reject MacDonald's bid as nonresponsive and
make award to Kenney if it is the next low responsive, responsible
bidder. In view of this recommendation, we need not reach Kenney's
second basis of protest.
We sustain the protest.
FOOTNOTES
(1) We reversed this decision, however, in Pioneer Fluid Power Co. -
Reconsideration, B-214779.2, Mar. 22, 1985, 85-1 CPD Paragraph 332,
holding that the revised bid opening date entered in Pioneer's unsigned
Standard Form 19-B, Representations and Certifications, was contradicted
by the date used on the cover of the bid, which was signed. It
therefore appeared that the bidder's single use of the new date might be
explained by circumstances other than the actual receipt of the
amendment and did not clearly indicate the bidder's intent to be bound
by all of the material changes in the amendment.
B-220087; B-220087.2, 65 Comp. Gen. 258
Matter of: Plus Pendetur Corporation; Network Systems Corporation,
Jan. 30, 1986
Equipment - Automatic Data Processing Systems - Acquisitions, etc. -
Brooks Act Applicability
An acquisition of materials, supplies and installation of a local
area network (LAN) to be used to transmit information between computers
is an acquisition of automatic data processing equipment within the
meaning of the Federal Information Resources Management Regulation, 41
C.F.R. 201-2.001 (1985) and the Brooks Act, 40 U.S.C. 759 (1982). Where
the General Services Administration has not issued a delegation of
procurement authority, actions taken by an agency seeking to acquire
materials, supplies and installation of an LAN are unauthorized.
Plus Pendetur Corporation and Network Systems Corporation protest the
Navy's procurement of a local area network (LAN) under invitation for
bids (IFB) No. N00024-85-B-6408. The basic portion of the solicitation
is for the design of a broad-band cable system linking various data
processing equipment belonging to the Naval Sea Systems Command (NAVSEA)
and the Naval Air Systems Command (NAVAIR) at their Arlington, Virginia,
Crystal City building complex. The solicitation also includes option
items for materials and supplies for the installation of the system.
The protesters raise various objections to the Navy's handling of the
procurement. We need to reach only one of these complaints, an
allegation asserted by Network Systems that the Navy does not have
contracting authority. We sustain the Network Systems' protest and
dismiss Plus Pendetur's protest as premature.
The Brooks Act, 40 U.S.C. Section 759 (1982), gives the General
Services Administration (GSA) exclusive federal purchasing authority for
all commercially-available general purpose automatic data processing
equipment (ADPE). 40 U.S.C. Section 759(b)(2); 47 Comp. Gen. 275, 277,
278 (1967). GSA may delegate this authority. 40 U.S.C. Section
759(b)(2). GSA has impelemented its authority by publishing regulations
defining ADPE, which grant blanket delegations of procurement authority
in certain circumstances, but which otherwise require that an agency
seeking to purchase ADPE submit a documented Agency Procurement Request
to GSA requesting a specific Delegation of Procurement Authority (DPA).
Federal Information Resources Management Regulation (FIRMR), 41 C.F.R.
Section 201-2.001 and Part 201-23 (1985). Absent a GSA-approved DPA, an
agency lacks authority to acquire ADPE. PRC Computer Center, Inc., et
al., 55 Comp. Gen. 60, 67 (1975), 75-2 CPD Paragraph 35.
In its initial report to our Office, the Navy asserts that no DPA is
required because it is not buying ADPE. According to the Navy, it is
merely acquiring a cable telecommunications system. /1/ It admits it
will use the system to link various computers and peripheral computer
equipment. It argues, however, that ADPE embraces only general purpose,
commercially-available, mass-produced automated processing devices, and
does not encompass equipment such as telephones, telegraph, facsimile
and similar items. In the Navy's view, a LAN is clearly not ADPE
because it does not store, retrieve, collate or interpret data. Rather,
according to the agency, it is a telecommunications facility, consisting
of a network of cable and connectors as well as a control center
monitoring system.
Network System strongly disagrees. It contends that ADPE as defined
in the FIRMR includes not only commercially-available computers as such,
but auxiliary equipment, as well as devices to control and transfer data
or instructions to computers and data transmission and batch terminals.
It points out that LANS are designated as ADPE for federal supply
classification purposes (FSC Group 70). Moreover, the protester
contends, the LAN includes network interface units, which do store,
retrieve, interpret and manipulate data being transferred between
equipment served by the LAN.
GSA, in a report filed at our request, supports Network Systems'
position. In GSA's view, the items relating to the materials, supplies
and installation of the LAN are within the purview of its exclusive
authority under the Brooks Act and a DPA is required if the estimated
value of the procurement exceeds the blanket DPA thresholds it has
established. GSA asserts that the Navy's requirement is governed by the
FIRMR, Part 201.2. It notes that the Navy's technical specifications
include microcomputer systems and observes that data transmission and
communications equipment, sensors and other devices designed for use
with a configuration of ADPE are excluded from FSC Group 58, which
relates to telecommunications equipment. Moreover, GSA says the Navy
has previously requested and received DPAS for other LAN acquisitions.
It cites two recent examples (GSA case numbers KMA-84-0036 and
KMA-85-0349) involving the acquisition of broadband cable communications
systems for the Navy Medical Treatment Facilities and the acquisition of
a LAN for the Naval Military Personnel Command.
In rebuttal to the GSA report, the Navy reasserts its view that the
LAN is a telecommunications system rather than ADPE. In the
alternative, however, it argues that any DPA that is required need not
be obtained until it is ready to exercise the options. The Navy cites
no authority for this proposition, but maintains that it would not be
appropriate to require otherwise because it could not estimate the value
of the procurement, or, therefore, know whether the blanket delegation
applies, until the design phase is completed.
In addressing the issues, /2/ it is not necessary for us to decide
whether, as the Navy suggests, the equipment to be acquired is capable
of storing, retrieving, and collating data. We agree with Network
Systems that the LAN is ADPE if it is being acquired as auxiliary,
ancillary or other computer peripheral equipment. As Network Systems
contends, GSA has interpreted the Brooks Act as applying to the
acquisition of peripheral equipment. The FIRMR, 41 C.F.R. Section
201-2.001, defines ADPE as consisting of general purpose,
commercially-available, mass-produced automatic data processing devices
(i.d., components and the equipment systems configured from them),
including auxiliary equipment (such as plotters, data conversion
equipment, source data acquisition devices), devices used to control and
transfer data and/or instructions to and from central processing units
(including data transmission terminals, batch terminals, display
terminals, modems, sensors, multiplexors, and concentrators), as well as
general purpose mini- or microcomputers used to control, monitor,
measure or direct equipment. /3/
Moreover, our Office has concurred both in GSA's interpretation of
ADPE as including peripheral equipment intended to support computer
systems and in its classification of equipment such as modems as ADPE.
Modem, an abbreviation for modulator/demodulator, describes equipment
which converts digital signals into analog signals and vice versa, and
is used, for example, to connect computers through switched telephone
networks. In American Telephone and Telegraph Co., B-200989, Aug. 19,
1981, 60 Comp. Gen. 654 81-2 CPD Paragraph 157, we examined a complaint
by AT&T that modems and associated diagnostics being acquired by the
Social Security Administration were wrongly classified as ADPE.
Notwithstanding an earlier GSA classification of modems as
telecommunications equipment /4/ we agreed with GSA's later position
that treatment of the procurement as an ADPE acquisition was
appropriate.
Similarly, in Timeplex, Inc., et al. B-197346, et al., Apr. 13, 1981,
81-1 CPD Paragraph 280, we considered an Army award of a contract for
low speed time division multiplexer/demultiplexers (LSTDMS), equipment
designed to combine low speed digital data from a number of sources and
to retransmit that data from a number of sources and to retransmit that
data as a single, higher bandwidth stream of digital data. The LSTDMS
were being acquired to replace analog frequency division multiplexers.
Like the Navy in this case, the Army argued that LSTDMS were not
computer systems, central processing units, or auxiliary or other
peripheral equipment. Nevertheless, we held that GSA, which classified
LSTDMS as ADPE by placing them on the Federal Supply Schedule as FSC
Group 70 equipment, had acted properly, and we stated that the Army
would be required to obtain procurement authority to acquire the
commercially-available equipment. /5/ In reaching our conclusion, we
observed that APDE, as defined in Federal Procurement Regulations
Section 103.1102-1 (now FIRMR Section 202-2.00), appeared to broadly
embrace computer support equipment.
Applying these views to the facts of this case, we find that the LAN
being acquired is computer support equipment and is ADPE subject to the
Brooks Act. The solicitation calls for the design (and in the optional
provisions, the furnishing of materials, supplies and installation) of a
LAN suitable for direct connection to approximately 2000 machines,
including a variety of main-frame, mini- and microcomputers. In all,
some 6000 pieces of computer equipment will be supported. Moreover, the
IFB requires the use of specific access methods and support for certain
Institute of Electrical and Electronics Engineers standards that define
interface and protocol specifications for interconnection of computers.
/6/ Clearly, the LAN is being acquired as computer support equipment.
Further, we find that the Navy's contention that it is unable to
determine whether the blanket DPA dollar limitations are exceeded, and
that it will not have sufficient information to do so until the design
phase is completed, is not well founded. Earlier, it asserted, in
opposition to complaints by the protester, that the IFB was specific
enough to permit bidders to bid on the option provisions. If there was
sufficient information for offerors to bid intelligently, then surely
there is enough information for the Navy to estimate the cost of its
project. (Based on the bids received, the cost of exercising the
options well exceeds the $2.5 million limit established by GSA for a
blanket DPA in the FIRMR, 41 C.F.R. Section 201-23.104-1(c)(1).
Even if the information were not available, however, we would not
share the Navy's view that it would be appropriate to wait until
completion of the design phase of its project before determining whether
to obtain a DPA. As we read the FIRMR, Part 201-23 a DPA is required
unless it can be determined that the dollar amount involved will not
exceed the blanket DPA limits. See 41 C.F.R. Section 2-1-23.104-1. The
FIRMR procedure is based on the assumption that the request for
procurement authority will follow completion of a procurement planning
process that, among other things, should produce the data required to
complete the request including an estimate of system, contract, or item
life cost. See 41 C.F.R. Sections 201-23.106-1(3), 201-23.106-2(b)(4).
Armed with such information, an agency should know whether a blanket DPA
applies. Alternatively, if an agency cannot determine that a blanket
DPA applies, we think it must make a determination that a contemplated
procurement is not subject to blanket coverage and initiate a request
for procurement authority under 41 C.F.R. Section 201-23.106.
Further, we find no basis in the FIRMR or the Brook Act for Navy's
view that by including ADPE as option line items in a solicitation, it
may avoid applying for a DPA until it is ready to exercise to options.
The FIRMR clearly states that agencies shall comply with all of its
provisions that are applicable before "initiating procurement action on
a requirement," 41 C.F.R. Section 201-23.103(b)(1); this includes
obtaining a DPA. In our view, the Navy violated this requirement when
it issued the IFB containing the option line items because it thereby
initiated a procurement action for an ADPE requirement. We so conclude
because although the basic portion of the contract calls only for design
work that by itself would not require a DPA, it is very clear from the
solicitation that the Navy was intending to acquire ADPE under this
contract and in accordance with the design provided by the contractor.
In this connection, we note that the Navy evaluated the option prices,
something it properly would do only if anticipated, prior to issuing the
solicitation, that it would exercise the options and thereby acquire the
equipment covered by the option items. See Federal Acquisition
Regulation, 48 C.F.R. Section 17.206 (1984). These option prices, we
further point out, represent significantly more than 50 percent of the
total price bid by the low responsive bidder. Clearly, the Navy cannot
realistically assert that it was only buying design services here.
Since no DPA was obtained, we find that the Navy had no authority to
conduct the procurement; it has no authority, therefore, to award the
installation options. In the circumstances, we are recommending to the
Navy that it now seek a DPA.
Since approval of a Navy application for procurement authority will
require review of its proposed procurement action for compliance with
the FIRMR, and since the Navy, which has not addressed the procurement
planning and solicitation requirements set out in the FIRMR, may have to
revise its solicitation before it can proceed, consideration of the
remainder of the issues raised by both protesters appears to be
premature. Plus Pendetur did not question the need for a DPA, and its
protest is dismissed. Network Systems' protest is sustained.
By separate letter, we are bringing our recommendation to the
attention of the Secretary of the Navy.
FOOTNOTES
(1) The apparent awardee, American Television Systems (ATS), joins in
this view.
(2) We reject a threshold contention by the Navy and ATS that Network
Systems is not an interested party because the procurement was set aside
for small business and Network Systems does not meet the applicable size
standards. The protester admits that it would not qualify as a small
business under the present solicitation, but asserts that it would
qualify under the appropriate standard if the requirement is procured as
ADPE. This has not been rebutted and it thus appears that the protester
has the requisite direct economic interest to assert that the
requirement must be procured as ADPE.
(3) In asserting its view that the LAN is a telecommunications
facility, the Navy concedes that the FIRMR contains procedures for the
acquisition of telecommunications facilities, but contends that these
procedures do not apply, citing an exemption in FIRMIR Section
201-1.103(c)(3) that stems from the operation by GSA of public utility
communications services under 40 U.S.C. Section 295. We see no
connection between the provisions cited and this case since we are not
deciding whether the telecommunications provisions of the FIRMR apply,
but rather, whether the ADP procurement provisions of the FIRMR apply to
equipment of the type to be acquired.
(4) GSA's reclassification, now reflected in the FIRMR definition of
ADPE, was, as our decision indicates, the result of an internal GSA
reexamination of the scope of the Brooks Act and was consistent, we
concluded, with the intent of the Congress that the Act be applied
liberally so that it would not be rendered obsolete by rapid technical
development in fields such as telecommunications. American Telephone
and Telegraph Co., supra, at p. 4.
(5) Noting, however, that there was uncertainty as to whether the
Army's requirements, which included data encryption and other special
capabilities, could be filled without modifying equipment to such an
extent that it would lose its character as general purpose commercially
available equipment, we applied our decision prospectively and
recommended that the Army resolve this matter with GSA. It is not
asserted here that the LAN is to be modified so that it might lose its
general purpose character.
(6) We note also that we have reviewed ATS' comments on the GSA
report. We see nothing in the comments, which were received after the
filing deadline, that would alter our finding that a DPA is required.
B-220327, 65 Comp. Gen. 255
Matter of: Wirco, Inc., Jan. 29, 1986
Bids - Invitation for Bids - Amendments - Failure to Acknowledge -
Waived as Minor Informality
A bidder's failure to acknowledge an amendment that adds two
containers to each of five previously-scheduled deliveries of containers
is not a material deviation requiring rejection of the bid as
nonresponsive. Rather, it may be treated as a minor informality that
may be cured after bid opening when the bidder has submitted a price for
and is obligated to provide the correct total number of containers and
the effect on price, if any, of the change made by the amendment is
negligible.
Bids - Responsiveness - Pricing Response - Minor Deviations from IFB
Requirements
Failure of the low bidder to bid on an option item added by amendment
is not a material deviation requiring rejection of the bid as
nonresponsive when the option price is not evaluated.
Wirco, Inc. protests the rejection of its low bid as nonresponsive to
invitation for bids (IFB) No. N00024-85-B-6270, issued on June 28, 1985
by the Naval Sea Systems Command (NAVSEA). The solicitation was for a
first article and various production quantities of torpedo shipping
containers.
We sustain the protest.
The bid schedule included 16 different line items, some with
subitems, covering base and option quantities of the containers, as well
as progress reports, data, and warranties. Except for the first
article, the Shipping Instruction Data Form (Attachment A) required all
to be delivered at specified times to TRW in Cleveland, Ohio. Shipping,
the IFB specifically stated, would be at government expense, normally on
a government bill of lading.
At issue here is line item No. 0003AA, for which bidders were to
submit unit and extended prices for 35 containers on an f.o.b. origin
basis. However, the delivery schedule for this item called only for 5
shipments of 5 containers each, for a total of 25 containers. Amendment
No. 0001, dated July 22, among other things corrected this discrepancy
and increased the quantity for each shipment of this item to 7, for a
total of 35.
NAVSEA rejected Wirco's low bid for failure to acknowledge receipt of
the above-discussed amendment or to submit a delivery schedule. The
agency awarded a contract to Yanke Container Corporation on September
10.
Wirco contends that its failure to acknowledge the amendment should
not render its bid nonresponsive because the amendment was not material,
but merely corrected an "obvious typographical error." The protester
further contends that its omission of the delivery schedule should not
render its bid nonresponsive because in signing Standard Form 33, Wirco
agreed to provide the items at the prices set forth in its bid within
the times specified in the delivery schedule.
NAVSEA maintains that, contrary to the protester's argument,
correction of the delivery information was a material change that could
have affected price. According to the agency, Wirco had no basis for
assuming that the correct schedule was 5 deliveries of 7 containers
each, since the 10 containers omitted from the original delivery
schedule could have been required to be shipped either sooner or later
and in various other combinations. The agency concludes that it
therefore properly rejected Wirco's bid.
Generally, a bidder's failure to acknowledge the receipt of an
amendment or to demonstrate clearly an obligation to perform the
amendment's requirements renders the bid nonresponsive. Lear Siegler,
Inc., B-212465, Oct. 19, 1983, 83-2 CPD 465. /1/ However, the failure
of a bidder to acknowledge receipt of an amendment may be waived or
allowed to be cured where the amendment had either no effect or merely a
negligible effect on price, quantity, quality, or delivery. Federal
Acquisition Regulation (FAR), 48 C.F.R. Section 14.405 (1984) Gentex
Corp., B-216724, Feb. 25, 1985, 85-1 CPD Paragraph 231. No precise
standard can be employed in determining whether a change required by an
amendment is more than negligible, and the determination must be based
on the facts of each case.
Although an amendment is material where it imposes legal obligations
on the contractor that were not contained in the original solicitation,
see Reliable Building Maintenance, Inc., B-211598, Sept. 19, 1983, 83-2
CPD Paragraph 344, here Wirco bid on and was legally bound to provide
the correct total number of containers, 35. While the NAVSEA
theoretically could have required delivery either sooner or later and in
various other combinations, thus arguably affecting price, here it did
not do so. The amendment merely added 2 containers to each of the
previously scheduled 5 deliveries to TRW. We are not convinced that
such an addition would have more than a negligible effect on price, /2/
and we agree with Wirco that the change was more in the nature of a
typographical correction.
Thus, we find the facts here do not support rejection of Wirco's bid
as nonresponsive, since Wirco committed itself to the total number of
containers required. Rather, we believe Wirco should have been given
the opportunity to cure the deficiency. Given the $41,631 difference
between Wirco's and Yanke's bids (Wirco at $1,096,577 and Yanke at
$1,138,208), a cure would not have been prejudicial to other bidders.
Remaining for resolution is whether Wirco's failure to bid on the
line item added by the amendment rendered its bid nonresponsive. The
agency has not questioned the acceptability of the bid on this basis.
We note, however, that the item in question, No. 0016AE, is a warranty
provision applicable to item No. 0007, which in turn is an option item.
Neither Wirco nor Yanke bid on the warranty provision.
We have held that where option prices are not included in the
evaluation and where it is not specified that they may not exceed a
particular ceiling, a bidder's failure to quote option prices is not a
material deviation, and a bid should not be rejected as nonresponsive on
this basis. 51 Comp. Gen. 528 (1972); AMS Mfg., Inc., B-203589, Sept.
2, 1981, 81-2 CPD Paragraph 195, aff'd on reconsideration, B-203589.2,
Nov. 2, 1981, 81-2 CPD Paragraph 371. Here, the solicitation did not
provide for the evaluation of options or include a ceiling on option
prices. Moreover, in determining the low and second-low bidder, NAVSEA
considered only prices for base quantities. Wirco's failure to bid on
the warranty provision is therefore not a material deviation that
requires bid rejection. See 52 Comp. Gen. 614 (1973).
Performance has been delayed pending our decision. By letter of
today to the Secretary of the Navy, we are therefore recommending that
if Wirco is determined to be responsible and cures its failure to
acknowledge the amendment, award should be made to it and the contract
awarded to Yanke be terminated for the convenience of the government.
The protest is sustained.
FOOTNOTES
(1) We note that Wirco correctly states that the failure to return
part of the bid package, such as the delivery schedule, does not
automatically render a bid nonresponsive where the omitted portion of
the bid is incorporated into the bid by reference. See Werres Corp.,
B-211870, Aug. 23, 1983, 83-2 CPD Paragraph 243. Under those
circumstances, the submittal is in a form such that acceptance would
create a valid and binding contract, requiring the bidder to perform in
accord with all material terms and conditions of the IFB. Id. However,
the rule is not applicable here because the amendment revised the
delivery schedule.
(2) We note that the addition had no effect of transportation costs,
because the bid terms were f.o.b. origin and the solicitation did not
specify that these costs would be evaluated (although such evaluation is
provided for in FAR, 48 C.F.R. Section 47.305-3(f)(2). Even if
transportation costs had been evaluated, presumably those from Wirco's
plant in Indiana to the Cleveland delivery point would be less than
those from Yanke's plant in Idaho to the same delivery point.
B-217921, 65 Comp. Gen. 253
Matter of: Captain Kenneth R. Peterson, USA Jan. 29, 1986
Vehicles - Rental - Damage Claims
An Army officer was authorized to rent a car for use with another
officer while on temporary duty. An accident occured while the car was
driven by the other officer. This officer, though not specifically
authorized to rent a car on his travel order, was authorized to use that
car for official business. Since the accident occurred while the driver
was performing official business, payment may be made to the rental
company for the deductible amount of damages required by the rental
contract.
An Army officer was authorized to rent a car for his use together
with another member for transportation while on a temporary duty
assignment. An accident occurred at the time the car was being driven
at the temporary duty location by the Army officer whose orders did not
authorize the car rental. We are asked whether a direct payment may be
made by the Government to the car rental agency of the deductible amount
required by the rental contract for damage to the rented vehicle. /1/
We conclude that payment may be made since the officer was authorized to
use the rental vehicle for official travel and since it may be
determined that he was using the car for official travel when the damage
occurred.
Captain Kenneth R. Peterson and Captain Kaleo L. Elia, Headquarters,
Combined Army Training Activity, Fort Leavenworth, Kansas, were ordered
to perform temporary duty at Fort Monroe, Virginia, to attend a meeting.
Captain Peterson was authorized a rental car on his travel orders for
his use together with Captain Elia for transportation at the temporary
duty location while on the assignment.
Captain Peterson rented a car from Budget Rent A Car on November 27,
1984. He declined to purchase "Collision Damage Waiver" coverage to
provide accident collision insurance coverage for the first $1,000 of
loss or damage.
The rental car was driven by Captain Peterson for the initial travel
required. However, on the morning of November 28, Captain Elia drove
from his quarters intending to go to a drug store to obtain needed
medication. While en route he was involved in a traffic accident.
Captain Elia was cleared of all charges in connection with the accident.
Captain Peterson paid the usual rental charges and has been
reimbursed. Budget Rent A Car submitted the claim for the deductible
amount, the amount Captain Peterson became contractually obligated to
pay for the loss through collision damage to the rental car in the
maximum amount of $1,000.
The submission states that most commands minimize the use of rental
cars by requiring that travelers share the car when a group travels to a
temporary duty point. Normally, only one person is authorized a rental
car even though other members of the group may have a requirement to use
the rental car in conducting official business.
In accordance with para. 1-3.2c of the Federal Travel Regulations,
incorp. by ref., 41 C.F.R. Section 101-7.003 (1984), para. M4405-1c of
the Joint Travel Regulations, Volume 1, provides that extra collision
insurance, "Collision Damage Waiver," will not be purchased but that a
member may be reimbursed up to the deductible amount as contained in the
rental contract for personal funds paid to rental car agencies for
damage sustained by an automobile properly rented, and damaged in the
performance of official business. Such deductible amount may also be
paid directly to the car rental company.
It is clear that Captain Elia was authorized by the Army to drive the
rental car although the cost of the rental was authorized on Captain
Peterson's orders. We find no specific requirement in law or regulation
that a specific authorization be included in an individual's travel
orders to use a Government controlled vehicle on official business.
Accordingly, Captain Elia could drive the rental car on official
business.
Captain Elia was driving the rented car from his lodgings to go to a
drug store to obtain required medication at the time the accident
occurred. We find that, by analogy to the rule applicable to the use of
Government owned or leased vehicles, this travel was travel for official
purposes. Even though certain travel which is primarily for the
sustenance, health or comfort of the traveler may not be considered
official travel for purpose of reimbursement on a mileage basis or for
payment of taxi fares, it is considered travel for official purposes
when it merely involves the use of a Government controlled vehicle. The
rule applicable to the use of a Government owned or leased vehicle is
equally applicable to vehicles rented for official business. See 1 JTR
para. M4406-1, which specifically provides that Government controlled
vehicles may be driven on necessary trips to drug stores.
Under the rental contract Captain Peterson became liable for the
payment of the deductible amount of $1,000 to Budget Rent A Car because
the automobile was damaged in the performance of official business.
This amount would have been reimbursable to Captain Peterson if he had
paid from personal funds. However, as provided by regulation the
Government may pay the deductible amount directly to the car rental
company. 1 JTR para. M4405-1c(2); B-162186, May 28, 1971.
Under the terms of the rental contract liability for the deductible
amount of the damage to the rental car is established regardless of a
question of negligence. However, as indicated in B-162186, supra, in
appropriate circumstances the Government may find it advantageous to
make claim against the negligent party to recoup the amount involved.
For the reasons stated the voucher payable to Budget Rent A Car
submitted may be paid.
FOOTNOTES
(1) Major T.A. Stout, Finance and Accounting Officer, Fort
Leavenworth, Kansas, submitted this request for a decision and it has
been assigned PDTATAC control number 85-6 by the Per Diem, Travel and
Transportation Allowance Committee.
B-216550, 65 Comp. Gen. 245
Matter of: USDA Collection of Excess Advance Deficiency Payments on
1983 Corn and Grain Sorghum Corps, Jan. 29, 1986
Agriculture Department - Price Support Programs - Deficiency Payments
Section 120 of the Omnibus Budget Reconciliation Act of 1982 provided
that any debts that might result from advice deficiency payments made to
farmers who participated in the 1983 Feed Grain, Rice, Upland Cotton and
Wheat Programs were to be repaid to the U.S. on or before Sept. 30,
1984. However, that provision would not preclude the Department of
Agriculture from exercising appropriate discretion to select the best
means to collect those debts, including temporary suspension of
collection until an administrative offset could be accomplished,
pursuant to the Federal Claims Collection Act of 1966, as amended, and
the Federal Claims Collection Standards.
Federal Claims Collection Act of 1966 - Debt Collection -
Administrative Responsibility
The decision of the Department of Agriculture to defer the collection
of debts arising from excessive advance payments made to farmers who
participated in the 1983 Feed Grain, Rice, Upland Cotton and Wheat
Programs was not adequately supported by findings and other evidence
that complies with the requirements of the Federal Claims Collection
Standards.
Federal Claims Collection Act of 1966 - Debt Collection -
Administrative Responsibility
The provisions of section 102.2(e) of the Federal Claims Collection
Standards do not excuse agencies that collect debts by administrative
offset from the need to sent written notices to debtors of amounts owed
to the U.S. including all the information required by other applicable
regulatory provisions.
Federal Claims Collection Act of 1966 - Debt Collection -
Administrative Responsibility
Before it may temporarily suspend the collection of debts pursuant to
section 104.2(b)(2) of the Federal Claims Collection Standards, an
agency must properly conclude both that the debtor is presently
financially unable to pay the debt, but that his future prospect justify
giving him more time, and that future collection can be effected through
administrative offset or that the temporary suspension of collection is
likely to enhance his ability to pay.
Interest - Debts Owned United States - Notice Effect
Farmers who signed Department of Agriculture form "ASCS-477" in order
to participate in the 1983 Feed Grain, Rice, Upland Cotton and Wheat
Programs entered into contracts that obligated them to comply with and
be bound by agency regulations providing for the assessment of interest
(without the need for further notice before interest could accrue) on
delinquent debts arising under those programs. Consequently, interest
should be assessed and collected (pursuant to the agency's regulations
and the Federal Claims Collection Standards) on debts arising under
those programs, regardless of the fact that Agriculture has not
individually notified each debtor that interest be paid on those debts.
The Inspector General of the United States Department of Agriculture
(USDA) has requested our opinion on the propriety of USDA's decision to
defer the collection of some debts which were made due on September 30,
1984, by section 120 of the Omnibus Budget Reconciliation Act of 1982
(OBRA), Pub. L. No. 97-253, 96 Stat. 763, 768 (7 U.S.C. Section
1445b-2(c) (1982)). The debts arose as a result of what turned out to
be overpayments made in advance in 1982 to corn and grain sorghum
farmers participating in the 1983 Feed Grain, Rice, Upland Cotton and
Wheat Programs. The Inspector General also asks whether the decision to
defer the collection of some of the debts was in compliance with the
Federal Claims Collection Standards requiring agencies to take timely,
aggressive action to collect debts owned to the United States and to
assess interest on past due debts. We requested, received and
considered the views of USDA on the questions raised.
For the reasons givens below, we find that the decision by USDA to
defer the collection of the debts from farmers who agreed to participate
in the 1984 program did not violate section 120 of OBRA. However, we
also find that USDA's method of collecting these deferred debts was
inconsistent with the Federal Claims Collection Standards (FCCS).
Furthermore these debts were governed by contracts in which USDA's
debtors agreed to make payment by a specified date, and to pay interest
on any amounts not paid by that date.
BACKGROUND
Under the Agricultural Act of 1949, as amended, 7 U.S.C. Sections
1421 et seq. (1982), USDA (through the Commodity Credit Corporation
(CCC) and the Agricultural Stabilization and Conservation Service
(ASCS)) administers a variety of programs designed to provide price
supports and other assistance to the agricultural sector. Farmers who
participate in those programs and comply with the regulations governing
them may receive Federal assistance, including loans and direct cash
payments. 7 U.S.C. ch. 35A (1982). Among the programs administered by
USDA under this authority are the Feed Grain, Rice, Upland Cotton and
Wheat Programs for crop years 1982-85. 7 C.F.R. pt. 713 (1984). /1/
Farmers who participate in these programs may be eligible to receive
"deficiency payments," which are direct cash awards made when the
national average market price for a given agricultural commodity falls
below a "target" price established by law. 7 C.F.R. Sections 713.1(a),
713.106, 713.108. Normally, deficiency payments are calculated and paid
part way through the marketing year for each particular commodity, i.e.,
several months after harvest. E.g., S. Rep. No. 504, 97th Cong., 2d
Sess. 84 (1982). Deficiency payments to corn and grain sorghum farmers
are normally paid "as soon as practicable" after April 1, for the
previous year's crop. 7 C.F.R. Section 713.108(d)(3).
Section 120 of OBRA required USDA to make estimated deficiency
payments in advance of the normal payment dates to farmers who
participated in the 1983 crop programs. However, if USDA later
determined that the advance payments exceeded the amount of the actual
deficiency payments that were due, the participating farmers were
required to refund the excess amounts to USDA. By statute, those
refunds were due at the end of the marketing year for each particular
crop. For 1983 corn and grain sorghum crops, the due date was September
30, 1984. 7 C.F.R. Sections 713.(h)(3), 713.104(d).
In November 1983, USDA determined that the national average market
price for the 1983 crops of corn and grain sorghum would probably exceed
the established "target" prices. Consequently, farmers who received
advance deficiency payments for those crops would owe USDA refunds for
the full amounts of the advances paid. USDA informed its local offices
of these facts, and directed them to advise the indebted farmers of
their liability and that refunds would be due and payable on October 1,
1984. The local offices were also directed to remind farmers about the
assessment of interest on past due debts arising from the failure to
comply with applicable regulations. The local offices were not
specifically instructed, however, concerning interest assessments on
debts arising from the excessive advance payments. USDA/ASCS Notice No.
PA-932 (Nov. 8, 1983).
In March 1984, USDA substantially revised its instructions to its
local offices concerning the collection of these debts. It instructed
county offices not to issue any further demand letters for repayment of
overpayments of advance deficiency payments for corn and grain sorghum
and to notify farmers who received demand letters that the demand for
refund was being deferred and any late payment charge previously
determined would not apply. Existing claims were to be canceled.
Instructions on how to reestablish them were to be issued later. After
October 1, 1984, any unrefunded advance deficiency overpayments were to
be set off against other payments earned by farmers. County offices
were also instructed to notify farmers that if they chose to participate
in the 1984 crop program, collection of the debts would be deferred
until the date the final deficiency payment was determined for the 1984
crop program. For corn and grain sorghum, this date was April 1, 1985.
USDA/ASCS Notice No. PA-951 (Mar. 9, 1984).
In August 1984, USDA again revised its instructions to its local
offices concerning these debts. /2/ As before, local offices were
prohibited from demanding payments, assessing interest, or taking any
action other than offset (when and if available) to collect the advance
deficiency payments owed by those farmers who signed up for the 1984
crop year programs. This revision provided guidance on reestablishing
claims and added that local offices were to take all normal, necessary
and appropriate actions to recover the advance payments owed by those
farmers who chose not to participate in the 1984 programs. The revision
specifically directed local offices to send demand notices and assess
interest against nonparticipating farmers on October 1, 1984. USDA/ASCS
Notice No. PA-978 (Aug. 21, 1984).
In summary, USDA divided the debts which arose from the 1983 crop
advance deficiency payments into two classes: debts owed by farmers who
did not participate in the 1984 crop programs, and debts owed by farmers
who did participate in the 1984 program. Regarding the first class,
USDA initiated prompt, aggressive activities designed to collect these
debts as soon as possible. On those debts, demand notices were issued
on the first day the debts were past due according section 120 of OBRA,
as were interest assessment; offsets were taken whenever available;
and local offices were advised to take all normal debt collection steps.
Regarding the second class, however, for 7 months after the debts
became past due under section 120, USDA restricted its collection
activities to offset when, if ever, it might be available. No demand
letters were sent and no interest was assessed until April 1985.
DISCUSSION
1. Was USDA authorized to defer collection of debts made due by
statute on September 30, 1984?
Section 120 of OBRA only sets the date on which the refunds owed by
farmers who received overpayments of deficiency payments by way of
advances became due and payable. It does not preclude USDA from
exercising its authority and discretion (pursuant to other applicable
laws and regulations) to choose the methods and tools which it
reasonably determines are best suited to collect those debts after they
become due. In this regard, we note that the FCCS, which implement the
Federal Claims Collection Act of 1966, as amended, 31 U.S.C. ch. 37,
specifically authorize agencies to defer collection of the full amount
of a debt by entering into a voluntary installment repayment agreement
(4 C.F.R. Section 102.11), collecting the debt in installments by
administrative setoff (4 C.F.R. Sections 102.3, 102.4), and suspending
collection activity (4 C.F.R. Section 104.2). In our opinion, section
120 did not repeal by implication or otherwise limit USDA's preexisting
authority to exercise sound discretion under 31 U.S.C. ch. 37 and the
FCCS to determine what methods and collection schedule are best suited
to recover those debts. Cf. 64 Comp. Gen. 142, 145-46 (1984) (implied
repeal not favored). Thus in certain situations, USDA was authorized to
defer until a later date the collection of debts that section 120 of
OBRA made due on September 30, 1984.
2. Was USDA's handling of debts owed by participants in the 1984
crop program consistent with the FCCS? /3/
USDA maintains that under its regulations and the FCCS, it may assess
interest only on "delinquent debts," which are defined by those
regulations as payments that are "overdue in accordance with the terms
of an arrangement for payment as provided for in the contract, agreement
or notification of indebtedness * * *." See 7 CFR Section 1403.2(d);
FCCS, 4 CFR Section 101.2(b). Thus USDA argues that these debts were
not technically "delinquent" since USDA did not issue demands which
specified a date by which payment would be past due, and that it was
under no obligation to send demand letters earlier than it did. We
disagree.
The FCCS require agencies to take "aggressive action on a timely
basis with effective follow-up" to collect debts owed the United States.
4 CFR Section 102.1 Section 102, of the FCCS prescribes the use of
prompt, appropriate, written demands. 4 CFR Section 102.2. /4/ That
section provides, as USDA has noted, that "(t)he availability of funds
for offset and the agency's determination to pursue it releases the
agency from the necessity of further compliance with paragraphs (a), (b)
and (c) of (section 102.2)." 4 CFR Section 102.2(e). However, section
102.2(e) also provides that "(i)f, either prior to the initiation of, or
at any time during, or after completion of the demand cycle, an agency
determines to pursue offset, then the procedures specified in Section
102.3, Section 102.4, or 5 U.S.C. Section 5514, as appropriate, should
be followed." Id. As was explained in the Supplementary Information
Statement that accompanied the publication of the revised FCCS in the
Federal Register, /5/ this section does not eliminate the need to inform
the debtor of the nature and amount of his debt, the date the debt is
due, the financial consequences of making late payment, and the agency's
intention to collect by means of offset unless the debtor works out
other satisfactory arrangements. (The notice would also inform the
debtor of his statutory right to contest the existence or amount of the
debt.) The provisions of section 102.2(e) were intended not to
facilitate delays in collection, but rather to create an equitable yet
efficient short-cut in the debt collection process. /6/ Consequently,
the provisions of section 102.2(e) do not permit agencies to avoid the
requirement for prompt aggressive action by simply choosing not to send
any notice of the debt at all and thereby avoid establishment of a due
date.
We must also disagree with USDA's implicit conclusion /7/ that these
debts are not created and governed by contracts which prescribe a
payment due date. In order to participate in, and receive the benefits
of the 1983 crop year deficiency programs, farmers were required to sign
a form ASCS-477. /8/ 7 CFR Section 713.50(b)(2)(i). That form
obligated those farmers to comply with applicable regulations (7 CFR pt.
713) which specify that refunds of excess advance payments are due by
the end of the marketing year -- in this case. September 30, 1984 (7
CFR Sections 713.104(d)(1), 713.3(h)(3)) -- and that payments not timely
made would be subject to "late payment charges" specified in the
regulations. Consequently, it is our opinion that, even though demand
notices were not sent, farmers who participated in the 1983 corn and
grain sorghum crops program did enter into contracts that specified the
date on which payment was due, and that refunds not paid on or before
September 30, 1984, constituted delinquent debts under those contracts,
the FCCS, and the regulations of USDA, CCC, and ASCS. See FCCS, 4 CFR
Section 101.2(b); 7 CFR Section 1402(d).
The fact that the governing statute, regulations, and contracts
specified September 30, 1984, as the date on which these debts were due
and payable is not dispositive, however. The regulations provide two
bases on which an agency might delay collection of the full amount of a
debt. The first basis involves the use of installment repayment
agreements. 4 CFR Section 102.11. Under the FCCS, debts are normally
to be collected in "one lump sum." 4 CFR Section 102.11(a). However,
"if the debtor is financially unable to pay the indebtedness in one lump
sum, payment may be accepted in regular installments." Id. Agencies
which enter into such arrangements are required to obtain financial
statements and enforceable written agreements, as well as assess
interest on the debt. Id. Since USDA did not take these steps and does
not cite this authority, it does not appear that USDA's activities
either were intended to (or actually do) fall within the scope of this
authority.
The second basis involves suspension of the collection of debts based
upon one or more of three different grounds, 4 C.F.R. Section 104.2.
Two of those grounds, the inability to locate the debtor, and the
pendency of a request for waiver or administrative review (4 CFR
Sections 104.2(a), 104.2(c)), do not seem to be applicable here. The
third ground involves the financial condition of the debtor and is
addressed in 4 CFR Section 104.2(b), which provides:
(b) Financial condition of debtor. Collection action may also
be suspended temporarily on a claim when the debtor owns no
substantial equity in realty or personal property and is unable to
make payments on the Government's claim or effect a compromise at
the time but the debtor's future prospects justify retention of
the claim for periodic review and action, and;
(1) The applicable statute of limitations has been tolled or
started running a new; or
(2) Future collection can be effected by offset,
notwithstanding the statue of limitations, with due regard to the
10-year limitation prescribed by 31 U.S.C. 3716(c)(1); or
(3) The debtor agrees to pay interest on the amount of the debt
on which collection action will be temporarily suspended, and such
temporary suspension is likely to enhance the debtor's ability to
fully pay the principal amount of the debt with interest at a
later date. (Italic supplied.)
USDA maintains that its decision to seek possible future
opportunities to collect these debts through administrative offset
enabled it to defer other collection activities against its debtors.
However, the "catchline" of section 104.2(b) and its use of the
conjunction "and" clearly shows that although the availability of future
offset activity is relevant to suspension of collection under section
104.2(b), it must be tied to an appropriate evaluation of the financial
condition of the debtor (or appropriate class of debtors). It is not
clear to us that USDA attempted to apply these criteria in its handling
of these debts, nor does USDA cite them in support of its policies in
this case.
Instead, USDA states that its decision to collect this class of debts
exclusively through the use of administrative offset (and thereby defer
for 7 months the use of other appropriate collection activities) "served
several policy purposes" including: (1) increasing the level of
participation in the 1984 crop programs; (2) providing farmers with
funds to repay their debts; and (3) taking advantage of legislative
changes which resulted in 1985 crop program advance payments in October
1985 -- thus facilitating collection of some of the amounts owed through
offset. /9/
It is not clear to us how the reasons offered by USDA to justify its
collection policies reflect application of the criteria governing
suspension of collection under the FCCS. Certainly, to the extent that
USDA could and did legitimately anticipate that offset would be
available shortly after, or at any time during the delinquency of these
debts, USDA could and should have used administrative offset to collect
those debts, to the extent feasible. However, once the specific
opportunity for taking offset was gone, USDA should have employed the
various other means available to it under the FCCS to promptly and
aggressively collect the remaining balances. 4 C.F.R. Section 102.1.
Finally, we agree with the Inspector General that the interest
assessment policies followed here by USDA, and its constituent agencies,
CCC and ASCS, are not entirely consistent with the FCCS. Compare 7
C.F.R. Sections 713.103(e), 713.104(d)(2), 1403.1 to 1403.6 with 4
C.F.R. Section 102.13. We assume that at least some of the
inconsistencies may be attributed to the fact that USDA's regulations
generally predate enactment of 31 U.S.C. Section 3717 and the most
recent revision of the FCCS. /10/ However, we need not evaluate the
propriety of these inconsistencies in order to resolve the Inspector
General's questions because, as was pointed out above, these debts are
governed by contracts which explicitly fix the interest policies
applicable to them.
The governing contracts, as quoted above, specifically provide that
in return for the payments and other benefits available under these
programs, the farmers agree to repay past due overpayments with interest
and to be bound by and comply with the applicable USDA regulations.
Since all of the necessary terms are specified in or ascertainable from
these contracts and incorporated regulations, we conclude that USDA was
legally entitled to interest on those advance payments or portions
thereof that remained unpaid as of October 1, 1984. USDA's failure to
issue demand letters to its debtors pursuant to 31 U.S.C. Section 3717
and the FCCS does not alter this conclusion, since the requirements of
section 3717 and section 102.13 of the FCCS are not applicable to the
extent that the governing contract explicitly fixed the applicable
interest terms. 31 U.S.C. Section 3717(g)(1); 4 C.F.R. Section
102.13(i)(1)(iii). We are not aware of anything in the FCCS that would
have authorized USDA or its agencies to waive those interest charges
under these circumstances. See 4 C.F.R. Section 102.13(g). Cf. 49 Fed.
Reg. at 8893.
CONCLUSIONS
For the reasons given above, we find that USDA's policies concerning
the collection of the debts arising from the advance deficiency payments
made for 1983 corn and grain sorghum crops did not violate section 120
of OBRA. However, those policies were not consistent with the
provisions of the FCCS, in that USDA failed to take timely, aggressive,
and effective action to collect those debts owed to the United States by
farmers who participated in the 1984 Feed Grain Programs. We also find
that, despite its failure to send appropriate notices which advised
those debtors of their liability for interest charges, USDA is legally
entitled to, and should take, appropriate steps to recover interest
assessments on those debts pursuant to the governing contracts.
FOOTNOTES
(1) USDA did not formally prescribe regulations to implement these
programs until Jan. 14, 1983. 48 Fed. Reg. 1679 (1983). (Those
regulations were not codified in the Code of Federal Regulations
(C.F.R.) until the 1984 edition.) USDA began implementing these programs
before the regulations had been promulgated.
(2) USDA did issue several other revisions which did not
substantially alter the provisions relevant to this case. E.g.,
USDA/ASCS Notice No. PA-957 (Apr. 7, 1984); USDA/ASCS Notice No. PA-980
(Sept. 17, 1984). Since those other revisions made no relevant changes,
they will not be described here.
(3) That the FCCS apply to USDA, CCC and ASCS is clear. See e.g., 7
CFR Section 1.52 (1984) (the FCCS "are applicable to and controlling on"
USDA.); CCC Docket No. CZ 161a, Section B(II)(A)(2) (Rev. 4, Jan. 13,
1971) (the FCCS "shall be applicable to all claims by CCC regardless of
amount."); ASCS Handbook No. 58-FI, "Managing CCC and ASCS Claims," pt.
1, para. 7, at 2 (Rev. 5, Amend. 1, March 10, 1983) ("Authority for
managing ASCS and CCC claims is mandated by (the) Federal Claims
Collection Standards. * * *")
(4) The regulations of ASCS, for example, adopt the position that
written demands should be made "as soon as it is known that a payment is
owed to ASCS or CCC." ASCS Handbook, No. 58-FI, supra, para. 77.
(5) 49 Fed. Reg. 8889, 8890 (1984) ("We emphasize that offset, while
obviating the need to comply with the specific demand requirements of
Section 102.2, still requires written notification. The first step in
any offset, administrative or salary, must be a written notification
advising the debtor of the agency's intent to use offset. Thus,
eliminating the need to comply with Section 102.2 does not eliminate the
need for written notice.").
(6) See 49 Fed. Reg. at 8890 ("(D)eviation from the demand cycle of
Section 102.2 in offset cases does not violate any rights of the debtor.
(At the same time, however,) the collection action in such cases need
not be anywhere near as detailed as it would be if offset potential did
not exist.").
(7) In arguing from the applicable regulations that interest may only
be assessed on payments that are past due under the terms of a demand
letter, USDA overlooks that portion of these regulations which provides
that debts are also "delinquent" if payment is past due under the terms
of a contract or agreement. 7 CFR Section 1403.2(d); 4 CFR Section
101.2(b).
(8) The form ASCS-477, entitled "Notice of Intention to Participate
and Application for Payment," provides that, in return for the benefits
to be received under the program, the farmer agrees to "comply with the
regulations governing the applicable program and payment limitations
(and that) overpayments not repaid by the required date will be subject
to late payment charges according to regulations (7 CFR 1403)."
(9) The second and third reasons offered by USDA are not particularly
useful in supporting its position. First, as the FCCS point out, offset
generally should not be taken against "advance" payments. Frequently,
taking offset against advance payments tends to substantially interfere
with or defeat the purposes of the program payments against which offset
would be taken. 4 C.F.R. Section 102.3(a).
Second, it is difficult to see how the legislation to which USDA here
refers actually served as a basis for the decision (made in March 1984)
to restrict USDA's collection activities to offset. That statute
conditioned the making of advance payments for the 1985 programs upon a
determination by USDA that the quantity of surplus corn on hand on
September 30, 1985, would probably exceed a designated amount. Pub. L.
No. 98-258, 98 Stat. 130, 132-33, Section 202 (1984), to be codified in
7 U.S.C. Section 1444d(e).
The USDA's Preliminary Regulatory Impact Analysis concerning the 1985
programs (which was issued on May 11, 1984) did not even speculate
concerning the determination required by Pub. L. No. 98-258. It wasn't
until September 14, 1984 (when the Final Regulatory Impact Analysis for
the 1985 program was issued) that USDA made the findings necessary under
that act to authorize advance payments for the 1985 programs. Compare
USDA Preliminary Regulatory Impact Analysis (1985 Feed Grain Program)
(May 11, 1984) with USDA Final Regulatory Impact Analysis (1985 Feed
Grain Program) Sept. 14, 1984) (incorp. by ref. in 50 Fed. Reg. 1892
(Sept. 14, 1984)). Thus, it seems unlikely that USDA's March 1984
decision to rely solely upon offset was significantly motivated by
anticipation of advance payments pursuant to the provisions of Pub. L.
No. 98-258.
(10) E.g., 7 C.F.R. pt. 1403 (1984) (source: 47 Fed. Reg. 37075
(Aug. 25, 1982)). Note: section 3717 was originally enacted on October
25, 1982 (Pub. L. No. 97-365, Section 11, 96 Stat. 1749, 1755-56), and
the FCCS were most recently revised on March 9, 1984 (49 Fed. Reg. 8889
(1984)).
B-221114, 65 Comp. Gen. 242
Matter of: Essex Electro Engineers, Inc., Jan. 27, 1986
Contracts - Negotiation - Justification
Agency decision to use negotiation procedures in lieu of sealed
bidding procedures is justified where the basis for award reasonably
includes technical considerations in addition to price-related factors.
Essex Electro Engineers, Inc., protests the terms of solicitation No.
DAAK70-85-R-0344, a small business set-aside, issued by the Army Belvoir
Research and Development Center, Fort Belvoir, Virginia, for generator
sets and associated items. Essex principally contends that the Army
improperly failed to apply sealed bidding procedures to the procurement,
which instead requests proposals under negotiated procedures. Essex
also contests the propriety of the solicitation's evaluation and award
selection criteria and alleges that the solicitation's quality assurance
provisions lack adequate specificity to permit full and open
competition.
We deny the protest.
The solicitation requested technical proposals and price for 24
electric generator sets. These generator sets are transportable and are
driven by a gas turbine engine; they require supporting equipment,
various systems, and other devices for proper operation. The
solicitation states that award will be made on the basis of the overall
lowest price among those proposals found technically acceptable as to
stated technical criteria. Further, the solicitation expressly provides
that evaluation will involve "the contractor's capability to interpret,
perform, and satisfactorily complete the engineering, manufacturing,
quality assurance and management requirements of the proposed contract."
In this connection, the solicitation lists the following major
evaluation criteria: 1) Technical Approach; 2) Scientific and
Technical Personnel; 3) Manufacturing; 4) Organization and Management;
and 5) Quality Assurance.
Essex essentially argues that under the Competition in Contracting
Act of 1984 (CICA), 10 U.S.C.A. Section 2304 (West Supp. 1985), and
under the implementing regulations, sealed bidding is still the
"preferred" and "first in order" method of procurement. Essex cites
Federal Acquisition Regulation (FAR), Section 6.401 (Federal Acquisition
Circular (FAC) 84-5, Dec. 20, 1984, effective for solicitations issued
after Mar. 31, 1985), which provides:
(a) Sealed bids . . . Contracting officers shall solicit sealed
bids if --
(1) Time permits the solicitation, submission, and evaluation
of sealed bids;
(2) The award will be made on the basis of price and other
price-related factors;
(3) It is not necessary to conduct discussions with the
responding offerors about their bids; and
(4) There is a reasonable expectation of receiving more than
one sealed bid. (Italic Supplied.)
Essex maintains that this regulation applies here. Specifically,
Essex contends that the Army has complete and detailed specifications;
that its requirements are not unique or complex; and that similar
procurements have in the past been the subject of sealed bidding
procedures. According to Essex, the Army's sole justification for using
negotiation procedures is its unfounded belief that there is a
"possibility" that discussions "may be necessary" during the course of
this procurement.
In response, the Army states that this solicitation, for the first
time, allows offerors to propose either of two alternate engines,
manufactured by "Allison" or "Teledyne," and that offerors are required
to provide extensive integrated logistics support (ILS) data concerning
the chosen engine. Further, government drawings are not available for
the Teledyne engine so that offerors in the procurement must supply
these drawings and data. Because this procurement is set aside for
small business, the Army states that the contracting officer followed
the recommendation of his technical personnel to negotiate the
procurement so that discussions, if necessary, concerning the scope,
nature and extent of the ILS requirements could be undertaken with small
business firms.
We do not think that the Army acted improperly. While CICA
eliminates the statutory preference for formally advertised procurements
("sealed bids"), the provisions of the FAR, quoted above, do provide
specific criteria for determining whether a procurement should be
conducted by the use of sealed bids or competitive proposals. See
United Food Services, Inc., B-217211, Sept. 24, 1985, 85-2 CPD Paragraph
326. However, we do not agree that the circumstances here mandate the
use of sealed bids. The use of sealed bids is restricted to
circumstances where the award will be made on the basis of price and
other price-related factors. FAR, Section 6.401. Clearly, the basis
for award here is not restricted to price-related factors alone. The
Army, in addition to requesting prices, also seeks technical proposals
containing specific technical data. In this regard, the protester
argues that the data the Army seeks for evaluation purposes is not so
complex that it cannot be obtained during a preaward survey as part of a
responsibility determination under sealed bidding procedures.
We disagree. First, the general rule is that the determination of
the government's minimum needs and the best method of accommodating
those needs is primarily the responsibility of the contracting agencies.
This rule recognizes that, since government procurement officials are
the ones most familiar with the conditions under which supplies,
equipment, or services have been used in the past and how they are to be
used in the future, they are generally in the best position to know the
government's actual needs. See Frequency Electronics, Inc., B-204483,
Apr. 5, 1982, 82-1 CPD Paragraph 303. As to the decision to negotiate
the procurement, we will not question the judgment of the agency which
determined that the technical data regarding the new engine is
sufficiently important to warrant discussions and a negotiated
procurement unless the determination is shown to be unreasonable. Such
a determination essentially involves the exercise of a business judgment
by the contracting officer which, on this record, has not been shown to
be unreasonable.
Second, we reject the protester's argument concerning the use of a
preaward survey as a substitute for negotiations, since a preaward
survey conducted after or aside from the actual competition would not
accomplish the Army's purpose. A preaward survey, as part of the
agency's investigation of an offeror's responsibility, focuses on the
firm's ability to perform as required and involves matters like
financial resources, experience, facilities and performance record, but
does not include negotiation of the terms of the contract to be
executed. In contrast, the focus of the negotiation process is to
develop, through discussions if necessary, the contractual terms
themselves, such as a promised method of production, and, thereby, to
define and frame the terms of a firm's offer. See Saxon Corp.,
B-216148, Jan. 23, 1985, 85-1 CPD Paragraph 87. Thus, elimination by an
agency of a small business proposal, during the evaluation process, even
for traditional responsibility matters such as "understanding" of the
scope of work, does not generally have to be referred to the Small
Business Administration as a nonresponsibility determination. See
Tri-States Services Company, B-218733.2, Aug. 20, 1985, 85-2 CPD
Paragraph 196. Accordingly this basis for protest is denied.
Two minor issues remain.
The protester alleges that the solicitation's evaluation criteria are
not appropriate for a sealed bid procurement and that, in any event, the
relative importance of the evaluation factors is not stated with
sufficient specificity. We have already found that the procurement was
properly negotiated so that the present solicitation's evaluation scheme
is not intended to be appropriate for sealed bid procurements.
Moreover, as stated previously, the solicitation simply and clearly
provides that award will be made on the basis of overall lowest price
among those proposals found technically acceptable as to stated
technical criteria. In short, we have reviewed this evaluation scheme
and find the solicitation criteria for evaluation and award to be
simple, straightforward and complete. Accordingly, this basis for
protest is also denied.
Finally, the protester argues that the solicitation is indefinite in
that it provides that the awardee must comply with a "Quality Program
Requirement" (MIL-Q-9858A) that is "in effect on the contract date." The
protester states that it is patently unfair to require firms to submit
offers without a full knowledge of the particular specification revision
that is applicable. In this respect, we note that the FAR specifically
provides for incorporation in a solicitation of specifications "in
effect on the contract date." See FAR, 48 C.F.R. Section 52.246-11
(1984). In fact, however, the solicitation incorporates a baseline
quality contract requirement, that is, MIL-Q-9858A, dated Dec. 16, 1963,
as amended Mar. 8, 1985. It is this revision that an offeror must
propose and the quality contract program under it must be in place by
the time of award. There is no evidence in the record that a new
revision is anticipated, and we have been informally advised that, in
fact, no revisions are in process.
The protest is denied.
B-220804, 65 Comp. Gen. 240
Matter of: Artisan Builders, Jan. 24, 1986
General Accounting Office - Jurisdiction - Contracts - Nonappropriated
Fund Activities
Although a procurement is for a nonappropriated fund activity, when
it is conducted by the Air Force, a federal agency, the General
Accounting Office has jurisdiction under the Competition in Contracting
Act of 1984 to decide a bid protest concerning an alleged violation of
the procurement statutes and regulations.
Bids - Responsiveness - Pricing Response - Minor Deviations From IFB
Requirements
Bids based on a price per square foot, rather than per linear foot as
required by the solicitation, is responsive when the intended price per
linear foot is apparent from the face of the bid, the bid commits the
contractor to perform the exact thing called for in the solicitation at
a fixed price, and no other bidder is prejudiced by the agency's waiver
of this defect as a minor irregularity.
Artisan Builders protests the award of a contract to Concrete
Finishing, Inc., under invitation for bids (IFB) No. F02600-85-B-0044,
issued August 12, 1985, by Williams Air Force Base, Arizona. Artisan
believes that the Air Force should have rejected the awardee's bid for
the construction of concrete paths for golf carts at the base golf
course because the bid was on the basis of square feet, rather than
linear feet as required by the IFB.
We deny the protest.
One of three line items in the base bid schedule called for unit and
extended prices for 12,040 linear feet of concrete paths with a uniform
width of 6 feet. At bid opening on September 17, Concrete Finishing was
the apparent low bidder with a total base bid of $105,948. Artisan was
second low bidder at $143,623.20.
Initially, the contracting officer indicated to those present at the
bid opening that there might be a problem with Concrete Finishing's bid
because its unit price for the item in question was a price per square
foot. However, upon review, the Air Force determined that bidding on a
per-square-foot basis was a common industry practice and that the price
per linear foot could be determined simply by multiplying Concrete
Finishing's unit price per square foot by six. The contracting officer
therefore found the bid responsive and awarded Concrete Finishing the
contract. Artisan alleges that it was the low responsible bidder and
seeks termination of the protested contract.
The threshold issue, raised by the Air Force, is whether our Office
has jurisdiction to consider this protest, since the base golf course is
a nonappropriated fund activity. Under section 2741 of the Competition
in Contracting Act of 1984 (CICA), our Office decides bid protests
concerning alleged violations of the procurement statutes and
regulations by federal agencies. 31 U.S.C.A. Section 3552 (West Supp.
1985). While our Bid Protest Regulations provide that we will not
consider protests of procurements by nonappropriated fund activities, 4
C.F.R. Section 21.3(f)(8) (1985), we have held that the authority of our
Office to decide bid protests is based on whether the procurement is
conducted by a federal agency and is not dependent on whether
appropriated funds are involved. See T.V. Travel, Inc. et al., --
Request for Reconsideration, B-218198.6 et al., Dec. 10, 1985, 65 Comp.
Gen. . . ., 85-2 CPD Paragraph. Therefore, since this procurement was
conducted by the base contracting office at Williams Air Force Base and
since Artisan alleges that the Air Force, a federal agency, violated the
procurement statutes and regulations, we have jurisdiction.
As for the merits of the protest, we do not believe Concrete
Finishing's submission of unit prices on a per-square-foot basis is
fatal to its bid, since the intended price per linear foot can be
determined from the face of the bid itself. First, as the Air Force
indicates, given the uniform 6-foot width of the concrete path, the
firm's price per square foot, $1.45, can be converted to a price per
linear foot simply by multiplying by six -- for a total of $8.70 per
linear foot. The firm's extended price for the line item in question is
$104,748, which, when divided by the 12,040 linear feet specified in the
IFB, yields a unit price of $8.70. This method of calculating a
bidder's intended unit price is legally permissible, and it permitted
the Air Force to evaluate all bidders on a common basis. See Aqua
Marine Constructors, B-212790, Oct. 20, 1983, 83-2 CPD Paragraph 471.
In summary, although Concrete Finishing failed to bid in the precise
manner requested by the IFB, there is no doubt that the firm has
committed itself to perform the exact work required at a fixed price.
See Werres Corp., B-211870, Aug. 23, 1983, 83-2 CPD Paragraph 243. In
our opinion, Concrete Finishing's failure to bid on a per linear foot
basis is a matter of form rather than of substance, a minor irregularity
that has not prejudiced the other bidders, and it therefore can be
waived by the contracting agency. See Federal Acquisition Regulation,
48 C.F.R. Section 14.405 (1984). Accordingly, we agree with the Air
Force that the bid is responsive.
Artisan further complains that the contracting officer misled it both
at the bid opening and later regarding the nonresponsiveness of Concrete
Finishing's bid, preventing an earlier protest on the matter. The
contracting officer denies this allegation and, since Artisan was able
to file a protest in time to stop performance of the contract until our
Office rendered a decision, we fail to see how the protester was
prejudiced in any way, even if we assume that its allegation is correct.
The protest is denied.
B-220197, 65 Comp. Gen. 237
Matter of: Michael Longo, M.D., Jan. 24, 1986
Officers and Employees - New Appointments - Relocation Expense
Reimbursement and Allowances
There is no indication in the statutes or regulations governing the
relocation of Federal appointees of any intent to deprive reimbursement
of expenses incurred in undertaking an authorized move that is
interrupted by the appointee's death, and those expenses are allowable
to the extent that they do not exceed the reimbursement that would have
been payable if the appointee had not died. Hence, reimbursement may be
allowed for the expenses of a household goods shipment initiated by a
physician newly appointed to a position with the Veterans Administration
in furtherance of an authorized move, notwithstanding that he died while
the goods were in transit, and the shipment was then recalled.
Officers and Employees - New Appointments - Relocation Expense
Reimbursement and Allowances
A person newly appointed to the Federal service who has not yet
entered on duty does not have the status of a Federal "employee."
Consequently, relocation allowances credited to the account of a
deceased Veterans Administration appointee are payable to his estate in
the manner prescribed for deceased public creditors generally, and may
not instead be paid directly to his survivors in the manner otherwise
specifically prescribed by statute for settling the accounts of deceased
employees.
The question presented here is whether payment may be allowed in the
case of a physician newly appointed to a position in the Federal service
for expense incurred in undertaking an authorized household goods
shipment that was not completed because of his death. /1/ In the
circumstances, we conclude that payment may issue to his estate.
Background
In April 1985 Dr. Michael Longo was appointed to the position of
staff physician at the Veterans Administration Medical Center, Bay
Pines, Florida. At the time he and his wife resided in Farmington
Hills, Michigan. On May 13, 1985, the Veterans Administration provided
him with a written authorization to make the move from Michigan to
Florida at Government expense. This included authority for the
transportation of up to 18,000 pounds of household goods using the
commuted rate system. Generally, under that system, an individual
selects and pays a commercial mover, and obtains reimbursement from the
Government based on prescribed schedules of commuted rates. /2/
Dr. Longo arranged to have his household goods loaded for transport
by a commercial mover on June 28, 1985. He died 2 days later. The
truck carrying the households goods was still in Michigan, and his widow
had the shipment returned to their residence in Farmington Hills. The
mover presented her with a bill in the amount of $4,840.33.
The concerned Veterans Administration finance officer questions
whether reimbursement of transportation expenses may be allowed in these
circumstances and, if so, whether payment may be made directly either to
Mrs. Longo or to the commercial carrier.
Reimbursement of Expenses
There is no indication in the status or regulations governing the
relocation of Federal appointees and employees of any intent to deprive
reimbursement of expenses incurred in undertaking an authorized move
that is interrupted by the death of the appointee or employee.
In the present case, the household goods shipment was undertaken by
Dr. Longo as the result of the Veterans Administration's prior
authorization of his move from Michigan to Florida at Government expense
under the authority of 5 U.S.C. Section 5723. Although the household
goods shipment was recalled because of his death, we do not find that
this may serve as a basis for disallowing reimbursement of the expenses
involved, provided they do not exceed the amount that would have been
payable had the shipment been completed. Although Dr. Longo did not
become an employee of the Veterans Administration, the travel and
transportation allowances otherwise applicable may be paid because
travel expenses of new appointees may be paid whether or not the new
appointee has been appointed at the time travel is performed. 5 U.S.C.
Section 5723(c).
Payment to Estate
As indicated, under the commuted rate system there is no direct
contractual relationship between the Government and the commercial
carrier, and the Government incurs no direct obligation to pay the
carrier for services rendered. Rather, the individual involved incurs
the obligation to pay for those services, and that individual may then
seek reimbursement from the Government at prescribed rates. Hence, in
this case the allowable transportation expenses may not be paid to the
commercial carrier and are instead to be credited to Dr. Longo's
account.
Unpaid pay and allowances, including relocation allowances, which are
credited to the account of a deceased Federal employee are by specific
provision of statute and regulation made payable directly to the
employee's surviving spouse in the absence of a contrary beneficiary
designation. /3/ In this case, however, Dr. Longo did not enter on duty
with the Veterans Administration following his appointment to the
Federal service, so that he does not have the status of a deceased
Federal "employee" for the purpose of these provisions of statute and
regulation. /4/ Consequently, payment may not issue directly to his
widow, and should instead be made to his estate in the manner prescribed
for deceased public creditors generally. /5/
FOOTNOTES
(1) This action is in response to a request for an advance decision
from Mr. Conrad R. Hoffman, Director, Office of Budget and Finance,
Veterans Administration (VA file reference 074C1:8-5-4).
(2) See Federal Travel Regulations, para. 2-8-3, incorp. by ref., 41
C.F.R. Section 101-7.003.
(3) See 5 U.S.C. Sections 5581-5583 and 4 C.F.R. Part 33.
(4) See 5 U.S.C. Section 2105. See also 54 Comp. Gen. 1028, 1030
(1975); 45 Comp. Gen. 660 (1966); and Rodgers D. O'Neill, B-205972,
May 25, 1982.
(5) See 31 U.S.C. Section 3702 and 4 C.F.R. Part 35.
B-220644, 65 Comp. Gen. 230
Matter of: APEC Technology Limited, Jan. 23, 1986
Contracts - Negotiation - Offers or Proposals Evaluation - Technical
Acceptability - Administrative Determination
Contracting agencies enjoy a reasonable degree of discretion in
determining the acceptability of submitted technical proposals, and
General Accounting Office (GAO) therefore will not substitute its
judgment for that of the agency by making an independent determination
unless the agency's action is clearly shown to be arbitrary or in
violation of procurement statutes or regulations.
Contracts - Negotiation - Requests for Proposals Specifications -
Conformability of Equipment, etc. Offered - Administrative Determination
The term "state-of-the-art" may be narrowly applied as a solicitation
requirement to mean only that each offeror's product be its latest
design, rather than to mean adherence to an industry-wide technological
standard, so long as the end result is not the submission of offers with
such differing levels of technology that competition on a materially
similar baseline is effectively precluded.
Contracts - Protests - General Accounting Office Function - Free and
Full Competition Objective
A protester's presumable interest as a beneficiary of more
restrictive specifications is not protectible under General Accounting
Office (GAO) bid protest function, which is rather to ensure that the
statutory requirements for full and open competition have been met.
APEC Technology Limited protests the award of a contract to
Teletronix Information Systems under request for proposals (RFP) No.
SSA-RFP-85-0250, issued by the Social Security Administration (SSA),
Department of Health and Human Services. The procurement is for the
acquisition of telephone response units (TRUs) for use in SSA's Boston,
Chicago, and Miami field offices. APEC essentially complains that
Teletronix's offered equipment is technically noncompliant with certain
material requirements of the solicitation. We deny the protest.
Background
The TRUs being acquired allow callers to access prerecorded
informational messages and in certain applications to leave messages.
The RFP contemplated the award of a firm-fixed-price contract and
provided that the award would be made to that responsible offeror whose
proposal was technically acceptable and which offered the lowest present
value cost to the government over the 1-year contract period. Price
proposals were allowed on the basis of either lease, purchase, or lease
with/purchase option plans. Of the 64 firms originally solicited, only
APEC and Teletronic submitted proposals by the July 22, 1985, closing
date.
At principal issue in this case, the RFP provided that the offered
TRUs were to be "state-of-the-art" equipment "of the latest design and
in current production." The specifications also required at paragraph
C.2(b) that the TRUs have the capability to store a minimum of 50
prerecorded messages from 3 to 5 minutes in length; and at paragraph
C.2(e) required the capability to transmit "any message to any caller
within an average time of 10 seconds from the time of selection."
Moreover, paragraph C.2(g) required that the equipment provide a caller
voice messaging feature so that callers would be able to access certain
predesignated messages and subsequently record a message. Paragraph C.5
required that the equipment provide printed management information which
would cumulatively show: (a) the total number of calls received by the
TRU; (b) the total number of times each particular prerecorded message
was accessed; and (c) the total number of calls that disconnected
before any particular message was received in it entirely.
On July 27, subsequent to the proposal closing date, APEC sent a
letter to the contracting office which alleged that the TRUs offered by
Teletronix would fail to meet certain mandatory specifications due to
the fact that the Teletronix equipment utilized cassette tapes to store
the prerecorded messages. APEC emphasized that its own equipment
utilized the newer disk system technology, and the firm asserted that
such disk systems were more appropriate to meet SSA's particular
requirements.
SSA determined from its initial price evaulation that APEC's offer
was low for the Chicago location and that Teletronix's offer was low for
the Boston and Miami locations. (There were somewhat varying equipment
requirements among these three locations, for example, the Miami
location did not require the caller voice messaging feature.)
SSA then conducted a technical evaluation and determined that both
proposals were technically unacceptable but susceptible to being made
acceptable through discussions. Accordingly, SSA held oral discussions
with both firms pointing out the areas of proposal deficiency and
subsequently issued a written request for best and final offers. SSA's
request for best and final offers included amendment 0001 to the RFP,
which specifically changed paragraph C.2(e) so that the 10-second
message accessing requirement now applied only to the minimum 50
messages to be stored in the system and not to "any message" to be
stored, as formerly required. The amendment also added a requirement
that the TRUs were to be installed "in a manner that complies with all
applicable building and electrical codes" and further provided that the
government would no longer consider lease with/purchase option plans in
evaluating the price proposals.
Although Teletronix's price remained unchanged in its best and final
offer, APEC reduced its guaranteed equipment "Buy Back" offer for each
location, thus increasing both its lease and purchase plan prices. /1/
Accordingly, the firm's offer for the Chicago location was no longer
low. Upon evaluation of the revised technical proposals, SSA's project
officer determined that both proposals were technically acceptable.
However, the contracting officer disagreed with this determination since
the project officer had based his finding on the responses made by the
firms during the oral discussions, and the firms' written responses in
their best and final offers did not reflect full compliance with the
specifications.
The contracting officer felt that neither APEC nor Teletronix had
demonstrated that its equipment met the requirement of paragraph C.5(c)
that the printed management information provide the total number of
calls that disconnected before each particular prerecorded message was
received in its entirety, since both firms appeared to be providing only
the total combined number of disconnects for all system messages without
distinction. Moreover, the contracting officer determined that
Teletronix had not sufficiently demonstrated that its equipment
conformed to the amended requirement of paragraph C.2(e) that the TRUs
be able to transmit any of the minimum 50 prerecorded messages within an
average time of 10 seconds from the time of selection. Further, the
contracting officer questioned whether Teletronix's equipment met the
requirement of paragraph C.2(g) for caller voice messaging, since he
felt that the specification reasonably could be interpreted as requiring
a single recording mechanism, and Teletronix's equipment in fact
utilized multiple recorders. Finally, the contracting officer
determined that Teletronix had not shown that its equipment met the
requirements of paragraph C.5 (a) and (b) that the system's printed
management information show both the total number of calls received by
the TRU and the total number of times each prerecorded message was
accessed.
At this point, SSA considered clarifying the caller voice messaging
specification to indicate that a single recorder mechanism was not
necessary. (APEC had interpreted the specification as requiring a
single mechanism in its July 27 letter.) However, SSA determined that a
clarification was not in order because it felt that both firms could
meet the requirement under either interpretation. SSA then determined
to amend the RFP by deleting the requirement at paragraph C.5(c) for the
system's printed management information to provide the total number of
disconnects for each particular message because neither firm appeared to
understand the requirement and, in any event, SSA concluded that the
requirement exceeded its actual minimum needs.
Because of time constraints, SSA did not issue a written amendment
deleting paragraph C.5(c), but informed both offerors of the change
orally. SSA requested the submission of a second round of best and
final offers, and the offerors were asked to acknowledge the deletion
and to state whether there were any changes from their original best and
final offers. Additionally, Teletronix was specifically asked to
describe how its system would comply with the caller voice messaging
requirement and to provide a sample management information printout.
Teletronix satisfied SSA's concerns in its revised best and final offer,
and its proposal therefore was deemed to be technically acceptable.
Accordingly, since Teletronix offered the lowest evaluated price for all
three locations (on a purchase basis), the firm was awarded the
contract. Performance has been suspended pending our resolution of the
protest.
APEC argues that Teletronix's equipment is technically noncompliant
with certain specifications because the equipment utilizes cassette
tapes as a recording medium which represent an older technology.
Therefore, APEC asserts that the TRUs offered by Teletronix are
unacceptable because they are not "state-of-the-art" equipment as called
for in section "C" of the RFP. APEC contends that Teletronix's
equipment cannot meet the average 10-second message accessing
requirement because of the corollary requirement that the TRUs be able
to store a minimum of 50 prerecorded messages. APEC notes that the
original requirement at paragraph C.2(e) for average 10-second message
accessing for "any message" was amended to refer only to "any of the 50
messages"; it is APEC's apparent view that Teletronix's equipment
cannot provide 10-second message accessing if more than 50 messages are
to be recorded on its cassette tape system, which APEC believes was
clearly contemplated by the RFP. APEC contends that paragraph C.2(e)
was specifically modified for the sole competitive benefit of Teletronix
as APEC states that its own disk system can provide 10-second message
accessing for up to 100 messages.
Moreover, APEC asserts that it was improper for SSA to amend the RFP
at the last moment to delete the requirement at paragraph C.5(c) for the
system's printed management information to provide the total number of
disconnects for each specific message. APEC asserts that such action
worked to its prejudice because its equipment was fully compliant with
the requirement. APEC also notes that SSA failed to issue a written
amendment concerning the deletion of paragraph C.5(c).
Finally, APEC complains that it was specifically asked to verify that
its equipment had Underwriters' Laboratories (UL) approval, but that the
same verification was not demanded of Teletronix. APEC notes that the
RFP was amended to specify that offerors' equipment had to comply with
all applicable building and electrical codes for the particular
locations, but did not require UL approval. Accordingly, APEC believes
that an intial requirement for UL approval was waived in Teletronix's
sole favor.
Analysis
Contracting agencies enjoy a reasonable degree of discretion in
determining the acceptability of submitted technical proposals, and this
Office therefore will not substitute its judgment for that of the agency
by making an independent determination unless the agency's action is
shown to be arbitrary or in violation of procurement statutes or
regulations. Rack Engineering Co., B-214988, Sept. 10, 1984, 84-2 CPD
Paragraph 272. The protester clearly bears the burden to show that the
agency's technical evaluation was unreasonable. Magnavox Advanced
Products and Systems Co., B-215426, Feb. 6, 1985, 85-1 CPD Paragraph
146. We do not believe that APEC has met that burden here.
On the issue of whether Teletronix's utilization of a cassette tape
system meets the requirement for "state-of-the art" technology, APEC,
although not disputing that the Teletronix equipment represents the
firm's latest design, strenuously urges that tape systems are a
six-year-old technology that has been superseded by disk systems.
Therefore, in APEC's view, the utilization of obsolete technology, even
though in a firm's latest design, cannot be properly constructed as
compliance with a "state-of-the-art" requirement. We do not agree.
The common definition of the term "state-of-the-art" is "the
scientific and technical level attained (in a particular industry) at a
given time." See The Random House College Dictionary, 1980 Revised
Edition, p. 1282. However, this Office has recognized that the standard
may be more narrowly applied to mean only that each offeror's equipment
represent its latest design, rather than to mean adherence to an
industry-wide technological standard, so long as the end result is not
the submission of offers with such differing levels of technology that
competition on a materially similar baseline is effectively precluded.
Honeywell Information Systems, Inc., B-191212, July 14, 1978, 78-2 CPD
Paragraph 39. Moreover, we believe that the phrase "the TRU shall be of
the latest design and in current production" can only be read to refer
to an individual offeror's equipment. Thus, even though the Teletronix
equipment may utilize an older technology as a recording medium (in any
event, we do not decide that cassette tape systems are technologically
obsolete as APEC seemingly urges), the record would have to show clearly
that competition between the two firms was fundamentally unequal before
SSA's, more narrow application of the "state-of-the-art" standard could
be considered objectionable. Id.
In our view, the record makes no such showing. As SSA explains, the
agency only required that the equipment offered by a particular offeror
be the firm's latest TRU model in current production and states that the
RFP was specifically written so that TRUs with disk, tape on other
recording mediums meeting the mandatory performance specifications would
be acceptable. Furthermore, SSA emphasizes that the basis for award was
the lowest evaluated price for equipment meeting the mandatory
specifications. Therefore, there was a complete absence of any
indication in the RFP that the government was willing to pay a premium
for equipment reflecting the latest industry-wide technological advance.
Since it is undisputed that the Teletronix equipment was the firm's
latest model, we therefore reject APEC's assertion that it failed to
meet the "state-of-the-art" requirement set forth in section "C," and we
find nothing objectionable in SSA's desire to maximize competition by
developing specifications that were not restricted to only one recording
medium. Cf. University Research Corp., 64 Comp. Gen. 273 (1985), 85-1
CPD Paragraph 210 (award improper where better solicitation
draftsmanship could have achieved a more extensive competition).
In essence, we believe APEC is actually asserting that the RFP should
have been limited to offers to furnish only disk system TRUs since, in
the firm's view, only that newer technology is appropriate to satisfy
SSA's needs. However, we have consistently refused to countenance such
challenges to an agency's broadening of the competition. See Ricwil,
Inc., et al., B-214625, et al., Oct. 17, 1984, 84-2 CPD Paragraph 415.
In this regard, the purpose of our role in resolving bid protests is to
ensure that the statutory requirements for full and open competition
have been met; thus, a protester's presumable interest as a beneficiary
of more restrictive specifications is not protectible under our bid
protest function. Ray Service Co., B-217218, May 22, 1985, 64 Comp.
Gen. 528, 85-1 CPD Paragraph 582. APEC has made no showing that SSA
acted fraudulently or in bad faith in broadening the competition to
allow for more than one recording medium that met its needs. Id.
To the extent APEC contends that the Teletronix equipment, by
utilizing a cassette tape system, is noncompliant with certain
specifications, it is clear from the record that the agency conducted a
thorough evaluation of the two offers and ultimately determined that
both TRU systems were acceptable. We believe this is a classic example
of a procurement in which there may be more than one means of meeting an
agency's performance specifications. See A.B. Dick Co., B-207194.2,
Nov. 29, 1982, 82-2 CPD Paragraph 478. Thus, for example, although SSA
originally expressed doubt that Teletronix's tape-based equipment would
be able to transmit the minimum 50 recorded messages within an average
time of 10 seconds from the time of selection as required by the amended
paragraph C.2(e), the evaluation documents show that Teletronix, through
an operational test, demonstrated this capability to the agency's
satisfaction. As Teletronix explains, its system "stacks" the most
frequently accessed messages around a "home position" on four different
track levels, thus drastically reducing the time needed to transmit a
message after a caller has made his selection. Similarly, in its
revised best and final offer, Teletronix explained that its equipment,
although using multiple recorders, would be able to meet the requirement
of paragraph C.2(g) for caller voice messaging since each of the four
track levels is in continuous operation and can record messages without
interrupting the message-transmitting function. APEC has not shown that
SSA's determinations of technical acceptability on these points were
arbitrary or otherwise in violation of the procurement statutes or
regulations. Rack Engineering Co., B-214988, supra.
Although we understand APEC's concern that paragraph C.2(e) was
amended so that the 10-second accessing requirement now applied only to
the minimum 50 recorded messages and not to any additional messages that
might be later stored in the system, we fail to find any indication in
the record that this was done with the express purpose of waiving a
material requirement for Teletronix's sole competitive benefit. See
A.B. Dick Co., B-207194.2, supra. Rather, it is a general rule of
federal procurement that specifications should be drafted in such a
manner that competition is maximized, unless a restrictive requirement
is necessary to meet the government's legitimate minimum needs. See
Hydro-Dredge Corp., B-215873, Feb. 4, 1985, 85-1 CPD Paragraph 132.
Consequently, even though SSA has not expressly stated in the record why
it deleted paragraph C.2(e), we must presume that SSA concluded, after
initial discussions, that the 10-second message accessing requirement
for more than the minimum 50 messages was in excess of its actual needs,
and that continued insistence on the requirement would only serve to
restrict the competition unduly. Absent evidence of favoritism, fraud,
or intentional misconduct by government officials, we will not question
an agency's decision to relax solicitation requirements and thus enhance
competition. Eastern Marine, Inc., B-213945, Mar. 23, 1984, 84-1 CPD
Paragraph 343. No such evidence is present here.
Similarly, it is apparent that SSA deleted the requirement at
paragraph C.5(c) for the system's printed management information to
provide the total number of disconnects for each particular message
because the requirement was unnecessary for its essential management
information purposes. SSA's evaluators determined that neither
proposal, even after revisions, reflected an understanding of the
feature and, although APEC asserts that its equipment in fact has the
capability to meet the specification, this does not establish any
impropriety in the agency's decision to delete paragraph C.5(c). See
Eastern Marine, Inc., B-213945, supra. Thus, SSA determined that the
requirement was in excess of its actual minimum needs, and we will not
question such a determination absent a clear showing that it has no
reasonable basis. Frequency Electronics, Inc., B-204483, Apr. 5, 1982,
82-1 CPD Paragraph 303. APEC has made no showing that SSA's
determination in this regard was unreasonable.
To the extent APEC asserts that SSA acted improperly by not issuing a
written amendment concerning the deletion of paragraph C.5(c), we have
held that the failure to issue a written amendment does not constitute a
material procurement impropriety where all offerors were informed of the
agency's changed requirements during discussions and were given the
opportunity to submit revised proposals reflecting those changes.
Decilog, Inc., B-206901, Apr. 5, 1983, 83-1 CPD Paragraph 356. Here,
since both APEC and Teletronix were orally advised that paragraph C.5(c)
was being deleted, and the firms were asked to acknowledge the deletion
in their revised best and final offers, SSA's failure to confirm the
change in writing was only a minor informality which worked no
competitive prejudice.
With regard to APEC's assertion that SSA waived the requirement for
UL approval in Teletronix's favor, the record establishes that SSA
initially asked both firms for verification of such approval, but
subsequently decided to amend the RFP to require that the offered
equipment comply with all applicable building and electrical codes.
Apparently, SSA determined that mere verification of UL approval was not
sufficient to demonstrate that the offered equipment would be acceptable
for operational use in every location, especially since the agency had
specific concerns about equipment compliance at the Chicago site due to
past difficulties in meeting the city's codes. Clearly, SSA's actions
in this matter were reasonable, and we fail to see how APEC was harmed
thereby. In any event, the record in fact establishes that the power
module for the Teletronix equipment has UL approval.
The protest is denied.
FOOTNOTES
(1) The record is somewhat unclear as to why APEC made this pricing
change. Although the firm indicates that it reduced its "Buy Back"
offer as the result of agency advice, the firm apparently is not
alleging any impropriety on the agency's part in this matter.
B-217628, 65 Comp. Gen. 226
Matter of: Pension Benefit Guaranty Corporation Printing and
Distribution Requirements, Jan. 23, 1986
Printing and Binding - Purchases From Other Public Printer - Propriety
The Pension Benefit Guaranty Corporation (PBGC) may not be regarded
as exempt from the Government-wide statutory requirements (44 U.S.C.
501, 1701) to satisfy its printing and distribution needs from the
Government Printing Office because the statutes and legislative history
which created PBGC clearly indicate that Congress intended that, after
the first 270 days of the corporation's existence, it would be subject
to those requirements.
Printing and Binding - Purchases from Other than Public Printer -
Propriety
Agencies and establishments of the United States Government are
required by 44 U.S.C. 502, 1701 to satisfy their printing and
distribution requirements through the offices of the Government Printing
Office (GPO) unless their enabling legislation confers some statutory
exemption from those requirements. Those agencies and establishments
which have previously been found exempt from those requirements have
been given the statutory authority to determine the character and
necessity of their accounts, "notwithstanding the provisions of any
other law governing the expenditure of public funds." Since the statutes
creating the Pension Benefit Guaranty Corportation (29 U.S.C. 1301 et
seq.) do not contain such a provision, that corporation may not be
regarded as exempt from the general requirement to use GPO to satisfy
its printing and distribution needs.
The Executive Director of the Pension Benefit Guaranty Corporation
(PBGC) has requested our opinion on whether PBGC is exempt from the
provisions of 44 U.S.C. Sections 501 and 1701 (1982) which generally
require Federal Government agencies and establishments to have their
printing and distribution needs handled by the Government Printing
Office (GPO). For the reasons given below, we find the PBGC is not
exempt from those statutory requirements.
PBGC STATUTORY AUTHORITY
PBGC was established by title IV of the Employment Retirement Income
Security Act of 1974 (ERISA) in order to administer a program of pension
plan termination insurance. /1/ Pub. L. No. 406, 93rd Cong., 2d Sess.,
88 Stat. 829, 1003 et seq., codified in, 29 U.S.C. Section 1301 et seq.
(1982). PBGC is one of the wholly owned Government corporations listed
in the Government Corporation Control Act, as amended. 31 U.S.C.
Section 9101(3)(I) (1982). Among other things, PBGC is authorized:
* * * to enter into contracts, to execute instruments, to incur
liabilities, and to do any and all other acts and things as may be
necessary and incidental to the conduct of its business * * *. 29
U.S.C. Section 1302(b)(8).
In addition, the act which created PBGC expressly granted PBGC
certain additional powers which were characterized as "temporary
authority for (PBGC's) initial period." ERISA, Section 4004, 88 Stat.
1008-9 ("catchline" of section). That additional "temporary authority"
provided that:
In addition to its other powers under this title, for only the
first 270 days after the date of enactment of this act the
corporation (PBGC) may --
(1) contract for printing without regard to the provisions of
chapter 5 of title 44, United States Code, * * *. ERISA, Section
4004(f)(1), 88 Stat. 1009; 29 U.S.C. Section 1304 note.
GPO Printing and Distribution Requirements
Pursuant to 44 U.S.C. Sections 501 and 1701, each executive
department, independent office, and establishment of the Federal
Government is required (with certain exceptions not relevant here) to
obtain its printing and distribution services from GPO. In a number of
previous cases, however, this Office has ruled that some Federal
agencies and establishments are exempt from these requirements. /2/
PBGC thinks it should also be regarded as being exempt from the
requirement to use GPO printing and distribution services. PBGC argues
that given its broad authority under 29 U.S.C. Section 1302(b)(8), the
"temporary initial authority" granted PBGC in its enabling legislation
should not be read as "constituting an affirmative application" of the
GPO printing and distribution requirements to PBGC. PBGC also argues
that its authority under 29 U.S.C. Section 1302(b)(8) is as broad as the
authority which has been conferred upon the agencies and establishments
that GAO previously found to be exempt. We disagree with both of these
arguments.
DISCUSSION
The first basis upon which we disagree with PBGC's analysis concerns
the provisions of Section 4004(f) of ERISA, as quoted above. The plain
language of that section clearly shows that Congress contemplated that
(except for the initial 270 days of PBGC's existence) PBGC was and would
be subject to the GPO printing requirements. See, e.g., Perrin v.
United States, 444 U.S. 37, 42 (1979); 38 Comp. Gen. 812, 813 (1959)
(plain meaning rule of statutory construction). That this language
accurately reflects the intent of Congress may be seen in the House
Conference Report which states that PBGC "is also to have special
temporary powers during the first 270 days after enactment to * * *
contract for printing without regard to the provisions to chapter 5 of
title 44 United States Code * * *." H.R. Rep. No. 1280, 93rd Cong., 2d
Sess. 382 (1974) (House Conference Report). The interpretation of
section 4004(f) of ERISA that PBGC urges upon us would render otherwise
clear language and legislative history meaningless and absurd. This
would violate the established presumption against interpreting statutes
in a way which renders them ineffective. E.g., 62 Comp. Gen. 55, 56-57
(1982), citing FTC v. Manager, Retail Credit Co., 515 F.2d 988, 994
(D.C. Cir. 1975). Thus, we find that the language and legislative
history of section 4004(f) of ERISA clearly show that Congress meant
PBGC to be subject to the GPO printing requirements after an initial
start-up period of 270 days. (This interpretation was evidently shared
as well by the congressional codifiers of title 29 of the United States
Code. They dropped subsection (f) of section 1304 from the Code
completely, presumably because it was executed. See Note following 29
U.S.C. Section 1304.)
Second, even if we could disregard the provisions of section 4004(f)
of ERISA, it is our opinion that the authority granted PBGC is not as
broad as that granted to the other establishments and agencies which
this Office has previously determined to be exempt from the GPO printing
and distribution requirements. Under its statutes, PBGC is authorized
to "enter into contracts, to execute instruments, and to incur
liabilities, and do any and all other acts and things that may be
necessary or incidental" to the conduct of its business and
responsibilities under law. 29 U.S.C. Section 1302(b)(8). The statutes
creating each of the organizations that we have previously found exempt
not only give them that authority, but also provide that they may
determine the character and necessity of their own accounts
"notwithstanding the provisions of any other law governing the
expenditure of public funds." /3/ This statutory authority was present
in all of our decisions exempting organizations from GPO's printing and
distribution requirements. /4/ In B-209585, Jan. 26, 1983 (which
established an exemption for the Tennessee Valley Authority (TVA)), we
noted that our previous cases had turned on the agency's authority to
"determine its necessary expenditures without regard to any other
provision of law governing the expenditure of public funds." That
decision went on to quote TVA's enabling legislation as authorizing TVA
to "make such expenditures and enter into such contracts * * * as it may
deem necessary * * *." 16 U.S.C. Section 831h(b). The decision then
concluded that TVA has authority that is "certainly as broad" as that
granted the other exempt agencies and establishments. Although B-209585
did not spell out that TVA may determine the character and necessity of
its own accounts "notwithstanding the provisions of any other law
governing the expenditure of public funds," that authority, in fact, is
present in TVA's enabling legislation. Id.
It was the existence of this specific statutory authority to
determine the propriety of their expenditures and obligations,
notwithstanding the provisions of any other laws governing the
expenditure of public funds, that enabled us to conclude that TVA and
those other agencies and establishments were exempt from the otherwise
strict statutory requirements to use GPO printing and distribution
services. PBGC does not have this authority. /5/ In the absence of
more specific statutes that override them (such as the provisions noted
above), Government-wide statutory requirements and prohibitions must be
obeyed. Cf. 24 Comp. Gen. 339, 341 (1944) ("The decisions of this
office (cannot) overcome (a) statutory prohibition * * * except when
specifically authorized by law."). Consequently, we may not conclude
that the provisions of 29 U.S.C. Section 1302(b)(8) create a statutory
exemption from the GPO printing and distributing requirements for PBGC.
Moreover, the provisions of 44 U.S.C. Sections 501 and 1701 already
enumerate a number of exceptions which do not include a general
exemption for PBGC. In this regard, the Supreme Court has ruled that
"(w)here Congress expressly enumerates certain exceptions to a general
prohibition (or requirement), additional exceptions are not to be
implied, in the absence of evidence of a contrary legislative intent."
Andrus v. Glover Construction Co., 446 U.S. 608, 616-17 (1980), citing
Continental Casualty Co. v. United States, 314 U.S. 527, 533 (1941).
See also 55 Comp. Gen. 1077, 1078 (1976). For this reason, we may not
imply the existence of an additional exception covering PBGC.
CONCLUSION
In summary, we find that the statutes creating PBGC did not confer
upon it sufficient authority to constitute (or permit the inference of)
an exemption from the requirements of 44 U.S.C. Sections 501, 1701. We
also find that the Congress, as shown in the language and history of
section 4004(f) of ERISA, exempted the PBGC from these requirements only
for the first 270 days of the corporation's existence.
FOOTNOTES
(1) The law creating PBGC vests in it two fundamentally different
duties. On one hand, PBGC is a "trustee" for the non-public funds of
terminated pension plans. ERISA, Section 4042, 29 U.S.C. Section 1342.
In this capacity, PBGC is serving primarily the interests of the
participants and beneficiaries of the plan, in the same manner and to
the same degree as would a nongovernmental party appointed to the same
position.
On the other hand, PBGC also serves as an "insurer" using revolving
funds which are appropriated public funds. ERISA Section 4005(b)(2)(D),
29 U.S.C. Section 1305(b)(2)(D). Cf., e.g., 60 Comp. Gen. 323 (1981);
43 Comp. Gen. 759 (1964); B-193573, Dec. 19, 1979. Cf. also National
Treasury Employees Union v. FLRA, No. 82-2176 (D.C. Cir. May 10, 1983)
(unpublished opinion), aff'g 9 F.L.R.A. 82 (Case No. O-NG-230, Aug. 3,
1982). When acting in this other capacity, PBGC is serving primarily
the interests of the United States.
This decision only addresses PBGC's activities in its capacity as
insurer, and its use of public funds. This is because 44 U.S.C.
Sections 501 and 1701 explicitly apply only to (a) printing work
undertaken "for" (i.e., primarily in the interests of) the Government,
and (b) to distribution services reimbursed with "(m)oney appropriated
by any Act * * *" respectively.
(2) E.g., 14 Comp. Gen. 698 (1935) (Federal Home Loan Bank Board);
A-49652, June 28, 1933 (Home Owners' Loan Corporation); A-60495, Oct.
4, 1938 (Federal Savings and Loan Insurance Corporation) (modifying 14
Comp. Gen. 695 (1935)); B-156202, Mar. 9, 1965 (Federal Housing
Authority); B-114829, July 8, 1975 (United States Postal Service);
B-209585, Jan. 26, 1983 (Tennessee Valley Authority).
(3) See, e.g., Pub. L. No. 43, Section 4(j), 48 Stat. at 132 (HOLC);
Pub. L. No. 43, Section 6, 48 Stat. at 143 (FHLBB); Pub. L. No. 76,
Section 22, 49 Stat. at 298 (FSLIC); 39 U.S.C. Sections 401(3), 410(a),
2008(c) (USPS); 12 U.S.C. Section 1702 (FHA); 16 U.S.C. Section
831h(b) (TVA).
(4) See the cases and statutes cited previously in footnotes 2 and 3,
respectively.
(5) In two of our previous cases (63 Comp. Gen. 1 (1983) and
B-194274.2, May 8, 1979) we determined that GAO did not have the
authority to consider bid protests involving PBGC procurements because
we assumed that PBGC, like most other wholly owned Government
corporations, had the authority to determine the character and necessity
of its own expenditures, notwithstanding the provisions of other laws
governing the expenditure of public funds.
As indicated above, however, PBGC does not in fact have that
authority. Were we to reconsider those two cases now in light of the
findings of this case, we would have to overrule them due to our
erroneous assumption regarding PBGC's authority. At the same time,
however, we note that the holdings of those two cases have already been
effectively mooted as a result of the passage of the Competition in
Contracting Act of 1984, 31 U.S.C.A. Sections 3551-56 (1985 Supp.).
See, e.g., B-218441, Aug. 8, 1985. Accordingly, our decisions in 63
Comp. Gen. 1 and B-194274.2, supra, are hereby modified to be consistent
with our decisions in this case and in B-218441, supra.
B-220588, 65 Comp. Gen. 222
Matter of: TMS Building Maintenance, Jan. 22, 1986
General Accounting Office - Jurisdiction, Contracts - Performance -
Contract Administration Matter
Protest against agency actions during the protester's contract
performance concerns contract administration and is for consideration by
the procuring agency, not General Accounting Office (GAO)
Contracts - Protests - General Accounting Office Procedures -
Timeliness of Protest - Data Basis of Protest Made Known to Protester
Protest that agency improperly awarded a sole-source contract is
dismissed as untimely since it was not filed within 10 days after the
protester knew the protest basis.
Contracts - Negotiation - Requests for Proposals - Failure to Solicit
Protest against agency's failure to request an offer from the
protester, whose contract had just expired, for a 5-month, emergency
contract for essentially the same services is denied where the agency
reasonably determined that, based on problems the protester had
encountered in an aspect of performance that would be critical to the
5-month contract, the firm was not a potential source.
Contracts - Negotiation - Limitation on Negotiation - Propriety
Although the Competition in Contracting Act of 1984 authorizes an
agency to use noncompetitive procurement procedures in situations of
unusual or compelling urgency, the statute also requires the agency to
solicit offers from as many potential sources as is practicable, and
does not recognize a lack of advance planning as a legitimate
justification for using such procedures.
TMS Building Maintenance protests sole-source contract awards by the
Department of Energy (DOE) to Taylor Waites Company for janitorial
services for DOE's Albuquerque office, to be performed in a number of
buildings located in the secured area of a military reservation and in
three unsecured buildings. TMS also protests certain actions taken by
DOE while TMS was performing the janitorial services as the incumbent
contractor. In addition, TMS requests reimbursement of the costs it
incurred in pursuing this protest.
We dismiss the protest in part and deny it in part. We deny the
request for costs.
TMS was the contractor for the janitorial services from October 1,
1982, through September 20, 1985. During TMS's contract performance,
its contract was modified because one building was being renovated and
did not require janitorial services. Also, according to DOE, TMS was
having problems performing the balance of the contract. Specifically,
TMS did not have a sufficient number of personnel with security
clearances to provide services in the secured area. Consequently, when
the renovations were completed, DOE did not permit TMS to resume work in
the building; instead, on April 8, 1985, DOE awarded a contract to
Waites on a sole-source basis to provide those services. The contract
was modified on August 4 and September 4 to encompass additional
buildings. Performance under Waites' contract initially ended on
September 30 but, due to the present protest, subsequently was extended
into October.
TMS first protests that any performance problems it experienced while
it was the contractor were caused by DOE's unreasonable interference;
that its contract did not require a specific number of personnel with
security clearances; and that DOE improperly permitted Waites to
perform some duties covered by TMS's contract while TMS still had the
contract.
These allegations concern matters of contract administration, which
is the responsibility of the contracting agency. See Satellite
Services, Inc., B-219679, Aug. 23, 1985, 85-2 C.P.D. Paragraph 224.
Disputes on such matters are to be reviewed pursuant to the contract's
disputes provisions rather than under our Bid Protest Regulations, 4
C.F.R. part 21 (1985), which are reserved for considering whether the
award or proposed award of a contract complies with statutory and other
legal requirements. Consequently, we will not consider this basis of
TMS's protest.
TMS next protests the April 8 award of a sole-source contract
(lasting, as modified, into October 1985) to Waites for services in the
renovated building in the secured area. We will not consider this
issue, however. Under our Bid Protest Regulations, a protest like this
one must be filed within 10 working days after the protester knows or
should know the basis of the protest. 4 C.F.R. Section 21.2(a)(2).
From the comments submitted by TMS, it is apparent that TMS knew Waites
was performing under that contract as early as August 1985. Since TMS
did not submit its protest until September 26, this issue is untimely.
Finally, TMS protest that in October DOE awarded another sole-source
contract to Waites; TMS argues that the agency at least should have
solicited an offer from TMS.
DOE responds that as TMS's contract was expiring at the end of
September the agency was considering whether to complete preparation of
the materials needed for a competitive procurement to secure the
services for the following period, or to contract for the services
through the Small Business Administration (SBA) under the 8(a) program.
The janitorial services, however, were needed immediately to avoid
adversely affecting the health and safety of employees, and to avoid the
immediate closing of the cafeteria and health unit. DOE therefore
decided to award an interim, 5-month contract to cover the period from
when TMS's contract expired until a competitive or 8(a) award could be
made.
As to DOE's decision not to solicit an offer from TMS for that
period, the agency explains that the contractor's employees will be
performing services in an area where they inadvertently may view
restricted information and, consequently, the contractor has to have a
sufficient number of personnel with DOE security clearances, which are
obtained only after a full field investigation and take 6 to 8 months to
process. The agency asserts that having a sufficient number of
personnel with security clearances also was a requirement of TMS's
contract and that, as stated above, TMS did not meet its obligations in
that regard. Because TMS did not have enough personnel with security
clearances, DOE argues that award of the 5-month contract to Waites, the
only known source able to begin performance right away, was proper.
Under the Competition in Contracting Act of 1984 (CICA), an agency
may use noncompetitive procedures to procure goods or services where the
agency's need is of such an unusual and compelling urgency that the
government would be seriously injured if the agency is not permitted to
limit the number of sources from which it solicits bids or proposals.
41 U.S.C.A. Section 253(c)(2) (West Supp. 1985). This authority,
however, is limited by the CICA provisions at 41 U.S.C.A. Section
253(e), which require agencies, nevertheless, to request offers from as
many potential sources as practicable, and at 41 U.S.C.A. Section
253(f)(5)(A), which states that a lack of advance planning does not
justify the use of such procedures. Further, before using
noncompetitive procedures, an agency must execute a written
justification for doing so, which is to include a description of efforts
made to ensure that officers are solicited from as many sources as is
practicable, and a description of any market survey conducted or a
statement of the reasons why a market survey was not conducted. 41
U.S.C.A. Section 253(f)(3).
We see no basis to object to DOE's decision that TMS could not meet
the agency's needs when DOE awarded the contract to Waites in October.
The record shows that DOE had issued a cure notice to TMS and had
contemplated terminating TMS's contract, which already had been modified
a number of times to decrease the secured area in which TMS provided
service; as stated above, TMS had been unable to provide an adequate
number of personnel with the necessary clearances. DOE did not pursue
termination, however, only because the contract was to expire in 2
months and because TMS agreed to correct the deficiencies in its
performance. The record further shows that during an August 30 meeting,
TMS stated that it could provide only two full-time and three part-time
employees with security clearances, which DOE found unacceptable for
more than limited work. Notably, while TMS disputes the reasons for its
performance problems, and whether its contract required the number of
cleared employees that DOE was requesting, the firm does not deny that
problems existed. Given these factors, we cannot conclude that DOE
unreasonably determined that TMS was not an available source to perform
the services. We therefore deny TMS's protest against DOE's failure to
solicit and offer from the firm for the 5-month contract.
Nevertheless, we point out that the fact that TMS could not perform
does not in itself justify DOE's decision to award a sole-source
contract to Waites without giving any other possible contractors a
chance to compete. Although the janitorial services may have been
needed immediately and the successful contractor had to employ a number
of cleared personnel, DOE has not explained why it found that Waites was
the only available source with a sufficient number of cleared personnel
to perform the contract. As stated above, an agency must solicit
proposals from as many firms as is practicable even when using CICA's
noncompetitive procedures.
Furthermore, and as also stated above, an agency may not use a lack
of advance planning to justify the use of noncompetitive procedures.
DOE, obviously aware that TMS's contract would expire in September, knew
as early as April 1985 that TMS was having performance problems because
the company did not have the necessary number of cleared personnel. At
that time, DOE also knew that the successor contractor would have to
have cleared personnel and that it would take 6 to 8 months to obtain
security clearances. Yet it does not appear that DOE took any steps
before September to plan for the use of competitive procedures to secure
the required services after TMS' contract was completed. There is no
evidence in the record that DOE attempted to contact other potential
sources, and DOE did not conduct a market survey only because, according
to the agency, a 1981 cost comparison showed that it would be cheaper to
contract for the services than to have government personnel perform
them. The purpose of a market survey, however, is not to determine the
cost benefits of contracting for services but, in accordance with the
principle that agency's should achieve maximum competition, to determine
if there are other qualified sources capable of meeting the government
needs.
Accordingly, although we have denied this protest, by separate letter
we are bringing the matter of the sole-source award's propriety to the
attention of the Secretary of DOE. In this respect, this procurement
deficiency does not warrant terminating Waites' contract at this time,
since the services must be provided continuously; the contract was
awarded to Waites for only 5 months; and when the contract expires DOE
plans to procure the services competitively or to contract with the SBA
under the 8(a) program.
Finally, TMS requests that it be paid the costs of pursuing its
protest. A protester is entitled to such costs only where the
contracting agency has unreasonably excluded the protester from the
procurement. 4 C.F.R. Section 21.6(e). Since we have concluded that
TMS was not unreasonably excluded here, the firm is not entitled to the
claimed reimbursement.
The protest is dismissed in part and denied in part.
B-219122, 65 Comp. Gen. 216
Matter of: Hollis W. Bowers - Waiver of Erroneous Overpayments -
Insurance Premiums, January 22, 1986
Debt Collections - Waiver - Civilian Employees - Compensation
Overpayments - Failure to Deduct Insurance Premiums
Section 8707(d) of Title 5, United States Code, grants an agency the
authority to waive the collection of unpaid life insurance deductions,
where it fails to withhold the proper amount, if the individual is
without fault and recovery would be against equity and good conscience.
This waiver authority is not subject to the $500 limit on agency
authority in 5 U.S.C. 5584. However, this Office may also consider the
waiver of erroneous underwithholding of insurance premiums under the
broad waiver authority contained in 5 U.S.C. 5584.
Debt Collections - Waiver - Civilian Employees - Compensation
Overpayments - Failure to Deduct Insurance Premiums
Employee received overpayments of pay because agency failed to deduct
full insurance premiums from his pay. Employee is not held at fault for
overpayments where premiums stated on leave and earnings statements did
not appear unreasonable and employee was unaware that premiums should
have been $200 higher per pay period. If the deduction appears
reasonable on it face, we are aware of no reason to expect or require an
employee to audit the amount shown. Overpayments are waived since the
employee could not have been expected to question the correctness of
this pay.
In this decision we hold that Mr. Hollis W. Bowers, an employee of
the Nuclear Regulatory Commission (NRC), may be granted waiver of
erroneous payments made to him as a result of his agency's
underdeduction for Federal Employees Group Life Insurance (FEGLI)
premiums. This decision overrules a denial of his application for
waiver under 5 U.S.C. Section 5584 made by our Claims Group on March 14,
1985.
BACKGROUND
Mr. Bowers was appointed to the position of Assistant Director for
Investigations, Office of the Inspector and Auditor (GS-15), with NRC on
October 18, 1982. He had previously worked for approximately 30 years
with the Federal Government, retiring in 1970 at the GS-14 level.
During Mr. Bowers' previous Federal service he had been covered by
FEGLI. On October 18, 1982, during Mr. Bowers' orientation session for
new NRC employees, he submitted an SF-2817, "Life Insurance Election,"
which indicated his election of standard coverage and additional
coverage at five times the basic coverage. At this time Mr. Bowers was
given a copy of the FEGLI Handbook (SF-2817A, FPM Supplement 870-1)
which explains the insurance coverage available and the applicable
rates. However, Mr. Bowers reports that the employee who conducted the
orientation briefing did not highlight for him the relatively high cost
of FEGLI for someone of Mr. Bowers' age who elects the maximum coverage
available. Mr. Bowers received two Notification of Personnel Action
Forms (SF-50s), one contemporaneous with his FEGLI election, and both
stating that he was covered by the regular insurance and the additional
insurance at five times his pay. Additionally, Mr. Bowers received 26
Earnings and Leave Statements with the correct FEGLI coverage code but
with the incorrect withholding amount immediately prior to the
correction of the amount withheld.
The first pay period for which Mr. Bowers was charged the correct
FEGLI premium amount was pay period 23 of 1983, covering the period of
October 16-30, 1983. On November 8, 1983, Mr. Bowers contacted an
appropriate agency official to question the increase in his FEGLI
payroll withholding for pay period 23 as shown on his Earnings and Leave
Statement. Mr. Bowers was concerned that an error had been made since
he had not changed his FEGLI coverage. Upon review, the agency
discovered that Mr. Bowers had been charged the correct FEGLI amount for
his elected coverage in pay 23, the pay period Mr. Bowers had
questioned, but that he had been undercharged for the prior 26 pay
periods. The agency's investigation determined that the cause of the
error stemmed from a problem in the automated payroll system.
The NRC reports that the automated payroll system problem was
corrected with the installation of a new operating system for the
payroll computer. The agency reports that no inquiry or other action
was initiated by Mr. Bowers to verify the correctness of his FEGLI
withholding until pay period 23. On December 6, 1983, Mr. Bowers was
billed for the overpayment caused by the underdeductions of life
insurance premiums in the amount of $5,200, represented by the amount of
underdeduction per pay period of $200 times the 26 pay periods involved.
The correct biweekly cost of FEGLI for the total coverage elected by
Mr. Bowers was $253.99.
By memorandum dated December 19, 1983, Mr. Bowers requested NRC to
waive the erroneous overpayments of pay made to him as a result of the
underwithholding of FEGLI premiums under the agency's waiver authority
found in 5 U.S.C. Section 8707(d) (1982). The NRC, acting through its
Director, Division of Accounting and Finance, Office of Resource
Management, denied Mr. Bowers' request for waiver by memorandum dated
February 28, 1984. In denying his request for waiver, the Director
pointed out that our Office has held that it is incumbent upon an
employee to verify the correctness of entries on Earnings and Leave
Statements provided to the employee. The Director cited our decision
Willie Baca, B-211932, October 20, 1983, where we sustained the denial
of a waiver where an employee was furnished with Earnings and Leave
Statements showing erroneous deductions resulting from an administrative
error in computing the correct payroll deductions for the employee's
life insurance.
By letter dated September 26, 1984, Mr. Bowers appealed the denial of
his request for waiver by NRC to our Claims Group. Our Claims Group
sustained the action of NRC in denying waiver by letter dated March 14,
1985, essentially agreeing with the rationale for denial set forth by
the NRC.
ANALYSIS AND CONCLUSIONS
Waiver Jurisdiction
Mr. Bowers raises a question concerning the authority under which
both the NRC and our Claims Group considered his request for waiver.
Mr. Bowers has specifically and repeatedly requested that his request
for waiver be considered pursuant to 5 U.S.C. Section 8707(d), which
provides that if "an agency fails to withhold the proper amount of life
insurance deductions from an individual's salary . . ., the collection
of unpaid deductions may be waived by the agency if, in the judgment of
the agency, the individual is without fault and recovery would be
against equity and good conscience." As Mr. Bowers has pointed out,
section 8707(d), by its terms, does not have any waiver limitation
amount such as exists in 5 U.S.C. Section 5584(a), which limits an
agency's waiver authority to amounts not in excess of $500.
Since Mr. Bowers' overpayments specifically resulted from NRC's
failure to withhold the proper amount of life insurance deductions and
exceeded $500, he questions the propriety of the NRC's and our Claims
Group's denial of his waiver request under 5 U.S.C. Section 5584 (1982).
The NRC reports that it applied 5 U.S.C. Section 5584 as a result of
the regulation published by the Office of Personnel Management at 5
C.F.R. Section 870.401(h)(2) (1984), which states that an agency will
make its determination on the waiver of collection in accordance with 5
U.S.C. Section 5584 when specifically considering the collection of
unpaid life insurance premiums.
We have been informally advised by OPM, the agency which proposed the
enactment of 5 U.S.C. Section 8707(d), that it did not intend any change
in the waiver authority, standards, or procedures by its enactment. It
has attempted to clarify this by the promulgation of its rules found at
5 C.F.R. Section 870.401(h). The OPM has advised that its primary
purpose in proposing the enactment of 5 U.S.C. Section 8707 was to make
clear that if an agency waives the collection of unpaid insurance
deductions from an individual's pay, the agency must submit an amount
equal to the sum of the uncollected deductions, and any applicable
agency contributions, to OPM for deposit in the Employees' Life
Insurance Fund.
Our Claims Group did not consider Mr. Bowers' waiver request under 5
U.S.C. Section 8707(d) as he had requested for the reason that section
8707(d) provides no authority for our Office to do so. However, the
broad waiver authority provided our Office under 5 U.S.C. Section 5584
has been consistently interpreted as encompassing the waiver of
erroneous underwithholding of FEGLI premiums. See Sanot M. Lacagnina,
B-203459, December 8, 1981; and Willie Baca, B-211932, supra. We are
not aware of anything in the legislative history of the Federal
Employees Group Life Insurance Act of 1980, Public Law 96-427, 94 Stat.
1833, which added the provisions of 5 U.S.C. Section 8707(d), to suggest
that the Congress had any intent to deprive employees of their existing
right to appeal waiver denials to our Office. We do not believe that 5
U.S.C. Section 8707(d) should be interpreted as implicitly foreclosing
our pre-existing waiver authority under 5 U.S.C. Section 5584. We have
been informally advised by OPM that it is in agreement with this view.
Therefore, our Office retains concurrent jurisdiction under 5 U.S.C.
Section 5584 to consider waiver of FEGLI underwithholdings,
notwithstanding 5 U.S.C. Section 8707(d).
Merits of Waiver
In requesting that our Office reverse the Claims Group's denial of
his waiver request, Mr. Bowers makes the following arguments:
GAO relies on a judgmental observation that a reasonable and
prudent employee of my grade (GS-15) and experience (30 years of
Government service) must be held responsible for his actions . . .
moreover, I'm perplexed as to how GAO establishes what the grade
has to do with being reasonable and prudent.
I did the reasonable and prudent thing upon receipt of my first
pay period statement of earnings and deductions. I examined it.
I saw no reason to question the $53.99 FEGLI deduction and,
moreover, when one considers the Federal contribution is 50% of
that, the premium seems reasonable to me . . . I've learned such a
total premium is comparable with private insurance rates.
I believe in light of all the circumstances in my situation and
the provisions established by the Congress in 5 U.S.C. 8707(d)
that on the basis of equity and good conscience, my appeal should
be sustained.
Waiver of claims for overpayments to Federal employees of pay and
allowances is authorized by 5 U.S.C. Section 5584 (1982). That section
provides that where collection of such a claim would be against equity
and good conscience and not in the best interests of the United States,
it may be waived in whole or part unless there is an indication of
fraud, misrepresentation, fault, or lack of good faith on the part of
the employee. Since there is no indication of fraud, misrepresentation,
or lack of good faith on the part of the employee in this case, waiver
hinges on whether Mr. Bowers is found to be at fault.
Fault, as used in the statute authorizing waiver, is considered to
exist if it is determined that the concerned individual should have
known that an error existed but failed to take action to have it
corrected. See 4 C.F.R. Section 91.5 (1985), and 56 Comp. Gen. 943
(1977). If an employee has records which, if reviewed, would indicate
an overpayment, and the employee fails to review those documents for
accuracy or otherwise fails to take corrective action he is not without
fault and waiver will not be granted. Jack A. Shepherd, B-193831, July
20, 1979. Thus, if an employee is given a Standard Form 50 showing he
has FEGLI coverage but his regular Earnings Statements show that the
necessary insurance premium deductions are not being made, the employee
has notice of an error and is ordinarily considered to be at least
partially at fault if he fails to take corrective action. Rosalie L.
Wong, B-199262, March 10, 1981; Annie E. Strom, B-204680, February 23,
1982.
We do not believe that fault may be imputed to Mr. Bowers in this
case. Although Mr. Bowers was given a copy of the FEGLI handbook which
explains the coverage and the applicable rates, he states, without
dispute, that the orientation briefing did not highlight the relatively
high cost of optional insurance for his age at maximum coverage. When
Mr. Bowers received his first Earnings and Leave Statement he examined
it and found the $53.99 deduction to be reasonable. Considering his age
and his belief (albeit erroneous) that the Government contributed 50% of
the cost, citing 5 U.S.C. Section 8708, he found no reason to question
the deduction. We note that under the FEGLI prior to 1981, when Mr.
Bowers had been previously employed by the Government, the coverages and
costs were less and allocations favored older employees. Under these
circumstances, the determinative question is whether the deduction for
FEGLI shown on Mr. Bowers' Earnings and Leave Statement appeared
reasonable. If the deduction appears reasonable on its face, we are
aware of no reason to expect or require an employee to audit the amount
shown. We have been informally advised by one major insurance company
headquartered in the Washington, D.C., area that comparable insurance
would have factored out to approximately $99 per pay period for someone
of Mr. Bowers' age. We believe that for this and the other above
reasons, it was reasonable for Mr. Bowers to believe the FEGLI deduction
of $53.99 to be reasonable.
Further, the error was entirely the fault of the agency. As noted
above, the agency's investigation determined that the cause of the error
stemmed from a problem in the automated payroll system over which Mr.
Bowers exercised no control. No one picked up the error and it would
have continued to go undetected, except that about 1 year later, on
November 8, 1983, Mr. Bowers questioned the increase in his FEGLI
withholding for the prior pay period. The error was then discovered.
We believe that it is significant that Mr. Bowers did question the
increase in his FEGLI withholding, which represented the correct amount,
as this at least suggests that he never really knew what his FEGLI
coverage cost. We believe that the above facts clearly support a
finding that Mr. Bowers was not at fault in accepting the overpayments.
We find that collection action would be against equity and good
conscience and not in the best interests of the United States.
Accordingly, the amount of $5,200 representing the underdeductions
for FEGLI premiums is hereby waived.
B-219856, 65 Comp. Gen. 213
Matter of: Charles E. Potts, Jan. 21, 1986
Travel Expenses - Overseas Employees - Renewal Agreement Travel -
Requirements
Federal employees who agree to perform consecutive overseas tours of
duty are eligible for tour renewal travel for themselves and their
dependents to the U.S. for a period of leave. An employee's dependents
may properly perform tour renewal travel by accompanying the employee on
a temporary duty assignment in the U.S. and the employee in that
situation may defer his own tour renewal travel for use during leave
taken at a later date. Hence, the wife and son of a Defense Department
employee stationed overseas were properly authorized tour renewal travel
to accompany the employee when he performed a temporary duty assignment
at Fort Meade, Md. notwithstanding that as a general rule Federal
employees have no entitlement to the concurrent travel of their
dependents on temporary duty assignments.
Travel Expenses - Overseas Employees - Renewal Agreement Travel -
Requirements
Federal employees stationed overseas who are eligible for tour
renewal travel to the U.S. for themselves and their dependents may elect
to defer their own tour renewal travel to some time subsequent to the
time of their dependents' travel. An employee who defers personal tour
renewal travel and is later unable to perform that travel has no
obligation to refund the expenses of the tour renewal travel performed
earlier by the dependents. A Defense Department employee who was
apparently precluded by official action from exercising his own
eligibility for deferred tour renewal travel is thus not liable to
refund the expenses of the tour renewal travel performed earlier by his
wife and son.
The question presented in this matter is whether a Federal employee
stationed overseas was properly allowed the travel of his dependents at
public expense when they accompanied him on a temporary duty assignment
to the United States. /1/ In the particular circumstances we conclude
that the dependents' travel was properly authorized as overseas tour
renewal travel, notwithstanding that as a general rule Federal employees
have no entitlement to the concurrent travel of their dependents at
public expense during temporary duty assignments.
Background
In 1983 Mr. Charles E. Potts, a civilian employee of the Department
of Defense, received a written travel authorization for a permanent
change-of-station transfer from Pearl Harbor, Hawaii, to Melbourne,
Australia, with a 30-day temporary duty assignment en route at Fort
Meade, Maryland. The documents authorized the transportation of his
wife and son as his dependents, and indicated that the authorization was
for the purpose of "Travel Between Official Stations" and also "Renewal
Agreement Travel."
In conformity with this travel authorization, Mr. Potts traveled with
his family by commercial airline from Honolulu, Hawaii, to Baltimore,
Maryland, on July 15, 1983. They remained in the Baltimore area while
Mr. Potts performed his 30-day temporary duty assignment at Fort Meade,
and they then traveled on by commercial airline from Baltimore to
Melbourne, Australia, on August 15, 1983. Mr. Potts obtained the
airline tickets for this travel through the use of a Government
Transportation Request issued in Hawaii on the basis of his travel
authorization.
Finance and Accounting officials of the Department of Defense now
question whether Mr. Potts' travel authorization was consistent with the
governing provisions of statute and regulation with respect to the
travel performed by his dependents. The officials note that as a
general rule employees are not entitled to have their dependents
accompany them at public expense on temporary duty assignments. /2/ The
officials indicate, however, that Mr. Potts was also eligible for
overseas tour renewal travel at public expense for himself and his
dependents to and from Fort Meade, Maryland, on the basis of his
agreement to perform consecutive overseas tours of duty. /3/
Nevertheless, they further note that regulations applicable to tour
renewal travel of Department of Defense employees provide that
dependents "cannot perform round trip travel under renewal agreement
authority if the employee concerned does not perform authorized renewal
agreement travel." /4/ They question whether that provision of the
regulations may have operated to preclude Mr. Potts' wife and son from
traveling with him to Fort Meade at public expense, since his own travel
to that place was for the purpose of performing official business on a
temporary duty assignment rather than for the purpose of taking leave
between consecutive overseas tours of duty.
Analysis and Conclusion
Subsection 5728(a) of title 5, United States Code, provides that an
agency shall pay from its appropriations the expenses of round-trip
travel of an employee, and the transportation of his immediate family,
but not household goods, from his posts of duty outside the continental
United States to the place of his actual residence at the time of
transfer to the post of duty, after he has satisfactorily completed an
agreed period of service outside the continental United States, and is
returning to his actual place of residence to take leave before serving
another tour of duty at the same or another post of duty outside the
continental United States under a new written agreement made before
departing from the post of duty. /5/
We have expressed the view that under 5 U.S.C. Section 5728(a) the
payment of the transportation expenses of an employee's dependents from
an overseas post of duty to the actual place of residence in the
continental United States and return may generally not be allowed unless
the employee himself returns to the continental United States for the
purpose of taking leave. /6/ Thus, as noted by the Defense Department
officials, regulations that have been adopted to implement 5 U.S.C.
Section 5728(a) provide that dependents' eligibility for round-trip
overseas tour renewal travel is contingent upon the performance of
renewal agreement travel by the sponsoring employee. /7/
We have also expressed the view, however, that 5 U.S.C. Section
5728(a) is to be given a liberal construction to effectuate the
beneficial congressional purpose for its enactment, and consistent with
that principle we have held that an employee need not perform tour
renewal travel at the same time as his dependents, but may instead elect
to defer his own renewal agreement travel to a later date. /8/
Moreover, we have specifically held that an employee's dependents may
perform authorized tour renewal travel by accompanying the employee on a
temporary duty assignment he is directed to perform in the continental
United States between overseas tours of duty, and that the employee in
that situation may then defer his own tour renewal travel for use in a
subsequent trip by himself to the United States. /9/ In addition, we
have repeatedly and consistently held that an employee who defers his
own tour renewal travel and is later precluded from performing that
travel for reasons beyond his control has no obligation to refund the
expenses of the tour renewal travel performed by his dependents at an
earlier date. /10/
In the present case, therefore, our view is that Mr. Potts' wife and
son were properly authorized tour renewal travel when they accompanied
him to his temporary duty assignment at Fort Meade in July and August
1983, and that he remained eligible to perform his own tour renewal
travel separately for the purpose of taking leave in the United States
at a later date. Although there is no indication that he subsequently
performed such leave travel, the records before us suggest that he was
precluded from doing so because of official actions which were beyond
his control. Hence, we conclude that he is not liable to refund any
portion of the expenses of the travel performed by his wife and son in
1983 from Honolulu, Hawaii, to Fort Meade, Maryland, and thence to
Melbourne, Australia.
The question presented is answered accordingly.
FOOTNOTES
(1) This action is in response to a request for a decision received
from Mr. Kenneth F. Chute, a Finance and Accounting Officer of the
Department of Defense.
(2) See paragraph C7000, Volume 2 of the Joint Travel Regulations;
and Joseph Salm, 58 Comp. Gen. 385 (1979).
(3) The officials report that Fort Meade, Maryland, had been Mr.
Potts' permanent duty station prior to his assignment to Hawaii, and
that Fort Meade was consequently determined to be his "actual place of
residence" in the continental United States for overseas tour renewal
travel purposes.
(4) Paragraph C4156, Volume 2 of the Joint Travel Regulations.
(5) An amendment to 5 U.S.C. Section 5728(a) enacted on September 8,
1982, had the effect of deleting entitlement to tour renewal travel for
employees stationed in Hawaii, but the amending legislation contained a
provision preserving the entitlement for employees who, like Mr. Potts,
were then currently serving a tour of duty in Hawaii. Public Law
97-253, Section 351, September 8, 1982, 96 Stat. 800.
(6) 46 Comp. Gen. 153, 155 (1966); 35 Comp. Gen. 101, 102 (1955).
(7) Paragraph C4156, Volume 2 of the Joint Travel Regulations, cited
above (footnote 4).
(8) See 55 Comp. Gen. 886, 889 (1976); and 46 Comp. Gen., supra, at
155.
(9) Alan B. Carlson, B-186310, February 16, 1977.
(10) See, e.g., James I. Lucas, B-186021, November 9, 1976; and
B-166357, April 17, 1969.
B-221245.2, 65 Comp. Gen. 212
Matter of: International Diamond Products Corp. - Reconsideration,
Jan. 17, 1986
Contracts - Protests - General Accounting Office Procedures -
Reconsideration Requests - Additional Evidence Submitted - Available but
Not Previously Provided to GAO
Dismissal of a protest for failure to include a detailed statement of
the protest grounds is affirmed where the protester furnished its
details for the first time in its reconsideration request filed 1 month
after the original deficient protest was filed.
Contracts - Protest - General Accounting Office Procedures - Timeliness
of Protest - Date Basis of Protest Made Known to Protester
A reconsideration request, filed 1 month after the original protest,
is untimely if viewed as an entirely new protest where its sets forth
the same grounds on which the original protest was based, since it was
not filed in General Accounting Office (GAO) within 10 working days
after the protest grounds were known.
International Diamond Products Corp. (IDP) requests reconsideration
of our dismissal of its protest under Defense Logistics Agency (DLA)
request for proposals (RFP) No. DLA400-85-R-9957. We affirm the
dismissal.
IDP protested to our Office by mailgram received December 6, stating
that an award to any other offeror would be improper and in bad faith
"because it would be based on restrictive bidding and sole source
procurement." The mailgram also stated that a detailed explanation of
the protest bases would follow. No details were received by our Office,
and we considered IDP's mailgram insufficient to satisfy the requirement
of our Bid Protest Regulations that a protest include a detailed
statement of the legal and factual grounds of protest. 4 C.F.R. Section
21.1(c)(4) (1985). We therefore dismissed IDP's protest.
In its January 6 letter (received January 8) requesting
reconsideration, IDP for the first time provides details of its December
6 protest and asks that we reconsider the protest since it concerns the
"serious issue of free and open competition being stifled" in favor of a
sole-source procurement.
IDP does not explain why it did not furnish details with its protest,
and we see no reason why the details would not have been available at
that time. Where a protester, when filing a complaint, has information
necessary to explain the basis for its protest, we will not excuse the
failure to furnish this information. We therefore will not reconsider
our dismissal. See Electro-Methods, Inc. -- Reconsideration,
B-218180.2, Apr. 17, 1985, 85-1 C.P.D. Paragraph 438.
To the extent IDP's reconsideration request could be viewed as a new
protest, it is untimely. Under our Regulations, a protest must be filed
no later than 10 working days after the basis of protest first was, or
should have been, known. 4 C.F.R. Section 21.2(a)(2). Even if we
assume IDP's grounds for protest did not arise until December 6, the
date we received the firm's mailgram, the reconsideration request was
not submitted within 10 working days thereafter and, thus, could not be
considered a timely protest.
Our Office will consider an untimely protest where it involves a
matter of widespread interest or importance to the procurement community
that previously has not been considered. Griffin Galbraith, B-218933,
Sept. 19, 1985, 64 Comp. Gen. 85-2 C.P.D. Paragraph 307. IDP's protest
is based on DLA's alleged failure to enable IDP to gain government
approval of its product, leading to a possible improper sole-source
procurement. Although the resolution of this issue obviously would be
of interest to IDP, we do not believe the procurement community as a
while has a similar interest in the matter. In any event, we have
decided protests concerning the government's failure to approve offered
products, see e.g. S.H.E. Corp., B-205417.2, Sept. 30, 1982, 82-2 C.P.D.
Paragraph 298, and alleged improper sole-source procurements. See e.g.
Bartlett Technologies Corp. B-218786, Aug. 20, 1985, 85-2 C.P.D.
Paragraph 198.
Our decision is affirmed.
B-220049, 65 Comp. Gen. 205
Matter of: Price Waterhouse, Jan. 16, 1986
Contracts - Protests - Procedures - Contracting Agency Requirements
Procuring agency's delay in providing portions of the procurement
record relevant to a protest issue is inconsistent with its obligation
under the Competition in Contracting Act of 1984 to submit a complete
report to the General Accounting Office, including all relevant
documents. The General Accounting Office will not consider the untimely
submission since to do so would delay resolution of the protest.
Contracts - Negotiation - Offers or Proposals - Discussion With all
Offerors Requirement - "Meaningful" Discussions
Procuring agency's failure to alert offerors during discussions to
the fact that their estimated levels of effort and offered prices are
considered unreasonably high does not meet its obligation to conduct
meaningful discussions with all offerors within the competitive range.
Such discussions with only one of the offerors would also be improper.
Contractors - Responsibility - Determination - Review by GAO -
Affirmative Finding Accepted
The General Accounting Office will not review an allegation that an
offeror is not responsible because proposed key personnel may be
committed to work on another contract, since this allegation does not
fall within the exception under which affirmative determinations of
responsibility are reviewed.
Contracts - Negotiation - Offer or Proposals - Prices - Unprofitable
Acceptance of a below-cost offer for a fixed-price contract is not
itself grounds for protest, and the procuring agency, not the General
Accounting Office, is responsible for ensuring that losses from a
below-cost offer are not recovered during contract performance.
General Accounting Office - Recommendations - Contracts - Procurement
Deficiencies - Correction
The Competition in Contracting Act requires the General Accounting
Office to disregard the costs of contract termination and recompetition
in making recommendations where it determines that an award was not in
accord with applicable statutes and regulations after the procuring
agency determines that continued performance is in the government's best
interest although the protest was filed within 10 days of award.
Price Waterhouse protests the award of a contract to Arthur Young &
Company under solicitation No. A-85-9, issued by the Department of the
Treasury. Price Waterhouse contends that because of the substantial
difference in proposed prices, either the two firms did not compete on
an equal basis or Arthur Young submitted a below-cost proposal. The
firm also alleges that Treasury misled it during discussions and
provided Arthur Young with access to information that was not disclosed
to Price Waterhouse.
We sustain the protest in part and dismiss it in part.
Background
In September 1984, Treasury contracted with Price Waterhouse to
establish detailed specifications and a logical design for a
department-wide payroll system. The system was to be based on an Army
payroll system that Price Waterhouse had recently designed, with
additions and deletions necessary to meet requirements of the Treasury.
The Treasury solicitation in question here, issued on April 10, 1985,
sought offers to design, develop, and implement the new payroll system
based upon the work previously performed by Price Waterhouse.
The solicitation provides that in evaluating proposals for the new
system, cost will be given a weight of 50 percent, with a maximum score
of 100 out of 200 possible points. The solicitation contemplates a
fixed-price incentive contract and states that each offeror's proposed
target cost and ceiling price are to be given equal weight in scoring
the cost factor. /1/ The other evaluation factors and their respective
weights and possible points are as follows: plan of accomplishment (19
percent or 38 points), corporate experience and capacity (12 percent or
24 points), qualifications of professional staff (12 percent or 24
points), and qualifications of project manager (7 percent or 14 points).
Treasury received four proposals but found only those of Arthur Young
and Price Waterhouse to be technically acceptable. Both firms'
estimated levels of effort -- how many staff members and hours would be
required to perform the work -- were greatly in excess of the
government's estimates. (Treasury further states that its estimates
were based upon the effort that will be necessary for a contractor less
familiar with the payroll system than either of these two offerors.)
Arthur Young offered a ceiling price of approximately $6.3 million, and
Price Waterhouse offered a ceiling price of approximately $7.4 million.
Treasury conducted a "fact finding" session with each offeror to
discuss assumptions in their proposals and, on August 9, requested them
to submit best and final offers by August 20. In the interim, Treasury
reopened a reading room that it had previously established for potential
offerors. The reading room had been opened initially because of the
volume of applicable standards and procedures, including the
specifications for the Army payroll system and summaries of additions
and deletions to that system prepared by Price Waterhouse. Price
Waterhouse's contract to establish detailed specifications for the
Treasury system had not been completed when offers were first submitted.
Consequently, to the material previously available in the reading room
the agency added detailed analyses of the required modifications to the
Army payroll system that had been submitted by Price Waterhouse through
August 13. (Previously, only one-page summaries of the modifications
had been available, and the number of modifications had been reduced
from 157 to 111 after the reading room had been closed with submission
of initial offers.)
Only Arthur Young was notified of the reopening of the reading room;
Treasury states that since Price Waterhouse had prepared all of the
additional information, the agency did not consider it necessary to
invite that firm.
In its best and final offer, Arthur Young decreased its target cost
and ceiling price by more than 45 percent each, while the protester
increased its price slightly. Arthur Young's final technical score was
slightly lower than that of Price Waterhouse; its cost score was
substantially higher (100 points versus less than 50 points). This
difference in cost scores resulted primarily from a difference in the
offerors' estimated levels of effort. At the contracting officer's
request, the evaluators reviewed the sufficiency of Arthur Young's
revised estimated level of effort for each task. They concluded that
the firm's revised estimates were achievable and that Price Waterhouse
had "grossly overestimated" the necessary levels of effort and,
consequently, had greatly overpriced the work. Treasury announced its
intention to award a contract to Arthur Young on September 3; this
protest followed.
Price Waterhouse's Protest
Price Waterhouse contends that the more than 100 percent difference
between the two offerors' prices, as well as other factors, establish
either that Arthur Young and Price Waterhouse did not compete on a
common basis or that Arthur Young bid well below cost. If the latter is
true, the protester argues that the opportunities for change orders and
follow-on contracts at artifically high prices are so great that
acceptance of the offer would undermine the integrity of the procurement
system.
The protester learned from the administrative report that it was
considered to have "grossly overestimated" much of the level of effort
required, and that Treasury recognized this early in the procurement,
before the fact finding sessions. Price Waterhouse also learned from
the report that Treasury had reopened an augumented reading room but had
informed only Arthur Young. As a result, during a conference at our
Office on October 21, Price Waterhouse presented two additional bases of
protest: (1) that Treasury's failure to indicate during discussions
that the firm had overestimated the level of effort required and its
"instructions" to increase the firm's efforts in some areas clearly
prejudiced Price Waterhouse; and (2) that while the reading room
materials had been prepared by Price Waterhouse, the firm was prejudiced
by not knowing which documents Treasury deemed material.
GAO Analysis
A threshold issue involves Treasury's request that we not consider
Price Waterhouse's protest concerning the scope of discussions because
the agency has not had a full opportunity to respond. As noted above,
the matter was expressly raised by Price Waterhouse at the conference,
when our Office asked agency officials in attendance to provide those
portions of the procurement record concerning the subjects discussed
with both offerors. The agency thus had an opportunity to address the
issue in its postconference comments. On November 13, following an oral
request, the agency was given another opportunity to supplement the
record specifically with respect to the protester's written contentions
about Treasury's discussions with the offerors and the agency's
obligations in that regard. Treasury declined to do so on grounds that
it would be inappropriate to provide any information without a finding
by us that the issues had been raised in a timely manner by the
protester and a written explanation from our Office of the issues being
considered.
On January 15, 87 working days after Price Waterhouse filed its
protest, the agency provided an affidavit regarding subjects discussed
with the offerors and a letter dated August 2 from Arthur Young to
Treasury answering questions asked during the firm's fact finding
session. Treasury does not indicate whether there are other documents
in its possession relevant to the subject matter of discussions. As
required by the Competition in Contracting Act of 1984 (CICA), 31
U.S.C.A. Section 3555(a) (West Supp. 1985), our Bid Protest Regulations
provide that a protest decision may not be delayed by the failure of a
party to meet filing time limits. 4 C.F.R. Section 21.3(g) (1985).
Failure to comply with prescribed time limits may result in resolution
of a protest without consideration of the untimely submission. Id. In
this case, consideration of Treasury's new evidence, including any
response by Price Waterhouse, would clearly delay resolution of the
protest. Consequently, we have not considered the January 15 filing.
Moreover, we believe that Treasury's delay in providing documents in
its possession concerning discussions conducted in this procurement is
inconsistent with its obligation to submit a "complete report (including
all relevant documents)" under CICA, 31 U.S.C.A. Section 3553(b)(2).
Our Bid Protest Regulations provide that we will dismiss protests that
are untimely on their face without requiring an agency report. 4 C.F.R.
Section 21.3(f) (1985). On November 13, our Office advised Treasury
that the issues raised at the conference by Price Waterhouse did not
appear untimely on their face, and, thus, were not suitable for
dismissal at that time. Since the issues were raised less than 10 days
after the protester received the agency report filed in our Office on
October 15, we find that they are timely. See 4 C.F.R. Section
21.2(a)(2). In any event, even if the new issues had been untimely, we
believe that the discussion record was relevant to the original protest
issue -- that the two offerors did not compete on an equal basis -- and
should have been provided in the initial agency report. In our view,
Treasury had a reasonable opportunity to consider and respond in a
timely manner to Price Waterhouse's claim that discussions were
inadequate, and we will consider the protest issue.
The governing CICA provision, 41 U.S.C.A. Section 253b(d)(2) (West
Supp. 1985), requires that written or oral discussions be held with all
responsible sources whose proposals are within the competitive range.
Such discussions must be meaningful, and in order for discussions to be
meaningful, agencies must point out weaknesses, excesses, or
deficiencies in proposals unless doing so would result either in
disclosure of one offeror's approach to another or in technical
leveling. The Advantech Corp., B-207793, Jan. 3, 1983, 83-1 CPD
Paragraph 3; Ford Aerospace & Communications Corp., B-200672, Dec. 19,
1980, 80-2 CPD Paragraph 439. Once discussions are opened with an
offeror -- and a request for best and final offers constitutes
discussions, Decision Sciences Corp., B-196100, May 23, 1980, 80-1 CPD
Paragraph 357 -- the agency must point out all deficiencies in that
offeror's proposal and not merely selected ones. Checchi and Co., 56
Comp. Gen. 473 (1977), 77-1 CPD Paragraph 232.
During discussions, agencies are prohibited from advising an offeror
of its price standing relative to other offerors, Federal Acquisition
Regulation (FAR), 48 C.F.R. Section 15.610(d)(3) (1984), and are not
required to point out that a proposed price is too high if the price is
still below the government estimate. University Research Corp.,
B-196266, Jan. 28, 1981, 81-1 CPD Paragraph 50. On the other hand,
discussions cannot be meaningful if an offeror is not apprised that its
price exceeds what the agency believes to be reasonable. See Washington
School of Psychiatry/The Metropolitan Educational Council for Staff
Development, B-192756, Mar. 14, 1979, 79-1 CPD Paragraph 178.
Here, the only two technically acceptable offerors, both of whom
Treasury believes have a clear, complete understanding of the work,
proposed levels of effort substantially in excess of the agency's
estimates. For some tasks the two firms projected levels of effort
relatively close to those of Treasury, while for others and in total
their estimates greatly exceeded those of the government. Moreover,
Treasury believes that its estimates are accurate, and bases its
conclusion that Price Waterhouse "grossly overestimated" and "grossly
overbid" key portions of the work on those estimates.
The record for our consideration is incomplete, and therefore we
cannot determine whether Treasury gave the protester any indication of
this significant deficiency, which was apparently recognized early in
the procurement. /2/ The only other offeror also initially proposed
levels of effort greatly in excess of the government estimates. In view
of the substantial reduction in total estimated level of effort in
Arthur Young's best and final offer, we cannot dismiss the possibility
that Treasury did discuss this matter with Arthur Young.
In the context of the record before us, we conclude that the agency
either did not discuss estimated levels of effort with the offerors or
that it discussed the issue only with Arthur Young. We believe that
neither approach would be proper. Failure to apprise the only two
offerors in the competitive range that they proposed unreasonably high
levels of effort would violate the requirement for meaningful
discussions and, in this procurement for a fixed-price contract, would
pose a risk that the government would procure for an unreasonably high
price. Discussing the issue only with Arthur Young would not cure
Treasury's failure to conduct meaningful discussions with all offerors
in the competitive range, but would raise an additional question, i.e.,
whether the offerors were treated fairly and equally. Accordingly, we
sustain Price Waterhouse's protest on this basis.
Price Waterhouse's other contentions regarding the propriety of
Treasury's actions are largely not for our consideration. The firm
argues that in finding Arthur Young to be responsible, Treasury may not
have considered the fact that Arthur Young's personnel may have been
proposed to work on another government contract. Our Office does not
review protests against affirmative determinations of responsibility
absent specific circumstances, and this allegation does not fall within
the exceptions to the rule. See 4 C.F.R. 21.3(f)(5).
Price Waterhouse also claims that a below-cost offer should not be
accepted by Treasury. A fixed-price incentive contract is subject only
to limited adjustment based upon the contractor's cost experience during
performance, and it places no obligation on the agency to pay more than
the agreed ceiling price. See ABA Electromechanical Systems, Inc.,
B-188735, Nov. 28, 1977, 77-2 CPD Paragraph 411. There are a number of
legitimate reasons why a firm might submit a below-cost offer, 50 Comp.
Gen. 788 (1971), and such an offer does not in itself, provide grounds
for rejection.
The protester argues that the incentive and opportunity for change
orders and follow-on contracts at artifically high prices are so great
in this procurement that acceptance of a below-cost offer would
undermine the integrity of the procurement system. Contracting officers
are required to take appropriate action to ensure that buying-in losses
are not recovered through change order or follow-up contract pricing.
FAR, 48 C.F.R. Section 3.501-2(b). The nature and extent of such
actions are largely matters of contract administration, and not within
the scope of our bid protest function. See Columbia Loose-Leaf Corp.,
B-184645, Sept. 12, 1975, 75-2 CPD Paragraph 147.
Finally, Price Waterhouse has not suggested specifically how it was
prejudiced by not knowing what documents were placed in the reading room
for Arthur Young's review before submission of best and final offers.
Treasury has provided the protester with a list of those documents, and
we expect that access to any additional documents will be provided to
both firms.
On September 20, Treasury found that it was in the best interest of
the government to proceed with Arthur Young's performance of the
contract based on its projections of savings that will result from the
new payroll system. Under CICA, 31 U.S.C.A. 3554(b)(2), when such a
finding has been made and our Office determines that an award was not in
accord with applicable statutes or regulations, we are required to make
recommendations without regard to any cost or disruption from
terminating, recompeting, or reawarding the contract, although in this
case performance has been underway for a relatively short period.
We therefore are recommending that the Treasury reinstate the request
for proposals, conduct additional discussions with both offerors, and,
if appropriate, terminate the current contract for the convenience of
the government and reaward to Price Waterhouse.
We sustain the protest on grounds of failure to conduct meaningful
negotiations and dismiss the remainder of the protester's contentions.
FOOTNOTES
(1) A fixed-price incentive contract provides for a variable profit
for the contractor if its costs fall above or below its target cost,
based upon a sharing formula. This potential increase or decrease in
profit is intended to provide an incentive for effective contract
management. The final price is limited by an agreed price ceiling.
Federal Acquisition Regulation (FAR), 48 C.F.R. Section 16.403 (1984).
(2) Copies of Treasury's request for Price Waterhouse's best and
final offer, with attached summaries of the four items discussed during
the fact finding session with the firm have been provided by the
protester. From these it appears that the items discussed generally
involve areas in which Treasury believed that Price Waterhouse had
underestimated the scope of the project. The protester also submitted
affidavits by those attending the Price Waterhouse/Treasury fact finding
session on the protester's behalf, stating that Treasury never stated or
implied that Price Waterhouse had overestimated necessary levels of
effort or submitted a price proposal that the agency considered too
high. As noted above, the agency declined to provide documents or other
accounts of the nature of the fact finding sessions or other discussions
with offerors until January 15. We have not considered Treasury's
untimely submission in this decision.
B-219619.2, 65 Comp. Gen. 202
Matter of: OTKM Construction Incorporated - Request for
Reconsideration, Jan. 16, 1986
Bids - Mistakes - Correction - Intended Bid Price - Established in Bid
Discrepancy in bid between stated total of lump sum and extended
price items and the correct mathematical total of such items may be
corrected so as to displace another, otherwise low offer where both the
intended bid price and the nature of the mistake are apparent on the
face of the bid. Contracting officer did not lack a reasonable basis
for determining that -- in view of the consistency between the correct
mathematical total of the items, the intermediate subtotals of the items
and the individual item prices -- the bidder intended its bid price to
be the correct mathematical total rather than the stated total of the
items.
Bids - Mistakes - Verification - Propriety
Protest that it was improper for the contracting officer to receive
bidder's advice concerning possible mistake in bid prior to determining
the intended bid or for the contracting officer to advise protester of
the apparent mistake prior to requesting verification from the bidder is
denied. Since the contracting officer suspected a mistake in bid, he
was required to request from the bidder a verification of the bid,
calling attention to the suspected mistake. Even if he first informed
the protester of the apparent mistake, it has not been shown how this
prejudiced the protester.
OTKM Construction Incorporated (OTKM) requests reconsideration of our
decision in OTKM Construction Inc., B-219619, Sept. 5, 1985, 64 Comp.
Gen. . . . , 85-2 C.P.D. Paragraph 273, wherein we denied its protest
against the determination by the Forest Service, U.S. Department of
Agriculture, to permit correction of the bid submitted by Marvin L.
Cole, General Contractor, Inc. (Cole), in response to invitation for
bids No. R6-85-27C for the construction of the Mount St. Helens Visitor
Center in the Gifford Pinchot National Forest, Washington. We affirm
our prior decision.
The solicitation schedule included 33 items divided among five
groups. For some items bidders were to enter unit and extended prices
based upon the estimated quantity involved; other items were bid upon a
lump sum or "each" basis. At the foot of each of the five groups of
items a blank was provided for the entry of a subtotal and at the bottom
of the last page of the four-page schedule was another blank for "TOTAL
ALL ITEMS -- BUILDING, SITE, SEWERAGE AND ROAD."
Of the six bids received, OTKM submitted the apparent low bid of
$2,924,409.90, while Cole submitted the apparent second low bid of
$2,953,350.
Upon examining Cole's bid, the Forest Service noted that the unit
prices were properly extended, except for the rounding off of some item
prices and a $1 error in one extension. The subtotals of all five
groups also were the correct mathematical totals of the item prices.
The only discrepancy was between the amount Cole entered for "TOTAL ALL
ITEMS" -- $2,953,350 -- and the correct mathematical total of the
subtotals for the five groups -- $2,890,987 -- a difference of $62,363.
In view of the consistency of the rest of the bid, contracting officials
determined that Cole had made an apparent clerical error in calculating
the stated total bid price for all items. Accordingly, they determined
that Cole's bid was subject to correction to reflect an intended bid
price of $2,890,985.16, which is the correct mathematical total of all
the items when the extended prices are not rounded off. When contacted
to verify its bid price, Cole confirmed that the mistake occurred in
adding the item prices rather than in calculating the item prices
themselves.
OTKM, however, then protested to the Forest Service against
permitting correction of Cole's bid and making award to Cole. When the
agency denied that protest, OTKM filed a protest with our Office.
As we indicated in our prior decision, where the bid contains a price
discrepancy, and the bid would be low on the basis of one price but not
the other, correction is not allowed unless the asserted correct bid is
the only reasonable interpretation ascertainable from the bid itself or
on the basis of logic and experience. The bid cannot be corrected if
the discrepancy cannot be resolved without resort to evidence that is
extraneous to the bid and has been under the control of the bidder. See
Frontier Contracting Co., Inc., B-214260.2, July 11, 1984, 84-2 C.P.D.
Paragraph 40; Harvey A. Nichols Co., B-214449, June 5, 1984, 84-1
C.P.D. Paragraph 597.
We noted that not only were the unit prices in Cole's bid generally
properly extended, but, most significantly, the subtotal for each group
of items was the correct mathematical total of the item prices in that
group. Given this internal consistency in Cole's bid, we were unwilling
to question the Forest Service's determination that the only reasonable
interpretation of the discrepancy was that Cole had intended its bid
price to be the correct mathematical total of the item prices rather
than the stated total entered at the bottom of the last page of the
schedule. Moreover, we also found that the nature of all but $5 of the
discrepancy -- a sum which we considered to be de minimis -- could be
determined without benefit of advice from the bidder.
In its request for reconsideration, OTKM argues that our prior
decision is inconsistent with the decisions of the court in McCarty
Corp. v. United States, 499 F.2d 633 (Ct. C1. 1974, and in Armstrong &
Armstrong, Inc. v. United States, 356 F. Supp. 515 (E.D. Wash. 1973),
aff'd 514 F.2d 402 (9th Cir. 1975). We disagree, since we consider the
facts in these cases to be distinguishable from the circumstances here.
In both McCarty and Armstrong there existed a discrepancy between the
stated total of the item prices and the correct, mathematical total of
the items. In neither case, however, was there any internal consistency
or other indication in the bid suggesting that either the stated total
or the correct mathematical total of the item prices was more likely to
be the intended bid price. There was no indication in McCarty that the
item prices were other than lump sum prices, while in Armstrong the
schedule included lump sum items as well as items whose price was based
upon stated unit and extended prices, Armstrong, 356 F. Supp. 514, 516.
Since, therefore, it was unclear whether the mistake was in one or more
of the individual item prices or in the stated total of the item prices,
the intended bid price could not be ascertained from the face of the bid
and the court held that the agency had acted improperly in permitting
correction so as to displace the otherwise low bidder. McCarty, 499 F.
Supp. 633,638; Armstrong, 514 F.2d 402, 403.
By contrast, here the items were divided into five groups and the
subtotal for each group of items in Cole's bid was the correct,
mathematical total of the item prices in that group. Given this
consistency between the indivdual item prices and the subtotals for each
group, we do not believe that the Forest Service lacked a reasonable
basis for concluding that the only reasonable interpretation of the
discrepancy was that the mistake was in the stated total of the item
prices and that Cole had intended its bid price to be the correct
mathematical total of the item prices.
OTKM also argues that in our prior decision we ignored several
irregularities in Cole's verification of its intended bid prices. OTKM
first claims that the contracting officer had received the advice of
Cole prior to making a determination as to the bid intended and then
claims that the contracting officer advised OTKM of the apparent mistake
in Cole's bid and of the bid price apparently intended prior to
requesting verification from Cole. In addition, OTKM points out that
Cole, in its July 23, 1985 written verification of its intended bid,
listed its intended bid price as totaling $2,890,897, rather than
$2,890,985.16, the correct, mathematical total of all items when the
extended prices are not rounded off.
The fact that the contracting officer may have contacted Cole to
request verification of its intended bid price does not establish that
Cole's input was necessary for determining the intended bid. See Harvey
A. Nichols Co., B-214449, June 5, 1984, 84-1 C.P.D. Paragraph 597 at 4.
Rather, the Federal Acquisition Regulation (FAR), 48 C.F.R. pts. 1-53
(1984), requires that
where the contracting officer has reason to believe that a
mistake may have been made, the contracting officer shall require
from the bidder a verification of the bid, calling attention to
the suspected mistake. (Italic supplied.)
48 C.F.R. Section 14.406-1; see 48 C.F.R. Section
14.406-3(g)(1)(iv). We note that the failure of a contracting officer
to draw the bidder's attention to the mistake suspected and the basis
for the suspicion may result in an inadequate verification request and,
therefore, in an award which does not result in a binding contract. See
Ziegler Steel Service Corp., B-195719, Jan. 14, 1980, 80-1 C.P.D.
Paragraph 40; Y.T. Huang and Associates Inc., B-192169, Dec. 22, 1978,
78-2 C.P.D. Paragraph 430.
If, on the other hand, the contracting officer first informed, OTKM
of the mistake which was apparent on the face of Cole's bid prior to
requesting verification from Cole, then we fail to see how this action,
however unusual, prejudiced OTKM.
We also do not see how the minor mistake in Cole's written
verification of its intended bid price prevents correction here. Since
Cole apparently had previously verified that it had intended a bid price
of $2,890,987, the total of all the items after Cole had rounded off the
extended prices, and since the mistaken figure of $2,890,897 was entered
as the total of a column of figures -- representing the sums of the item
prices on each page of the schedule -- which in fact totaled $2,890,987,
we consider Cole merely to have made an insignificant transposition
error in entering its intended bid price in the written verification.
OTKM's remaining arguments in its request for reconsideration are
mere restatements of its previous contentions that under our caselaw
Cole should not have been permitted to correct its bid and that Cole's
bid should have been rejected as nonresponsive. We remain unconvinced
by these arguments.
OTKM has failed to demonstrate any error of law or fact warranting
reversal or modification of our prior decision. See Ross Bicycles, Inc.
-- Request for Reconsideration, B-219485.2, July 31, 1985, 85-2 C.P.D.
Paragraph 110. Accordingly, our prior decision is affirmed.
B-220005.2, 65 Comp. Gen. 200
Matter of: Tri-Count Corrugated, Inc., Jan. 14, 1986
Contracts - Protests - General Accounting Office Procedures -
Timeliness of Protest - Adverse Agency Action Effect
Subsequent protest to General Accounting Office (GAO) which was not
filed within 10 working days of actual knowledge of initial adverse
agency action is dismissed as untimely. Earlier receipt by GAO of
information copy of letter which was addressed to the contracting
officer and did not include a clear indication of a desire for a
decision by GAO did not constitute a protest to GAO.
Tri-County Corrugated, Inc. (Tri-County), protests any award to
American Refuse Services, Inc. (American), or World Refuse Service, Inc.
(World), under invitation for bids No. N62467-85-B-5903, issued by the
Department of the Navy for solid waste collection and disposal services
at the Naval Training Center Complex in Orlando, Florida. We dismiss
the protest as untimely.
By letter addressed to the contracting officer and dated August 21,
1985, Tri-County protested that American and World had failed to arrive
at their bid prices independently, thus violating the solicitation's
certificate of independent price determination. In particular,
Tri-County alleged that the president of American was the vice-president
of World and pointed out that the bids submitted by the two firms were
precisely $40,000 apart.
In letters addressed to our Office and dated August 22 and August 23,
Tri-County enclosed the August 21 letter to the contracting officer and
indicated that "we hereby officially file with your office this
protest."
Subsequently, on August 30, we dismissed the protest to our Office,
holding that:
(I)f Tri-County means to suggest that the two firms acted
jointly in preparing their proposals, then we note that collusive
bidding is a matter for the determination of the contracting
officer who, if he perceives evidence of collusion, is expected to
report the situation to the Attorney General. Federal Acquisition
Regulation, Sections 3.103 and 3.303, 48 C.F.R. Sections 3.103 and
3.303 (1984). Further, whether a bidder in line for award may
have engaged in collusive bidding is to be considered in the
contracting officer's determination of responsibility. Our Office
will not consider a challenge to an affirmative determination of
responsibility where, as here, there has been no showing of
possible fraud or bad faith. See DelRocco & Sons, Inc., B-218314,
Mar. 22, 1985, 85-1 C.P.D. Paragraph 339.
Tri-County Corrugated, Inc., B-220005, Aug. 30, 1985, 85-2 C.P.D.
Paragraph 257.
On November 15, we received from Tri-County an information copy of a
letter dated November 8 and addressed to the contracting officer. This
letter informed the contracting officer that Tri-County had received a
notice that the contracting officer had denied the protest to the agency
and advised the contracting officer that Tri-County "intends to
administratively appeal the denial of its bid protest." Since we did not
consider this letter to constitute a protest to our Office, we took no
action.
On November 27, we received a letter from Tri-County, addressed to
our Office, which indicated that "a memorandum in support of the bid
protest filed November 8, 1985, with your office" was enclosed. This
letter included a copy of Tri-County's November 8 letter to the
contracting officer and a memorandum concerning the "APPEAL FROM THE
DECISION OF THE CONTRACTING OFFICER" which was "BEFORE THE COMPTROLLER
GENERAL OF THE UNITED STATES."
Tri-County apparently believes that it filed a protest with our
Office concerning the contracting officer's denial of its agency-level
protest when it sent us a copy of the November 8 letter addressed to the
contracting officer. We disagree. Since the November 8 letter was not
addressed to our Office and did not include a clear indication that
Tri-County desired a decision by our Office, that letter did not
constitute a protest to this Office. 4 C.F.R. Section 21.1(c) (1985);
see also Canberra Industries, Inc., B-213812, Mar. 15, 1984, 84-1 C.P.D.
Paragraph 310; cf. Container Products Corporation, B-218556, June 26,
1985, 64 Comp. Gen. 641, 85-1 C.P.D. Paragraph 727. In addition, we
note that Tri-County knew at least as early as November 8 of the Navy's
denial of its agency-level protest. It was not until November 27 that
we received from Tri-County correspondence indicating its belief that
the matter was before us for decision. Even if we construe this
correspondence as a "protest," since it was not filed with our Office
within 10 working days after receipt of actual knowledge of the initial
adverse agency action, it is untimely. 4 C.F.R. Section 21.2(a)(3).
In any event, as indicated previously, on August 30, 1985, we
dismissed the identical protest to our Office and no timely appeal was
perfected pursuant to section 21.12 of our Bid Protest Regulations, 4
C.F.R. Section 21.12.
The protest is dismissed.
B-220521, 65 Comp. Gen. 185
Matter of: Sperry Corporation, Jan. 13, 1986
Contracts - Negotiation - Awards - Initial Proposal Basis - Propriety
Although an award properly may be made on the basis of initial
proposals without discussions in certain circumstances, under the
Competition in Contracting Act the award must result in the lowest
overall cost to the government and, in fact, must have been made in the
absence of any discussions. Thus, where the agency awards a contract to
a higher-priced offeror and also holds price discussions, the award is
not made on an initial proposal basis consistent with the statutory and
regulatory requirements.
Contracts - Negotiation - Offers or Proposals - Discussion With All
Offerors Requirement - "Meaningful" Discussions
Since, as a general rule, contracting agencies must hold discussions
with all responsible offerors for a negotiated procurement whose
proposals are within the competitive range, an agency acts improperly by
not conducting technical discussions and by requesting best and final
offers expressly limited to revisions in price proposals only where
overall technical considerations were assigned much greater weight than
price in the evaluation scheme and the deficiencies noted in the initial
technical proposals were suitable for correction through discussion.
Sperry Corporation protests the award of a contract to AAI
Corporation under request for proposals (RFP) No. F41608-85-R-4352,
issued by the Department of the Air Force. The procurement is for the
acquisition of standardized automatic test equipment for testing the
radar, avionics, and electro-optical systems for the B-52 bomber.
Sperry essentially complains that the award was improper due to the Air
Force's failure to conduct technical discussions during the source
selection process. We sustain the protest.
Background
The RFP contemplated the award of a firm-fixed-price contract with
options and provided that the award would be made to the offeror
obtaining the highest total weighted score as the result of the price
and technical evaluations. The evaluation criteria to be utlizied in
the source selection process were listed in the RFP as follows, in
descending order of importance: (1) technical approach; (2) price;
(3) probability/manufacturing capability; (4) life cycle cost
management; (5) logistics supportability; and (6) management.
(Although not announced in the RFP, the Air Force assigned respective
weights of 30, 20, 19, 16, 10, and 5 percent to these criteria.)
Nine proposals were submitted in response to the RFP, and Sperry's
initial technical proposal received the fifth highest technical point
score. AAI's proposal received the second highest technical point
score. Sperry's initial proposed price was the lowest and was
significantly lower than AAI'S in comparison.
Subsequent to this initial evaluation, the Air Force determined that
the funds available were insufficient to award the contract as
originally contemplated. Accordingly, the Air Force decided to
redesignate certain items in the RFP as option items instead of "initial
buy" items. An amendment was issued to this effect, and discussions
were then held to give the offerors the opportunity to restructure their
price proposals in order to effect these changes. Best and final offers
were requested specifically limited to revisions in the price proposals;
the Air Force advised all offerors that the technical proposals had
been evaluated and rated as originally submitted, and that it did not
plan to hold any technical discussions.
Upon reevaluation, Sperry's best and final price remained low, and
was lower than AAI's by some 17 percent. Accordingly, Sperry received
the maximum possible weighted score for price, but since price was only
weighted 20 percent, this advantage did not offset the firm's relatively
low combined weighted technical score (technical approach, logistics
supportability, etc.). In terms of total weighted score, Sperry was
fourth highest among the offerors. Although AAI's best and final price
was higher than Sperry's, it was not the highest, and, therefore, the
firm was able to obtain the highest total weighted score:
(TABLE OMITTED)
Accordingly, the Air Force awarded the contract to AAI pursuant to
the RFP's established evaluation and source selection scheme which
provided that the award would be made to the offeror with the highest
weighted score.
Sperry protests the award on the principal ground that the agency's
failure to conduct technical, as well as price, discussions was a clear
violation of the Federal Acquisition Regulation (FAR), which provides,
with limited exceptions, that the contracting agency shall conduct
written or oral discussions with all responsible offerors for a
negotiated procurement who submit proposals within the competitive
range. FAR, 48 C.F.R. Section 15.610(b) (1984). Sperry argues that
since its proposal was determined to be technically acceptable by the
Air Force's evaluators and, hence, within the competitive range, /1/ the
agency's failure to afford the firm the opportunity to submit a revised
technical proposal was inherently prejudicial with regard to the firm's
competitive standing among the offerors. We believe the protest has
merit.
Analysis
At the outset, we note that the Air Force argues that the award is
not subject to challenge because it was consistent with the RFP's
established evaluation and source selection scheme. In this regard, it
is well-settled that where, as here, an RFP contains a precise numerical
formula including cost/price and states that award will be made to the
highest point scored offeror, then the award must be made to the offeror
obtaining the highest total score as the result of the cost/price and
technical evaluations unless the source selection authority determines
that the difference among technical scores does not, in actuality,
represent any significant difference in technical merit. Harrison
Systems Ltd., 63 Comp. Gen. 379 (1984), 84-1 CPD Paragraph 572. Since
the record in this case establishes that the Air Force determined that
the five top-scoring technical proposals were not in fact essentially
equal, the Air Force's argument that the award was unobjectionable is
valid to this limited extent.
However, the real issue involved in this matter is not whether the
source selection decision was consistent with the scheme set forth in
the RFP, but whether the Air Force acted properly in using only the
initial technical scores in formulating the overall competitive ranking
among the offerors.
The Air Force asserts that it was proper not to conduct technical
discussions where its evaluators determined that the government could
accept any of the five top-scoring initial technical proposals without
the need for such discussions, since all of the proposals, although not
essentially equal, were technically acceptable. As the underlying basis
for this assertion, the Air Force relies upon the FAR, 48 C.F.R. Section
52.215-16, as incorporated into the RFP, which provides at paragraph (c)
that the government may award a contract on the basis of initial offers
received, without discussions. We believe that the Air Force's reliance
is misplaced.
FAR, 48 C.F.R. Section 52.215-16(c), reflects the major exception to
the general requirements that an agency must conduct written or oral
discussions with all responsible offerors whose proposals are within the
competitive range. In this regard, FAR Section 15.610(a)(3) (Federal
Acquisition Circular 84-5, Apr. 1, 1985) provides that discussions are
not required when it can be clearly demonstrated from the existence of
full and open competition or accurate prior cost experience that
acceptance of the most favorable initial proposal without discussions
would result in the lowest overall cost to the government at a fair and
reasonable price, provided that the solicitation advised offerors of
this possibility and that no discussions are in fact held. /2/
In the present matter, we believe that this exception allowing for
award on the basis of initial proposals is inapplicable and in any event
would have been improper since the award to AAI has not resulted in the
lowest overall cost to the government. In fact, the award to AAI was
not made on the basis of initial proposals without discussions since the
agency held price discussions and requested best and final offers to
allow for price revisions. See Decision Sciences Corp., B-196100, May
23, 1980, 80-1 CPD Paragraph 357. The exception allowing for award on
an initial proposal basis is always conditioned by the complete absence
of any written or oral discussions with any offeror. FAR Section
15.610(a)(3)(ii) (FAC 84-5); see also Technical Services Corp., 64
Comp. Gen. 245 (1985), 85-1 CPD Paragraph 152.
Accordingly, we believe the only matter for resolution is whether the
Air Force properly limited its request for best and final offers to
revisions in the price proposals only without also affording the
offerors the opportunity to submit revised technical proposals as well.
Generally, this Office considers that discussions have taken place if an
offeror is given the opportunity to revise its initial proposal, either
in terms of price or technical approach. The Aerial Image Corp.,
Comcorps, B-219174, Sept. 23, 1985, 85-2 CPD Paragraph 319, and we have
held in this regard that an agency's decision not to engage in technical
discussions is unobjectionable where a proposal contains no technical
uncertainties. Weinschel Engineering Co., Inc., B-217202, May 21, 1985,
64 Comp. Gen. , 85-1 CPD Paragraph 574; Information Management, Inc.,
B-212358, Jan. 17, 1984, 84-1 CPD Paragraph 76. Therefore, the Air
Force's decision to request best and final offers on the basis of price
revisions alone would not be subject to question if in fact the initial
technical proposals contained no uncertainties or deficiencies. We
believe this is not the case.
The essential purpose of discussions is to furnish offerors with
information concerning deficiencies in their proposals and to give them
an opportunity for revision. Technical Services Corp., B-216408.2, June
5, 1985, 85-1 CPD Paragraph 640. Although agencies are not obligated to
conduct all-encompassing discussions, that is, to discuss all inferior
or inadequate aspects of a proposal, agencies still generally must lead
offerors into the areas of their proposals which require amplification.
Id.; Dynalectron Corp. -- Pac Ord, Inc., B-217472, Mar. 18, 1985, 85-1
CPD Paragraph 321. This is the essence of the long-standing requirement
that meaningful discussions be held. See Raytheon Company, 54 Comp.
Gen. 169 (1974), 74-2 CPD Paragraph 137. One purpose of meaningful
discussions is to advise offerors within the competitive range of
informational deficiencies in their proposals so that they can be given
an opportunity to satisfy the government's requirements. FAR, 48 C.F.R.
Section 15.610(b).
In this regard, our examination of the source selection documents
shows that both the AAI and Sperry initial technical proposals (the only
proposals that have been furnished as part of the agency's
administrative report), although determined to be technically
acceptable, nonetheless contained certain informational deficiencies or
omissions which should have been resolved through technical discussions,
since the discussions would not have resulted in technical leveling or
technical transfusion.
We note that AAI's proposal, which in fact was selected for the
award, was evaluated as deficient in several areas for either not
containing the requested information or failing to discuss fully all
elements. Accordingly, AAI's proposal received few or no technical
evaluation points in these areas out of the total number of points
possible. The same holds true with regard to the evaluation of Sperry's
proposal, which was perceived to have omissions or deficiencies in
numerous areas. Most strikingly, Sperry received no points in two
specific subcriteria areas out of a respective 10 and 20 possible points
because the firm had not provided adequate information in its proposal
and had failed to state its intent to comply with a requirement.
Consequently, although it is impossible to ascertain what the
competitive ranking of offerors would have been if the firms had been
given the opportunity to submit revised technical, as well as price,
proposals, we conclude that the omissions and deficiencies noted by the
evaluators /3/ were, in large part, suitable for correction, thus
mandating that technical discussions be held. See Decision Sciences
Corp., B-196100, supra.
With regard to Sperry's initial technical proposal, we cannot find
that the proposal was deficient to the extent that, even if discussions
had been held to allow for the correction of individual deficiencies,
the firm had no chance of being selected for the award. See Marvin
Engineering Co., Inc., B-214889, July 3, 1984, 84-2 CPD Paragraph 15.
Although Sperry ranked fifth in terms of initial technical proposals,
there was only a difference of 7.49 weighted technical points between
its proposal and AAI's and its best and final price was substantially
lower. Hence, considering the RFP'S stated basis for award, we believe
that Sperry conceivably might have been able to obtain the highest total
weighted score (given the 80 percent weight assigned to overall
technical factors) if the firm had been afforded the opportunity to
submit a revised technical proposal.
Although we sustain the protest, we note that the Air Force has
advised this Office that a preaward survey to establish Sperry's
responsibility as a prospective contractor has resulted in a
recommendation that no award be made to the firm because of certain
concerns regarding the adequacy of the firm's software quality assurance
plan.
Nonetheless, by separate letter of today, we are recommending to the
Secretary of the Air Force that negotiations be reopened with all
competitive range offerors to allow for the submission of new best and
final offers encompasing both technical and price revisions. If AAI is
not in line for award as a result of these negotiations, we further
recommend the present contract with AAI be terminated for the
convenience of the government.
The protest is sustained.
FOOTNOTES
(1) Generally, offers that are technically unacceptable as submitted
and would require major revisions to become acceptable are not for
inclusion in the competitive range. Ameriko Maintenance Co., Inc.,
B-216406, Mar. 1, 1985, 85-1 CPD Paragraph 255.
(2) The regulatory provision that award on the basis of initial
proposals result in the lowest overall cost to the government reflects
an express statutory requirement of the Competition in Contracting Act
of 1984 (CICA), Pub. L. No. 98-369, 98 Stat. 1175. See 10 U.S.C.A.
Section 2305(b)(4)(A)(ii) (West Supp. 1985), as added by section 2723(b)
of the CICA, which specifically provides that an agency may award a
contract without discussions "when it can be clearly demonstrated from
the existence of full and open competition or accurate prior cost
experience with the product or service that acceptance of an initial
proposal without discussions would result in the lowest overall cost to
the United States." The previous statutory language did not require that
the award result in the lowest overall cost to the government. See 10
U.S.C. Section 2304(g) (1982); Shapell Government Housing, Inc., 55
Comp. Gen. 839 (1976), 76-1 CPD Paragraph 161; Frank E. Basil, Inc.;
Jet Services, Inc., B-208133, Jan. 25, 1983, 83-1 CPD Paragraph 91.
(3) We do not expressly identify the omissions and noted deficiencies
in the proposals because of our following recommendation that
discussions be reopened. Moreover, such identification would be
inconsistent with our in camera review of the source selection documents
as requested by the Air Force.
B-220078, 65 Comp. Gen. 191
Matter of: Engine & Generator Rebuilders, Jan. 13, 1986:
Contracts - Protests - General Accounting Office Procedures -
Timeliness of Protest - Solicitation Improprieties - Apparent Prior to
Bid Opening/Closing Date for Proposals
Where protest is against alleged impropriety in solicitation and was
filed prior to closing date for receipt of initial proposals, protest is
timely and for consideration.
Contracts - Negotiation - Requests for Proposals - Specifications -
Minimum Needs - Overstated
Contracting agency's burden of providing rational support for
restriction that engine rebuilding services be provided by the
manufacturer or its authorized affiliates has not been met where the
agency has not shown that the capabilities to provide the services are
limited to those sources. An agency must use advance planning and
market research to prepare specifications that achieve full and open
competition and include restrictions only to the extent necessary to
meet its needs.
Contracts - Protests - Allegations - Unsubstantiated
Protest that restriction for rebuilding truck engines to engine's
manufacturer and its authorized affiliates unduly restricts competition
lacks merit where the protester was extended an opportunity to submit
and explanation of its capabilities at the planning stages of the
procurement, but declined to do so.
Contracts - Protests - Interested Party Requirement - Protester Not in
Line for Award
Where the protester is ineligible for award under a solicitation for
engine rebuilding services, General Accounting Office (GAO) need not
consider protest of the solicitation's requirement that the contractor
use a specific brank of parts.
Engine & Generator Rebuilders (EGR) protests any award under the Army
Tank-Automotive Command's request for proposals (RFP) No.
DAAE07-85-R-J453 for the rebuilding/reconditioning of certain Cummins
Engine Company (Cummins) diesel engines in 5 ton trucks that are
essential to the Army's mobility. The RFP limits competition to
Cummins, its authorized dealers, distributors and subsidiaries and
required the use of Cummins' parts. EGR protests that these limitations
unduly restrict competition and preclude EGR from consideration for the
contract.
We deny the protest.
As a preliminary matter, the contracting agency believes that the EGR
protest should be dismissed as untimely because our Bid Protest
Regulations require protests to be filed within 10 working days after
the basis is known or should have been known, whichever is earlier. The
agency states that before the RFP was issued on August 1, 1985, the
contracting officer discussed restricting the procurement to Cummins and
its authorized affiliates with the protester, and also had a synopsis of
the intended procurement, including the restrictions, published in the
Commerce Business Daily (CBD). EGR did not file its protest with our
Office until August 30.
The cited provision of our Bid Protest Regulations applies only in
cases other than those covered by section 21.2(a)(1), which states that
protests based upon alleged solicitation improprieties apparent prior to
the closing date for the receipt of initial proposals must be filed
prior to the closing date for the receipt of initial proposals. The EGR
protest is based upon such as impropriety and was filed prior to the
closing date, October 31, 1985. The protest therefore is timely.
When a protester challenges specifications as being unduly
restrictive, the contracting agency must make a prima facie showing that
the restriction is needed 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 CPD Paragraph 342. We will not upset an agency's decision as to
its needs and the best method of accommodating them absent a clear
showing that the decision was arbitrary or unreasonable, since officials
of the contracting agency are most familiar with the conditions under
which supplies or services will be used. ASC Pacific Inc., B-217188,
May 3, 1985, 85-1 CPD Paragraph 497.
The Army basically asserts that the restriction to Cummins and its
authorized affiliates is necessary to assure quality and reliability
since the Army lacks detailed rebuilding/reconditioning instructions as
well as reliable testing and inspection procedures. The Army explains
that while it is in the process of developing a Depot "Maintenance Work
Directive" including detailed specifications, apparently based on
Cummins' published manuals and its training programs, more time is
needed to complete the directive, as the sections regarding inspection
criteria and quality standards need refinement. In their absence, the
Army maintains, it must rely on Cummins' good reputation and specialized
quality assurance procedures to assure that the rebuilt engines will be
acceptable. Cummins and its authorized dealers have provided these
services in the past.
The RFP provides for the acceptance of the rebuilt engines based on a
certificate of conformance executed by the contractor in lieu of a
government inspection. A certificate of conformance may be used in
circumstances where because of the contractor's reputation or past
performance, it is likely that the furnished items will be acceptable
and any defective work would be replaced, corrected or repaired without
contest. Federal Acquisition Regulation (FAR), 48 CFR Section 46.504
(1984).
Regarding necessary repairs, the Army states that Cummins provides an
extensive warranty and maintains a worldwide network of service
facilities that honors the warranty. The Army considers the worldwide
network an important consideration since many of the trucks are located
in Europe.
The Army states, and the protester does not refute, that during the
contracting officer's conversation with the protester, the contracting
officer requested that EGR submit an explanation of the firm's
capabilities for evaluation by the Army's technical personnel. The
protester never did so. Without such a submission, the Army maintains,
it has no way of ascertaining whether any firm besides Cummins and its
affiliates can meet the agency's needs. Additionally, the Army notes
that there are many Cummins' affiliates capable of competing under the
RFP as issued. Restricting the contract to these sources therefore does
not deprive the government of the benefits of competition.
We believe the Army's explanation fails to support its position that
the restriction to Cummins and its affiliates is necessary to meet the
agency's needs, and does not indicate why the Army could not satisfy its
needs by requiring that any diesel engine rebuilding source demonstrate
its capabilities to perform the services. In this regard, we see no
reason why the RFP could not require offerors to demonstrate a previous
record of satisfactorily meeting similar requirements and providing
warranty protection, either as a matter of responsibility or under
listed technical evaluation criteria as a matter of technical
acceptability.
We note that EGR states, without disagreement from the Army, that the
Cummins engine is rebuilt in the normal course of business by others
than those permitted to submit proposals and with the same standards of
workmanship. Regarding the Army's lack of rebuilding/reconditioning
directive, EGR asserts that the latest published Cummins service and
shop manuals, with which the RFP requires compliance, are available to
any interested offeror. The protester states that under circumstances
similar to this procurement, the Department of the Navy referenced
another engine manufacturer's manuals in the solicitation without
restricting competition to the manufacturer. Additionally, the
protester alleges that the Army has a technical manual for engines that
contains two chapters on engine overhaul and the engine system. The
protester also contends that it can match the scope of Cummins' warranty
coverage, but does admit that it would be unable to service the engines
in Europe. EGR states it could pay to have the work done there or
transport the engines to the United States where it could do the work.
In preparing for the procurement of supplies or services, a
contracting agency must specify its needs and solicit offers in a manner
designed to achieve full and open competition, so that all responsible
sources are permitted to compete. 10 U.S.C.A. Section 2305(a)(1)(A)
(West Supp. 1985). A solicitation may include restrictive provisions
only to the extent necessary to satisfy the needs of the agency or as
otherwise authorized by law. 10 U.S.C.A. Section 2305(a)(1)(B)(ii). To
develop specifications that achieve full and open competition, the
agency should use advance procurement planning and market research. 10
U.S.C.A. Section 2305(a)(1)(A)(ii).
The Army did not advise the extent to which it used advanced planning
and market research in determining how to meet its needs. In the
absence of any indication that the Army engaged in the planning and
research activities required by law and that such activities warranted
the restriction to Cummins and affiliates, we must conclude that the
restriction is not justified. It is undisputed, however, that before
the restriction was imposed, the protester was extended the opportunity
to demonstrate its ability to provide the needed rebuilding services at
the planning stages of the procurement, and declined to do so. Since
the protester was in fact given an opportunity to show that it could
meet the Army's needs but declined to do so, we deny the protest. (No
other firm has protested the restriction to Cummins and its affiliates
in response to the RFP or the CBD synopsis notifying the procurement
community of the intended procurement.) In light of this record,
however, we are recommending by separate letter that the Secretary of
the Army take appropriate action to insure that full and open
competition is achieved on future procurements.
Since EGR is ineligible for award under the current RFP, we need not
consider its objection to the RFP'S requirement that the contractor
provide Cummins' parts.
Accordingly, the protest is denied.
B-217227, 65 Comp. Gen. 186
Matter of: Duro Paper Bag Manufacturing Co., Jan. 3, 1986
Bids - Mistakes - Correction - Denial - Acceptance of Contracts at
Initial Bid Price
Where low bid for the supply of grocery bags is 18 to 23 percent less
than the second low bid on various items for which the low bidder
alleges its bid was mistaken, but the allegation of mistake is
essentially unsupported by any evidence, it is within the contracting
agency's discretion to make award on the basis of the bid as originally
submitted since under the circumstances there is not adverse effect on
the competitive bidding system.
Duro Paper Bag Manufacturing Co. (Duro) protests the award to Trinity
Paper and Plastics Corporation (Trinity) of certain items of a
solicitation issued by the General Services Administration (GSA) Office
of Federal Supply and Services, Region 5, under invitation for bids
(IFB) 5FCG-34A-84-070. The procurement was for paper grocery bags, to
be provided under a 6-month term contract. Duro contends that GSA'S
award of the contract items to Trinity was improper because after bid
opening Trinity claimed that it made a mistake in its bid on the subject
items and subsequently, when market conditions allegedly were more
favorable, revoked its claim of error with the knowledge that it was the
low bidder. We deny the protest.
Background
At the time of bid opening on June 5, 1984, it was determined that of
the nine bids received, Trinity was the apparent low bidder on items 6,
9, and 11 (among others not pertinent to this case), and that Duro was
the next low bidder on these items. The agency's comparison of the two
lowest bids on the three items, however, revealed price differentials
between Trinity's bid and Duro's bid of 14.20 percent of item 6 ($2.16
per unit), /1/ 13.18 percent on item 9 ($1.95 per unit), and 22.54
percent on item 11 ($4.00). A further comparison by the agency of
Trinity's prices on these three items with the then-current contract
prices showed that Trinity's prices were lower by 15.37 percent, 17.2
percent, and 22.54 percent, respectively. In accordance with the
agency's procedure whenever price differential exceed 10 percent, the
contracting officer requested, by mailgram dated July 3, 1984, that
Trinity verify its bid.
By letter dated July 9, 1984, Trinity responded to the contracting
officer, stating:
Reviewing your telegram request (for verification of the bid) .
. . we are enclosing a copy of Stone Container Corporation price
increase which was not taken into consideration with our costing
department on the above offer.
As paper going into the finished product of paper sack accounts
for 75% of our total cost; this increase in paper which was not
taken in consideration of our (May 24) quotation accounts for this
tremendous difference we believe between our quotation and the
next low bidder.
Therefore, we would like to withdraw our bid quotation for item
numbers 6, 9, . . . and 11.
Enclosed with Trinity's letter was a single sheet of paper bearing
Stone Container Corporation's letterhead and containing a price list,
dated March 23, 1984, entitled "New Prices Effective 5/1/84", and
consisting of a list of prices, on a per ton basis, of various kinds of
kraft paper.
On July 13, the contracting officer acknowledged Trinity's
"allegation of a mistake" and advised Trinity that it must provide
additional evidence of its claimed mistake since "the Federal
Acquisition Regulation precludes any correction or withdrawal of a bid
unless the alleged mistake is supported by clear and convincing
evidence." This letter was followed by another letter to Trinity, dated
July 18, in which the contracting officer requested that Trinity verify
its prices on other items in the solicitation that required the same
bag, but differing only in quantities and destinations. In explanation
of this request, the contracting officer stated that if Trinity's prices
on the subject items were in error due to its failure to consider a
recent increase in the price of paper, it would appear that its other
prices for the same item were also mistaken. /2/
On July 19, Trinity's Vice President for Sales replied to the
contracting officer's July 13 letter, stating:
Our cost sheets are done manually, and basically these are
scratched out and handed to me, and therefore, (we) do not have
any additional substantiation (as) you requested . . . other than
what we (previously) supplied . . .
Then by letter dated July 23, Trinity wrote to the contracting
officer:
"Reviewing your July 18, 1984 letter on (Solicitation
5FCG-34A-84-070), our quotation offer date of May 24, 1984 pricing
will remain as originally quoted."
When contacted by GSA concerning this letter, Trinity stated that it
wished to honor its bid prices on all items it had bid and reiterated
that no bid preparation documentation was available. Counsel in GSA's
regional office then contacted Trinity and asked that it submit evidence
which would substantiate that its prices were mistaken as to those items
for which it had asked that its bid the withdrawn. According to GSA,
Trinity at first agreed to submit the old price list that it initially
claimed to have used in error and to restructure its bid with and
without the mistake it earlier claimed, but later indicated to the
agency that it would not provide documentation to support its previous
allegations of mistake in its bid.
Upon being advised that Trinity was awarded items 6, 9, and 11, Duro
protested to GSA, contending that after intially claiming an error in
its bid, Trinity was permitted to take advantage of the time extensions
for award requested by GSA to observe the price decline in the paper
market as a result of which Trinity decided to waive its claim of error.
Duro requested that it be awarded the contract for the contested items
or, alternatively, that those items be resolicited to correct the
procedural improprieties which had occurred.
The agency denied Duro's protest, stating that Trinity did not submit
clear and convincing evidence to prove its initial allegations of
mistake in bid and that since there was no evidence of mistake, there
was no basis to permit withdrawal of its bid. As a basis for its
determination, GSA cited section 14.406-3(g)(5) of the Federal
Acquisition Regulation (FAR), which provides:
Where the bidder fails or refuses to furnish evidence in
support of a suspected or alleged mistake, the contracting officer
shall consider the bid as submitted unless (i) the amount of the
bid is so far out of line with the amounts of other bids received,
or with the amounts estimated by the agency or determined by the
contracting officer to be reasonable, or (ii) there are other
indications or error so clear, as to reasonably justify the
conclusion that acceptance of the bid would be unfair to the
bidder or to other bona fide bidders.
GSA maintains that Trinity's bid prices were not so low as to have
been obviously in error and that since there were no other indications
of error in Trinity's bid, the contracting officials were required by
the regulation to consider Trinity's original bid as submitted.
Essentially, the protester argues two general points as the bases of
its protest. First, it contends that the GSA afforded Trinity an unfair
advantage by improperly allowing Trinity to waive its postbid opening
claim of mistake after it had been apprised of the percentage difference
between its bid and the next low bid and had the opportunity to review
changed market conditions. Secondly, Duro contends that GSA
misinterpreted and misapplied the FAR. More specifically, the protester
contends that after Trinity claimed a mistake in bid and was then
allowed to waive its claim of error, it was a position to elect either
to stand by or to withdraw its bid, depending upon which action was to
its advantage, and that for GSA to consider Trinity's bid under these
conditions was contrary to the principles of the competitive bidding
system.
Duro maintains that the provisions of FAR, 48 C.F.R. Section
14.406-3(g)(5), do not apply to the circumstances of this case where the
bidder first claims a mistake in bid and then attempts to recant or
waive its claim of mistake. The protester further contends that the
regulation applies only in cases where a bidder fails or refuses to
furnish any evidence in support of a suspected or alleged mistake. Duro
expresses the view that since Trinity provided as evidence of its
mistake a copy of the price list which, it said, represented a price
increase not taken into consideration by its costing department, the FAR
provision does not apply here. The protester also contends that even if
the regulation is applicable in this case, it would preclude
consideration of Trinity's original (erroneous) bid because the
substantial difference between Trinity's bid, the next low bid, and the
then current prices on the items in question clearly indicate that
Trinity's bid prices were in error so that it was unfair to other
bidders for GSA to consider the contested items of that bid.
Discussion
The mistake in bid rules, permitting relief for certain mistakes made
in the calculation and submission of bids, are premised on the basis of
two principles: that it would be unfair for the government to take
advantage of what it knows or should know is an error by the bidder, and
that the government should not automatically be deprived of an
advantageous offer solely because the bidder made a mistake. See
Shnitzer, Government Contract Bidding 449 (1976). Because mistake in
bid situations arise in the period after bid opening, however, when bid
prices have been exposed and market conditions may have changed, the
rules also reflect a paramount concern with protecting the integrity of
the competitive bidding system. Panoramic Studios, B-200664, Aug. 17,
1981, 81-2 C.P.D. Paragraph 144. These rules, for example, require a
bidder alleging mistake in its bid to meet a high standard of proof
before correction of the bid will be allowed. FAR, 48 C.F.R. Section
14.406-3(a). Similarly, where it is reasonably clear that a mistake has
been made, the bid cannot be accepted, even if the bidder verifies the
bid price, denies the existence of a mistake, or seeks to waive an
admitted mistake, unless it is clear that the bid both as submitted and
intended would remain low. Panoramic Studios, supra, and cases cited
therein. On the other hand, a bidder is not permitted to avoid the
consequences of the firm bid rule (requiring a bid to be available for
acceptance for a specified period) merely by alleging that there is an
error in its bid; rather, there must be some evidence of the mistake.
Murphy Brothers, Inc. -- Reconsideration, 58 Comp. Gen. 185 (1978), 78-2
C.P.D. Paragraph 440; B-164388, July 29, 1968.
Under the rules applicable to this procurement, the agency could
permit withdrawal if the evidence "reasonably support(ed)" the existence
of a mistake; if the evidence did not, the agency could decide not to
permit withdrawal. FAP, 48 C.F.R. Section 14.406-3(c), (d).
Here, the only documentation furnished by Trinity in support of its
allegation of mistake was a one-page price list for kraft paper which it
states it overlooked in arriving at its price for grocery bags. Not
furnished was the price list it actually used or any worksheets which
would show how the cost of kraft paper was factored into Trinity's bid
price. Under these circumstances, as GSA points out, there is nothing
to show which price list actually was used by Trinity in the preparation
of its bid; nothing which explains the relationship of the price list
to the calculation of the price submitted; and nothing which explains
why the failure to use the price list would result in a mistake in some,
but not all, of the items solicited. GSA states that "in the absence of
any evidence showing the relation of (the price list furnished by
Trinity) to the bid preparation process, there is, in effect, no proof
of mistake at all."
We have long recognized that agencies must in the first instance
evaluate the adequacy of evidence supporting the possibility of mistake,
and that the determinations made by the agencies are not subject to
objection unless there is no reasonable basis for the decision. See,
e.g., 53 Comp. Gen. 232 (1973). Here, the only evidence in support of
the possibility of mistake consists of the price list submitted by
Trinity and the bids of Trinity and Duro which reflect that Trinity's
bids on the three items involved are 13, 14, and 23 percent below
Duro's. We agree with GSA that the price list, by itself, does not
reasonably establish that Trinity made a mistake, and we do not think
that Trinity's bid prices, while below Duro's, are so out of line as to
by themselves indicate that Trinity's bid prices are mistaken. Compare
37 Comp. Gen. 579 (1958), where the amount of the bid and other factors
strongly indicated that the low bidder, who refused to provide
documentary evidence of mistake, had made a mistake and likely would not
be the low bidder if the mistake were corrected.
Since we agree with the agency that there is no credible evidence of
a mistake here, we further agree that Trinity could not have withdrawn
its bid under the FAR, 48 C.F.R. Sections 14-406-3(c) and
14.406-3(g)(5).
Duro argues, of course, that notwithstanding those FAR provisions the
protection of the competitive bidding system requires the rejection of
Trinity's bid because Trinity first alleged mistake and then, instead of
supporting the allegation, stood by its original bid. As Duro points
out, we have required the rejection of a bid where the bidder first
claimed a mistake and then sought to take the contract at the bid price.
See, e.g., 52 Comp. Gen. 706 (1973). In those cases, however, it
generally was clear, either from discrepancies between bids or from
information provided by the bidder, that a mistake indeed had been made;
those cases usually involved the bidder's seeking to remain in
contention for award when bid correction was denied. Here, however,
there is no meaningful evidence that a mistake has been made and in the
absence of such evidence Trinity was bound by the submission of its bid
and the agency could not properly reject the bid. That being so,
Trinity in fact did not have the opportunity to get mistake in bid
relief considered by the agency (since there was no evidence of mistake)
and then to have the bid as submitted remain in contention when that
relief was not provided. Since it is that opportunity that must be
guarded against, we fail to see how acceptance of Trinity's bid under
the circumstances here would be detrimental to the bidding system.
The protest is denied.
FOOTNOTES
(1) For these items, one unit is a bale consisting of 400 bags. The
solicitation listed estimated 6-month requirement quantities for the
three items, respectively, as 73,906 bales, 16,786 bales, and 14,375
bales.
(2) These items had not been included in the contracting officer's
initial request that Trinity verify its bid because they were within
GSA'S 10 percent price differential guideline.
B-220032.2, 65 Comp. Gen. 184
Matter of: H.L. Carpenter Company - Reconsideration, Jan. 2, 1986
Contracts - Protests - General Accounting Office Procedures -
Reconsideration Requests - Request for Conference - Denied
Request for reconsideration based on the allegation that our Office's
denial of a bid protest conference request resulted in an erroneous
decision predicated on inadequate facts is denied where the request was
submitted with the protester's comments on the agency report, making the
scheduling of a conference within 5 days after the report's receipt, in
accordance with General Accounting Office (GAO) Bid Protest Regulations,
a practical impossibility, and where the protester had full opportunity
to present its position in writing.
Contracts - Protests - General Accounting Office Procedures -
Reconsideration Requests - Error of Fact or Law - Not Established
Request for reconsideration of the balance of the original protest is
denied where the protester raises no new facts or legal arguments which
were not considered during the pendency of the original protest and
where the protester fails to show an error of law or fact with regard to
those issues.
H.L. Carpenter Company (Carpenter) requests reconsideration of our
decision in H.L. Carpenter Co., B-220032, Nov. 21, 1985, 85-2 C.P.D.
Paragraph . . . Carpenter complains that we improperly denied its
request for a bid protest conference which it submitted in its comments
on the agency report, resulting in the exclusion of relevant facts from
consideration in our initial decision. Further, Carpenter states that
we failed to consider applicable facts and law on the balance of issues
in its protest, resulting in our dismissal of one of its issues and our
denial of the remainder. We deny the request.
Carpenter's original protest contained many allegations that the
estimated quantities, workload requirements and other provisions of a
solicitation, issued by the Department of the Army for the operation of
furniture repair facilities at Fort Bragg, North Carolina, were vague,
ambiguous and/or misleading. Carpenter also complained that job
descriptions in the solicitation bore little resemblance to the
classification of employees in the Department of Labor Rate Wage
Determination. After a review of the Army's report and Carpenter's
comments, we concluded that the Army's assessment of its minimum needs
was reasonable and that the Army's estimated workload requirements were
based on the best information available at the time of the issuance of
the solicitation. We also stated that our Office does not review wage
rate determinations.
By letter of December 12, 1985, Carpenter complains that we violated
our regulations by denying as untimely Carpenter's request for a bid
protest conference, which the firm submitted with its comments on the
Army's report. The effect of this denial, Carpenter states, was to
exclude relevant facts, which resulted in an erroneous decision.
Carpenter argues that because it submitted the request within what it
considered 5 working days after receipt of the agency report, the
request for a conference was timely.
We find no merit in Carpenter's position, which evidences confusion
as to the difference between our time limit for scheduling a conference
and the time for protesters to request a conference. As we advised
Carpenter in our October 16 denial of its conference request,
conferences are held within 5 working days of the data that agency
reports are received. Bid Protest Regulations, 4 C.F.R. Section 21.5(b)
(1985). Though the exact time for requesting a conference is not stated
expressly in our regulations, our regulations do state that conference
requests "should be made at the earliest possible time in the protest
proceeding." 4 C.F.R. Section 21.5(a). This language, when read in
conjunction with the other language in the subsection on conferences,
indicates that, as a practical matter, conference requests must be filed
prior to the submission of comments on the agency report. Requests
filed with comments, like Carpenter's request, would make scheduling
conferences within the regulation's timeframe impossible, delay the
resolution of the protest, and run afoul of 4 C.F.R. Section 21.5(c),
which states that comments on the agency report will not be considered
if a conference is held.
In any case, bid protests to our Office ultimately are decided on the
basis of the written record. See 4 C.F.R. Section 21.3. A conference
only provides a forum for an oral interchange between parties, and this
interchange does not become part of the record unless submitted in
writing within 5 days of the conference. See 4 C.F.R. Section 21.5(c),
(e). Carpenter had a clear opportunity to submit any facts it had
regarding this solicitation in its protest and comments on the agency
report. Thus, any omission of facts known at the time of the protest
was due to Carpenter's failure to make full use of this opportunity, and
not from the absence of a conference.
With regard to the balance of Carpenter's request, our regulations
require that a request for reconsideration contain a detailed statement
of the factual and legal grounds upon which reversal or modification is
warranted and that it specify errors of law made or information not
considered previously. 4 C.F.R. Section 21.12(a). Information not
considered previously refers to information that was overlooked by our
Office or information to which the protester did not have access when
the intitial protest was pending. Tritan Corp. -- Reconsideration,
B-216994.2, Feb. 4, 1985, 85-1 C.P.D. Paragraph 136.
Carpenter's request merely restates the grounds of its initial
protest, which we addressed in our decision. For instance, Carpenter
seeks to have us consider its same arguments with regard to workload
requirements and the identification of service items and ordering
offices. Our Office, however, will not reconsider a decision, based on
the protester's reiteration of arguments already addressed. See Tritan
Corp. -- Reconsideration, B-216994.2, Supra; Ginter Welding Inc. --
Reconsideration, B-218894.2, July 16, 1985, 85-2 C.P.D. Paragraph 54.
The request for reconsideration is denied.
B-218994, 65 Comp. Gen. 182
Matter of: Joel R. Zaientz - Reimbursement for Unused Portion of
Airline Ticket Purchased by the Government, Jan. 2, 1986
Travel Expenses - Air Travel - Constructive Cost Reimbursement - No
Expenses Incurred
On official airline travel the employee's return flight was
overbooked, he voluntarily vacated his seat, and he took the next
scheduled flight. Airline company issued a Miscellaneous Charge Order
(MCO) to the employee to be used on a standby basis within 1 year.
Claimant was later authorized official travel from Rockville to San
Francisco, Cal. He used the MCO (determined by GAO to belong to
employee) to purchase an airline ticket for a personal side trip from
San Francisco to Ft. Lauderdale, Fla. His return trip to Baltimore was
included in the segment paid by the MCO. Employee may not be reimbursed
for the cost of the unused portion of the official airline ticket since
the government has no obligation for the cost of the return travel as no
travel expenses were incurred.
This decision is in response to a request by Mr. Walter W. Pleines,
Director, Division of Finance, OFR, Social Security Administration
(SSA), Department of Health and Human Services, for an advance decision.
The issue is whether the reclaim travel voucher in the amount of $166,
submitted by Mr. Joel R. Zaientz, an employee of the agency,
representing the unused portion of an airline ticket purchased by the
government, may be certified for payment. For the reasons stated later,
Mr. Zaientz is not entitled to reimbursement for the unused portion of
the airline ticket, and therefore, the reclaim travel voucher may not be
certified for payment.
Mr. Zaientz was authorized to perform official airline travel from
Rockville, Maryland, to Jackson, Mississippi, and return, in August
1983. Upon arrival at the gate for his return flight, Mr. Zaientz
voluntarily vacated his seat on the flight, which was overbooked, and
took the next scheduled flight to Baltimore, Maryland. The airline
company issued a Miscellaneous Charge Order (MCO) to Mr. Zaientz, valued
at $350, to be used, on a standby basis, within 1 year.
In its settlement action dated June 19, 1984, our Claims Group
determined that, based upon the decisions of this office, Mr. Zaientz
should be allowed to keep the MCO, valued at $350, for voluntarily
vacating his reserved seat on the overbooked airplane. See William J.
Gournay, 60 Comp. Gen. 9 (1980); Charles E. Armer, 59 Comp. Gen. 203
(1980); William R. Stover, B-199417, October 10, 1980; Edmundo Rede,
Jr., B-196145, January 14, 1980.
On June 3, 1984, Mr. Zaientz performed official travel from Rockville
to Denver, Colorado, and San Francisco, California. He had been
instructed by SSA not to use the MCO until a decision as to its
ownership had been rendered by this Office. However, on June 6, 1984,
after completing his temporary duty assignment, Mr. Zaientz used the MCO
to purchase a ticket from the airline company for a personal side trip
from San Francisco to Ft. Lauderdale, Florida. His return trip from
official travel to Baltimore on June 12, 1984, was included as a segment
paid by the MCO.
In submitting his travel voucher, Mr. Zaientz attached the unused
portion of his official ticket for the return segment of the San
Francisco trip and noted thereon that, "Return trip to BWI at no cost to
Government (used free complimentary ticket by Delta Airlines on earlier
business trip)." On his reclaim travel voucher, Mr. Zaientz is
reclaiming the sum of $166 representing the portion of his original
government-issued airline ticket which was not used for his return
travel from San Francisco to Baltimore.
Mr. Zaientz contends that the MCO was issued to him personally for
use on a standby basis. He states that had he not taken the initiative
of trying to save the government money by using the MCO prior to its
expiration date, August 11, 1984, it would have been completely wasted
since he had no official travel again until December 1984. He feels
that equity and good conscience dictate that his reclaim for $166 for
the San Francisco-Baltimore segment of his trip, paid for by the MCO, is
completely justified.
The SSA contends that, although Mr. Zaientz did return to Baltimore
on the ticket purchased with the MCO, he used the ticket primarily for
his personal trip to Ft. Lauderdale. The agency also states that it has
no authority to reimburse a traveler when no out-of-pocket expenses are
incurred.
The purpose of the issuance, the government, of the original airline
ticket to Mr. Zaientz was to relieve him from the payment of the
expenses of his official travel from Baltimore to San Francisco, and
return, to perform official government business. While it is true that
Mr. Zaientz used the MCO issued to him personally to pay, not only for
his personal trip to Ft. Lauderdale, but also for his return trip to
Baltimore, the fact remains that he did not personally incur or pay for
any expenses of travel in returning to Baltimore. It follows that since
no travel expenses were incurred by Mr. Zaientz for his return trip to
Baltimore, the government has no obligation to reimburse him for the
cost of the return travel. Compare Bob McHenry, B-184092, September 29,
1975, and Gerald K. Colmer, B-173758, October 8, 1971.
Accordingly, the reclaim travel voucher in the amount of $166,
wherein Mr. Zaientz claims reimbursement for the unused portion of an
airline ticket purchased by the government, may not be certified for
payment.
B-217478, 65 Comp. Gen. 177
Matter of: Walter C. Stephenson, Jan. 2, 1986
Property - Public - Damage, Loss, etc. - Accountability of Civilian and
Military Personnel - Evidence
The Forest Service assessed a claim against one of its forest rangers
to recover $1,475.15 (plus interest) for unauthorized expenditures which
he directed his staff to make in order to expand and improve the
building which serves as headquarters for the Jemez District of the
Santa Fe National Forest. Pursuant to General Accounting Office (GAO)'S
settlement authority under 31 U.S.C. 3702 (1982), and the agency's
regulations which provide for assessing financial liability against
Forest Service employees, GAO finds that the legal basis of the claim
has not been adequately established. Therefore, collection should be
terminated.
We have been asked to review the determination of the United States
Forest Service, Department of Agriculture, concerning a debt asserted
against Mr. Walter C. Stephenson, Forest Ranger for the Jemez District
of the Santa Fe National Forest. In accordance with its interpretation
of its regulations, the Forest Service determined that Mr. Stephenson
should reimburse the Government for some unauthorized expenditures of
public funds. Prior to rendering this decision, we obtained the
comments of both Mr. Stephenson and the Forest Service. For the reasons
given below, we find that the Forest Service has not adequately
established the legal basis for this claim, and its collection should be
terminated.
BACKGROUND
In August and September of 1982, Mr. Stephenson, as Jemez District
Forest Ranger, instructed his staff to take steps and expend funds
necessary to accomplish the laying of a concrete slab which eventually
would be used to support a structural addition to the building in which
he and his staff worked. According to the record submitted by the
Forest Service, Mr. Stephenson authorized work and expenditures, based
upon his mistaken interpretation of applicable Forest Service
regulations. /1/ In the view of the Forest Service, the actions taken
by Mr. Stephenson and his staff violated a number of Forest Service
procurement regulations which, among other things, required him to
obtain official approval before undertaking a construction project of
this kind and amount. /2/
On or about September 9, 1982, the work and expenditures authorized
by Mr. Stephenson came to the attention of higher officials in the
Forest Service. Mr. Stephenson and his staff were immediately ordered
to suspend work on the project, pending investigation of its propriety.
In an apparent coincidence, on the next day, September 10, 1985,
regional officials of the Forest Service issued a notice intended to
clarify the regulation which Mr. Stephenson had misinterpreted. /3/
That notice stated that "(s)ome situations which have come to our
attention recently indicate that regional direction may not be clear"
concerning the need to obtain approval for work of the kind and amount
ordered by Mr. Stephenson. According to the notice, "confusion and
misunderstandings" had occurred. Forest Service officials were advised
that if work had already been undertaken "without the required
approval," approval should be sought as soon as possible. /4/
On October 15, 1982, the Santa Fe National Forest Supervisor filed a
10-page report concerning the Stephenson incident. Among the findings
in that report were the following:
It is believed that the intent of the District Ranger
(Stephenson) was to solve a problem of lack of office space the
best way he could and as legally as possible. There is no doubt
but what he was wrong in the approach he took.
The District Ranger exercised poor judgment in not seeking
advice as to how to proceed in this project, and must be held
responsible for proceeding without proper approvals from both
engineering and fiscal. It appears that Ranger Stephenson
committed an error (FSM 6507.2) e.g. ". . . unintentional human
errors, miscalculations, misjudgments, misinterpretations, etc.".
It is felt that he should receive punishment commensurate with
this offense. (Mr. Stephenson) has had an exemplary career with
the Forest Service since 1969. There is no record of wrong-doing
during his career. The wrong-doing committed in this case relates
to misinterpretation of policy and management direction. There
has been no effort to cover up what was happening or hide any
facts. Supplies were purchased and labor expended for a structure
that is and will become government property. Because of these
mitigating circumstances it is believed that a letter of reprimand
should be levied against Mr. Stephenson.
All of this action does not negate the need for expansion of
(Mr. Stephenson's) Jemez Office. * * * As soon as approval would
be received completion of the slab (and the office expansion) to
the approved design should be allowed so as to take advantage of
the effort already expended. /5/
This initial report was incorporated without criticism or dispute
into the Forest Service's final decision of August 29, 1984. /6/
However, despite the finding in the incorporated initial report that Mr.
Stephenson had committed an "unintentional human error," the agency's
final decision on the matter concluded that he should be held
financially liable for the "non-salvageable" portion of the work he
improperly authorized. /7/ To support this conclusion, the final
decision cited section 6507.32 of the Forest Service Manual (FSM) (FSM
4/81 AMEND 199) which states that "when instructions are deliberately
violated, the individual shall be held financially liable when the
willful act causes a pecuniary loss to the Government. /8/
Consequently, on September 28, 1984, Mr. Stephenson was billed by the
Forest Service for $1,475.15 to cover "non-salvageable costs connected
with the Jemez Ranger Office Addition (9/17/82)." Finally, we note that
the Forest Service has now determined that the project that Mr.
Stephenson attempted to initiate without the proper authority is, in
fact, necessary and appropriate, and is scheduled for completion in the
near future.
GAO JURISDICTION AND SCOPE OF REVIEW
The General Accounting Office is authorized to review this matter
under its general authority to settle "all claims of or against the
United States Government." 31 U.S.C. Section 3702(a) (1982).
In Government employee liability cases resulting from loss or damage
to Government property, our Office engages in a narrow review of agency
actions. We determine, first, whether the agency asserting a claim
against its employee has statutory authority to do so, or is acting
under appropriate administrative regulations. See, e.g., 25 Comp. Gen.
299 (1945); B-208108, July 8, 1983.
Our Office then asks whether the agency followed the regulations in
the individual case. As we stated in B-208108, July 8, 1983:
If an agency has held an employee liable consistent with its
regulations -- for example, by finding him negligent -- we will
not substitute our judgment for that of the investigating
authority, and will overturn the finding only if we conclude that
it lacks a rational basis.
See also B-212502, July 12, 1984. Cf. 54 Comp. Gen. 310, 312 (1974);
57 Comp. Gen. 347, 350 (1978).
DISCUSSION
1. Does Forest Service have sufficient regulations?
The Forest Service clearly has administrative regulations that
satisfy the requirements of our previous decisions, as discussed above.
The Forest Service Manual (FSM) provides that:
(i)ndividuals will be held financially liable for their willful
or unauthorized acts which result in monetary or other personal
gain to which they are not entitled under the regulations. Also,
when instructions are deliberately violated, the individual shall
be held financially liable when the willful act causes a pecuniary
loss to the Government. FSM, Section 6507.32 (FSM 4/81 AMEND
199).
At the same time, however, the FSM also provides for:
* * * another category of actions that are unintentional human
errors, miscalculations, misjudgments, misinterpretations, etc.
These result from employees not being fully and adequately
advised, not fully knowledgeable of the subject or specific
regulations concerning their action, * * * or other actions that
may result from human error and are not intentional. Employees
should be advised and/or assisted concerning how these types of
errors can be corrected. * * * FSM, Section 6507.2 (FSM 4/81
AMEND 199)
The FSM states that "(e)rrors as described in FSM 6507.2 are not to
be administered under (section 6507.32)." FSM, Section 6507 (FSM 4/81
AMEND 199). In view of this last provision, it would appear that the
FSM does not authorize the assessment of pecuniary liability against
Forest Service employees for errors of the kind described in section
6507.2
2. Has Forest Service followed those regulations?
Our review of the record leads us to conclude that the Forest Service
did not properly apply its regulations in this case.
There is no contention that Mr. Stephenson profited financially from
his actions. Therefore, in order to hold Mr. Stephenson liable
(pursuant to FSM, Section 6507.32) for the costs incurred by the
Government, the agency must conclude that his actions constituted a
"deliberate violation" of the applicable regulations. Giving this
phrase its plain and ordinary meaning, we find that the words
"deliberate violation of instructions" refer to actions willfully taken,
either with full awareness that they were not consistent with the
applicable orders and regulations of the agency, or with complete and
reckless disregard of whether they were consistent.
As we noted earlier, the Santa Fe National Forest Supervisor
investigated the incident and, on October 15, 1982, filed a lengthy and
detailed report. In that report, the Supervisor concluded that Mr.
Stephenson had "exercised poor judgment" and had committed an error of
the type covered by FSM, Section 6507.2 ("unintentional human errors,
miscalculations, misjudgments, misinterpretations, etc.") There is no
suggestion in this report of any "deliberate violation" by Mr.
Stephenson. Consistent with his findings, the Supervisor recommended
issuance of a letter of reprimand.
The Forest Service continued to review the matter and issued its
final decision on August 29, 1984. The final decision quoted at length
from the Santa Fe National Forest Supervisor's October 1982 report, but
stopped short (literally in the middle of a sentence) of the conclusion
in that report that Mr. Stephenson's error had been an unintentional one
within the scope of FSM, Section 6507.2. The final decision then went
on to quote various regulations, including FSM, Section 6507.32 but not
6507.2, and without further discussion, determined Mr. Stephenson to be
liable in the amount of $1,475.15. The final decision contained no
support for its conclusion, nor did it make any attempt to refute the
contrary findings and recommendations of the Santa Fe Supervisor's
report upon which it heavily relied.
When we wrote to the Forest Service in response to Mr. Stephenson's
appeal, the Forest Service replied that:
In view of all the procurement, fiscal, and engineering
instructions and/or regulations that were violated, this evidence
appears sufficient to support a conclusion of deliberate action.
It is also relevant to note that Mr. Stephenson could have easily
obtained technical advice from the Forest Service Supervisor's
Office employees regarding the propriety of the construction
project he was initiating. In view of the ultimate size and
permanency of the project, it appears reasonable to expect that
such technical advice should have been requested and followed.
Since it apparently was not, this too indicates deliberate action.
We do not agree that the mere number of rules violated is evidence
sufficient to find a "deliberate violation." In the absence of other
evidence to corroborate such a conclusion, it seems more likely that
those violations resulted from ignorance, judgmental error, improper
training and supervision, or simple negligence. The same may be said of
the other factors cited by the Forest Service. In view of the factual
record and investigative reports compiled by the Forest Service in this
matter, we think that the Forest Service's comments amount to
after-the-fact justifications, and we do not accord them much weight.
The record compiled by the agency is certainly sufficient to permit
the Forest Service to conclude (as it has) that Mr. Stephenson exercised
"poor judgment" and should have sought additional guidance from his
superiors. However, the record does not establish either a willfull
intent to circumvent the applicable regulations, or a motive for Mr.
Stephenson to do so. To the contrary, there is ample evidence that Mr.
Stephenson was simply attempting to carry out his official duties, and
remedy a problem (the existence of which is now acknowledged by his
agency) in an expeditious, though procedurally improper, fashion. His
actions do not appear to have been intentional, willful violations of
the governing regulations; but rather "unintentional human errors,
miscalculations, misjudgments, (and) misinterpretations * * *," as is
noted in the agency's record. The fact that regional officials felt it
necessary to simultaneously issue a clarification of the regulation
which Mr. Stephenson misinterpreted (as well as the admissions contained
in that notice to the effect that other Forest Service employees had
similarly misinterpreted it), before they had become aware of Mr.
Stephenson's actions, lends credence to the conclusion that his actions
were "unintentional" and resulted from an honest misinterpretation of
the Forest Service regulations.
For these reasons, it seems more reasonable to conclude on the record
presented that Mr. Stephenson's actions fall within the scope of FSM,
Section 6507.02, rather than FSM, Section 6507.32 -- the former of which
does not afford a basis for assessing pecuniary liability for losses
suffered by the Government. FSM, Section 6507.
CONCLUSION
In view of the foregoing, we find that the Forest Service has not
properly applied its regulations in this case, and has not adequately
established a legal basis for the debt it has asserted against Mr.
Stephenson. The Forest Service should therefore terminate its efforts
to collect its claim for $1,475.15 (plus interest and all other related
charges) in connection with the Jemez Ranger Office Addition. See FSM,
Sections 6507.35a, 6507.6 (FSM 4/81 AMEND 199); 4 C.F.R. Section
104.3(d) (1985).
FOOTNOTES
(1) Mr. Stephenson was relying upon his interpretation of section
6516.31 of the Forest Service Manual (FSM) (ID No. 133, June 17, 1982),
which provides:
Minor, unforeseen construction and acquisition of buildings and
other facilities may be financed from the benefiting operating and
research funds under the following conditions:
1. The need was unforeseen at the time of budget preparation,
2. The work is of a higher priority than work foregone,
3. Standards fully protect the resources, and
4. The total project is estimated to be less than $50,000.
Mr. Stephenson maintains that the work he ordered fell under the
category of "minor, unforeseen construction." Among other things, he
argues that the concrete slab (estimated to cost approximately $8,000)
may be considered to be a project separate and distinct from the
eventual construction of the structural addition to the building
(estimated to cost about $50,000).
(2) Forest Service bases its position upon the provisions of a
regional regulation (Region 3, PBMI, FY 1982) which states:
Projects estimated to cost $50,000 or more must be financed
from C&LA (Construction and Land Acquisition) funds and must be
approved in advance by the Regional Forester. Minor construction
projects (including renovation of or additions to a building)
unforeseen at the time of budget presentation and estimated to
cost less than $50,000 can be financed from benefiting funds,
providing Regional Forester's approval has been obtained and
documented in the financial plan records * * *.
Forest Service maintains that the work authorized by Mr. Stephenson
does not qualify as "minor, unforeseen construction" because, in its
view, it is not feasible to treat the concrete slab and the eventual
structural addition (which together are estimated to cost approximately
$60,000) as separate projects. In any event, the regulation cited by
Forest Service requires that approval be obtained for such work,
regardless of its size.
(3) Based on notations in the notice itself, it would appear that the
notice, although dated September 10, was originally drafted on or before
September 2, 1985, i.e., before Mr. Stephenson's unauthorized work was
discovered by higher authorities. This notice clearly indicates that
Mr. Stephenson was not alone in his misinterpretation of Forest Service
regulations.
(4) Regional Forester M. J. Hassell, "6520 Financial Management"
Letter, Sept. 10, 1982.
(5) Santa Fe National Forest Supervisor James L. Perry, "1450
Investigations" Letter to Regional Forester, R-3, Oct. 15, 1982. The
record also contains a number of other official documents which reached
the same or similar conclusions. E.g., Santa Fe National Forest
Supervisor Maynard T. Rost, "6500 Finance and Accounting" Letter, Apr.
5, 1984.
(6) Director of Fiscal and Accounting Management, R-3, Arvin L.
White, "6500 Finance and Accounting" Letter, Aug. 1, 1984 (approved by
Director of Fiscal and Accounting Management, WO, C. E. Tipton, Aug. 29,
1984) at 1. (We note that prior to the issuance of this final decision,
in June 1983, Mr. Stephenson was suspended without pay for 2 weeks as
punishment for his failure to comply with Forest Service regulations in
this matter. This suspension cost Mr. Stephenson approximately $1,320
in lost salary.)
(7) Id. at 5 (Italic supplied.)
(8) Id. at 4 (Italic supplied.)
B-220602, 65 Comp. Gen. 172
Matter of: T.R. Ltd., Dec. 31, 1985
Bids - Invitation for Bids - Defective - Evaluation Procedures
Protest is sustained where Invitation for Bids (IFB's) flawed
evaluation scheme makes it impossible to determine which bid represents
the lowest cost to the government.
T.R. Ltd., trading as Raley's Emergency Road Service and Henry's
Wrecker Service (Raley), protests the rejection of its bid as
nonresponsive under invitation for bids (IFB) No. 3-6-12, issued by the
United States Department of the Interior, National Park Service
(Interior), for towing and wrecker services.
We sustain the protest.
The IFB's specifications required the contractor to provide all
labor, materials and equipment for towing, wrecker and miscellaneous
servicing of parked or disabled United States Park Police (USPP) and
civilian vehicles on a first priority basis. Assistance for private
motorists was to be at the expense of the motorists, and assistance
directed by the USPP for a disabled USPP vehicle was to be at the
expense of the government at rates in accordance with the IFB's Rate
Schedule.
The Bid Schedule contained three bid items. /1/ Bidders were
instructed that "Bids may be submitted on Items 1 and 2, or as an
alternate bid on Item 3 with a credit to the government." Items 1 and 2
required bids for services on an hourly rate basis for a base year and 2
option years. Item 3, captioned "ALTERNATE BID," required the
contractor to specify a monthly rate it would pay the government for the
right to be the first contractor called to service disabled or impounded
vehicles.
Attached to the Bid Schedule was a Rate Schedule on which bidders
were instructed to submit rates which would be charged distressed
motorists for services customarily accomplished by a commercial towing
company. The Rate Schedule stated that "The contractor shall provide to
the contracting officer prior to award a schedule of the rates which
will be charged distressed motorist." The Rate Schedule also provided
that "these rates shall be incorporated in the contract and will remain
in effect for the life of the contract or unless otherwise changed by
the contracting officer." At the bottom of the Rate Schedule was a
legend: "PLEASE RETURN WITH BID."
Three bids were received. Raley bid on all three items. One bidder
bid only on item 3. The third bidder inserted zero on items 1 and 2 and
prices for items 3. Raley offered the highest rate on item 3, but was
rejected as nonresponsive because it did not insert a fixed price on the
Rate Schedule for "5 gallons of fuel and start." (Raley inserted
"station rates".) The contracting officer also concluded that Raley's
pricing of all three items on the Bid Schedule made it impossible to
determine if Raley intended to be reimbursed by the government for its
services, if it intended to show a credit to the government, or if it
intended to subtract the sum of items 1 and 2 from item 3 and credit the
government with that difference. The contract was awarded to AnA, Inc.,
the bidder offering to pay the second highest monthly rate.
Raley protests that it set forth without ambiguity the exact amount
it would pay for the right to be designated towing company. According
to Raley, the Rate Schedule cannot be considered part of the
contractor's bid because the solicitation does not require that the Rate
Schedule be submitted with the bid, but rather prior to award. Raley
contends it should have been allowed to submit a definite price figure
for gasoline after bids were opened and prior to award.
It is unnecessary to decide the merits of Raley's protest because,
upon our review of the solicitation, we find the solicitation to have
been defective for not assuring the most favorable cost to the
government. The method used by Interior to evaluate bid prices under
item 3 was deficient in its failure to consider charges to the
government for services rendered to disabled USPP vehicles. Our Office
has consistently held that award in a sealed-bid procurement must be
based on the most favorable cost to the government. See Summerville
Ambulance, Inc., B-217049, July 1, 1985, 85-2 C.P.D. Paragraph 4; Go
Leasing, Inc., et al., B-209202, et al., Apr. 14, 1983, 83-1 C.P.D.
Paragraph 405. Moreover, we have stated that the lowest bidder must be
measured by the total work to be awarded. 50 Comp. Gen. 583 (1971);
Square Deal Trucking Co. Inc., B-183695, Oct. 2, 1975, 75-2 C.P.D.
Paragraph 206. Here, item 3 requested a lump-sum price from the
contractor for the privilege of being the first contractor called to
provide the specified services. Interior evaluated bids only by
comparing rates which bidders offered to pay the government on item 3.
Yet the specifications provided that assistance for a disabled USPP
vehicle would be at the expense of the government, at rates in
accordance with the Rate Schedule. If only the lump-sum prices on item
3 are evaluated, it is impossible to determine which bid results in the
lowest cost to the government, since a bid offering a high price on item
3 might not be as advantageous as a bid offering a lower price but
charging less for servicing government vehicles.
Since there was no assurance that any selection based only on prices
offered under item 3 would result in the lowest contract cost to the
government, we recommend that Interior resolicit this requirement using
an evaluation scheme accounting for charges to the government for
services rendered to disabled USPP vehicles. We recognize that for the
safety of park visitors, the convenience of the motoring public, and
assistance with law enforcement functions, it is critical that the USPP
retain an uninterrupted contract crane service. We therefore recommend
that the existing contract with AnA, Inc., not be terminated for the
convenience of the government until Interior receives an acceptable bid
under the resolicitation.
The protest is sustained.
FOOTNOTES
(1) The IFB's Bid Schedule and Rate Schedule are set forth in an
appendix to this decision.
B-218897, 65 Comp. Gen. 171
Matter of: Martha C. Biernaski, Dec. 31, 1985
Travel Expenses - Air Travel - Constructive Cost Reimbursement - No
Expenses Incurred
An employee who used a free airline ticket issued because of her
husband's membership in an airline's frequent travelers club for travel
on Government business may not be reimbursed the constructive cost of
the airline ticket since she has not demonstrated that she paid for that
ticket or had a legal obligation to do so. Thus it is concluded that
she acquired the transportation at no direct personal expense.
The Farm Credit Administration has requested an advance decision
concerning the propriety of payment of the constructive cost of airfare
to Mrs. Martha (Marilyn) C. Biernaski. /1/ Mrs. Biernaski may not be
reimbursed the constructive expense incurred in attending the conference
since she acquired the airline ticket in question at no direct personal
expense.
Mrs. Biernaski, a former employee of the Farm Credit Administration,
was issued a Government Travel Request and purchased an airline ticket
to attend a conference in San Diego, California. However, she did not
use that ticket /2/ but instead used a ticket issued to her husband as a
member of the Frequent Travelers Club of Eastern Airlines. She claims
reimbursement of the constructive cost that the Farm Credit
Administration would have paid had she not used the ticket obtained by
her husband for travel to attend the conference in San Diego,
California. Mrs. Biernaski has based her claim on the fact that the
Farm Credit Administration informed her that she could use whatever
means of transportation she wished and they would reimburse her on an
actual or constructive basis.
Apparently Mrs. Biernaski was not aware that when the Government
reimburses an employee for travel expenses on a constructive basis only
actual costs incurred by the employee may be reimbursed and that
reimbursement is limited to the constructive amount it would have cost
had the Government procured the transportation directly.
When informed that reimbursement on a constructive basis required the
employee to present evidence of expenses actually incurred, Mrs.
Biernaski submitted a letter from her husband's consulting firm
indicating that she had agreed to pay $600 for use of the free ticket.
The letter indicates that no payment had been received by the consulting
firm, but that it was expected.
As to the travel of civilian employees of the Government, 5 U.S.C.
Section 5706 provides that "only actual and necessary travel expenses
may be allowed * * *." Implementing regulations contained in paragraph
1-2.1, Federal Travel Regulations, FPMR 101-7, incorp. by ref. 41 C.F.R.
Section 101-7.903 (1983), provide that, "Transportation expenses which
the Government may pay either direct or by reimbursement include fares *
* * and other expenses."
Under these provisions of statute and regulation, civilian employees
may not be allowed gratuitous payments, but they may be allowed
reimbursement of travel expenses necessarily incurred by them is
complying with travel requirements imposed upon them by the Government.
See, for example, Bornhoft v. United States, 137 Ct. Cl. 134 (1956);
and Captain Dene B. Stratton, USN, 56 Comp. Gen. 321 (1977).
Although Mrs. Biernaski claims that she owes her husband's consulting
firm $600 for the free airline ticket issued to him by Eastern Airlines,
there is no evidence that a legal obligation has arisen or that payment
has been made. In that connection we note particularly that the free
ticket was issued because Mr. Biernaski was a member of the Frequent
Travelers Club; that it was not issued to his consulting firm; and
that it has not been demonstrated to be the subject of a legal
obligation for payment. Since we are unable to conclude that Mrs.
Biernaski incurred any ascertainable personal expenses for the ticket in
question her claim should be disallowed.
FOOTNOTES
(1) This decision is issued in response to a request from Victor L.
Summers, Chief, Budget and Accounts Section, Administrative Division,
Farm Credit Administration.
(2) The coach ticket that was procured with the Government Travel
Request was returned to the airline and the cost of it was refunded to
the Farm Credit Administration.
B-218228.3, 65 Comp. Gen. 167
Matter of: United Food Services, Inc., Dec. 30, 1985
Bids - Mistakes - Correction - Obvious Error
Where a bid's consistent pricing pattern is discernible, General
Accounting Office (GAO) will allow correction of the omission of an
option price for one item added by amendment in order to prevent an
obvious clerical error of omission from being converted to a matter of
responsiveness, since it is clear that the bidder intended to obligate
itself to provide the item.
United Food Services, Inc., protests the award of a contract to
Colbar, Inc. under invitation for bids (IFB) No. DABT23-85-B-0019,
issued by the Department of the Army for full food and dining services
at Fort Knox, Kentucky. The solicitation was for the base period from
April 1 to September 30, 1985 with four 1-year options. The Army
rejected United's bid as nonresponsive because the firm omitted option
year prices for one of the three dining facilities that Amendment No. 2
added to the facilities originally listed in the IFB.
We sustain the protest.
The Army issued the solicitation on January 17, 1985 and received 10
bids at opening on February 26. When United, the third-low bidder,
learned of its apparently inadvertent omission and the Army's proposed
rejection of its bid, it requested permission to correct the bid.
Because of problems encountered in the evaluation of bids, the Army
extended the contract of the incumbent, Colbar, for 6 months beginning
April 1. On August 20, the Army told United that it was rejecting its
bid, rather than allowing correction. By this time, the two lowest
bidders had withdrawn following mistake claims, and the Army had found
not only United but also the fourth, fifth, and sixth-low bidders
nonresponsive for various reasons. In United's case, the rejection was
based on failure to provide option year prices for services in Building
No. 1485, Group III, one of the dining facilities added by amendment.
The Army awarded a contract to Colbar, the seventh-low bidder, on
September 6, after determining that urgent and compelling circumstances
necessitated this action.
The IFB, at section M-1, required bidders to include prices for each
line item in the bid schedule and warned that failure to do so would
result in rejection of the bid as nonresponsive. The IFB further
provided that award would be made to the responsive, responsible bidder
whose total price, including options, was low. Amendment No. 2 added
three dining facilities to the 120 already on the bid schedule and
provided a form for the bidder to fill in unit and extended prices for
each year for each of the additional buildings. The amendment also
revised the meal adjustment clause for all years.
United's bid was complete for the dining facilities listed in the
original bid schedule. In addition, United acknowledged Amendment No. 2
and submitted prices for both base and option years for two of the
additional buildings. However, it did so by interlineating each of the
new line items on the original bid schedule, rather than using the
separate form that the Army had provided with the amendment. United
also revised the meal adjustment clause to reflect the amendment.
However, with respect to the third additional building, No. 1485, Group
III, United inserted a base year price only; it failed to interlineate
either unit or extended prices for the 4 option years. United now
offers to perform the option year services at either its intended price
for the option years or at the price which it bid for the base period
for the building in question. Alternatively, it offers to perform the
contract at the original bid price, i.e., without charge for the option
years for the building in question.
United argues that its omission is a mistake in bid, correctable as
an obvious clerical error, and that both its mistake and its intended
price are ascertainable from its pattern of pricing. United further
asserts that even if the amount of the intended bid cannot be clearly
proven for the purpose of bid correction, its mistake should be waived,
since, if waived, its intended bid would be 11%, or $7,219,163 lower
than that of the awardee ($62,921,598 as compared to $70,140,761), and
if corrected, its intended bid would be 10.5 percent, or $6,754,615
lower than that of the awardee ($63,386,146 as compared to $70,140,761).
Finally, United alleges that the award to Colbar violates applicable
statutes and regulations, since the record does not show the required
urgent and compelling circumstance which significantly affect the
interest of the United States. The protester also requests bid
preparation and protest prosecution costs.
As the Army points out, a bid generally must be rejected as
nonresponsive if, as submitted, it does not include a price for every
item requested by the IFB. Further, a nonresponsive bid may not be
corrected under the mistake in bid procedures after bid opening. E. H.
Morrill Co., 63 Comp. Gen. 348 (1984), 84-1 C.P.D. Paragraph 508; 52
Comp. Gen. 604 (1973). This rule, which applies to option items if they
are evaluated, reflects the legal principle that a bidder who has failed
to submit a price for an item generally cannot be said to be obligated
to provide that item. Id.; Goodway Graphics of Virginia, Inc.,
B-193193, Apr. 3, 1979, 79-1 CPD Paragraph 230. A bidder's subsequent
offer not to charge for the omitted item does not make the bid
responsive. See Farrell Construction Co., 57 Comp. Gen. 597 (1978),
78-2 CPD Paragraph 45.
Our Office, however, recognizes a limited exception under which a
bidder may be permitted to correct an omitted price. This exception,
which applies where the bid, as submitted, indicates the possibility of
error, the exact nature of the error, and the intended bid price, is
based on the premise that where there is a consistent pattern of pricing
in the bid itself that establishes both the error and the intended
price, to hold that bid nonresponsive would be to convert an obvious
clerical error of omission to a matter of responsiveness. See 52 Comp.
Gen. 604, supra, in which our Office permitted correction of an option
price omission where the bidder had submitted identical prices for the
base quantity and three of four option quantities.
We have not permitted bidders to insert an omitted option price where
the option work was added by amendment to a solicitation that did not
include options. E. H. Morrill Co., supra. Nor have we allowed
correction where all option prices were omitted from the bid. Ainslie
Corp., B-190878, May 4, 1978, 78-1 CPD Paragraph 340. However, we have
permitted bidders to insert an omitted line item or option price where
the bidder had bid on an identical item elsewhere in the IFB, Telex
Communications, Inc. et al., B-212385 et al., Jan. 30, 1984, 84-1 CPD
Paragraph 127; where option prices were identical to the base prices
for other items, International Signal and Control Corp. et al.,
B-192960, Dec. 14, 1978, 78-2 CPD Paragraph 416; and where identical
prices were inserted for the base period and the second option year,
Con-Chen Enterprises, B-187795, Oct. 12, 1977, 77-2 CPD Paragraph 284.
In these cases, the evidence of error and the intent to bid on an
omitted line item or an omitted option quantity were clear from the face
of the bid, and a reasonable, clear bidding pattern could be
established. Moreover, a pattern of pricing may be ascertained by
comparing the base and option prices for certain line items and applying
that pattern by analogy to different line items where a base price was
inserted but option prices were omitted. Consolidated Technologies,
Inc., B-205298, Apr. 23, 1982, 82-1 CPD Paragraph 375.
Here, although United omitted option year prices for one of the
dining facilities in Group III, our review of the firm's base and option
year prices for buildings in that category shows a pattern of pricing.
The firm's unit prices are identical for all 4 option years, and the
increase in unit prices for these years over prices for the base year
for all Group III buildings is between $4 and $8. United's base year
unit price for Building No. 1485 was $321. It therefore appears that
its intended unit price for the option year would be between $325 and
$329.
This analysis of the omission of the option price for Building No.
1485 establishes the existence and nature of United's error. While
United's intended price cannot be precisely determined, it is within an
extremely narrow range. Where it is clear that the intended bid would
have been the lowest, even though the amount of the intended bid cannot
be clearly proven for the purpose of bid correction, we have permitted
an exception to the rule that a bidder is not free to waive a mistake
claim after bid opening and to stand on its original bid price. Bruce
Andersen Co., Inc., 61 Comp. Gen. 30 (1981), 81-2 C.P.D. Paragraph 310.
Whether the intended bid would have been the lowest may be ascertained
by reference to reasonable estimates of omitted costs. Id.
Applying the rule so as to allow United to waive its mistake claim
and stand on its original bid price results in a total evaluated price
of $62,921,598. The next-low responsive bid, that of the awardee, was
$70,140,761. Thus, as noted above, the awardee's bid is 11 percent, or
$7,219,163 more than United's bid.
Considering the difference of approximately $7,000,000 between
United's bid and awardee's bid, we believe it is reasonable to assume
that United would have been the lowest bidder if either a corrected bid
or its original bid were allowed. United would have had to have bid
$5,000 per day per option year for Building No. 1485, Group III (in
contrast to a base year unit price of $321 per day for that building) in
order to be upset as the lowest bidder. We believe it is unreasonable
for the Army to conclude that United would have priced the 4 option
years at a rate that much higher than the rate for the option years
applied to the other buildings in Group III. Therefore, the rule that
prevents an obvious clerical error or omission from being converted to a
matter of responsiveness is applicable here, since United has otherwise
acknowledged Amendment No. 2, and since it is clear that the firm
intended to obligate itself to provide the services in question. We
sustain the protest on this basis.
Accordingly, we are recommending that the Army terminate Colbar's
contract and make award to United allowing United to waive its mistake
claim for the omitted option years for Building No. 1485, Group III. In
view of this recommendation, we need not consider whether the Army
should have extended Colbar's existing contract pending resolution of
the protest or whether, as United contends, urgent and compelling
circumstances did not exist, so that the Army improperly proceeded with
award and approved performance of Colbar's new contract. Further,
United is not entitled to bid preparation or protest prosecution costs.
See 4 C.F.R. Section 21.6(e) (1985).
We sustain the protest.
B-219906, 65 Comp. Gen. 164
Matter of: Rampart Services, Inc., Dec. 27, 1985
Bids - Invitation for Bids - Specifications - Restrictive
Options clause is not unduly restrictive of competition because of
risk to bidders resulting from political and economic instability of
countries in which weather data necessary for contract performance will
be collected where agency establishes prima facie support that clause is
reasonably related to its needs for continuous service on long-term
basis and protester fails to demonstrate that use of options places
undue risk on bidders.
Bids - Invitation for Bids - Specifications - Restrictive - Unduly
Restrictive
Time period between award and commencement of performance is unduly
restrictive of competition where agency has not provided prima facie
support that 30-day startup period is reasonably related to its minimum
needs and, in fact, acknowledges that longer startup period is required
for bidders without established communication circuits necessary for
contract performance.
Rampart Services, Inc., protests that the requirements for four
1-year options and a 30-day startup period in invitation for bids (IFB)
No. F41613-85-B0041 unduly restrict competition. /1/ The IFB, issued by
Carswell Air Force Base, Texas, solicited bids to furnish South American
weather data for dissemination by the Automated Weather Network, which
supports the meteorological requirements of the Department of Defense
and other federal agencies.
We deny the protest in part and sustain it in part.
Rampart first contends that the solicitation's inclusion of options
violates the Federal Acquisition Regulation (FAR) prohibition against
their use where the contractor will incur undue risks, citing FAR, 48
C.F.R. Section 17.202(c)(2) (1984). Rampart maintains that the risks
posed in gathering weather data from governmental or quasigovernmental
sources in South America are considerable, due to political
instabilities of the area, and alleges that those risks would be
reflected in excessively high bid prices for contract periods beyond the
initial year. The protester also submits statistics establishing that
inflation rates in South American countries are highly variable,
contending that as a result of currency fluctuations, South American
officials are reluctant to enter into long-term contracts.
The protester also maintains that the time available to the low
bidder to commence performance violates the FAR requirement that
contracting officers ensure realistic delivery schedules that do not
tend to restrict competition and cause resulting higher contract prices,
citing FAR, 48 C.F.R. Section 12.101(a). According to Rampart,
international communications companies require 90 days to implement an
international communications circuit for weather data collection, and
they charge a significant cancellation fee if a circuit is ordered and
then cancelled. The IBF required bids to be submitted by August 23 and
performance to begin on October 1, 1985. The protester maintains that
the approximately 30-day startup period limits competition to companies
with established communication circuits throughout South America. The
Air Force obtained a 90-day extension of the current contract after this
protest was filed. Consequently, Rampart argues that there is no reason
why the agency could not seek an extension sufficient to allow
reasonable competition for the contract.
The Air Force responds that the use of options is appropriate here
because the government anticipates the need for services beyond the
current year and will avoid annual startup and tear-down costs. The Air
Force believes that any risk of service loss due to political upheaval
is speculative. The agency reports that the service has been performed
by contractors for approximately the past 8 years without delays due to
political instability. Also, according to the Air Force, inflation in
the affected business has been predictable in the past, and the
countrywide inflation rates cited by Rampart are not necessarily
reflective of the weather-collecting business. The agency maintains
that both these factors can be incorporated into bids without undue
risk.
Regarding the startup period, the Air Force has confirmed with an
international communications company that 90 days are required to
establish the network necessary to perform the contract. However, the
agency offers two reasons why it is not required to provide this full
period. First, the Air Force suggests that companies not already in the
weather-data-gathering business are not responsible, and that it is
reasonable for the government "to use a start-up date that would prevent
unresponsible bidders from being eligible under the contract." In the
past, only airline companies which have established communications
networks encompassing major South American cities have provided this
service to the Air Force. According to the agency, there are two
bidders other than Rampart that have not questioned the reasonableness
of a 30-day startup period. Second, the Air Force argues that a 3-month
lapse in obtaining weather data would be unacceptable because of the
importance of the service. The agency emphasizes that the weather data
is critical to meet the requirements of the Department of Defense and
other federal agencies.
Where a protester challenges specifications as unduly restrictive of
competition and provides some support for that proposition, the
procuring agency must establish prima facie support for its contention
that the restrictions it imposes are reasonably related to its needs.
Cleaver Brooks, B-213000, June 29, 1984, 84-2 CPD Paragraph 1. If it
does so, the burden shifts to the protester to show that the
restrictions are clearly unreasonable. Id. This is so because
contracting officials are familiar with the conditions under which
supplies, equipment, or services have been used in the past and will be
used in the future and, thus, are in the best position to know the
government's actual needs.
We find that the Air Force has a reasonable basis for including
options in the procurement, but the agency has not justified its 30-day
startup period limitation.
The FAR provides that, subject to specified limitations, contracting
officers may include options in contracts when such action is in the
government's interest. FAR, 48 C.F.R. Section 17.202(a). Here, the
agency anticipates the need for services beyond the current year and
wishes to benefit from the price advantages of continuous service. The
agency reports it has received uninterrupted service for the past 8
years. In light of this fact, we do not believe that Ramport's concern
with political instability establishes that bidders assume an undue
risk. With respect to varying inflation rates in certain South American
countries, subcontract prices in United States currency or United States
currency equivalents should be relatively stable and predictable
irrespective of local currency fluctuations. The protester's bare
statement that South American governments are hesitant to enter
long-term contracts because of a sensitivity to monetary fluctuations
does not make the option requirement unreasonable.
Agencies are not obligated to eliminate all risk from a procurement.
Talley Support Services, Inc., B-209232, June 27, 1983, 83-2 CPD
Paragraph 22. Bidders are expected to exercise business judgment and
take attendant risks into account when developing their bids. Mere
disagreement with the agency's judgment that risks are reasonably
calculable is not sufficient to carry the protester's burden of proof.
See The Trane Co., B-216449, Mar. 13, 1985, 85-1 CPD Paragraph 306.
Here, Rampart has not shown that the requirements complained of are
clearly unreasonable, and we deny the firm's protest on this basis.
We find, however, that the Air Force has failed to establish a
reasonable basis for its approximately 30-day startup limitation, which
apparently limits competition to two airline companies having
established communication networks in South America. We find the
requirement to be unduly restrictive. As noted above, the agency
acknowledges that international communications companies require 90 days
to establish communication circuits. The agency's only explanations for
the necessity of lesser time here are that any interruption in service
would be unacceptable and that the restriction keeps nonresponsible
companies from bidding.
Agencies may restrict competition to the extent necessary to satisfy
the minimum needs of the government. Informatics, Inc., B-190203, Mar.
20, 1978, 78-1 CPD Paragraph 215, aff'd on reconsideration, 57 Comp.
Gen. 615 (1978), 78-2 CPD Paragraph 82 (2-month startup period found to
be unreasonable); 10 U.S.C.A. Section 2305(a)(1)(B)(ii) (West Supp.
1985). The Competition in Contracting Act of 1984 requires agencies to
use "full and open" competitive procedures, and places particular
emphasis on the importance of using advanced procurement planning to
open the procurement process to all capable contractors. 10 U.S.C.A.
Section 2301(a), 2305(a)(1)(A); H.R. Rep. No. 861, 98th Cong., 2d Sess.
(1984). Agencies may not justify the use of noncompetitive procedures
on the basis of a lack of advanced planning. 10 U.S.C.A. 2304(f)(5).
We have no reason to question the Air Force's statement that it needs
a continuous supply of weather data. However, by entering into a 90-day
contract extension with the incumbent, the agency established that an
interruption would not have occurred if the solicitation has provided a
longer startup period as requested by the protester. Moreover, such an
extension would have been unnecessary if the procurement had been
planned with the need for a 90-day period in mind.
With regard to possible nonresponsible bidders, we are aware of no
authority, either in statute or regulation, that permits an agency to
impose restrictive performance requirements in order to exclude firms
believed to have insufficient financial capacity or business experience.
These matters are properly addressed in the contracting officer's
responsibility determination. FAR, 48 C.F.R. Section 9.104-1.
We find the Air Force has failed to satisfy its threshold requirement
of establishing that the approximately 30 days available to the low
bidder before performance commencement is required by its minimum needs.
We are recommending that the Air Force revise the IFB to permit bidding
on the basis of a 90-day startup period.
The protest is sustained in part and denied in part.
FOOTNOTES
(1) Originally, Rampart also protested a requirement for performance
and payment bonds. Amendment No. 0005, issued on August 27, 1985,
deleted that requirement, and it therefore is no longer at issue.
B-219937, 65 Comp. Gen. 160
Matter of: Kinross Manufacturing Corporation, Dec. 26, 1985
Contracts - Protests - What Constitutes Protest
Inquiries to a contracting agency by a congressional aide regarding
rejection of a constituent's bid can reasonably be considered as a
protest to the agency where the aide ostensibly represents the interests
of the constituent and, while not expressly indicating an intent to
protest, adequately conveys the constituent's dissatisfaction to the
agency.
Contracts - Protests - General Accounting Office Procedures -
Timeliness of Protest - Adverse Agency Action Effect
Protest filed with General Accounting Office (GAO) before resolution
of an initial protest filed with the contracting agency is timely under
Bid Protest Regulations.
Contracts - Protests - General Accounting Office Procedures -
Timeliness of Comments on Agency's Report
Failure of an agency simultaneously to furnish a copy of a protest
report to the protester and to GAO does not warrant rejection of the
report where the protester is not prejudiced by the agency's
noncompliance with this procedural requirement.
Bids - Invitation for Bids - Amendments - Failure to Acknowledge - Bid
Nonresponsive
A bid must be rejected as nonresponsive although the bidder indicates
its awareness of one aspect of a solicitation amendment, i.e., the fact
that the bid opening had been extended, where this action does not
clearly indicate that the bidder received or even had knowledge of the
other substantive changes made by the amendment.
A solicitation amendment is material where the requirements aided by
the amendment, although not affecting the overall price of performance,
will affect the quality of the product being procured in more than a
trivial manner.
Kinross Manufacturing Corporation protests the award of a contract to
Martin Electronics, Inc. under invitation for bids (IFB) No.
DAAA09-84-B-0989, issued October 24, 1984 by the United States Army
Armament, Munitions, and Chemical Command, Rock Island, Illinois.
Kinross contends that the Army improperly rejected its low bid as
nonresponsive for failure to acknowledge an amendment to the
solicitation.
We deny the protest.
The Army issued four amendments to the solicitation, which was for a
quantity of signal illumination kits used with Navy survival vests.
Bidders were required to acknowledge all amendments when submitting
their respective bids. Amendment No. 4, issued April 22, 1985, extended
the bid opening date from April 23 to May 22, 1985. The amendment also
referenced certain technical drawings and specifications that, according
to the contracting officer, required that a "chamfered," or beveled,
edge be added to the signal kit's case mouth. The amendment also
required that an originally-prescribed clear enamel sealant be replaced
with a varnish sealant.
Kinross, the apparent low bidder, expressly acknowledged receipt of
only the first three amendments, returning them with its bid package on
May 18, 1985. Instead of returning the fourth amendment, however,
Kinross merely indicated, by means of a handwritten note in the
appropriate box of the amendment acknowledgement form, that the opening
date had been extended and that the extension was per a named agency
official. Kinross indicated that the effective date of amendment No. 4
was April 29, 1985, 7 days after the actual effective date of that
amendment.
After consulting the Naval Weapons Support Center as to the effect of
amendment No. 4, the contracting officer determined that Kinross' bid
should be rejected as nonresponsive for failure to acknowledge the
fourth amendment. The Army subsequently awarded the contract to Martin
Electronics, Inc.; performance has been delayed pending our resolution
of the protest.
Timeliness
The Army contends that Kinross' protest is untimely and accordingly
should be dismissed under our Bid Protest Regulations, which require
protests to be filed not later than 10 days after the basis for them is
known or should have been known, whichever is earlier. See 4 C.F.R.
Section 21.2(a)(2) (1985). Kinross, the Army maintains, was at least on
constructive notice of its basis for protest on July 18, when the
contracting officer and several other agency officials met with an aide
of the Congressman representing the district in which Kinross is located
regarding the determination that Kinross' bid was nonresponsive. The
Army contends that Kinross' protest should have been filed within 10
working days of July 18. In fact, our Office did not receive the
protest, filed by the Member of Congress on behalf of Kinross, until
August 13.
Kinross responds that the Army did not complete its review of the
nonresponsiveness determination until August 15, the date of a letter
from the Secretary of the Army to the Member of Congress. Kinross thus
argues that its protest is timely.
We find the protest to our Office timely. Although the Army did not
treat them as such, we believe the actions of the congressional aide,
who expressed dissatisfaction with the rejection of Kinross' bid during
the July 18 meeting and made further inquiries on July 23, can
reasonably be regarded as an agency-level protest. The Army evidently
viewed the interest expressed as warranting further internal review,
which was completed on August 15 when the Secretary of the Army
concurred with the contracting officer's decision. This decision, in
effect, constituted initial adverse agency action on the protest.
Kinross' protest to our Office therefore, is timely, since it was filed
on August 13, or 2 days before that adverse action was taken. See 4
C.F.R. Section 21.2(a)(3), which permits protests to be filed here up to
10 days after a protester learns of adverse agency action on its protest
to the agency.
In reaching the above conclusion, we recognize that the congressional
aide never expressly advised the Army that he was filing a protest on
behalf of Kinross. We note, however, that a protest need not be in any
particular form, so long as it can be reasonably considered as loding
specific objections to the agency's actions. See Hill Industries,
B-210093, July 6, 1983, 83-2 C.P.D. Paragraph 59. Here, the Army was
aware that the aide was ostensibly representing the interests of
Kinross. Moreover, the aide adequately conveyed Kinross'
dissatisfiaction with the rejection of its bid and requested that this
decision be reviewed. See Worldwide Marine, Inc., B-212640, Feb. 7,
1984, 84-1 C.P.D. Paragraph 152; compare Lion Recording Services, Inc.
-- Reconsideration, B-188768, Nov. 15, 1977, 77-2 C.P.D. Paragraph 366
(letters sent by congressman to procuring activity did not constitute a
protest when letters merely initiated an informational exchange between
the congressman and the agency concerning rejection of constituent's
bid).
Kinross' Contentions
Preliminarily, Kinross argues that we should not consider the
administrative report submitted by the Army in response to its protest
because of the Army's failure to comply with section 21.3(c) of our Bid
Protest Regulations. This section provides in pertinent part that the
contracting agency "shall simultaneously furnish a copy of the report to
the protester." Here, the Army submitted the report to our Office on
September 26. Kinross, however, did not receive its copy, which was
sent via regular mail and which was postmarked September 30, until
October 4.
While the Army did not comply with this procedural requirement, its
failure to do so does not warrant rejection of the report. Kinross was
not prejudiced by the Army's actions, since under section 21.3(e) of our
regulations, it still had 7 days from receipt of the agency report in
which to file comments with our Office, and has done so.
Primarily, Kinross protests the Army's determination of
nonresponsiveness, based on Kinross' failure expressly to acknowledge
all aspects of amendment No. 4. Kinross, citing two decisions of our
Office, Atlantic Scientific Corp., B-204895, Feb. 25, 1982, 82-1 CPD
Paragraph 166, and Algernon Blair, Inc., B-182626, Feb. 4, 1975, 75-1
CPD Paragraph 76, contends that it should nevertheless be considered as
having done so implicitly. Alternatively, Kinross contends that its
failure to acknowledge all aspects of amendment No. 4 should be waived
as a minor informality, since the amendment is not material.
In each of the two cases cited by Kinross, the bidder failed
expressly to acknowledge an amendment that made several changes to the
terms of a solicitation, including an extension of the bid opening date.
The bidder in each case nevertheless submitted its bid on the new
opening date.
As a general rule, a bid, to be considered for award, must comply in
all material respects to the terms of a solicitation. 48 C.F.R. Section
14.405 (1985). Minor irregularities, however, may be waived. 48 C.F.R.
Section 14.405 (1985). For example, the failure of a bid to include an
express acknowledgment of a material amendment does not preclude a
contracting activity from considering the bid for award where the bid
"clearly indicates that the bidder received the amendment." 48 C.F.R.
Section 14.405(d)(1). (Italic supplied.) In the two cited cases, we
determined that each bidder, although failing expressly to acknowledge
and amendment, had clearly indicated its knowledge of the amendment. In
this regard, we noted that each bidder's submission of its bid by the
respective bid opening date reflected actual knowledge of the amendment
and all the information contained therein. We concluded that this
action constituted an implied acknowledgment of the amendment, thereby
binding the bidder to perform all the changes set forth in the amendment
at the prices stated in its bid.
We believe Kinross' actions are distinguishable. Kinross expressly
indicated its awareness of one aspect of amendment No. 4, i.e., the fact
that the bid opening date had been extended. In a handwritten note,
Kinross indicated that its source of information as to the extension was
an agency official, not the amendment itself. In addition, Kinross
inserted an effective date that was different from the effective date of
the amendment. We do not consider this action as clearly indicating
that Kinross received or even had knowledge of the amendment. At most,
the bid indicates that Kinross' knowledge was limited to the new bid
opening date. We therefore cannot waive Kinross' failure to acknowledge
amendment No. 4 as a minor irregularity. Consequently, we cannot charge
Kinross with knowledge of the entire amendment, and we do not believe
the firm could be legally required to provide the changes required by
the amendment at its original bid price.
We find that the Army acted properly in rejecting Kinross' bid as
nonresponsive, because it was neither an express nor an implied offer to
provide the exact thing described in the soliciation, as amended. See
McGraw Edison Co., et al., B-217311, et al., Jan. 23, 1985, 85-1 CPD
Paragraph 93.
We also reject Kinross' alternate argument that its failure to
acknowledge the amendment should be waived as a minor informality.
Essentially, Kinross argues that so far as the changes made by amendment
No. 4 minimally affect the overall price of the contract, the amendment
is not material. We note, however, that price is not the only
dispositive factor in determining whether a particular amendment is
material. Other factors, such as the effect of the amendment on quality
of performance, must also be considered. See L. B. Samford, Inc., et
al., B-215859, et al., Nov. 14, 1984, 84-2 CPD Paragraph 533. Here, the
change to a new sealant apparently will not affect the quality of the
signal kit. The record indicates that this change was only issued
because the originally-prescribed sealant is no longer available. The
Army, however, asserts that the addition of the chamfer, or beveled
edge, affects the quality of this product. This requirement, the Army
states, will facilitate the assembly of the signal kit's case mouth and
permit better seating and sealing of the cap. Moreover, according to
the Army, the Naval Weapons Support Center will not accept the signal
kits without this change. Kinross has presented no evidence to the
contrary.
The record therefore supports the Army's determination that the
addition of the chamfer is material, and we agree that Kinross' failure
to acknowledge the amendment in its entirety rendered its bid
nonresponsive.
The protest is denied.
B-219260, 65 Comp. Gen. 157
Matter of: Kenneth C. Barnum -- Real Estate Expenses -- Assignment
of Second Mortgage, Dec. 26, 1985
Officers and Employees - Transfers - Real Estate Expenses - Interim
Financing Loans
Transferred employee sold residence at old duty station, received
$5,000 cash and accepted a second mortgage from the purchaser. In order
to obtain sufficient funds to purchase a residence at his new official
station, employee later assigned his interest in and to 120 monthly
installments under the second mortgage and received the sum of $12,000.
The transaction entered into by the employee was an "interim personal
financing loan." It was not a loan secured by the employee's interest in
his old residence, and thus was not a part of the total financial
package in the purchase of a residence at his new duty station. Hence,
the costs incurred in securing assignment of the second mortgage are not
reimbursable.
This decision is in response to a request by Mr. F. P. Cantrell,
Manager, Accounting Division, Federal Aviation Administration (FAA),
United States Department of Transportation, as to whether he may certify
for payment a reclaim travel voucher in the amount of $1,764.15. The
reclaim was submitted by Mr. Kenneth C. Barnum, an employee of the
agency, for reimbursement of costs incurred in the assignment of 120
monthly installments due him under a second mortgage on his residence at
his old duty station in order to purchase a residence at his new
official station. For the reasons stated later, the costs in the
reclaim travel voucher may not be certified for payment.
By travel order dated March 12, 1984, Mr. Barnum was authorized a
permanent change of station from Thatcher, Arizona, to Chandler,
Arizona. He sold his residence in Thatcher on July 10, 1984. As part
of the settlement, Mr. Barnum (and his wife) accepted a second mortgage
from the purchaser. He received approximately $5,000 in cash. In
October 1984, Mr. Barnum assigned his interest in and to 120 monthly
installments payable under the second mortgage to a lending institution.
He received a net sum of $12,000.
In his reclaim voucher of February 4, 1985, Mr. Barnum submitted a
claim for reimbursement of the sum of $1,764.15 incurred when he
assigned one-half of his interest in his second mortgage. The costs
involved in the sale of the second mortgage were for a sales commission
charged by an investment company for selling one-half of the second
mortgage, an escrow fee, an owner's policy, and recording fees.
Mr. Barnum was reimbursed the sume of $4,450.50 by FAA for real
estate expenses in connection with the sale of his residence at his old
duty station. Of this amount $3,980 was for a real estate sales
commission. He was also reimbursed the amount of $1,286.92 for real
estate expenses incident to the purchase of a residence at his new duty
station.
The statutory and regulatory authority for reimbursement of real
estate expenses incurred by a federal civilian employee upon transfer of
official station is contained in 5 U.S.C. Section 5724a(a)(4) (1982) and
Chapter 2, Part 6, of the Federal Travel Regulations, Incorp. by ref., 5
C.F.R. Section 101-7.003 (1984). Under these authorities, we have
allowed reimbursement of the expenses incurred by an employee in
obtaining a new mortgage, or a second mortgage on his residence at his
former duty station, where the mortgage transaction on that residence
was part of the "total financial package" essential to the purchase of a
residence at the new duty station. Arthur J. Kerns, Jr., 60 Comp. Gen.
650 (1981); Charles A. Onions, B-210152, June 28, 1983; James R.
Allerton, B-206618, March 8, 1983. See also, Marshall L. Dantzler,
B-217462, June 3, 1985, 64 Comp. Gen. 568.
In Kerns, 60 Comp. Gen. 650, the second mortgage obtained by the
employee was not on the residence which he was purchasing but on his old
residence which he had been unable to sell. The purpose of the second
mortgage transaction was to obtain funds to make the downpayment on the
residence which he was purchasing at his new duty station. We viewed
the second mortgage transaction as being a part of the total financial
package essential to the purchase of his new residence, and granted
reimbursement. In Onions, B-210152, we permitted an employee to be
reimbursed for the cost of refinancing his old residence in order to
obtain an assumable mortgage for the new purchaser and the downpayment
on a residence at his new duty station. In Allerton, B-206618, the
employee refinanced his residence at his old duty station in order to
facilitate its sale and in order to obtain a downpayment for the
purchase of a residence at his new duty station. The costs of
refinancing the mortgage on the old residence were allowed. The
mortgages in Kerns, Onions, and Allerton were all secured by the
employees' interests in their old residences. Therefore, the mortgage
loans obtained by the employees were not deemed to be "interim personal
financing loans," but loans made to the employees, secured by their
interests in their old residences, to enable them to make the
downpayments on the purchases of the residences at their new official
stations.
The common thread present in these decisions is that the financial
transactions involved, a second mortgage, a refinanced mortgage, and a
new mortgage, were secured by the employees' interests in their
residences at their old duty stations. In this case, Mr. Barnum sold
his residence at his old duty station and title passed to the purchaser.
Therefore, he no longer had an ownership interest in his former
residence. Consequently, the assignment of his interest in 120 monthly
installments of the sales price of the property was more in the nature
of an "interim personal financing loan," which occurred subsequent to
and was disassociated from the sale of the employee's residence at his
old official station. This Office has denied reimbursement of expenses
incurred by an employee in obtaining an "interim personal financing
loan." See 55 Comp. Gen. 679 (1976), wherein we held that since a
personal loan was not secured by the property being purchased, by means
of either a mortgage or deed of trust, the expenses incurred in
obtaining the short-term loan were not reimbursable.
Accordingly, the reclaim travel voucher submitted by Mr. Barnum may
not be certified for payment.
B-214597, 65 Comp. Gen. 154
Matter of: EPA Level of Effort Contracts -- Appropriation
Availability, Dec. 24, 1985
Contracts - Terms - Time Extension
The Environmental Protection Agency may not issue a nonseverable work
assignment under a cost-reimbursement, level of effort, term contract
where the effort furnished will extend beyond the contract's initial
period of performance into an option period. The Federal Acquisition
Regulation requires that term contracts be "for a specified level of
effort for a stated period of time." Further, issuance of a work
assignment which could not be performed until the next fiscal year would
violate the bona fide need rule.
Contracts - Modification - Propriety
The Environmental Protection Agency may not modify a level of effort
contract to accommodate a non-severable task extending beyond the
original contract period of performance. Since the period of
performance is an essential part of a level of effort contract, any
change in that term would substantially change the contract such that
the contract for which competition was held and the contract to be
performed are essentially different. Accordingly, such a contract could
not be extended by contract modification.
This is in response to a request from C. Morgan Kinghorn, Comptroller
of the Environmental Protection Agency (EPA), for a decision regarding
the propriety of issuing a hypothetical nonseverable work assignment
under a cost-reimbursement, level of effort, term contract, in which the
effort furnished will extend beyond the contract's initial period of
performance. EPA has also asked informally whether it may modify an
existing level of effort contract to accommodate a work assignment
extending beyond the term of the original contract to be funded with
appropriations available during the initial contract period. Although
the contract described in EPA's hypothetical also contains options to
extend the contract for additional periods of performance, EPA
recognizes that performance under any options would be funded with
appropriations available during the fiscal year covered by the option
period. EPA's second question, however, is whether a modification,
prior to option exercise, extending performance beyond the end of the
fiscal year during which the original period of performance takes place,
may encumber the funds of the expiring fiscal year.
For the reasons set forth below, we conclude that EPA may not issue a
work assignment extending beyond the term of a level of effort contract,
nor may it modify the term of an existing level of effort contract to
accommodate such a work assignment.
Background: EPA uses level of effort, term contracts to perform
service-intensive type work, including, for example, economic cost and
benefit analyses and technical analyses of hazardous waste regulations.
Typically, EPA, through its level of effort term contracts, purchases,
on a cost-reimbursement basis, a specified quantity of person-hours (the
level of effort) for the contract's base period and each option period.
The contract's estimated cost is established, based upon a maximum
number of hours set forth in the contract. EPA is obligated to order
and the contractor is obligated to furnish the specified level of effort
within the time period set forth in the contract. The contract provides
for a downward adjustment in the contractor's fees if the contractor
provides less than 90 percent of the specified level of effort. The
contract's scope of work merely sets forth the broad outlines of the
type of work to be performed. During the term of the contract, EPA
issues work assignments which draw on the contractor's specified
quantity of person-hours and require the contractor to work on a
specific task.
EPA raises the following hypothetical situation:
Assume a level of effort, work assignment contract is awarded October
1, 1982, with a period of performance through September 30, 1983. The
contract has an option for one additional year running from October 1,
1983, through September 30, 1984. Both the basic period of performance
and the option year are for 10,000 professional hours for each period.
Assume that the contractor has provided 9,000 hours as of September 25,
1983 and EPA issues a work assignment on September 26, 1983, for 1,000
hours. The contractor will provide the bulk of hours in FY 1984. The
work assignment, when viewed alone, is for nonseverable services.
For purposes of our analysis of this hypothetical situation, we have
assumed what EPA has implied but not stated, that the contract is being
funded under an appropriation that is available for obligation only
through the end of the contract term. /1/
EPA asks two questions regarding this hypothetical situation. The
first question is whether it properly may issue the 1,000 hour-work
assignment on September 26, 1983, recognizing that the contractor will
provide the bulk of hours in fiscal year 1984. The second question is
whether it could modify the terms of a level of effort contract to
accommodate a work assignment extending beyond the term of the contract.
Analysis: We conclude that in the hypothetical situation posed by
EPA, the issuance of a work assignment which could not be completed
within the contract's initial term of performance, i.e., by September
30, 1983, would have violated both the Federal Procurement Regulations
(FPR) /2/ and the "bona fide need" rule, 31 U.S.C. Section 1502(a). As
EPA concedes, EPA's level of effort contracts fall squarely within the
FPR definition of "term contracts." Section 1-3.405(e)(2) of the FPR
provide:
The Term form is one which describes the scope of work to be done in
general terms and which obligates the contractor to devote a specified
level of effort for a stated period of time for the conduct of research
and development.
The FPR further provides in section 1-3.405(e)(5):
In no event should the term form of contract be used unless the
contractor is obligated by the contract to provide a specific
level-of-effort within a definite period of time. (Italic supplied.)
Accordingly, to permit a contractor to provide a portion of the
required 10,000 professional hours beyond the basic period of
performance, i.e., after September 30, 1983, would be contrary to the
FPR requirement that such term contracts "provide a specific level of
effort within a definite period of time."
Further, the issuance of a work assignment which could not be
completed within the contract's initial term of performance would also
violate the bona fide need rule. The bona fide need rule requires that
appropriations made available for obligation during a given fiscal year
or years may be obligated only to meet a legitimate need arising in that
fiscal year (or years). 31 U.S.C. Section 1502(a) (1982). See, e.g.,
38 Comp. Gen. 628 (1959).
As a general rule, service contracts can extend beyond the duration
of an appropriation period only when the portion of the contract to be
performed after the expiration of the appropriation period is not
severable from the portion performed during the prior period. See 60
Comp. Gen. 219 (1981). In the EPA case, the level of effort contract
is, by definition, a severable services contract. It requires the
performance of a certain number of hours of work within a specified time
period rather than requiring the completion of a series of work
objectives. Because the original contract in EPA's hypothetical is for
10,000 hours of work to be performed in fiscal year 1983, funds
obligated under the contract may not be expended for work performed
within fiscal year 1984. See B-183184, May 30, 1975. The fact that a
work assignment issued under the contract late in the fiscal year might,
by its nature, be considered nonseverable if this were what the FPR (as
well as the FAR) call a "completion" form of term contract, does not
change the result in this case. A completion contraction would require
the contractor to complete and deliver a specified end product -- e.g.,
a final report. As long as the end product is a bona fide need of the
year in which it was ordered, the funds could remain obligated until the
end product was delivered. See FPR 1-3. 405(e)(1) and FAR 16.302(d)(1).
In contrast, the EPA hypothetical contract calls for 10,000 work hours
before the end of the fiscal year. Performance of those hours in the
next fiscal year would not be consistent with the requirements of the
contract.
The second question raised informally by EPA is whether it may modify
the original contract to accommodate the completion of a work
assignment, performance of which will extend beyond the end of the
contract period of performance. In raising this question, EPA says it
recognizes that a modification cannot be issued which extends the term
of the contract beyond the period of availability of the fiscal year
appropriation to be charged. Essentially, EPA is asking whether it may
amend a level of effort contract near the end of the fiscal year to
provide for the performance of a nonseverable task, performance of which
will extend beyond the end of the fiscal year. As noted, EPA's
modification would for the purpose of funding the modification with
expiring appropriations. Any options exercised, of course, would be
funded with currently available appropriations.
The determination of whether a particular modification should be
treated as a new procurement is generally decided on a case-by-case
basis. For example, we have held that if the contract as changed is
materially different from the contract for which the original
competition was held, the new requirement should be procured
competitively, unless a noncompetitive procurement is justifiable. 57
Comp. Gen. 285, 286 (1976).
The essential characteristics of a level of effort contract are the
stated level of work and the term in which that work is to be performed.
Therefore, any change in that structure -- particularly a change from a
specified level of effort for a fixed term to the performance of
specified, non-severable tasks -- would "substantially" change the
contract such that "the contract for which competition was held and the
contract to be performed are essentially different." Accordingly, we
conclude that a modification of the sort suggested by EPA to a level of
effort contract could not be done by contract modification, but rather
would require the execution of a new contract. This is because EPA's
suggested modification would turn a level of effort contract into a
contract for one or more nonseverable tasks.
In a memorandum prepared by the EPA Office of General Counsel on this
issue before it was submitted to us, the suggestion was made that use of
indefinite quantity or requirements contracts would eliminate the end of
year problems encountered with level of effort term contracts. We would
agree that the kind of services explained in EPA's hypothetical question
could be acquired under such an arrangement, provided that the nature of
the services themselves is nonseverable. It appears that the most
satisfactory form of contract, for EPA's purposes, may be the completion
contract, described earlier as requiring a specific end product as a
condition for payment of the full fee and costs. As a nonseverable
contract, performance could extend into a subsequent year but be payable
from funds obligated at the time the contract was executed. See FAR
16.306(d)(1), (2) and (3).
FOOTNOTES
(1) Our assumption is based on statements in EPA's inquiry letter
such as "so long as a nonseverable work assignment was issued during the
period of availability of a particular appropriation * * *." P. 4. We
are aware that EPA generally receives appropriations which are available
for 2 fiscal years, but the principles remain the same.
(2) The FPR, rather than the Federal Acquisition Regulation (FAR),
governed procurements by civilian agencies during the time period
specified in EPA's hypothetical questions. However, the FAR has nearly
identical provisions. See FAR 16.306(d)(2) and (4).
B-220276, 65 Comp. Gen. 151
Matter of: Ace Reforestation, Inc., Dec. 23, 1985
Bids - Multiple - Certificate of Independent Pricing Determination
Mere fact that individual bidders are partners and share common
business address does not establish that they engaged in price collusion
in violation of their Certificates of Independent Price Determination.
Bids - Multiple - Propriety
There is no blanket prohibition against partners and their
partnership competing on the same procurement.
Bonds - Miller Act Coverage - Contract Price Limitation
It is not legally objectionable for a member of a partnership to bid
as an individual on several solicitation items, and to include a $25,000
award limitation so that it would not have to secure the Miller Act bond
applicable to awards in excess of $25,000, even though its bid, if
combined with the partnership's bid, would exceed $25,000.
Ace Reforestation, Inc. (Ace) protests the proposed award of
contracts to other firms and individuals under United States Forest
Service solicitation No. R6-15-85-86, which included six bid items
covering the construction of six big game fences in the Umpqua National
Forest in Oregon. Ace claims that the firms and individual partners in
the firms violated their Certificates of Independent Price Determination
(CIPD), engaged in multiple bidding, and structured their bidding in a
manner that enabled them to avoid the solicitation's various bond
requirements. Ace contends that any award to these bidders, therefore,
would be improper. We deny the protest.
The solicitation stated that multiple awards, by items would be made
based on the lowest acceptable prices per item. The bids challenged by
Ace were submitted by S&S Contractors (S&S) and three S&S partners.
Each of these bidders offered prices on no more than three of the six
items, and each bid totaled less than $25,000. As this was the amount
above which bonds (bid bond, and Miller Act performance and payment
bonds, see 40 U.S.C. Section 270a-270f (1982)) were required by the
solicitation, none of the bids included bonds.
Mr. Holmgren, a partner in S&S, bid only on items 1, 2 and 3, and S&S
bid only on items 4, 5 and 6. The bids were low for all six items;
each bid included an award limitation of $25,000 or three items and,
thus, did not include bonds. The S&S bid was signed by Mr. Holmgren,
and the Forest Service subsequently learned from records on file with
the state of Oregon that S&S was a business name used by Mr. Holmgren.
The Forest Service thus deemed the Holmgren and S&S bids a single bid
and proposes awarding S&S/Holmgren items 1, 3 and 6, which yields the
combined bid's lowest three-item price, totaling less than $25,000.
The second low bid on items 1, 2 and 3 covered only those three items
and was submitted by an individual, Mr. Perry, who, according to
information Mr. Holmgren gave the Forest Service, also was a partner in
S&S. The Forest Service proposes awarding Mr. Perry a contract for item
2. The second low bidder on items 4, 5 and 6 was another S&S partner
(accordingly to Mr. Holmgren), Mr. Nash. The Forest Service proposes
awarding items 4 and 5 to Mr. Nash. Both Mr. Perry and Mr. Nash also
included a $25,000/three-item limitation in their bids, obviating the
need for bonding.
Ace was the third low bidder, after S&S and its partners, on items 1,
2 and 5.
Independent Price Determination
Ace argues that the proposed awards to S&S/Holmgren, Mr. Perry, and
Mr. Nash would be improper because these bidders violated their CIPDs.
Ace's argument is based on the fact that S&S and its partners were
affiliated through their partnerships and the fact that some of the
parties share business addresses. Ace believes the bidders thus must
have acted in concert when arranging their bid prices.
The purposes of the certification is to assure that bidders do not
collude among themselves to set prices or restrict competition by
inducing others not to submit bids, which would constitute a criminal
offense. B.F. Goodrich Co., B-192602, Jan. 10, 1979, 79-1 C.P.D.
Paragraph 11. We have specifically held that the fact that two bidders
may have common offices, ownership or business addresses is not by
itself sufficient to establish a violation of the CIPD or, in other
words, price collusion. Ace has presented no other evidence showing
that the S&S partners did not arrive at their bid prices independently,
and we will not assume that this was the case. Northwest Janitorial
Service, B-203258, May 28, 1981, 81-1 C.P.D. Paragraph 420.
In any event, it is within the jurisdiction of the Attorney General
and the federal judiciary, not our Office, to determine what constitutes
a violation of a criminal statute. Thus, if Ace wishes to pursue this
matter, it should do so through the Department of Justice, Northwest
Janitorial Service, B-203258, supra.
Multiple Bidding
Ace also contends that the bidders engaged in multiple bidding.
Multiple bids and bids submitted on the same requirement by more than
one commonly owned or commonly controlled company, or the same entity.
Multiple bidding is not objectionable where not prejudicial to the
interests of the government or other bidders. Atlantic Richfield Co.,
61 Comp. Gen. 121 (1981), 81-2 C.P.D. Paragraph 453 (prejudice where
awardee to be selected by lottery, so submission of multiple bids
unfairly increased chance for award).
Here, although S&S and three of its partners submitted bids, there
were no multiple bids as each partner bid in his own name, as an
individual, not on behalf of the partnership. We are aware of no
blanket prohibition against partners competing as individuals for awards
for which their partnership also is competing and, in any case, the mere
submission of bids by a firm and its partners does not necessarily
prejudice the other bidders. See Pioneer Recovery Systems, Inc.,
B-214700, B-214878, Nov. 13, 1984, 84-2 C.P.D. Paragraph 520 (no
prejudice from multiple bidding by two divisions of same company where
award is based on lowest bid and all offerors had same opportunity to
submit lowest bid).
Bonding Requirement
Ace claims that S&S and its partners improperly evaded the bid bond
and Miller Act bond requirements by each submitting separate bids on no
more than three of the items, limited to $25,000, so that no individual
bid reached the $25,000 bonding floor.
The Miller Act requires that performance and payment bonds be
acquired for federal construction contracts in excess of $25,000. The
performance bond is for the protection of the government in case of
default by the contractor, and the payment bond is for the protection of
persons supplying labor and material in the performance of the contract.
The purpose of a bid bond is to guarantee that the government will
recover its costs if the bidder revokes its offer after award, and also
to insure that the successful bidder will furnish the Miller Act bonds.
Southern Systems, Inc., B-193884, Feb. 14, 1980, 80-1 C.P.D. Paragraph
133.
The solicitation provided for multiple awards and allowed bidders to
exempt themselves from the bonding requirements by limiting their
potential awards to $25,000. This exemption well may have been the
incentive for the S&S partners to compete as individuals, but we see
nothing legally objectionable in any individual deciding to submit a bid
based on such an incentive. In so doing, the individual bidder even if
also a member of a partnership that also submitted a bid, accepts sole
legal responsibility for performing the contract.
Ace speculates that if the bidding on this procurement is condoned,
partnerships bidding on future similar procurements will engage in
similar practices and thereby undermine the bonding requirements. The
advisability of a bonding exemption, and the proper dollar amount below
which the exemption may be involved are matters for the contracting
agency to consider for each future procurement. The Forest Service
currently does not share Ace's concerns in this regard.
The protest is denied.
B-219684, 65 Comp. Gen. 145
Matter of: Nicolet Biomedical Instruments, Dec. 23, 1985
Contracts - Negotiation - Offers or Proposals - Evaluation - Brand Name
or Equal - Salient Characteristics-Satisfaction of Requirement
In a brand name or equal procurement, the contracting agency
improperly found the awardee's product technically acceptable where it
failed to comply with two salient characteristics in the request for
proposals. Specifically, the awardee's product (1) did not comply with
the requirement for an "impedance meter," where the product offered a
device which only measured, but did not register, the data being
monitored; and (2) did not comply with the requirement for "digital
filtering," where the product offered only one of various techniques
("digital smoothing") necessary to provide the full range of
capabilities contemplated by digital filtering.
Contracts - Protests - General Accounting Office Procedures -
Timeliness of Protest - Date Basis of Protest Made Known to Protester
Issue regarding agency's technical evaluation of awardee's product
first raised in protester's comments on agency report is timely, where
protester first had access to awardee's proposal when the agency
included it as part of the agency report; protester's comments were
filed within 10 days after receiving the report; and agency and awardee
had full opportunity to respond to the protester's allegation.
Contracts - Protests - Preparation - Costs - Compensable
Protester is entitled to recover the cost of filing and maintaining
its protest, including attorney's fees, as well as its proposal
preparation costs, where protester was unreasonably excluded from the
procurement but corrective action is not feasible in light of agency's
decision not to suspend performance during pendency of the protest.
Nicolet Biomedical Instruments protests the award of a contract to
Tracor Northern under request for proposals (RFP) No. DLA120-85-R-0023,
issued by the Defense Personnel Support Center, Defense Logistics Agency
(DLA). The solicitation sought proposals for three electrodiagnostic
systems. Nicolet contends that the product offered by Tracor did not
satisfy all the salient characteristics listed in the brand name or
equal purchase description.
We sustain the protest.
The solicitation, originally issued on October 11, 1984, after a
notification was published in the Commerce Business Daily (CBD), was
initially intended as a sole-source procurement for three Nicolet
Pathfinder II Evoked Potential Systems. In addition to receiving an
offer from Nicolet, the agency received offers from three unsolicited
sources in response to the CBD notice, including one submitted by
Tracor. Nicolet's unit price was $94,930; Tracor's price was
$68,882.66. (The other two offers were found technically unacceptable
and were not considered in the final evaluation for award.)
The agency's technical personnel determined that Tracor's product,
its model TM-3500, could satisfy the agency's needs, based on Tracor's
proposal and a previously scheduled demonstration of Tracor's product.
Consequently, the agency decided to amend the solicitation to add a
brand name or equal purchase description. The amended solicitation
listed the Nicolet Pathfinder II model as the brand name product.
The agency issued amendment No. 1 to the solicitation on March 11,
1985, adding the brand name or equal purchase description, including
numerous salient characteristics. In an attempt to make the
requirements less restrictive, the agency subsequently issued three
additional amendments, changing several of the salient characteristics
and extending the date for receipt of offers.
Only Nicolet and Tracor Submitted offers in response to the amended
solicitation. Both were found to be technically acceptable. The agency
awarded the contract to Tracor as the low offeror on August 5.
Nicolet contends that Tracor's equipment cannot comply with the
solicitation's salient characteristics in five areas: (1)
Multi-tasking; (2) Dual Averaging with Bilateral Somatosensory
Stimulation; (3) Electrode Impendance Testing; (4) EEG Analysis with
Trending; and (5) Digital Filtering. In support of its position,
Nicolet initially relied on its familiarity with the capabilities of
Tracor's product, and specifically cited areas where Tracor's product
does not conform to its own. After receipt of the agency report, the
protester based its contentions in part on Tracor's offer under the RFP.
The protester argues that the agency necessarily must have either
waived or relaxed the requirements which the Tracor product allegedly
does not meet, in order to find Tracor's product technically acceptable.
The protester says that if the requirements were so relaxed, the agency
was required to amend the solicitation and to afford it an opportunity
to propose less sophisticated equipment at a lower price.
The agency maintains that Nicolet's protest should be dismissed for
failure to state a basis for protest that is reviewable by our Office.
The agency views Nicolet as essentially contesting Tracor's capability
to satisfy the solicitation's minimum requirements. Consequently, the
agency considers this protest as a challenge to the contracting
officer's affirmative determination of Tracor's responsibility. The
agency correctly states that we do not review such challenges absent a
showing of possible fraud or bad faith on the part of producing
officials or of a failure to apply definitive responsibility criteria,
neither of which is alleged here. See Bid Protest Regulations, 4 C.F.R.
Section 21.3(f)(5) (1985).
We do not agree that Nicolet is protesting the agency's
responsibility determination. Although in its initial protest
submission Nicolet used terms which more appropriately relate to such a
determination, the protest, when viewed in its entirety, is a challenge
to the agency's technical evaluation of Tracor's product. It is
therefore appropriate for our review.
As to the agency's technical evaluation, our decisions generally
recognize that the procuring agency is responsible for evaluating the
data supplied by an offeror and ascertaining if it provides sufficient
information to determine the acceptability of the offeror's product.
International Systems Marketing, Inc. B-215174, Aug. 14, 1985, 85-2 CPD
Paragraph 166. The overriding consideration in determining the
equivalency of an offered product to the named product for purposes of
acceptability is whether the "equal" product performs the needed
function in a like manner and with the desired results, See Lanier
Business Products of Western Maryland, Inc., B-214468, July 23, 1984,
84-2 CPD Paragraph 84; it need not be an exact duplicate of the brand
name product in design or performance. Cohu, Inc., B-199551, Mar. 18,
1981, 81-1 CPD Paragraph 207. Rather, the product must meet the salient
characteristics as they are set forth in the solicitation; it need not
meet features of the brand name product that are not specified in the
solicitation. Security Engineered Machinery, B-220557, Sept. 27, 1985,
85-2 CPD Paragraph 353. We will not disturb the technical determination
by the agency unless it is shown to be unreasonable. Automated
Production Equipment Corp., B-210476, Mar. 6, 1984, 84-1 CPD Paragraph
269.
We have reviewed Nicolet's contentions regarding the evaluation of
Tracor's offer, along with the agency's and Tracor's responses. As
discussed in detail below, we find that it was unreasonable for the
agency to conclude that Tracor's product satisfied the RFP requirements
with regard to impedance meters and digital filtering.
Electrode Impedance Testing
The salient characteristics listed in the solicitation concerning
impedance testing are as follows:
(17) The remote jack box (electrode montage) shall have built-in
impedance meters for each input channel for monitoring and
electrode-subject interface. Electrode montage must be programmable at
console.
(18) Must have impedance meter for each channel at each amplifier
recording channel and at electrode interface box so that cable and
electrode integrity can be fully analyzed remotely at console.
Nicolet argues that Tracor's offer fails to comply with this
requirement because Tracor's system provides for impedance checking only
at the console, rather than at both the console and the jack box as
required by the solicitation. The protester maintains that the jack box
impedance testing capability is necessary because the patient is
normally prepared for monitoring outside the operating room and the jack
box meters are used to check electrode-patient interface at the time the
electrodes are being placed on the patient.
The agency responds that the protester has misinterpreted the
requirement. Specifically, according to the agency, the requirement in
salient characteristic No. 17 that impedance meters be built into the
jack box does not mean that the meter readings must also be available at
the jack box; rather, the agency states, the meter readings need only
be displayed at the system console. Consequently, in the agency's view,
Tracor's product with a reading site at the console only was acceptable.
We find DLA's position to be unreasonable. In our view, the only
reasonable interpretation of the term "impedance meter" is that it
refers to a device which both measures and displays data. See Random
House College Dictionary 841 (1980) (a meter is "an instrument that
automatically measures and registers a quantity consumed, distance
traveled, degree of intensity, etc."). The agency argues that Tracor
complied with this requirement by offering a "meter" which merely
transmits the data it measures to the console, where it then is actually
displayed. The device referred to by the agency cannot reasonably be
described as a meter, however; rather, the agency describes a
sensor-like mechanism which simply transmits data to a metering device.
See Institute of Electrical and Electronics Engineers, Inc., Standard
Dictionary of Electrical and Electronics Terms 626 (2d ed. 1978) (a
sensor "converts a parameter at a test point to a form suitable for
measurement by the test equipment"). Moreover, Tracor itself states
only that its jack box contains "impedance checking circuitry" -- i.e.,
a sensor device as described by the agency -- which then transmits the
data to the console. While the Tracor proposal concludes that this
arrangement provides an "equivalent method" for complying with the
impedance checking requirement, Tracor itself does not contend that its
product actually includes an impedance meter in the jack box or that
readings can be made at the jack box.
Since Tracor's product did not provide an "impedance meter" in the
jack box as, in our view, that term is reasonably construed, Tracor's
offer did not comply with salient characteristic No. 17.
Digital Filtering
Salient characteristic No. 24 provides as follows:
Must have zero-phase shift digital filtering allowing evaluation of
spectrum of acquired waveform with specific filtering out of information
with certain frequencies defined by user and reconstruction of waveforms
with unique filter characteristics without destroying original data.
In essence, this characteristic requires a capability to filter out
certain frequencies chosen by the user at the time of use. Tracor's
proposal stated that its product complies with this requirement by
offering "digital smoothing."
The protester contends that Tracor did not comply with the salient
characteristic because "digital smoothing" is insufficient to meet the
requirement for user flexibility as to filter type and frequencies.
Specifically, Nicolet contends that digital filtering requires the
capability to implement high-pass, low-pass, band-pass, and band-reject
filtering where the user can specify all frequency breakpoints.
According to the protester, the method offered by Tracor, digital
smoothing, consists of low-pass filtering only.
The agency first contends that the issue of Tracor's compliance with
salient characteristic No. 24 is untimely and should not be considered
because it was first raised in Nicolet's comments on the agency report.
Since those comments were filed more than 10 days after Nicolet knew or
should have known this basis of its protest, the agency argues, the
issue untimely raised under our Bid Protest Regulations, 4 C.F.R.
Section 21.2(a)(2).
As the agency states, Nicolet did not raise this issue in its
original protest letter. We do not find the issue untimely, however,
because Nicolet did not have access to Tracor's actual proposal until
the agency provided the proposal as part of the agency report. Thus,
while Nicolet based the allegations in its original protest letter on
its general familiarity with the Tracor product, Nicolet was not on
notice of the specific features specified in Tracor's proposal on which
the protest is based until it had access to the Tracor proposal. Since
Nicolet's comments on the report were filed within 10 days of the filing
of the agency report, this ground of protest is timely. In addition,
these comments were filed before the conference on the protest was held
so both the agency and Tracor had a full opportunity to respond to
Nicolet's contention both in the conference and in their subsequent
comments to our Office.
The agency does not take issue with Nicolet's description of the
methods required to fully provide digital filtering. The agency's only
response to Nicolet's contention is to agree that Tracor's method is a
type of "low-pass filtering," and to conclude, without further
explanation, that Tracor therefore complied with the salient
characteristic. We disagree. Low-pass filtering permits the exclusion
of only certain combinations of frequencies. As the protestor points
out, other frequency combinations can be filtered out, but only by use
of other types of filters. Since we read the specifications as calling
for user capability to define the frequencies that are to be filtered,
and given that the agency concedes that the Tracor product offers only
low-pass filtering, we fail to see how such a product could provide the
user with the capability specified in the salient characteristics.
In view of our conclusion that Tracor failed to comply with the
salient characteristics regarding the jack box impedance meters and
digital filtering, we find that the agency improperly found Tracor's
product to be technically acceptable. If the requirements for an
impedance meter and digital filtering as described in the salient
characteristics exceeded the agency's minimum needs, the agency should
have amended the RFP to reflect the agency's actual needs and to afford
Nicolet the opportunity to offer a lower-priced product which complied
with the less stringent requirements. See Sargent Industries, B-216761,
Apr. 18, 1985, 85-1 CPD Paragraph 442. By accepting Tracor's proposal
under these circumstances, the agency unreasonably excluded Nicolet from
any change of receiving the award.
Because the agency determined, pursuant to 31 U.S.C.A. Section
3553(d)(2) (West Supp. 1985), not to suspend performance of the contract
by Tracor during the pendency of the protest, and the equipment has been
delivered, we cannot recommend corrective action in the form of
resolicitation. See Bid Protest Regulations, 4 C.F.R. Section 21.6(b);
Computer Data Systems, Inc., B-218266, May 31, 1985, 85-1 CPD Paragraph
624. Based on our conclusion that the agency unreasonably excluded
Nicolet from any chance of receiving the award, however, we find that
Nicolet is entitled to its costs. Our regulations, implementing the
Competition in Contracting Act of 1984, 31 U.S.C.A. Section 3554(c),
provide that the costs of filing and pursuing a protest, including
attorney's fees, may be recovered where the agency has unreasonably
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. The recovery of costs for bid or proposal
preparation may be allowed where the protester has been unreasonably
excluded from competition and where other remedies as enumerated in our
regulations are not appropriate. See 4 C.F.R. Section 21.6(d), (e).
Accordingly, by separate letter we are advising the head of the
contracting agency of our determination that Nicolet be allowed to
recover its costs of filing and pursuing the protest, including
reasonable attorney's fees, as well as its proposal preparation costs.
Nicolet should submit its claims for such costs directly to the agency.
4 C.F.R. Section 21.6(f).
The protest is sustained.
B-219177, 65 Comp. Gen. 143
Matter of: Ruth J. Ruby -- Claim for Luncheon Cost at Training
Conference, Dec. 19, 1985
Meals - Reimbursement - Expenses Incident to Official Duties
Employee was invited to speak at luncheon session of agency training
program at her duty station, and she seeks reimbursement of cost of
luncheon. Cost of luncheon may be paid under 5 U.S.C. 4110 since the
record indicates that (1) the meal was incidental to the training
program, (2) attendance at the meal was necessary for full participation
in the meeting, and (3) the attendees were not free to take their meals
elsewhere. Gerald Goldberg, et al., B-198471, May 1, 1980.
ISSUE
The issue in this decision involves the claim of an employee for the
cost of a luncheon at her official duty station which was part of an
agency training program. We hold that although meal costs normally may
not be paid at the employee's official duty station, this expense may be
paid as a necessary training expense under the circumstances presented.
BACKGROUND
This decision is in response to a request from Mr. Donald C.
Sutcliffe, Regional Commissioner, Seattle Region, Social Security
Administration (SSA), reference SDX71:FF-5. The request concerns the
claim of an SSA employee, Ms. Ruth J. Ruby, for reimbursement of
luncheon expenses incurred while she was a guest speaker at an agency
training class held within the vicinity of her official duty station.
The agency request states that in September 1984, the agency held a
training class in the Seattle area for SSA Operation Supervisors, and
Ms. Ruby was invited as a guest speaker for the opening day luncheon.
Ms. Ruby later claimed reimbursement for the cost of the lunch ($9), but
payment was denied on the basis that subsistence expenses are not
reimbursable within 35 miles of the employee's official duty station.
In an earlier memorandum, the certifying officer also questioned (1)
whether providing meals was necessary to achieve the objectives of the
training program, and (2) whether the luncheon agenda could be
rescheduled to provide the trainees with an "ordinary lunch break."
Ms. Ruby contends that the training course, Basic Supervisory
Concepts, is part of the agency's internal training program under the
Government Employees Training Act, 5 U.S.C. Sections 4101-4118 (1982),
and the "Role of the Supervisor" lesson, presented during the lunch
period, is a required part of this training course. She states that the
students are not free to take meals elsewhere without being absent from
an essential portion of the training program. Finally, she argues that
the course is "very tightly structured," and she implies it would be
difficult to reschedule the luncheon agenda to another portion of the
training session.
OPINION
As the certifying officer pointed out, we have long held that an
employee may not be paid per diem or actual subsistence expenses at the
official duty station since those expenses are considered to be personal
to the employee. See 53 Comp. Gen. 457 (1974), and Federal Travel
Regulations, para. 1-7.6a, incorp. by ref., 41 C.F.R. Section 101-7.003
(1984).
On the other hand, meals during meetings at the official duty station
may be paid where the registration fee for the meeting is paid under the
training statute, 5 U.S.C. Section 4110 (1982), and the meals are
included in the fee at no additional charge and represent an incidental
part of the meeting. See 50 Comp. Gen. 610 (1971); 48 Comp. Gen. 185
(1968); and 39 Comp. Gen. 119 (1959).
Where the meals are not included in a registration fee for attendance
at the meeting and a separate charge is made, our decisions require that
three conditions be met for payment. Those three conditions are (1) the
meals must be incidental to the meeting, (2) attendance at the meal must
be necessary to full participation in the meeting, and (3) the employee
may not be free to take meals elsewhere without being absent from the
essential business of the meeting. Gerald Goldberg, et al., B-198471,
May 1, 1980.
In the present case, Ms. Ruby argues that all three conditions
outlined in the Goldberg decision have been met in this situation, and
there is no conclusive evidence from the certifying officer or other
agency official to the contrary. We note that there was no registration
fee required in this case since this was an internal agency training
program, but, in cases decided prior to Goldberg, we have allowed
agencies to pay meal costs for internal training programs under similar
circumstances. See B-193955, September 14, 1979; and B-193034, July
31, 1979.
The situation in the present case is clearly distinguishable from
cases involving agency meetings with working lunches or dinners at the
official duty station which were not organized under the training
statutes and for which payment was denied. See J. D. MacWilliams,
B-200650, August 12, 1981; Frank W. Kling, B-198882, March 25, 1981;
and B-180806, August 21, 1974. Similarly, we have denied reimbursement
to employees attending Federal Executive Association meetings, Combined
Federal Campaign luncheons, or an agency-sponsored labor relations
luncheon at their official duty stations where reimbursement is not
authorized under 5 U.S.C. Section 4110, and where meals were not
incidental to the meetings. See Pope and Ryan, B-215702, March 22,
1985, 64 Comp. Gen. 406; Sandra L. Ferguson, et al., B-210479, December
30, 1983; Henry C. DeSeguirant, B-202400, September 29, 1981; Gentry
Brown, et al., B-195045, February 8, 1980; and B-160579, April 26,
1978.
Accordingly, in the absence of evidence contrary to the statements
offered by the employee, we conclude that the employee may be reimbursed
for the cost of the luncheon as a necessary training expense.
B-217739, 65 Comp. Gen. 134
Matter of: Brigadier General Fred A. Treyz, USAF, Retired, Deceased,
Dec. 19, 1985
Pay - Retired - Survivor Benefit Plan - Remarriage of Member - Spouse's
Annuity Elgibility
A retired Air Force officer had Survivor Benefit Plan (SBP) coverage
for his spouse when in 1980 he was divorced. In the divorce settlement
he agreed to provide survivor benefit coverage for his former spouse
should the law ever be changed to allow it. He remarried, and a year
later (1981) his new spouse was automatically covered under the SBP. In
Sept. 1983 Public Law 98-94 was enacted authorizing a person in this
situation to elect SBP coverage for a former spouse. He did so in Dec.
1983 stating that the election was made pursuant to the divorce
settlement. Such an election is irrevocable; thus, a later attempt to
revoke it is ineffective and the former spouse is the beneficiary of the
SBP annuity upon his death.
Pay - Retired - Survivor Benefit Plan - Election Status
A terminally ill retired officer made an irrevocable election of
Survivor Benefit Plan (SBP) coverage in Dec. 1983 for his former spouse
pursuant to a clause in his divorce settlement agreeing to do so. Such
election precluded his current spouse from SBP coverage. In February
1984 an affidavit was received from him with a letter from his and his
current spouse's attorney attempting to revoke the election on the basis
that he was too ill to have understood the implications when he made the
election and stating that he wanted his current spouse to be covered.
The former spouse election was made in proper form, the member was never
adjudicated incompetent, and the great weight of medical and other
evidence presented supports the former spouse's contention that he was
mentally competent when he made the election. Thus, the election should
be given effect.
Pay - Retired - Survivor Benefit Plan - Contribution Indebtedness
An Air Force officer had Survivor Benefit Plan (SBP) coverage for his
spouse when he retired in 1978, but he was later divorced whereupon SBP
deductions from his retired pay ceased. He remarried in 1980 and his
new spouse became automatically covered under the SBP a year later.
However, he failed to advise the Air Force of the remarriage so retired
pay SBP deductions were not reinstated. In Dec. 1983 he elected SBP
coverage for his former spouse pursuant to their divorce settlement
agreement, and he died in Apr. 1984. The delinquent SBP premiums should
be collected from the former spouse's annuity notwithstanding that they
covered a period when the current spouse was covered under the SBP
rather than the former spouse.
The primary question in this case is who, the current or the former
spouse of a deceased Air Force officer, is entitled to his Survivor
Benefit Plan annuity. The retired officer's elected coverage for his
former spouse when he was seriously ill. Later he attempted to revoke
his election of coverage for his former spouse and obtain coverage for
this current spouse on the basis that he had been too ill to realize the
implications of his actions at the time he elected coverage for his
former spouse. /1/ We find that the former spouse rather than the
spouse at the time of his death is the proper beneficiary of the annuity
in this case.
Also, an ancillary question is asked concerning whether delinquent
premiums which were not deducted from the officer's retired pay may be
collected from the former spouse's annuity. We find that they may be
collected from her annuity.
Background
Brigadier General Fred A. Treyz, USAF, retired on September 1, 1978.
At that time he began participation in the Survivor Benefit Plan, 10
U.S.C. Sections 1447-1455, providing spouse coverage for his wife, Elva
M. Treyz, to whom he was married in 1945. On May 27, 1980, the Superior
Court of the State of Arizona, County of Pima, granted a divorce to Fred
and Elva Treyz. The court's order incorporated a May 20, 1980 property
settlement agreement which included a clause providing that General
Treyz's military retired pay would be divided equally between him and
Elva. It also included a clause providing:
The Husband further agrees that in the event Congress shall hereafter
enact legislation that would allow the Wife to receive any portion of
his retirement benefits after his death through a survivor's benefit
plan, the Husband shall take any and all actions necessary or
appropriate to insure that the Wife qualifies for and receives such
survival benefits upon his death, it being understood that if the
Husband should re-marry, the amount of money the Wife would receive
hereunder would lessen.
At the time of the divorce, there was no authority for a retiree to
elect coverage for a former spouse under the military Survivor Benefit
Plan. Thus, upon the divorce Elva lost her coverage under the Plan.
General Treyz subsequently married Carolyn H. Treyz and she became an
eligible beneficiary under the Survivor Benefit Plan on July 26, 1981, 1
year after the marriage. 10 U.S.C. Section 1447(3), and Master Sergeant
Paul J. Metzler, 56 Comp. Gen. 1022 (1977).
Effective September 24, 1983, Public Law 98-94 was enacted, section
941 of which made changes in various provisions of the Survivor Benefit
Plan statutes to enable a retiree to elect coverage for a former spouse
to the exclusion of the current spouse. On December 28, 1983, the Air
Force Accounting and Finance Center received documents executed on
December 15, 1983, by General Treyz electing coverage under the Survivor
Plan for his former spouse, Elva M. Treyz. The documents included the
required forms indicating that General Treyz was then married to Carolyn
Treyz, that he was divorced from Elva Treyz, and that he was electing
coverage for Elva pursuant to a voluntary written agreement he had
previously entered into incident to and incorporated in the court's
order in the divorce proceeding. Also included was a copy of the
court's divorce order and the property settlement agreement. The
documents were executed by General Treyz's mark (an X or his initials)
witnessed by two persons, one of whom was a notary public. The Finance
Center put the election into effect on January 1, 1984.
Subsequently, the Finance Center received a letter dated March 2,
1984, from an attorney representing General Treyz and Carolyn Treyz
indicating General Treyz was not competent to make the election in favor
of his former spouse, and requesting that it be withdrawn. Enclosed
with the attorney's letter was an affidavit the attorney indicated he
had prepared at General Treyz's request. In the affidavit, dated
February 17, 1984, General Treyz's states that he had had brain surgery
in May 1982, that he had received a series of cobalt treatments in June
1982 and in August 1983, and that he was taking strong dosages of
medication. He stated that, in December 1983, his son and former wife,
Elva, visited him. He also stated that his son indicated that General
Treyz needed to update his Survivor Benefit Plan forms, and his son made
the arrangements to have him sign the forms, which he did. He stated
further that due to his illness, the treatments he received, and the
medication he was receiving, he did not realize what was being signed or
the implications of those documents as far as his wife, Carolyn, was
concerned. General Treyz concluded by stating that he never at any time
intended to eliminate his wife, Carolyn, as beneficiary for his military
survivor benefits, that he never knew that he had signed any forms
changing the beneficiary until he was recently advised of this fact, and
that it was his desire that his wife, Carolyn, receive all of his
survivor benefits.
On April 9, 1984, General Treyz died and the Survivor Benefit Plan
annuity became payable.
The Disbursing Officer notes that the election forms General Treyz
executed in December 1983 appear valid on their face, and such execution
appears to have been done pursuant to the agreement made in the divorce
property settlement. Also, there is no indication that General Treyz
was ever adjudged incompetent by a court or through any administrative
proceeding. Thus, the Disbursing Officer states that it does not appear
proper to invalidate the election. He notes, however, that in addition
to General Treyz's affidavit, a statement of Dr. Richard B. McAdam, who
treated General Treyz, raises the question of whether General Treyz was
capable of making a voluntary election at the time he executed the
forms.
General Treyz's Competency
We are not empowered to render decisions on persons' mental
competency. However, in determining whether an expenditure may be made
we consider the record before us, and if that record raises extreme
doubt as to the competency of a party at the time the party executed a
document upon which our determination depends, we may find the matter
too doubtful to authorize payment. That is our inquiry here.
The statement of Dr. McAdam referred to by the Disbursing Officer was
forwarded by the attorney with General Treyz's February 17, 1984
affidavit. This was a letter dated February 14, 1984, from Dr. Richard
B. McAdam indicating that he had been treating General Treyz since May
2, 1982, for brain tumors and stating further in part:
In the last several months, General Treyz has exhibited evidence of
recurrent metastatic disease, that is, he has evidence clinically and by
computerized head scan of further metastatic brain tumors. He has also
exhibited tremendous decline in intellectual function in the last number
of months.
Based on the objective findings of CAT scan and surgical procedure
and my following the patient now for an extensive period of time, I can
state with certainty that General Treyz is totally unable to take care
of any of his personal affairs. He is unable to made any decisions
concerning himself or his economic status. I can further state with
certainty that this has been the case now for several months.
In support of Elva's claim to the annuity, her attorney wrote to the
Finance Center on July 10, 1984, stating that it is Elva's contention
that at the time he executed the former spouse's election in her favor
in December 1983, General Treyz was alert, cognizant of his situation,
and mindful of his affairs. She contends that he was desirous of
honoring the agreement he previously had made with her and that he was
fully competent to make the election.
As further support for her contention that General Treyz was mentally
competent when he executed the election forms in December 1983, her
attorney forwarded a second letter, dated September 25, 1984, from Dr.
McAdam clarifying the statements made in his February 14 letter. In the
September 25 letter Dr. McAdam indicates that he reviewed his records
concerning General Treyz, including notes he made on November 28, 1983.
Those notes indicate that while General Treyz walked in a slow shuffling
gait and generally was declining, he seemed to be mentally competent.
Dr. McAdam went on to state in part:
I have enclosed copies of my office notes, November 28, 1983, and
also a letter that I dictated on February 14, 1984. As you can see
based on my examination of November 28, 1983, I did state that the
patient seemed to be mentally competent. However on February 14, 1984,
I stated that the patient was unable to make any decision concerning
himself or his economic status which means I felt that he was not
mentally competent.
Based on this record, I would have to state that General Treyz was
most probably competent in December of 1983.
Reading these two statements of Dr. McAdam together, we are drawn to
the conclusion that he found General Treyz was "most probably competent"
to handle his affairs in December 1983 when he executed the election
forms, but by February 1984, when he executed the affidavit attempting
to withdraw the election, he had declined to the point where he was no
longer able to make "any decisions concerning himself or his economic
status."
In addition to Dr. McAdam's statements, the record also includes
statements from four other physicians who treated General Treyz for his
brain tumors. One physician, Dr. John Mattern II, indicates that he
first saw General Treyz on May 12, 1982 (and apparently at other times
thereafter), and that it was his opinion that General Treyz was not
"totally mentally competent" from the time of his original surgery until
his death. The other three physicians, however, state differently. Dr.
Michael A. Savin and Dr. J. Joseph Regan, who indicate they saw General
Treyz in their clinic at various times during the period of November
1982 through May 1983, state that at the time they saw General Treyz he
was "always fully oriented" and "able to make sound decisions" (Dr.
Savin), and in "full possession of his mental capacities" (Dr. Regan).
Dr. J. A. Wassum, who indicates he administered radiation therapy to
General Treyz during August 16 through 27, 1983, and saw him for a
follow-up visit on October 11, 1983, states that while his condition was
quite poor, "I do feel that he was oriented and mentally competent at
that time." Thus, Dr. Mattern's general statement that General Treyz was
not "totally" mentally competent is rebutted by the statements of the
other four physicians who treated him.
The record also contains affidavits of several other persons
submitted on behalf of Mrs. Elva Treyz testifying to General Treyz's
mental competency. Some of these affidavits may be summarized as
follows:
1. General Treyz's son, Major Fred A. Treyz III, testified in part
that he was stationed in Norfolk, Virginia, near his father's residence,
during the period of July 1983 through February 1984, during which time
he visited his father for several hours each day. He states that
General Treyz was aware that he was terminally ill, and that in the Fall
of 1983 he became increasingly concerned about the financial status of
his former wife, Elva (Major Treyz's mother). When General Treyz was
made aware of the September 1983 change in the survivor benefit law, he
asked Major Treyz to obtain more information from the Air Force, which
he did. Due to his father's physical infirmity, Major Treyz obtained
the necessary forms from the Air Force, and arranged to have Judge
Advocate General's Corps officers discuss the matter with his father.
He also states that at the suggestion of one of these officers and at
his father's request, he made an appointment for his father to see Mr.
Felix Hatchett, a civilian lawyer, on December 15, 1983. Mr. Hatchett
went over the forms with his father and witnessed his mark thereon after
Major Treyz had reminded his father that he did not have to sign the
forms if he did not want to. To this, Major Treyz states, his father
responded, "I know it, but I want to." Major Treyz states that without a
doubt, his father's health was poor in December 1983, but equally
without a doubt his mental health was excellent. He further states that
--
There is no doubt that my father was competent. At all times during
the period prior to and including his execution of the SBP beneficiary
change on December 15, 1983, my father had full comprehension of the
meaning and effect of his act. His mind was sound and alert. To the
best of my knowledge, my father was never adjudicated mentally
incompetent nor did Carolyn Treyz take any steps to have him so adjudged
or to have herself appointed as the guardian of his property. * * *
Neither my mother nor I took any advantage of my father's infirmity
to secure the SBP change. We engaged in no artifice. My father's
change of the SBP beneficiary was the result of his deliberate judgment.
2. Mr. Hatchett, the attorney at whose office General Treyz executed
the former spouse election forms, states that on December 15, 1983,
General Treyz came to his office in a wheel chair accompanied by his
son, Fred. He further states that at that time he was the attorney for
the former spouse, Mrs. Elva Treyz. He states that during the
conference, General Treyz "freely and voluntarily, and with apparent
knowledge and understanding of the consequences," executed the election
forms.
3. Captain Mark A. Exley, an Army Reserve Judge Advocate General's
Corps officer, indicates that Major Fred Treyz was a client of his. At
Major Treyz's request, he met with General Treyz at the General's home
in early December 1983 to discuss the Survivor Benefit Plan. Captain
Exley indicates that after advising the General that he was Major
Treyz's lawyer, not the General's, he advised him to talk with a lawyer
representing his own interest. Captain Exley states that General Treyz
indicated that he wanted to and had a duty to make the election change
in favor of his former wife if the law had been changed to allow it.
Captain Exley further states that there was no indication whatsoever
that General Treyz was under any duress or suffered from any sort of
diminished mental capacity, that his words were clear and his thoughts
were logical, that he knew what he was preparing to do, and that he was
capable of managing his own affairs.
4. Ms. Mary DiPaola, an attorney, who at the time was a captain in
the Army Judge Advocate General's Corps, states that in late November
1983 she visited the Treyz family for 4 days during which she spent
several hours each day with General Treyz. She indicated that he spoke
to her about many topics with coherence and wit, that his opinions were
sensible and resolute, that his memory was excellent, and that although
his speech was slow and he was physically frail, his mental facilities
appeared to be sound.
The weight of evidence before us, therefore, falls heavily on the
side of Elva's contention that General Treyz was mentally competent in
December 1983 when he executed the election forms, and that he did so to
carry out the agreement he had made in the 1980 divorce settlement.
Accordingly, we find insufficient basis for us to question his December
1983 execution of the election forms which appear valid on their face.
Law
The Survivor Benefit Plan provisions applicable here, as modified by
Public Law 98-94, effective September 24, 1983, are found in 10 U.S.C.
Sections 1448(b) and 1450. Sections 1448(b)(3) and (4), governing
application of the Plan, provide in pertinent part
(3)(A) A person --
(i) who is a participant in the Plan and is providing coverage
for a spouse * * * and
(ii) who has a former spouse who was not that person's former
spouse when he became eligible to participate in the Plan,
may * * * elect to provide an annuity to that former spouse. Any such
election terminates any previous coverage under the Plan and must be
written, signed by the person, and received by the Secretary concerned
within one year after the date of the decree of divorce, dissolution, or
annulment.
(C) An election under this paragraph may not be revoked except in
accordance with section 1450(f) of this title and is effective as of the
first day of the first-calendar month following the month in which it is
received by the Secretary concerned.
(4) A person who elects to provide an annuity to a former spouse
under paragraph (2) or (3) shall, at the time of making the election,
provide the Secretary concerned with a written statement (in a form to
be prescribed by that Secretary and signed by such person and the former
spouse) setting forth whether the election is being made pursuant to a
written agreement previously entered into voluntarily by such person as
a part of or incident to a proceeding of divorce, dissolution, or
annulment and (if so) whether such voluntary written agreement has been
incorporated in, or ratified or approved by a court order.
Under section 941(b) of Public Law 98-94, a person who on the date of
enactment of the law, September 24, 1983, was a participant in the Plan
providing coverage for a spouse, was given 1 year from that date of
enactment to elect coverage for a former spouse. The 1 year allowed in
subsection (b)(3)(A) as quoted above began to run not from the date of
divorce but from the date of enactment. This provision was included to
allow persons such as General Treyz, who prior to the enactment of the
law had been married, retired and divorced, the opportunity to elect
coverage for their former spouses.
Elva was General Treyz's former spouse in December 1983, but she was
not his former spouse when he became eligible to participate in the Plan
upon his retirement in 1978 since, at that time, she was still married
to him. Accordingly, when General Treyz elected coverage for Elva in
December 1983, he was a person described in section 1448(b)(3)(A), and
he made the election within the prescribed 1-year period as modified by
section 941(b) of Public Law 98-94.
Also, General Treyz's election was made on the forms prescribed by
the service and included the statements that the election was being made
pursuant to a voluntary written agreement previously entered into
incident to a divorce proceeding and that such agreement had been
incorporated in or ratified by court order. Thus, the election complied
with the provisions of 10 U.S.C. Section 1448(b)(4).
Section 1450(f)(2) of title 10, United States Code, provides in part:
(2) A person who, incident to a proceeding of divorce, dissolution,
or annulment, enters into a voluntary written agreement to elect under
section 1448(b) of this title to provide an annuity to a former spouse
and who makes an election pursuant to such agreement may not change such
election * * * unless --
(A) in a case in which such agreement has been incorporated in
or ratified or approved by a court order, the person --
(i) furnishes to the Secretary concerned a certified copy of a
court order which is regular on its face and modifies the
provisions of all previous court orders relating to the agreement
to make such election so as to permit the person to change the
election; and
(ii) certifies to the Secretary concerned that the court order
is valid and in effect; * * *
There is some ambiguity in the language of the clause of the 1980
separation agreement in which General Treyz agreed to provide survivor
benefit coverage for Elva should the law be changed to permit it in that
it indicates that, if he should remarry, Elva might expect not to
receive the full annuity. Such ambiguity is understandable since at the
time of the agreement the law had not been changed and the parties did
not know the provisions of the future change. As it turned out, the
modification to the law made no provisions for dividing the annuity
between wives, and the election form General Treyz executed clearly so
indicates. In addition it seems clear that in executing the election in
favor of Elva, he considered himself to be carrying out an obligation he
had assumed under the 1980 divorce settlement. Also, as is noted
previously, Congress made specific provision in Public Law 98-94 to
enable a person in General Treyz's situation to provide former spouse
coverage although he had been retired and divorced before the law was
enacted. Thus, General Treyz's election may be revoked only to the
extent authorized by 10 U.S.C. Section 1450(f)(2). Since the 1980
separation agreement provision requiring him to elect survivor benefit
coverage for Elva apparently was never modified by court order to permit
him to disregard that requirement, under 10 U.S.C. Section 1450(f)(2)
the revocation would be of no effect. This is so even if he had been
competent at the time he executed the February 1984 affidavit attempting
to revoke the election.
Accordingly, we find that Elva Treyz is the proper beneficiary for
General Treyz's Survivor Benefit Plan annuity.
Delinquent Premiums
The Disbursing Officer also advises us that at the time of his death
General Treyz had an outstanding debt of $3,695.14 for the cost of
Survivor Benefit Plan coverage which accumulated during the time Carolyn
Treyz was named beneficiary under the Plan. This debt accrued because
upon his divorce from Elva the deductions from his monthly retired pay
for the cost of her coverage ceased since he then had no eligible
beneficiary. 10 U.S.C. Section 1450(a). General Treyz did not give
prompt notice to the Air Force Accounting and Finance Center of his
marriage to Carolyn, so when she became the eligible beneficiary on July
26, 1981, the deductions were not reinstated as they should have been.
The Disbursing Officer notes that regulations require that, upon the
death of a retiree, delinquent costs are to be collected from the
annuitant's benefits before the annuitant can receive payment. He
questions, however, whether this requirement is applicable in a case
such as this where the delinquent costs were accumulated during a period
when a spouse who is not the ultimate beneficiary because of a changed
election would have been the beneficiary.
The Survivor Benefit Plan was designed on an actuarial basis as a
contributory plan. That is, generally, in return for protection of
their dependents upon the retirees' deaths, the retirees contribute
premiums usually in the form of deductions from their retired pay. 10
U.S.C. Section 1452. These deductions are calculated as provided by
statute regardless of who may be the potential spouse beneficiary. We
have held that where the required deductions to cover the cost of the
annuity were not made from a member's retired pay, the annuity is to be
reduced or withheld to make up the amount due. See 54 Comp. Gen. 493,
497 (1974). The changes in the law to allow a member to shift coverage
from a current spouse to a former spouse did not change this. General
Treyz participated in the Plan for which he was required to contribute
specified premiums as the cost of his participation. While the premiums
which were not collected in this case should have been collected when
Carolyn would have been the beneficiary had General Treyz died during
that period, they are due as a part of the total cost of General Treyz's
participation of the Survivor Benefit Plan and Elva has become the sole
and full beneficiary of the Plan. Accordingly, the amount due should be
collected from the annuity payable upon his death.
FOOTNOTES
(1) This matter was presented for an advance decision by Lieutenant
Colonel J. N. Johnson, Accounting and Finance Officer, Air Force
Accounting and Finance Center, Denver, Colorado. It has been assigned
control number DO-AF-1451 by the Department of Defense Military Pay and
Allowance Committee.
B-220961.2, 65 Comp. Gen. 132
Matter of: R.S. Data Systems -- Reconsideration, Dec. 18, 1985
Contracts - Small Business Concern - Awards - Responsibility
Determination
The bidder, not the contracting officer, has the burden of proving
the bidder's competency when applying to the Small Business
Administration (SBA) for a Certificate of Competency (COC). General
Accounting Office (GAO) will dismiss protests alleging that the
contracting officer failed to forward to SBA for its COC determination
information tending to show that a contractor is responsible where the
contractor had the information, but did not provide it to that SBA when
applying for a COC.
Contracts - Protests - General Accounting Office Procedures -
Reconsideration Requests - Error of Fact or Law - Not Established
Dismissal of protest is affirmed where request for reconsideration
does not establish that the decision was based on error of law or fact.
R.S. Data Systems (RSD) requests that we reconsider our decision in
R.S. Data Systems, B-220961, Nov. 21, 1985, 65 Comp. Gen. . . . , 85-2
C.P.D. Paragraph . . . . In addition, RSD requests that it be paid its
bid preparation expenses and its attorney's fees.
We affirm our prior decision and deny RSD's claim for its costs.
In our prior decision, we dismissed RSD's protest against the
Department of Housing and Urban Development's (HUD) rejection of RSD's
bid under invitation for bids (IFB) No. 85-877. RSD, a small business,
protested that, after the contracting officer found RSD to be
nonresponsible, he failed to submit to the Small Business Administration
(SBA), for its certificate of competency (COC) determination,
information which RSD supplied to the contracting officer which RSD
believes supports RSD's position that it is a responsible contractor.
However, we rejected RSD's argument that the contracting officer was
required to supply SBA with the information, because the burden is on
the contractor to prove through its COC application to SBA that it is
responsible, and RSD itself had the opportunity to supply SBA with the
information. See Federal Acquisition Regulation (FAR), 489 C.F.R.
Section 19.602-2(a) (1984); JBS Construction Co., B-187574, Jan. 31,
1977, 77-1 C.P.D. Paragraph 79.
The protester cites our decision in Kepner Plastics Fabricators,
Inc.; Harding Pollution Controls Corp., B-184451, B-184394, June 1,
1976, 76-1 C.P.D. Paragraph 351, for the proposition that the GAO may
recommend that SBA reconsider its COC determination when vital
responsibility information has not been considered. However, Kepner is
a case where the SBA did issue a COC, and the record disclosed that the
contracting officer may not have forwarded to the SBA all available
information which would tend to show that the awardee was not
responsible. We concluded that the possible failure of the SBA to
consider certain definitive responsibility issues may have prejudiced
other bidders.
Kepner is not applicable to the case at hand. In Kepner, the
contracting officer failed to alert the SBA to all the ways that the
prospective awardee may be nonresponsible. Here, however, the
contracting officer submitted to SBA adequate information to show that
RSD was nonresponsible. At that point, it was incumbent upon RSD, to
submit all relevant information and prove through its application for a
COC to SBA that it was responsible. See Shiffer Industrial Equipment,
Inc., B-184477, Oct. 28, 1976, 76-2 C.P.D. Paragraph 366, RSD has not
shown how it was prejudiced by the contracting officer's failure to
submit information that RSD itself had the burden and opportunity to
submit to SBA in making its application for a COC. See Shiffer
Industrial Equipment, Inc., B-184477, supra; Gallery Industries, Inc.
-- Request for Reconsideration, B-185963, June 16, 1976, 76-1 C.P.D.
Paragraph 383.
RSD also cites our decisions in Harper Enterprises, B-179026, Jan.
25, 1974, 53 Comp. Gen. 496, 74-1 C.P.D. Paragraph 31. and Gallery
Industries, Inc. -- Request for Reconsideration, B-185963, supra, as
standing for the proposition that GAO will make "appropriate
recommendations in COC situations where the record discloses that
information vital to responsibility determination has not been
considered." However, neither of these cases involved a situation, as
here, where the contractor had an opportunity to provide SBA with
information but did not. In fact, in our Gallery Industries decision,
in declining to consider the merits of a protest against the
determination of nonresponsibility and the SBA's denial of a COC, we
concluded:
Of particular importance, after the determination of
nonresponsibility by the agency, Gallery was afforded an opportunity to
furnish detailed data to SBA on the question of its competency to do the
work.
Similarly, RSD had an opportunity to provide SBA with the information
in question after HUD determined RSD was nonresponsible, but did not.
RSD also objects to the statement in our prior decision that we did
not consider it material if no copy of the solicitation was sent to SBA
by the contracting officer notwithstanding that FAR, 48 C.F.R. Section
19.602-1(c)(2), requires a copy to be furnished in connection with a COC
referral. RSD objects to this statement because it believes that SBA
needs the solicitation to determine whether it is necessary for its COC
determination. However, as we indicated in the prior decision, if it
was necessary, we are not aware of anything that would preclude SBA from
obtaining a copy when it is found to be absent from the referred record.
In our view, the omission is a matter of form that SBA could have
readily remedied and RSD had not shown otherwise.
Since RSD's request for reconsideration does not establish that our
prior decision was based on error of fact or law, the dismissal of RSD's
protest is affirmed. RSD's request that it be paid its bid preparation
expenses and attorney's fees is therefore denied. Monarch Engineering
Co., B-218374, June 21, 1985, 85-1 C.P.D. Paragraph 709.
B-220820, 65 Comp. Gen. 130
Matter of: Sidings Unlimited, Dec. 18, 1985
Bids - Responsiveness - Nonresponsive - Alternative Bid - Effect on
Conforming Base Bid or Other Alternatives
When a bidder submits a bid offering either of two products, one of
which will meet the specifications and the other of which will not, the
government is not precluded from accepting that option which meets the
solicitation's requirements.
Contracts - Modification - Change Orders - Within Scope of Contract
A contractor was issued a change order so that 5-inch vinyl siding
was to be used as opposed to 6-inch vinyl siding called for in the
specifications. We do not view this change as being substantial so as
to be beyond the scope of the contract.
Sidings Unlimited (Sidings) protests the award of a contract under
request for quotations (RFQ) 10/46-85, issued by the Forest Service,
Department of Agriculture, for the installation of vinyl siding on three
buildings at Hungry Horse Ranger District, Hungry Horse, Montana.
The protest is denied.
Sidings alleges that the Forest Service awarded the contract to
Riverside Construction (Riverside) based on Riverside's bid of 5-inch
siding instead of 6-inch siding which was required in the
specifications. Sidings states that 5-inch siding is cheaper than
6-inch and, had Sidings known that this requirement in the solicitation
was going to be changed, Sidings material cost would have been $600 less
and its bid, accordingly, would have been lowered by that amount.
Finally, Sidings states that it does not understand why the government's
cost has not been reduced now that a change order has been issued to
Riverside to install 5-inch rather than the 6-inch siding the
specifications originally called for.
The Forest Service reports the following two quotes were received:
TABLE OMITTED
We note that the Forest Service could not consider the prompt-payment
discount when it evaluated the bids. Tri-State Laundry Services, Inc.
d/b/a Holzberg's Launderers and Cleaners -- Request for Reconsideration,
B-218042.2, Mar. 11, 1985, 85-1 C.P.D. Paragraph 295.
Riverside's proposal offered the Forest Service its choice of 4-, 5-,
6- or 8-inch siding for the same price. The contracting officer states
that she awarded the contract on September 30, 1985, to Riverside on the
basis of 6-inch siding specified in the RFQ.
Subsequently, on October 1, a change in width of the siding was
discussed at the prework conference. The government decided that the
5-inch siding would be stronger and less flexible and provide sturdier
"J" channels for windows and doors than the 6-inch siding. Riverside
proposed a no-cost change order so that 5-inch rather than 6-inch siding
be used and the contracting officer approved the change.
The Forest Service contends that the change in the siding which was
made for the government's convenience and that this change was within
the scope of the contract and, therefore, was allowable. Moreover, the
Forest Service states that in regard to Siding's contention that the
change to 5-inch siding should have resulted in a lower cost to the
government, Riverside's supplier of siding confirmed that there was no
difference in price between 5-inch or 6-inch siding.
The protest initially raises the issue of whether Riverside bid was
responsive because it offered nonresponsive alternate items. Where a
solicitation does not provide for alternative bidding but a bidder
nevertheless submits a bid offering either of two products, one of which
will meet the specifications and the other of which will not, the
government is not precluded from accepting that option which will meet
the solicitation's requirements. P&N Construction Company, Inc., 56
Comp. Gen. 328, 333 (1977), 77-1 C.P.D. Paragraph 88. Riverside's
inclusion of offers of alternate siding sizes which are nonresponsive
under the solicitation did not preclude the Forest Service from
accepting its responsive offer for 6-inch siding. Northwest Forest
Workers Association, B-213180, May 2, 1984, 84-1 C.P.D. Paragraph 496.
With respect to Siding's concern about the change order, as a general
rule our Office will not consider protests against contract
modifications, since these involve contract administration -- a
responsibility of the procuring agency. Symbolic Displays, Inc.,
B-182847, May 6, 1975, 75-1 C.P.D. Paragraph 278. We, however, will
review an allegation that a modification exceeds the scope of an
existing contract and, therefore, should be the subject of a new
procurement. American Air Filter Co. -- Reconsideration, 57 Comp. Gen.
567 (1978), 78-1 C.P.D. Section 493; Aero-Dri Corp., B-192274, Oct. 26,
1978, 78-2 C.P.D. Paragraph 304. In determining whether a modification
is beyond the scope of the contract, our Office looks to whether the
original purpose or nature of a particular contract has been changed so
substantially that the contract for which the competition was held and
the contract to be performed are essentially different. E. J. Murray
Co., Inc., B-212107, Dec. 18, 1984, 84-2 C.P.D. Paragraph 680.
The change here is minor, does not affect the cost of the contract
and, thus, is not beyond the scope of the contract. Although Sidings
alleges that 5-inch siding is cheaper than 6-inch siding, the price
offered by Riverside for 5- and 6-inch siding, was the same. Evidently,
the size of the siding did not affect Riverside's costs since Riverside
also offered 8-inch siding, which, by Sidings' argument, would have been
more expensive. Accordingly, we find no prejudice to Sidings because of
the change order.
The protest is denied.
B-220110, 65 Comp. Gen. 127
Matter of: Talmadge M. Gailey, Dec. 17, 1985
Mileage - Travel by Privately Owned Automobile - Between Residence and
Temporary Duty Station
Army employee whose use of his privately owned vehicle was determined
to be advantageous to the Government is entitled to mileage for travel
on a daily basis between his place of abode and his alternate duty point
under Volume 2 of the Joint Travel Regulations. Under para. C2153
Department of Defense components do not have discretion to limit the
payment of mileage to the mileage amount by which his travel to the
alternate duty site exceeds the employee's commute between his residence
and his permanent duty station.
The question in this case is whether Mr. Talmadge M. Gailey, an
employee of the Department of the Army, is entitled to a mileage
allowance for the use of his privately owned vehicle on official
business between his place of abode and an alternate duty point where
travel by privately owned vehicle was determined to be advantageous to
the Government. /1/ We conclude that Mr. Gailey is entitled to mileage
for such travel.
Background
Mr. Gailey is a quality assurance inspector whose permanent duty
station is Fort Eustis, Virginia. During the period from July 1984
through March 7, 1985, he was assigned to the Hampton Marine Railway
Terminal to perform duties in connection with the contractor's repair of
Army vessels. During this period Mr. Gailey did not report to Fort
Eustis, but on a daily basis drove his own vehicle from his residence in
Saluda, Virginia, directly to Hampton. Hampton, Fort Eustis, and Saluda
are considered to be within the same commuting area. The distance
between Saluda and Fort Eustis is 39 miles, while the distance between
Saluda and Hampton is 49 miles.
In accord with installation policy concerning use of privately owned
vehicles, Mr. Gailey's use of his vehicle for local transportation to
and from Hampton during the period in question was approved as being
advantageous to the Government. Initially Mr. Gailey was reimbursed on
a mileage basis for his daily round-trip travel of 98 miles between his
residence and Hampton. However, in December 1984, the finance and
accounting officer limited payment of mileage to the difference between
the Saluda-to-Terminal distance and the Saluda-to-Fort Eustis distance
-- 10 miles each way for each day of work. In disallowing Mr. Gailey's
claim for an additional 78 miles each day, the finance and accounting
officer relied upon Comptroller General decisions giving agencies
discretion to limit mileage reimbursement for travel between an
employee's residence and places of temporary duty in the vicinity of
headquarters to the amount that exceeds the distance between his
residence and his permanent duty station. He also cites the general
principle that an employee must bear the expense of commuting to his job
and points out that there is no local agency policy governing the
payment of mileage in this situation. In claiming the additional
mileage that has been disallowed, Mr. Gailey relies upon Joint Travel
Regulations (JTR), vol. 2, para. C2153 as mandating the payment of
mileage for the full distance each way between his residence in Saluda
and his alternate duty point, the Hamptom Marine Railway Terminal.
Analysis and Conclusion
We have long held that agencies have discretion to limit the mileage
allowance paid for travel between an employee's residence and a
temporary duty site when use of a privately owned vehicle is approved as
advantageous to the Government. 36 Comp. Gen. 795 (1957). Prior to
September 1, 1970, Department of Defense components had discretion to
limit the mileage allowance paid for travel beginning at an employee's
residence. Under 2 JTR para. C6153 (Change No. 43, Feb. 1, 1969), the
predecessor to 2 JTR para. C2153, mileage could be limited to an amount
representing the mileage difference between reporting to the employee's
permanent duty station and the temporary duty station. However,
effective September 1, 1970, this regulation was amended to mandate
payment of mileage for the entire distance traveled from an employee's
place of abode to his temporary duty station and return when the use of
the automobile was determined to be advantageous to the Government. /2/
2 JTR para. C6153 (Change No. 59, September 1, 1970). This regulation
was renumbered in 1976. 2 JTR para. C2153 (Change No. 131, September 1,
1976). As in effect during the period of Mr. Gailey's assignment to
Hampton, 2 JTR para. 2153 (Change No. 212, June 1, 1983), allows no
discretion, but mandates payment of mileage for the entire distance to
an alternate duty point when travel begins at the employee's place of
abode and the employee does not first travel to his regular place of
work. Joe B. Knight, B-210660, September 27, 1983, aff'd., B-210660,
December 26, 1984. Since individual Department of Defense components no
longer have discretion to limit the payment of mileage to an alternate
duty point when an employee travels directly from his place of
residence, the finance and accounting officer's disallowance of Mr.
Gailey's claim for an additional 78 miles each day is contrary to the
controlling regulation.
The finance and accounting officer has also raised a question
concerning the location of Mr. Gailey's permanent duty station. He asks
whether, during Mr. Gailey's assignment to the Hampton Marine Railway
Terminal, the Terminal became Mr. Gailey's permanent duty station. The
question is significant because an employee must bear the expenses of
commuting between this place of abode and his permanent duty station.
Gretchen Ernst, B-192838, March 16, 1979. Mr. Gailey's assignment to
the Hampton Marine Railway Terminal was for the purpose of monitoring
repair work on four vessels. It was not intended to be of indefinite
duration and, in fact, it lasted 8 months. In the case of prolonged
assignments, 2 JTR para. C4455 provides:
When a period of temporary duty assignment at one place will exceed 2
months, consideration will be given to changing the employee's permanent
duty station unless there is reason to expect the employee to return to
his permanent duty station within 6 months from the date of initial
assignment or the temporary duty expenses are warranted in comparison
with permanent change-of-station movement expenses.
The finance and accounting officer has furnished nothing to indicate
that a determination was made to change Mr. Gailey's permanent duty
station. To the contrary such documentation as he has furnished
indicates that the Hampton Marine Railway Terminal was a temporary duty
site and the nature and duration of that assignment does not establish
otherwise. Accordingly, Mr. Gailey is entitled to be paid mileage from
his place of abode to his alternate duty point and return according to 2
JTR para. C2153 (Change No. 212, June 1, 1983).
FOOTNOTES
(1) This section is in response to a request for a decision received
from Major P. L. Capestany, Finance and Accounting Officer, Finance and
Accounting Division, U.S. Army Transportation Center, Fort Eustis,
Virginia. The Per Diem, Travel and Transportation Allowance Committee
has assigned the request Control Number 85-27.
(2) For a brief period in 1981, 2 JTR para. 2153 (Change No. 185,
March 1, 1981) again gave Department of Defense components authority to
limit mileage reimbursement for travel between an employee's residence
and an alternate duty point.
B-220079, 65 Comp. Gen. 125
Matter of: Data Resources, Inc., Dec. 16, 1985
Contracts - Negotiation - Offers or Proposals - Rejection - Proposed
Technical Approach Insufficiently Proven
Where protester's initial proposal is found technically unacceptable
although capable of being made acceptable, but protester fails to submit
a timely response to agency's request for clarification, agency's
subsequent exclusion of protester from negotiations with remaining
offeror is proper, since without additional information, protester's
proposal was technically unacceptable.
Data Resources, Inc. (DRI) protests the rejection of its proposal by
the Federal Emergency Management Agency (FEMA) under request for
proposals (RFP) No. FMW-85-R-2057. DRI's proposal was evaluated and
found to be technically unacceptable but capable of being made
acceptable through clarifications. FEMA refused to consider DRI's
proposal after DRI failed to submit a timely response to clarification
questions sent to DRI. DRI states that it never received FEMA's request
for clarifications and argues that FEMA unreasonably excluded DRI from
the competition.
We deny the protest.
The RFP was for the identification and analysis of the supply,
bottleneck and dislocation problems expected to occur in the United
States' civilian economy during an extended military mobilization. Two
of the four proposals received were rejected as technically
unacceptable, and the remaining two proposals, submitted by DRI and The
Analytical Sciences Corporation (TASC), were found technically
unacceptable but capable of being made acceptable. Thereafter, DRI and
TASC were sent written questions and were informed that responses were
due by a specific date. FEMA received a response from TASC but none was
received from DRI.
FEMA contacted DRI regarding its failure to submit a response. At
that time, DRI indicated that it had never received the questions sent
by FEMA and requested that the firm be provided an opportunity to submit
a response. FEMA advised DRI that no late submissions would be
considered unless the requirements of section 15.412 of the Federal
Acquisition Regulation (FAR), FAC, 84-7, April 30, 1985, regarding the
acceptance of late proposals or modifications were met. Since there was
no evidence that any of the exceptions which permit the consideration of
late proposals or modifications were applicable, FEMA advised DRI that
any late submission would not be considered.
The response submitted by TASC was evaluated by the technical
evaluation panel and TASC's proposal was found to be acceptable.
Discussions were then conducted with TASC, and due to an urgent and
compelling need to award the contract, award was made to TASC on
September 30, despite DRI's prior protest to our Office.
DRI indicates that its initial proposal, as well as TASC's, had been
found capable of being made acceptable by FEMA and that based on this
determination, a competitive range comprised of DRI and TASC was
established. DRI argues that notwithstanding its failure to respond to
the questions sent by FEMA, the firm should have been included in
further discussions since based on its initial proposal, the firm still
stood a reasonable chance of being selected for award. DRI notes that
its initial proposal was within 5 points of TASC's revised proposal and
that substantial changes were not required to address adequately the
questions raised by FEMA. Since only one offeror was left within the
competitive range, DRI argues that FEMA's decision to exclude it from
further consideration is subject to close scrutiny and, under the
circumstances, should not be upheld.
FEMA contends that the initial questions sent to the offerors were
merely requests for clarification and that DRI was never considered to
be within the competitive range. FEMA states that DRI was given the
same opportunity to participate as TASC, and through no fault of the
government, DRI failed to respond timely to the agency's request for
clarification of its proposal. FEMA argues that its refusal to consider
any late submission by DRI was entirely consistent with the late
proposal and modification provision contained in the solicitation and
that DRI was properly excluded from negotiations.
We agree FEMA was clearly justified in refusing to consider any late
proposal modification by DRI. See Woodward Assoc., Inc., et al.,
B-216714 et al., Mar. 5, 1985, 85-1 CPD Paragraph 274. Further, we
think that DRI's proposal was properly excluded from the subsequent
negotiations due to its failure to respond to the agency's request for
clarification.
It is well established that the determination of whether a proposal
should be included in the competitive range is a matter primarily within
the contracting agency's discretion. Our Office will not disturb such a
determination unless it is shown to be unreasonable or in violation of
procurement laws or regulations. Leo Kanner Assoc., B-213520, Mar. 13,
1984, 84-1 CPD Paragraph 299. In addition, we will closely scrutinize
any determination that results in only one offeror being included in the
competitive range. Falcon Systems, Inc., B-213661, June 22, 1984, 84-1
CPD Paragraph 658.
Here, both proposals were initially found technically unacceptable,
although capable of being made acceptable. The questions sent by FEMA
to both offerors were part of the ongoing process to determine which
offerors were within the competitive range. Both offerors were provided
the same opportunity to revise their proposals and we note that after
receiving the information requested of TASC, FEMA concluded that TASC's
previously unacceptable proposal was now acceptable. While DRI's
initial proposal was within 5 points of TASC's revised proposal, the
weaknesses in DRI's initial proposal remained and the proposal was still
technically unacceptable. In contrast, TASC's revised proposal was now
considered acceptable and under these circumstances, we find that FEMA
could reasonably exclude DRI from the competitive range.
The protest is denied.
B-219726, 65 Comp. Gen. 122
Matter of: Transportation -- Household Goods -- Live Animals, Dec.
16, 1985
Transportation - Household Effects - Pets - Status as Household Effects
The statute providing for the transportation, within prescribed
weight limitations, of the "baggage and household effects" of
transferred service members applies only to inanimate objects that can
be packed, stored, and shipped by commercial carrier at standard costs
computed on the basis of weight. Hence, the statute does not authorize
the transportation of live animals, including household pets, since the
transportation of live animals involves special handling and
extraordinary cost that cannot be calculated on the basis of weight, and
animals are fundamentally unlike the inanimate household furnishings and
personal effects acceptable for shipment by commercial movers.
The question presented here is whether animal pets may be shipped at
public expense under the authority of the statute which provides for the
transportation of the "baggage and household effects" of service members
who are ordered to make a permanent change-of-station move. /1/ We
conclude that this statute does not provide authority for the shipment
of pets.
Background
Subsection 406(b)(1)(A) of title 37, United States Code, provides
that a member of a uniformed service who is ordered to make a change of
permanent station "is entitled to transportation (including packing,
crating, drayage, temporary storage, and unpacking) of baggage and
household effects, or reimbursement therefor, within such weight
allowances prescribed by the Secretaries concerned."
Implementing statutory regulations are contained in Volume 1 of the
Joint Travel Regulations (1 JTR). Those regulations define the term
"household goods" as generally including all personal property
associated with the home and personal effects belonging to service
members and their dependents, on the effective date of the permanent
change-of-station orders, which can be accepted and transported as
household goods by an authorized commercial carrier. /2/ It is clear
from Chapter 8 of 1 JTR and from the definition of household goods that
that term encompasses all items referred to in 37 U.S.C. Section 406(b)
as "baggage and household effects." The definition contains a list of
items specifically excluded from coverage under the term "household
goods," and among the enumerated exclusions are:
3. live animals not required in the performance of official duties,
including birds, fish, and reptiles;
Hence, under the current regulations, since live animal pets are
specifically excluded from the definition of "household goods," they are
not "baggage and household effects" which may be transported at public
expense when service members are ordered to make a permanent
change-of-station move.
It is indicated that Army officials believe this prohibition against
the shipment of pets should be rescinded. The officials reportedly
believe that the prohibition has resulted in a hardship to service
members, not only because of the out-of-pocket expenses incurred by
them, but also because of the inconvenience they experience in having to
name personal arrangements for their pets' transportation.
The officials recognize that Federal departments and agencies must
act within their statutory authority in issuing regulations, but the
officials question whether the governing provisions of statute contained
in 37 U.S.C. Section 406(b)(1)(A) actually require the exclusion by
regulation of household pets from the "baggage and household effects"
which may be transported at public expense when service members are
ordered to make a permanent change-of-station move. The issue thus
presented is whether the Joint Travel Regulations may properly be
amended under the provisions of 37 U.S.C. Section 406(b)(1)(A) which are
currently in effect to permit the transportation of pets at Government
expense.
Analysis and Conclusion
As indicated, 37 U.S.C. Section 406(b)(1)(A) broadly authorizes the
transportation, including the packing and temporary storage, of
transferred service members' "baggage and household effects," subject to
prescribed weight limitations. Another statute, 37 U.S.C. Section
554(b), provides similar authority for the transportation of the
"household and personal effects" of service members who are officially
reported as dead, injured, ill, or in a mission status. Also, civilian
employees who are transferred are broadly authorized the transportation
of their "household goods and personal effects" under 5 U.S.C. Section
5724(a).
We have repeatedly observed that "baggage," "household effects" and
"household goods" are general terms not lending themselves to precise
definition, but varying in scope depending upon the context in which
they are used. /3/ We have consistently held, however, that the
statutes and regulations providing for the shipment of household goods
or personal effects of service members and civilian employees contain no
authority for the transportation of household pets. /4/ In those
decisions we have referred to regulations specifically prohibiting the
shipment of live animals in such circumstances, but we have also
observed generally that live animals, including pets and mascots, could
not properly be regarded as household goods or effects under the
applicable statutes because they were not classified by carrier tariffs
as household goods. /5/
We have reviewed the rationale of our prior decisions on this subject
and find the conclusion was properly reached that live animals are not
includable as "baggage," "household effects," or "household goods" under
37 U.S.C. Section 406(b)(1)(A) or the other provisions of statute
mentioned. The statutes plainly contemplate that the transportation of
household goods at public expense be limited to inanimate objects that
can be packed, stored, and shipped by a commercial carrier at standard
costs computed on the basis of weight. The transportation of live
animals involves special handling and extraordinary costs that cannot be
calculated on the basis of the animals' weight, so that we regard living
animals as being fundamentally unlike the inanimate household
furnishings and personal effects handled in the ordinary manner by
commercial movers. Moreover, we note that in the past when the Congress
has enacted legislation authorizing transferred Government personnel to
ship live animals as well as household furnishings to a new post of
duty, the type of animal and manner of shipment was specifically
prescribed. For example, Army officers were once authorized the
transportation of their private "mounts" or horses. /6/
We are consequently unable to conclude that the Congress intended to
authorize the shipment of animal pets at public expense by enacting the
legislation currently in effect which generally provides for the
transportation of service members' "baggage and household effects."
Hence, we conclude that the provisions of statute in question do not
provide authority for the transportation of animal pets at public
expense, and that the Joint Travel Regulations therefore may not be
amended to authorize their transportation.
The question presented is answered accordingly.
(1) This action is in response to a request for a decision received
from the Chairman of the Per Diem, Travel and Transportation Allowance
Committee (PDTATAC Control Number 85-25).
(2) The definition of "household goods" is contained in Appendix J of
Volume I, Joint Travel Regulations.
(3) See, e.g., 53 Comp. Gen. 159, 160 (1973); 52 Comp. Gen. 479, 481
(1973); 44 Comp. Gen. 65, 66 (1964).
(4) See, e.g., 27 Comp. Gen. 760 (1948) (service members in a missing
status); Major General Joseph T. Palastra, Jr., B-205577, May 18, 1982
(service member transferred); Ramon V. Romero, B-190330, February 23,
1978 (civilian employee transferred).
(5) 27 Comp. Gen., supra, at 761-762. Cf. 52 Comp. Gen., supra, at
480-482.
(6) See 8 Comp. Gen. 627 (1929); 6 Comp. Gen. 320 (1926); 2 Comp.
Gen. 346 (1922).
B-218198.6, et al., 65 Comp. Gen. 109
Matter of: T.V. Travel, Inc.: World Travel Advisors, Inc.; General
Services Administration -- Request for Reconsideration, Dec. 10, 1985
Contracts - Transportation Services - Procurement Procedures
General Accounting Office (GAO) will consider protests of competitive
selections of no cost, no fee travel management services contractors
under GAO's bid protest authority under the Competition in Contracting
Act since the selections are procurements of contracts for services.
Contracts - Transportation Services - Procurement Procedures
Competitive selections of no cost, no fee travel management
contractors by the General Services Administration are subject to the
procurement provisions of the Federal Property and Administrative
Services Act, as amended by the Competition in Contracting Act. These
selections are not distinguishable from those noncompetitive business
arrangements for substantially similar services that some agencies have
with Scheduled Airline Ticket Officers (SATO's). Therefore, these SATO
business arrangements are subject to applicable procurement laws. Omega
World Travel, Inc., Society of Travel Agents in Government, Inc.,
B-218025, B-218025.2, May 23, 1985, 64 Comp. Gen. . . . , 85-1 C.P.D.
590 is overruled.
Joint Ventures - Status
Scheduled Airline Ticket Office proposed by Air Transport Association
is a joint venture with capacity to contract with government.
Joint Ventures - Statutes
Proof of authority of person who executed proposal to bind the joint
venture on a negotiated procurement may be furnished after receipt of
proposals or best and final offers.
Contractors - Responsibility - Determination - Review by GAO -
Affirmative Finding Accepted
Protest that awardee will not meet contract requirements concerns
affirmative determination of responsibility, which will not be
considered except in limited circumstances not present here, or is a
matter of contract administration not for consideration under GAO's Bid
Protest Regulations.
Contracts - Protests - Authority to Consider - Contract Administration
Matters
Letter received from awardee after award concerns contract
administration and does not constitute improper discussions.
Contracts - Negotiation - Offers or Proposals - Evaluation -
Administrative Discretion
Evaluation of 37 proposals by a 26-person technical panel where only
four of the evaluators read and rated each proposal is not an abuse of
agency discretion.
Contracts - Negotiation - Offers or Proposals - Evaluation - Criteria -
Application of Criteria
Evaluation of awardee's proposal under rating plan used to evaluate
proposals in three areas, where it was apparently not downgraded,
appears to be improper, when the proposal fails to address two areas and
in the third area proposes less than the optimum staffing preference
indicated in rating plan and solicitation evaluation criteria. Protest
is therefore sustained and it is recommended that proposals in the
competitive range be rescored and award made to highest rated offeror.
Contracts - Protests - General Accounting Office Procedures -
Timeliness of Protest - Date Basis of Protest Made Known to Protester
Protest filed more than 10 working days after the protester was
apprised that award was made to another bidder is untimely under GAO's
Bid Protest Regulations.
Contracts - Small Business Concerns - Awards - Prior to Resolution of
Size Protest
Award to large business under small business set-aside is proper
where contracting officer is unaware of SBA determination when it made
the award and he has waited more than 10 business days from when SBA
received a size protest of the awardee's status and where there has been
no showing that the awardee's small business self certification is in
bad faith or that contracting officer knew it was not a small business.
However, GAO recommends that options not be exercised on large business
awardee's contract.
T.V. Travel, Inc. (T.V. Travel) and World Travel Advisors, Inc.
(World Travel), request reconsideration of our decision in T.V. Travel,
Inc.; World Travel Advisors, Inc.; Discovery Tour Wholesalers, Inc.,
B-218198, et al., June 25, 1985, 81-1 C.P.D. Paragraph 720.
Additionally, the General Services Administration (GSA) requests
reconsideration of this decision and our decisions in W. B. Jolley,
B-219028, June 27, 1985, 85-1 C.P.D. Paragraph 737; Vida Fox Clawson
Travel Services, Inc., B-218637, July 2, 1985, 85-2 C.P.D. Paragraph 16;
and Get-A-Way Travel, Inc., B-219007, July 2, 1985, 85-2 C.P.D.
Paragraph 18.
These decisions dismissed various protests of GSA awards for the
arrangement of travel services for official government travel for
various geographical areas because we found that the award selections
are exempt from the procurement statutes. The awards were based upon
competitive solicitations which led to no cost, no fee contracts for
travel management centers. The travel agents or Scheduled Airline
Ticket Offices (SATO) which become travel management centers obtain
their compensation from the air carriers and the other firms which
supply travel to the government or government employees. We concluded
that these contracts are no more than a management vehicle to obtain
travel services which themselves are exempt from the procurement
procedures. These decisions followed our decision in Omega World Travel
Inc.; Society of Travel Agents in Government Inc., B-218025, B-218025.2,
May 23, 1985, 64 Comp. Gen. 551, 85-1 C.P.D. Paragraph 590, which denied
a protest of the noncompetitive selection by the Navy of a SATO to
provide basically the same travel management services.
GSA's request for reconsideration is untimely on the T.V. Travel and
W. B. Jolley decisions, since GSA did not request reconsideration until
more than 10 days after its receipt of these decisions. 4 C.F.R.
Section 21.12 (1985). Consequently, GSA's request for reconsideration
of W. B. Jolley (B-219028) is dismissed. However, since T.V. Travel and
World Travel timely filed their reconsideration requests, GSA's views as
an interested party in that case will be considered.
T.V. Travel, World Travel and GSA contend that our decisions on the
GSA travel management center selections are erroneous as a matter of law
because the selections are subject to the procurement statutes and
regulations, and are subject to our bid protest jurisdiction. In this
regard, GSA asks us to reconsider the rationale of our decision in Omega
World Travel, where we held that obtaining such services was not a
procurement subject to the procurement laws. We have solicited and
considered the views of the Navy in response to GSA's reconsideration
request.
For the reasons stated below, we reverse our dismissal of those
protests of GSA travel management center selections on which we received
timely requests for reconsideration, and will consider the merits of
those protests under our Bid Protest Regulations, 4 C.F.R. Part 21
(1985). We also overrule our decision in Omega World Travel, 64 Comp.
Gen. supra. T.V. Travel and World Travel's protests (B-218198) are
sustained; Vida Fox Clawson Travel's (Clawson Travel) protest
(B-218637) is denied; and Get-A-Way Travel's protest (B-219007) is
dismissed as untimely.
GAO JURISDICTION OVER PROTESTS
We now decide that consideration of the merits of the protests of
GSA's travel management center selections would be appropriate under our
Office's newly defined bid protest authority under the Competition in
Contracting Act of 1984 (CICA), 31 U.S.C.A. Sections 3551-3566, West
Supp. 1985, as added by Section 2741(a) of Pub. L. 98-369, and that the
GSA selections are subject to the Federal Property and Administrative
Services Act (FPASA). Furthermore, we conclude that the noncompetitive
contracts or other business arrangements, which various federal agencies
have with SATO's or travel agents to perform travel management services,
are procurements subject to the applicable procurement laws.
Prior to the implementation of the procurement protest system
authorized by CICA, we decided bid protests based on our authority to
adjust and settle government accounts and to certify balances in the
accounts of accountable officers under 31 U.S.C. Section 3526 (1982).
See Monarch Water Systems, Inc., B-218441, Aug. 8, 1985, 64 Comp. Gen.
751, 85-2 C.P.D. Paragraph 146. CICA redefined a protest cognizable by
our Office as a:
Written objection by an interested party to a solicitation by an
executive agency for bids or proposals for a proposed contract for the
procurement of property or services, or a written objection by an
interested party to a proposed award or the award of such a contract.
31 U.S.C.A. Section 3551(1) (West Supp. 1985).
That is, our authority is no longer based upon our "accounts
settlement" authority, but rather is based on whether the complaint
concerns a procurement contract for property or services. GSA is
obtaining services under contract from the selected travel management
center contractor, even though it is not paying the contractor for these
services. The contract awarded contains most of the ordinary clauses
contained in procurement contracts. Also, GSA utilizes the procurement
system to select the travel management contractors.
Furthermore, GSA has stated that its selections of travel management
center contractors are procured pursuant to the Federal Acquisition
Regulation (FAR) and the FPASA. GSA is the cognizant agency responsible
for prescribing policies and methods of procurement and supply of
transportation services for the federal government. 40 U.S.C. Section
481 (1982). See also, Federal Property Management Regulation, Temporary
Regulation A-24, 50 Fed. Reg. 27951 (1985) which governs the use of
travel management centers for federal civilian agencies.
We now agree with GSA. As indicated in the Omega World Travel
decision, transportation obtained through Government Bills of Lading
(GBL) or Government Travel Requests (GTR) is not subject to the
procurement laws. See FAR, 48 C.F.R. Sections 47.000(a)(2),
47.200(b)(2) (1984). However, the travel management services in
question here are obtained by procurement solicitations which are
contractual vehicles considerably different from GBL's or GTR's. GSA
states that it consistently adheres to the FPASA and the FAR when it
obtains transportation services through procurement solicitations and
contracts.
Moreover, it is clear that the government is receiving a number of
valuable services, other than the airline tickets, from the travel
management centers, such as ticket delivery, making of reservations,
management reports, etc., and that the travel management contractor is
obtaining considerable benefits with his concomitant exclusive access to
the government business and entitlement to commissions.
Furthermore, 40 U.S.C. Section 481(a)(1) empowers GSA to prescribe
policies for the "procurement and supply of . . . nonpersonal services,
including related functions such as . . . transportation". Further, 40
U.S.C. Section 481(a)(3) empowers GSA to "procure and supply . . .
nonpersonal services for the use of executive agencies". By definition
nonpersonal services includes transportation. There is nothing in the
FPASA or any other statute that specifically exempts the procurement of
transportation services from the FPASA.
Moreover, we have held that the FPASA is applicable where services or
supplies are obtained by a civilian agency through contract, even where
no cost or fee is paid to the contractor. Use of Government Property by
Private Firm for Commercial Purpose, B-191943, Oct. 16, 1978 at pgs. 5-6
(the selection of a firm to be given an exclusive license to operate on
government property where the firm will provide for a fee, certain
documents to the public on behalf of a federal agency, is subject to the
Federal Procurement Regulations (FPR) (FAR's civilian agency predecessor
regulation); B-217448, Mar. 31, 1985 (letter and memorandum to the
Chairman, House Committee on Government Operations holding that a no
cost no fee exchange agreement between the Patent and Trademark Office
(PTO) and a firm to exchange the firm's automatic data processing
nonpersonal services for special access to PTO information on trademarks
and patents was subject to the Brooks Act, 40 U.S.C. Section 759 (1982),
the FPR, and the FPASA).
In view of the foregoing, we find the services obtained through the
GSA travel management centers are subject to our bid protest
jurisdiction and are covered by the procurement laws contained in the
FPASA, as amended by CICA. Our previous decisions on these selections
are modified accordingly and we reinstate those protests on which we
received timely protests.
As was noted in our previous decisions dismissing the protests of the
GSA selections, the GSA's business arrangements for travel management
centers are not distinguishable from those noncompetitive SATO
arrangements, such as the Navy's in Omega World Travel, where the SATO's
perform services substantially similar to those performed by the GSA
travel management center contractors. Consequently, such business
arrangements with SATO's or travel agencies are subject to applicable
procurement laws. /1/ Consequently, we overrule our decision in Omega
World Travel.
T.V. TRAVEL AND WORLD TRAVEL PROTESTS
1. Background
T.V. Travel and World Travel protested the award by GSA under
solicitation No. AT/TC 19791 of a contract to a SATO to be the federal
civilian travel management center for the Atlanta, Georgia, metropolitan
area. The SATO proposal was submitted by the Air Transportation
Association of America (ATA).
Fifteen proposals were received for the Atlanta travel management
center and the initial technical scores (out of a total possible 900
points) awarded the five proposals found by GSA to be within the
competitive range were:
TABLE OMITTED
After site visits, discussions and best and final offers, the SATO
was selected for award. GSA's selection statement reads, in pertinent
part, as follows:
During "best and final" negotiations SATO agreed to include
Corporation Services International as part of their services, to include
the Corporate rate hotel program. Thus bringing their proposal above
882 points. Added advantages are: Billing and delivery of ticket
procedures are already presently established and no change in operation
would be necessary. Administrative burden of setting up these
procedures would be burdensome and time consuming because of lack of
resources for 60 federal agencies and GSA thus saving administrative
costs.
Award to SATO is therefore considered to be in the Government's best
interest as they have the best qualified offer.
There is no indication or documentation in the record of SATO's final
score, except that it is said to be more than 882 points. T.V. Travel's
initial high technical score of 882 points apparently was not raised or
lowered after best and final offers.
On February 15, 1985, as timely supplemented on April 8, 1985, T.V.
Travel and World Travel protested the award because (1) the SATO lacks
contractual capacity; (2) the SATO is not a responsible contractor
because it cannot issue boarding passes by April 1, 1985, as promised in
its proposal; (3) GSA improperly considered a letter submitted by SATO
concerning its boarding pass capability a month after best and final
offers; (4) not all members of the GSA technical evaluation panel
reviewed the awardee's proposal; (5) SATO's proposal received too many
points and should have been downgraded in a number of technical areas;
(6) the SATO did not comply with the RFP requirement that it have a
"system with a direct interface between the reservation, ticketing and
accounting elements"; and (7) SATO was improperly credited with its
incumbency in making the award selection.
In its May 8, 1985, response to a supplementary agency report, the
protesters list a number of additional areas where the SATO proposal
should have been downgraded. However, these additional contentions,
raised piecemeal, are untimely and will not be considered under our Bid
Protest Regulations since they were not protested within 10 working days
of when the protesters were made aware of the scoring of the SATO's
proposal. 4 C.F.R. Section 21.2(a) (1985); 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.
2. SATO's Alleged Lack of Contractual Capacity
T.V. Travel and World Travel protest that the SATO lacks contractual
capacity because it is not a legal entity. The protesters contend that
the SATO arrangement is merely an agreement among scheduled airlines to
cooperate on ticketing.
SATO's are operating under the auspices of the ATA through its
marketing and service division, the Air Traffic Conference of America
(ATC). The ATA is a national trade and service organization whose
membership consists of various scheduled air carriers. The ATA
submitted to SATO proposal and identified itself as a joint venture.
See also Omega World Travel Inc., et al., 64 Comp. Gen. supra.
Joint ventures are recognized legal entities for contracting with the
government. See FAR, 48 C.F.R. subpart 9.6 (1984). A joint venture is
an association of persons or firms with an intent, by way of contract,
to engage in and carry out a single business venture for joint profit
for which purpose they combine their efforts, property, money, skill and
knowledge. 46 Am. Jur. 2d Joint Ventures Section 10 (1969); 48A C.J.S.
2d Joint Ventures Section 1 (1981). In this case, a number of scheduled
air carriers entered into a written agreement to propose SATO's on GSA's
travel management center contracts. This agreement provides for the
responsibilities, profits, liabilities and resources provided by the
participating airlines. Consequently, we believe that the proposing
entity, ATA, is a joint venture for the purpose of proposing on this
solicitation and that the AGA participating members are the joint
venture partners with all the liabilities that that status entails.
The protesters also argue that the SATO lacks contractual capacity
because the proposal, which was signed by ATA's Director of the Military
and Government Transportation Services Bureau, did not contain
powers-of-attorney signed by officials of each of the joint ventures
nominating this person as attorney-in-fact for the joint venture for
purposes of executing the proposal and resultant contract.
This protest basis also has no merit. It is clear that under
formally advertised procurements a bidder may furnish evidence of the
authority of the person which executed its bid to bind the bidder after
bid opening. Marine Power and Equipment Company, 62 Comp. Gen. 75
(1982), 82-2 C.P.D. Paragraph 514; Sevcik-Thomas Builders and Engineers
Coporation, B-215678, July 30, 1984, 84-2 C.P.D. Paragraph 128. The
rule should be no more strict in negotiated procurements and evidence of
authority to bind an offeror may be submitted after the closing date for
receipt of proposals or best and final offers, if there is any question
of the authority of the person who executed the proposal. Cambridge
Marine Industries, Inc., 61 Comp. Gen. 187, 189 (1981), 81-2 C.P.D.
Paragraph 517.
From our review, the ATA and ATC, of which the participating airlines
are members, granted the ATA representative who executed the proposal
the requisite authority to bind the SATO joint venture. This protest
basis is therefore denied.
3. Boarding Pass Capability
The protesters contend that the SATO was not able to issue boarding
passes by April 1, 1985, as required by the solicitation. This criteria
admittedly concerns SATO's responsibility. This Office will not review
an affirmative determination of responsibility, where, as here, possible
fraud or bad faith by the contracting officer has not been shown and no
allegation had been made that definitive responsibility criteria have
not been applied. AT&T Information Systems, Inc., B-216386, Mar. 20,
1985, 85-1 C.P.D. Paragraph 326. Additionally, whether the SATO will
perform the contract in accord with the requirements is a matter of
contract administration, and as such, it is the contracting agency's
responsibility not encompassed by our bid protest functions. Advanced
Structures Corporation, B-216102.2, B-216102.3, Mar. 28, 1985, 85-1
C.P.D. Section 370. Consequently, this protest basis is dismissed.
The protesters also object to GSA's reference to a letter dated
February 25, 1985, from Delta Airlines, Inc., one of the joint
venturers, promising timely installation of the equipment necessary to
assure the boarding passes by April 1, 1985. The protester contends
that this constitutes improper discussions, under the FAR, with one
offeror in the competitive range to make its proposal acceptable without
opening up discussions with all firms in the competitive range. This
contention has no merit. The referenced letter was submitted 3 weeks
after award and obviously concerned the administration of the contract
and not award selection. Consequently, no discussions were required
with the other offerors who had been in competitive range. This protest
basis is therefore denied.
4. Scoring by all Technical Evaluators
The protesters allege that GSA committed a procedural error in that
one or more members of the technical review panel did not review SATO's
proposal. GSA reports that the technical review panel was made up of 26
persons from the user agencies of which four persons were to evaluate
each initial proposal. If a proposal contained a recommendation by a
user agency for a particular offeror, that user agency's representatives
were excluded from evaluating that particular proposal. The initial
technical score of each offeror is the sum of the scores of the four
evaluators who read and rated the proposal.
It is within the contracting agency's discretion as to how many and
which members of a technical evaluation panel will review each proposal.
Data Resources, Inc., B-203166, Aug. 5, 1981, 81-2 C.P.D. Paragraph 98.
Consequently, we have recognized that a procuring agency may properly
evaluate individual proposals with less than the entire evaluation panel
and not all members of the panel need review each proposal. Data
Resources, Inc., B-203166, supra; Design Concepts, Inc., B-186125, Oct.
27, 1976, 76-2 C.P.D. Paragraph 365. In this procurement, where 37
total proposals for six city areas were received, GSA did not abuse its
discretion in this evaluation method.
5. Rating of SATO's Proposal
T.V. Travel and World Travel protest the evaluation of SATO's
proposal. The protesters allege that SATO's proposal was
"nonresponsive" because it did not propose a system with "direct
interface" between the reservation, ticketing and accounting elements.
The protesters also allege that SATO could not have earned the 872 out
of 900 possible points that it was awarded on the initial evaluation.
In this regard, the protesters allege a number of SATO proposal
deficiencies including (A) SATO's alleged failure to have its
headquarters in the Atlanta area; (B) its failure to propose one travel
counselor for each $500,000 in anticipated travel volume; (C) its
inability to reconcile automatically Diners Club credit card billings
with management reports; and, (D) its inability to transmit management
reports electronically.
The initial proposals of the offeror were scored in accordance with a
rating plan with a total possible 225 points (900 possible points with
four evaluators). This rating plan was not disclosed to any offeror
until after award. These protest contentions are based upon GSA's
scoring of SATO's proposal under the rating plan.
A. Atlanta Headquarters
Under the rating plan, seven points (28 points for four evaluators)
were to be awarded if the firm's headquarters is located in the city to
be served. In the initial report, GSA states that SATO identified its
headquarters as Washington, D.C. -- the ATA headquarters. However, in
the report on the supplemental protest, GSA indicates that SATO's
proposal was evaluated under the rating plan with Atlanta as the
headquarters.
In response to our query, GSA indicated that it no longer has in its
files any of the evaluators' individual scoring sheets under the rating
plan for either initial or best and final offers. Consequently, we are
unable to verify precisely how this matter was evaluated. GSA did
provide summary scores for the five general areas evaluated. These
indicate that SATO was downgraded only four points out of 280 possible
points (four evaluators) for the general area of project management,
whereunder this aspect of the rating plan was evaluated. It follows
that SATO was not downgraded for its headquarters location.
Our review of SATO's proposal indicates that the Atlanta SATO office
has the authority to implement, coordinate and supervise the services
provided. The proposal also indicates that an ATA employee located in
Washington, D.C., has the ultimate total responsibility for oversight,
management and operations. It appears that the Atlanta SATO operates as
an individual entity with the ATA providing only policy guidance.
Further, the only evaluation criteria stated in the solicitation, to
which this aspect of the rating plan relates, is that "the offeror
facilities will be evaluated on the basis of how the location . . .
relate(s) to the level of services provided to government." Under the
circumstances, we find that GSA acted reasonably in not downgrading
SATO's proposal.
B. Direct Interface of System Elements
T.V. Travel and World Travel also contend that SATO's proposal should
have been rejected as "nonresponsive," or at least downgraded, because
of its failure to have a system with "direct interface" between certain
system elements. In this regard, paragraph "M(1)" of the solicitation
states in pertinent part:
. . . The Contractor must provide automated reservation equipment
capable of displaying all available fares. In addition, the Contractor
must have a system with direct interface between the reservation,
ticketing and accounting elements so that all passenger reports and
summary data may be automatically generated from point-of-sale
information.
Under the rating plan, three points (12 points for four evaluators)
were allocated to a rating plan criteria which stated in pertinent part:
The Offeror has already computer support for accounting, including
software which interfaces with the reservation and ticketing functions .
. . . If the offeror has developed his/her own program, the proposal
should clearly indicate that it interfaces with the res/ticketing
system.
SATO's offer proposed the TYNMET MARSPLUS (Multi-Access Reservation
System) automated reservations and ticketing system. SATO also enhanced
its system with a Tandy 1000 personal computer to prepare the required
management information reports and to perform accounting and billing.
GSA states that it has no reason to question SATO's capability to meet
its requirements.
The SATO proposal does not state that the accounting, reservation and
ticketing functions will directly inferface. Also, there is no
explanation of how reports will be automatically generated from
point-of-sale information. Further, there is no statement of any
specific hardware or software interface between the MARSPLUS system and
the Tandy 1000 computer. On the other hand, the solicitation does not
define what is meant by "direct interface," and thus what GSA actually
intended by this paragraph is not entirely clear. In this case, it
appears that a data base for ticketing and reservations is obtained from
the MARSPLUS system which is somehow put into the Tandy computer to
prepare the required management reports and to perform accounting and
billing. Therefore, despite the less than clear explanation in SATO's
proposal, we are unable to conclude that SATO's proposal is not in
compliance with paragraph "M(1)" or that the proposal should have been
downgraded in this area.
C. Number of Travel Agents
The protesters also contend that SATO should have been downgraded for
not proposing one travel counselor for each $500,000 of anticipated
travel. This criteria is worth three points (12 points for four
evaluators) in the rating plan utilized. GSA states that SATO proposed
15 travel counselors and that only one travel counselor per $700,000 in
anticipated travel was required by the solicitation.
However, our review of SATO's proposal only indicates that 14 travel
counselors were proposed. The government's estimated travel under this
contract is reported to be approximately $10 million. Therefore, it
appears that SATO proposed only one travel counselor for approximately
$715,000 in anticipated travel. Although this ratio does not violate
solicitation requirements, both the evaluation criteria set forth in the
solicitation and the rating plan indicate that offerors which proposed
one travel counselor per $500,000 in anticipated travel will be rated
higher than those who proposed fewer counselors. Consequently, the SATO
apparently should have been downgraded for not proposing one counselor
per $500,000.
This aspect of the rating plan is also under the project management
category, where SATO was downgraded only 4 points out of a total
possible 280 points (four evaluators). Consequently, it seems likely
that the SATO was not downgraded in this area either. Therefore, it
appears this aspect of the evaluation was improper.
D. Diners Club Account Reconciliation
The protesters also contend that the SATO should have been downgraded
for failing to "demonstrate willingness and capability to perform
automated reconciliation of accounts for agencies participating in GSA's
Diners Club contract." Five points (20 points for four evaluators) are
allocated to this evaluation criteria in the rating plan. The
evaluation criteria set forth in the solicitation states that this is an
enhancement which will be awarded additional points in the evaluation.
GSA has not responded to this protest contention. SATO received a
perfect score in the initial evaluation for the general category of
equipment capability, of which this aspect of the rating plan is a part.
Therefore, it is apparent that GSA did not rate this as a deficiency.
From our review of SATO's proposal, there is no indication that SATO has
this capability. Therefore, it appears that GSA did not properly
evaluate this matter.
E. Electronic Transmission of Summary Reports
GSA again did not respond to the protest allegation that SATO should
have been downgraded because it cannot "transmit summary reports
electronically." Under the rating plan, two points (eight points for
four evaluators) were allocated to this item. As noted above, SATO was
not downgraded for any aspect of equipment capability of which this
aspect of the rating plan is a part. Our review of SATO's proposal
reveals that there is no indication that SATO has this capability.
Therefore, it appears that GSA did not properly evaluate this matter.
6. Recommendation
SATO's proposal was apparently not properly rated in a number of
evaluation areas. There is no indication that these matters were
discussed with SATO or corrected in its best and final offer. Indeed,
the record does not reveal SATO's final point score. In view of the
relatively close point scores. GSA's award selection conclusion that
SATO's proposal received the highest point score may well be incorrect.
T.V. Travel's and World Travel's protests are therefore sustained.
It is recommended that GSA reevaluate those proposals in the competitive
range in the aforementioned areas and determine which offeror is the
highest ranked. If SATO is not the highest ranked, then we recommend
that its contract be terminated for the convenience of the government
and award made to the highest rated offeror.
T.V. Travel and World Travel protest that the award was improperly
based upon SATO's incumbent status -- an evaluation criteria not set
forth in the solicitation. In its report, GSA states that this was not
a factor in the award selection. GSA explains that the statements in
the selection statement regarding the advantage of selecting the
incumbent are only "added advantages," not controlling the award
selection, and SATO received the award because it received the highest
score. In view of GSA's position, we need not consider this protest
basis further and it is denied.
GET-A-WAY TRAVEL'S PROTEST
Get-A-Way Travel protested the award by GSA under solicitation No.
GSA-3FC-85-N-001 of a contract to Cherry Hill Travel, Inc., to be the
travel management center for the Philadelphia, Pennsylvania,
metropolitan area. Get-A-Way Travel contends that GSA was biased
against it in evaluating its proposal.
GSA contends that Get-A-Way's Travel's protest is untimely under our
Bid Protest Regulations. We agree.
Get-A-Way Travel protested this same matter to the contracting
officer by letter dated April 2, 1985. GSA denied this protest by
letter dated May 9, 1985. The protester was orally apprised on May 10,
1985, that award had been made to Cherry Hill Travel. Get-A-Way
Travel's protest was filed in our Office on May 30, 1985.
Section 21.2(a)(3) of our Bid Protest Regulations, 4 C.F.R. Section
21.2(a)(3) (1985) requires that when a protest has been initially filed
with the contracting agency, any subsequent protest to our Office must
be filed within 10 working days of when the protester becomes actually
aware of the adverse agency action on the protest. Get-A-Way Travel's
protest to our Office was filed more than 10 working days after it was
apprised of the award to Cherry Hill Travel. Therefore, the protest is
untimely and is dismissed.
CLAWSON TRAVEL PROTEST
Clawson Travel protests the GSA award of a contract under
solicitation No. 8FCG-E6-DU008 to Morris Travel Corporation (Morris) to
be the travel management center for the Salt Lake City, Utah,
metropolitan area. The protester alleges that the Small Business
Administration (SBA) found that Morris is not a small business and that
GSA should not have made award to Morris until it received the SBA's
ruling on a size protest of Morris' status. We deny the protest.
A size protest had been filed on March 26, 1985, with GSA alleging
that Morris was not a small business. GSA forwarded the matter to the
SBA on March 28, 1985, and made several telephone calls (April 18 and
May 2) to ascertain the status of the SBA size determination. GSA
reports that no indication was given by SBA that a decision on the
protest was imminent. On May 6, 1985, the SBA found that Morris was not
a small business concern. On May 7, 1985, GSA made award to Morris.
GSA reports that it was unaware of SBA's size determination at that
time.
FAR, 48 C.F.R. Section 19.302(h)(1) (1984) provides that a
contracting officer shall not award a contract after receiving a timely
size protest until the SBA has made a size determination or until 10
business days have expired since the SBA's receipt of the protest,
whichever occurs first. Since the contracting officer waited more than
10 business days and did not receive notice of the size determination
prior to award, he was justified in proceeding to award. John C.
Holland Enterprises, B-216250, Sept. 24, 1984, 84-2 C.P.D. Paragraph
336; J. R. Youngdale Construction Co., and John R. Selby, Inc.,
B-214448, B-214484, Mar. 13, 1984, 84-1 C.P.D. Paragraph 306. There is
no legal duty for the contracting officer to telephonically check with
the SBA as to the status of a size determination, nor does the fact that
he had previously checked such status with the SBA estop him from making
award if he complied with the FAR.
Clawson Travel also asserts that GSA should have known the Morris'
small business self-certification was erroneous and that the protest to
SBA would be upheld, and should therefore not made an award. However,
by Clawson Travel's own admission, this protest was "not a typical
appeal in that it challenged one of the fundamental size formulas used
by the SBA." Since Clawson Travel has not established that Morris' small
business self-certification was not made in good faith, its protest is
denied.
Nevertheless Morris has been found by SBA to be other than a small
business concern on this small business seaside procurement. In view of
Morris' status, we recommend that the options in its contract not be
exercised.
FOOTNOTES
(1) Also section 1464 of the Department of Defense Authorization Act
of 1986, Pub. Law 99-145, November 7, 1985, states:
It is the sense of the Congress that the Secretary of each
military department should provide, in the establishment of travel
offices or the acquisition of travel services for official travel,
for free and open competition among commercial travel agencies,
scheduled airline traffic offices (SATOs), and other entities
which provide such services.
B-220007, 65 Comp. Gen. 104
Matter of: NKF Engineering, Inc., Dec. 9, 1985
Contracts - Negotiation - Conflict of Interest Prohibitions -
Organizational
Statements by two procurement officials that a consultant to an
offeror learned the relative standing and strengths and weaknesses of
competing proposals while he was employed by the government establish a
reasonable basis for an agency's determination that the offeror probably
received an unfair advantage in submitting its best and final offer.
This determination, based on "hard facts" rather than suspicion or
innuendo, justifies exclusion of the offeror's proposal from further
consideration.
Contracts - Negotiation - Offers or Proposals - Rejection - Propriety
Agency is not required to refer to the Small Business Administration
in determination to exclude an offeror's proposal because of the
likelihood of an impropriety or conflict of interest in preparation of
the proposal where there is no question as to the offeror's capability
to perform or any other traditional element of responsibility.
NKF Engineering, Inc. protests the Naval Sea Systems Command's
rejection of its proposal in response to request for proposals (RFP) No.
N00024-83-R-4175(Q). NKF contends that the Navy erred in concluding
that the firm had obtained an unfair competitive advantage and argues
that the appearance of an impropriety or conflict of interest is not a
sufficient basis upon which to disqualify an offeror.
We deny the protest
Background
The Navy issued the RFP on March 22, 1983, soliciting offers to
provide engineering services in the area of ship and submarine
survivability, ship signatures, vibration and noise, fire protection,
damage control, and safety. Of five proposals submitted on May 24, the
Navy ranked NKF's technical proposal second and its cost proposal fifth,
with an overall ranking of second.
Following the initial evaluation of proposals, the Deputy Director of
the Survivability Sub Group, Naval Sea Systems Command, Yip Park,
retired and became a consultant to NKF. The Navy believed that Mr. Park
knew the result of the evaluation of the technical and cost proposals,
as well as other information relating to the procurement. In part to
mitigate any advantage NKF might obtain through its employment of Mr.
Park, the Navy amended the solicitation to add additional tasks and to
change both the technical evaluation factors and the weights accorded
those factors. At the same time, the agency requested best and final
offers.
In its best and final offer, NKF reduced its offered price by
approximately 33 percent. Its technical score remained second-high,
slightly below that of the highest rated offeror. Its cost score was
the highest, and it was ranked first overall.
While the Navy believed that its amendment of the solicitation
counteracted any advantage that NKF might have gained through Mr. Park
in the technical area, it concluded from NKF's substantial price
reduction that the firm probably knew the relative technical and cost
standings of its competitors. Believing that an award to NKF would
appear to have resulted from an unfair competitive advantage and would
bring into question the integrity of the procurement, the Navy
disqualified NKF for having an organizational conflict of interest. The
agency announced that award would be made to the firm ranked second
overall, Weidlinger Associates. This protest followed.
NKF raises three issues. First, it contends that there is no
evidence of improper conduct on the part of NKF, Mr. Park, or Navy
procurement officials. Without "hard facts" showing an actual
impropriety or conflict of interest, NKF contends, the Navy was not
justified in finding the firm ineligible for an award. Second, NKF
states that the organizational conflict of interest provisions of the
Federal Acquisition Regulation (FAR), 48 C.F.R. subpart 9.5 (1984),
cited as the legal basis for the Navy's action, do not encompass the
situation in this case. /1/ Finally, NKF argues that since it is a
small business concern, the Navy was required to refer its decision to
exclude the firm to the Small Business Administration (SBA) for
consideration under the certificate of competency program.
Evidence of Improprieties
Until his retirement on September 30, 1984, Mr. Park, as noted above,
served as Deputy Director of the group within the Naval Sea Systems
Command that requires the services included in the protested
procurement. He was designated as the Project Engineer/Program Manager
for the procurement and was listed in the RFP as the contracting
officer's technical representative. The Navy states that Mr. Park
prepared a revision to the source selection plan that was used in the
initial evaluation, developed the government's cost estimate, and was
thoroughly familiar with the required work.
On October 25, 1983, after evaluation of the technical proposals, Mr.
Park was appointed chairman of the Contract Award Review Panel for the
procurement. This panel had the responsibility of, among other things,
directing subsequent evaluation of proposals, determining the
competitive range, and recommending an award to the selecting official.
The procurement record filed with our Office does not reflect any
meeting of the review panel before Mr. Park retired a year later. In an
affidavit submitted by NKF, Mr. Park states that the evaluation of
proposals was suspended until another procurement was completed, and
that he never actually served as chairman of the review panel at issue
here.
The Navy contends that Mr. Park knew the relative standing of each
proposal in the technical and cost areas, as well as each proposal's
strengths and weaknesses. In support of these allegations, the Navy has
submitted two affidavits. In the first, the legal advisor for the
procurement states that the members of the review panel also served as
the review panel for another procurement. He states that during a
meeting of the panel to consider the other procurement, the chairman of
the technical evaluation group for the protested procurement briefed the
panel on the strengths, weaknesses, and relative standing of each
technical proposal. Also, the cost evaluator briefed the panel
regarding cost proposals, and he specifically told the panel that NKF
had proposed a high cost and was not in a competitive position.
In the second affidavit, the cost evaluator for the procurement
states that he saw Mr. Park working on the source selection plan and
that he had discussed the appropriate labor mix for the procurement with
Mr. Park. He also states that in informal discussions he told Mr. Park
that the NKF's estimated cost and fee were significantly higher than
those of other offerors.
NKF responds to these allegations primarily through affidavits of Mr.
Park. He states that -- before his retirement -- he never saw or
discussed the technical or cost proposals and was never advised of their
relative standing. He believes that the proposals were not even
evaluated before he retired, since the procurement had been suspended
until award of another contract. He states that he did prepare a
revised evaluation plan and did discuss with the cost evaluator the
appropriate labor mix for another procurement that was proceeding
simultaneously, thereby suggesting that the cost evaluator has confused
the two procurements.
NKF also provided affidavits of all employees participating in the
preparation of its best and final offer, stating that they never spoke
to or received information from Mr. Park except for a copy of his
resume. The firm's best and final offer stated that Mr. Park was
available as a consultant to work on the contract, and it included his
resume. The NKF employees state that they had no information regarding
the relative standing of the offerors, the Navy's cost estimate, or
estimated labor mix. The revisions in NKF's cost proposal are
attributed solely to questions presented by the Navy and to a desire to
offer the lowest, reasonable estimated cost.
NKF's consultant agreement with Mr. Park specifically prohibits him
from disclosing or using any secret or confidential information of
others, including his former employer. Before entering the agreement,
the president of NKF requested that Mr. Park verify with Navy officials
that Mr. Park's consulting with NKF would be appropriate and not create
a conflict of interest. According to the president of NKF, Mr. Park
reported that Navy legal counsel saw no reason why he could not provide
consulting services to NKF or any other contractor.
In light of this factual record, NKF asks that we apply the standard
of review applicable to the issuance of an injunction against a contract
award where the disappointed bidder alleges improprieties or a conflict
of interest. In CACI, Inc. -- Federal v. United States, 719 F.2d 1567
(Fed. Cir. 1983), the court reversed a judgment of the United States
Claims Court enjoining an award because the lower court's inferences of
actual or potential wrong-doing were based upon "suspicion and innuendo"
rather than "hard facts." This standard is consistent with our
traditional view that offerors should not be excluded because of a
"theoretical" conflict of interest, Cardiocare, a division of Medtronic,
Inc., 59 Comp. Gen. 355 (1980), 80-1 CPD Paragraph 237, and we have
applied the standard specifically to a protester's allegations of
impropriety involving a former government employee assisting a proposed
awardee with proposal preparation. See Culp/Wesner/Culp, B-212318, Dec.
23, 1983, 84-1 CPD Paragraph 17.
We agree that it is appropriate to use the CACI standard in this
case. We disagree, however, with NKF's contention that an "actual"
impropriety or conflict of interest must be established before an agency
may consider an offeror ineligible. The court in CACI was concerned
that the lower court's opinion regarding the possibility and appearance
of impropriety was not supported by the record. 719 F.2d at 1575,
1581-2. No requirement to establish an actual impropriety was imposed
or implied, and we do not believe that agencies must meet such a
requirement in order to take action they believe necessary to maintain
the integrity of the procurement system. Our role is to determine
whether there was a reasonable basis for the agency's judgment that the
likelihood of an actual conflict of interest or impropriety warranted
excluding an offeror. See Chemonics International Consulting Div., 63
Comp. Gen. 14 (1983), 83-2 CPD Paragraph 426. A reasonable basis must
include more than mere innuendo or suspicion. Culp/Wesner/Culp, supra.
Here, we find that the potential for a decisive unfair advantage was
reasonably established to the Navy by the statements of two procurement
officials, subsequently presented to our Office in sworn affidavits,
that they had witnessed Mr. Park being told the relative standing of
offerors and other confidential information about the procurement. We
do not believe that the mere possibility that both Navy officials were
mistaken, or, alternatively, that Mr. Park might not recall receiving
the information, or that no advantage may actually have been received by
NKF made the Navy's belief in the likelihood of a serious impropriety
unreasonable. Also, we note that the procurement record contains no
evidence that NKF took any steps, other than the standard restriction in
its consulting agreement, to prevent improper use of Mr. Parks' possible
knowledge about the procurement, to apprise the Navy of any concern in
this regard, or to address in any way the clear appearance that the firm
would gain an unfair advantage by employment of Mr. Park. Therefore, we
find that the Navy had a reasonable basis to conclude that an
impropriety or conflict of interest was likely and to exclude NKF from
the competition.
Conflict of Interest Regulations
The Navy states that its rejection of NKF's proposal was pursuant to
the regulation governing organizational conflicts of interest. As NKF
points out, the FAR, 48 C.F.R. Section 9.501, states that an
organizational conflict of interest exists when the work under a
proposed contract may, without a restriction on future activities,
result in an unfair competitive advantage to the contractor or impair
the contractor's objectivity. Such a conflict would arise where, for
example, a contractor prepares and furnishes specifications for items to
be competitively procured and then is allowed to furnish those items in
the subsequent procurement. FAR, 48 C.F.R. Section 9.505-2.
We agree with NKF that the situation here does not establish an
organizational conflict of interest specifically encompassed by the
procurement regulations. However, a contracting agency may impose a
variety of restrictions, not explicitly provided for in applicable
regulations, where the needs of the agency or the nature of the
procurement dictate the use of such restrictions. Acumenics Research
and Technology, Inc., B-211575, July 14, 1983, 83-2 CPD Paragraph 94.
We see little difference between excluding an offeror because of an
unfair advantage gained helping prepare the statement of work, Nelson
Erection Co., Inc., B-217556, Apr. 28, 1985, 85-1 CPD Paragraph 482, and
excluding an offeror that has entered a consulting arrangement with a
retired official who not only was involved in planning the procurement,
but is reasonably believed to know the standing of other offerors and
details of their proposals.
Certificate of Competency
The FAR, 48 C.F.R. Section 19.602-1, requires a contracting officer,
upon determining that a responsive small business lacks certain elements
of responsibility (including "competency, capability, capacity,
integrity, perserverance, and tenacity"), to refer the matter to the
SBA. NKF argues that the Navy is required to refer the determination to
exclude NKF to the SBA. The protester is joined in its opinion by SBA's
Chief Counsel for Advocacy, who filed comments with our Office on this
issue.
The Navy responds that FAR, 48 C.F.R. Section 19.602-1(a)(2)(i),
excludes from the certificate of competency program determinations that
a small business concern is not responsible because it is "unqualified
or ineligible" to receive an award under applicable laws and
regulations. The Chief Counsel for Advocacy points out that we have
questioned whether this regulatory exception overcomes a small business
concern's right to a certificate of competency referral under the Small
Business Act, 15 U.S.C. Section 637(b)(7) (1982), when compliance with a
traditional element of responsibility is at issue. International
Business Investments, Inc., et al., 60 Comp. Gen. 275 (1981), 81-1 CPD
Paragraph 125.
We do not believe that the Navy's exclusion of NKF involves a
question of responsibility. Some conflict of interest issues, such as
whether an offeror's performance on a contract will be influenced by
conflicting economic interests, involve the offeror's capability to
perform and are, therefore, matters of responsibility. In this case,
however, no one has questioned NKF's capability. Rather, the Navy
believes that it is so likely that NKF received an improper advantage
that the integrity of the competitive process in general and of this
procurement in particular require exclusion of the firm. This question
is not related to any of the traditional elements of responsibility, and
it therefore, in our view, need not be referred to the SBA.
The protest is denied.
FOOTNOTES
(1) The Defense Acquisition Regulation (DAR), reprinted in 32 C.F.R.
pts. 1-39 (1984), is applicable to this procurement because the RFP was
issued before the April 1, 1984 effective date of the Federal
Acquisition Regulation. Since differences in the two regulations are
not relevant to this protest, we will observe the practice of the
parties and refer to provisions of the FAR.
B-219664, 65 Comp. Gen. 92
Matter of: Dynalectron Corporation, Dec. 6, 1985
Contracts - Negotiation - Requests for Proposals - Specifications -
Quantity Estimates - Best Available Information Requirement
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.
Contracts - Protests - General Accounting Office Procedures -
Timeliness of Protest - Soliciation Improprieties - Apparent Prior to
Bid Opening/Closing Date for Proposals
Protester's subsequent allegations that specific work-load estimates
and specific deduction categories -- relating to deductions for
unsatisfactory performance from the payments to the contractor -- are
defective are untimely where not received by General Accounting Office
(GAO) until after the closing date for receipt of initial proposals
since GAO's Bid Protest Regulations require alleged improprieties
apparent prior to the closing date to be filed prior to the closing
date. 4 C.F.R. 21.2(a)(1) (1985). Although the protester in its
initial protest, filed prior to the closing date, generally alleged that
many of the approximately 200 workload estimates and many of the
approximately 84 deduction categories were defective, such general
allegations do not render subsequent specific allegations timely since
our Bid Protest Regulations do not contemplate a piecemeal presentation
or development of protest issues.
Contracts - Damages - Liquidated - Actual Damages v. Penalty
Provision in the performance requirements summary which permits the
government to deduct from the payment to the contractor an amount for
the untimely delivery of preliminary audiovisual material for review and
editing by agency officials does not impose an impermissible penalty.
Although protester claims that the government will suffer no damage so
long as the final print is delivered on time as required under the
specifications, protester has failed to show that it was unreasonable
for the agency to expect that in some instance, the government might
suffer administrative inconvenience or insufficient time for a
meaningful review if the preliminary materials are not delivered on
time.
Contracts - Damages - Liquidated - Actual Damages v. Penalty
Protest that a provision in the performance requirements summary --
which permits the government to deduct amounts for unsatisfactory
services -- imposes an impermissible penalty because the agency selected
the same allowable deviation -- the permissible number of defects -- and
the same method of surveillance, by random sampling, for several
deduction categories is denied where the protester fails to show that
the agency choices were arbitrary, unreasonable or otherwise improper.
Contracts - Negotiation - Requests for Proposals - Specifications -
Restrictive - Undue Restriction Not Established
Protest that solicitation requirement for timely performance of
services notwithstanding variations in the workload is unduly burdensome
because the provision for an adjustment in the delivery schedule in the
event of saturation does not define when an adjustment is required is
denied. The protester neither alleges nor shows that the general
requirement for timely performance notwithstanding variations in the
workload is not part of the agency's requirements; GAO is aware of no
requirement that agencies set forth in their solicitation the precise
basis for adjustments; and nothing in the provision interferes with the
contractor's right to seek relief under the disputes clause in the
solicitation.
Contracts - Negotiation - Requests for Proposals - Specifications -
Restrictive - Undue Restriction Not Established
Clause in solicitation for audiovisual services which imposes
liability on contractor for the costs reasonably incurred by the
government -- the cost of reshooting the film -- as a result of the loss
of exposed film is not unduly burdensome. Although the agency failed to
place a definite limit on the potential liability of the contractor, the
Federal Acquisition Regulation, 48 C.F.R. 45.103(a) (1984), generally
provides that contractors are responsible and liable for government
property in their possession, and the solicitation included estimates of
the agency's annual requirements for different types of audiovisual
productions and required offerors to propose a specific cost for the
most frequently used elements in audiovisual productions.
Contracts - Negotiation - Requests for Proposals - Specifications -
Restrictive - Undue Restriction Not Established
GAO is aware of no basis upon which to object to provision, in
solicitation for audiovisual services, for adjusting downward the price
for a particular audiovisual production in the event that the contractor
utilizes fewer personnel than the number which it proposed to use when
negotiating the price for that production and which formed the basis of
the agreed price.
Dynalectron Corporation (Dynalectron) protests the terms of request
for proposals No. DAVA01-85-R-0001, issued by the Defense Audiovisual
Agency (DAVA) for the procurement of audiovisual services. Dynalectron
alleges that the workload estimates in the solicitation are erroneous,
that the liquidated damages provisions impose a penalty, and that the
solicitation otherwise imposes undue risk and burden upon the
contractor. We deny the protest.
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 (RS') -- e.g., black
and white and color prints, slides, research assistance, maintenance --
and were required to propose a total price for providing all these
services during each of the base and option periods. Under the
audiovisual productions portion of the solicitation, offerors were
provided with estimates of DAVA's annual requirements for 91 of the most
frequently used elements of audiovisual productions -- e.g., producers,
videotape editors, video cassettes -- and were required to propose a per
unit cost to the government for each element. When DAVA requires an
individual production during the contract period, the contractor will
submit a contract pricing proposal setting forth the estimated usage of
costed elements, as priced at the time of contract award, and any
uncosted elements likely to be required. Based upon this proposal, the
government and contractor will negotiate a fixed price for the
production. The solicitation provided that proposals would be evaluated
for purposes of award by adding the price for all option quantities to
the price for the basic quantity and that award would be made to the
responsible offeror submitting the low, technically acceptable offer.
Shortly before the August 9, 1985, closing date for receipt of
initial proposals, Dynalectron filed this protest against the terms of
the solicitation.
Workload Estimates
Dynalectron alleges that the solicitation's workload estimates for
the audiovisual services are erroneous and misleading because they
differ substantially from the government's actual requirements.
Dynalectron points out that the statistics concerning the workload under
the current contract are reported weekly to DAVA as required under that
contract. In its initial protest, 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 this
solicitation. Rather, these estimates were instead based upon the
estimates contained in the prior solicitation which resulted in the
current contract so as to more easily compare the advantages 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 issued amendment No. 6, which, among other things,
replaced many, but not all, of the original estimates with revised
estimates. DAVA describes 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.
In its September 30 comments, Dynalectron admits that the corrections
to the workload estimates for the motion picture laboratory and the
motion media depository, covering approximately 6 of the 20 RS'
originally identified as defective, appear to be "fairly accurate and
reflect experience." Dynalectron, however, contends that "for the most
part," DAVA has failed to provide historical workload data and argues
that in all areas other than the RS' related to the motion picture
laboratory and the motion media depository, the corrections were
"erratic to non-existent." In support of its contention, Dynalectron now
provides what it claims to be the actual 1984 and 1985 workloads for all
the RS'.
When the government solicits offers on the basis of estimated
quantities to be utilized over a given period, the estimates must be
compiled from the best information available. They must be a reasonably
accurate representation of the anticipated needs, although there is no
requirement that they be absolutely correct. See Fabric Plus, Inc.,
B-218546, July 12, 1985, 85-2 C.P.D. Paragraph 46; cf. Ace Van &
Storage Co., Windward Moving & Storage Co., B-213885, et al., July 27,
1984, 84-2 C.P.D. Paragraph 120. A protester challenging an agency's
estimates bears the burden of proving that those estimates are not based
on the best information available, otherwise misrepresent the agency's
needs, or result from fraud or bad faith. See D.D.S. Pac, B-216286,
Apr. 12, 1985, 85-1 C.P.D. Paragraph 418; Ace Van & Storage, supra,
B-213885, et al., 84-2 C.P.D. Paragraph 120 at 8.
Dynalectron has not met that burden. Dynalectron essentially argues
that the estimates are defective because they deviate from the current,
actual workload under Dynalectron's contract with DAVA. The
differences, however, between the current workload figures and the
estimates in the solicitation for the 10 FS' identified in Dynalectron's
original protest have in fact been significantly reduced as a result of
the substitution of the revised estimates. Moreover, we point out that
workload estimates should represent the best estimates of the agency's
anticipated future requirements, not merely parrot the current workload
figures. This is particularly important here where (1) a comparison of
the workload figures for 1984 and 1985 as provided by Dynalectron
reveals significant fluctuations in the character and quantity of the
work, thus calling into question a total reliance on the figures for
1985, (2) a new agency with potentially different priorities is assuming
responsibility for these functions, and (3) a contract under this
solicitation could be extended by exercise of the options to a period of
nearly 5 years. Cf. Richard M. Walsh Associates, Inc., B-216730, May
31, 1985, 85-1 C.P.D. Paragraph 621.
We recognize that in its September 30 comments, Dynalectron has
identified additional RS' for which the workload estimates in the
solicitation are allegedly defective. The alleged defects in these
specific RS', however, were apparent prior to the August 9 closing date
for receipt of initial proposals and our Bid Protest Regulations require
protests which are based upon alleged improprieties in a solicitation
apparent prior to a closing date to be filed prior to that closing date.
4 C.F.R. Section 21.2(a)(1) (1985). Moreover, since our Bid Protest
Regulations are designed to give protesters and interested parties a
fair opportunity to present their cases with the least disruption
possible to the orderly and expeditious process of government
procurements, they do not contemplate a piecemeal presentation or
development of protest issues. See Pennsylvania Blue Shield, B-203338,
Mar. 23, 1982, 82-1 C.P.D. Paragraph 272. Accordingly, we consider
Dynalectron's detailed allegations of September 30 concerning these
additional, specific estimates to be untimely, notwithstanding the
general allegation in its initial protest that the estimates for
two-thirds of the RS' differed from the current workload. See also
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;
Pennsylvania Blue Shield, B-203338, supra, 82-1 C.P.D. Paragraph 272 at
4-5.
Payment Deductions for Defective Performance
The solicitation incorporates by reference the standard clause
"Inspection of Services -- Fixed-Price." This clause provides that if
any of the services do not meet the contract requirements, the
government may require the contractor to perform the services again in
conformity with the contract requirements. Where the defects cannot be
remedied by reperformance, the government may reduce the contract price
to reflect the reduced value of the services performed. Federal
Acquisition Regulation (FAR), 48 C.F.R. Section 52.246-4 (1984). The
solicitation further indicates that any reduction in the monthly payment
to the contractor because of unacceptable performance will be based on
the Performance Requirements Summary (PRS) included in the solicitation.
The PRS indicates that the government will use periodic inspections,
review of customer complaints and random sampling to evaluate the
contractor's performance. Prior to the issuance of amendment No. 6, the
PRS apportioned a percentage of the contract price to each RS. The PRS
provides that a part of the value for each RS the performance of which
is unsatisfactory will be deducted from the payment to the contractor in
the same proportion as the defective performance bears to the inspected
lot, in the case of random sampling, or to the entire service in other
cases. The PRS states that "up to a maximum of 25% of the total value
of the service" may be deducted for late performance, at a rate of 1
percent for each time unit -- which varies according to the RS in
question -- of untimeliness. Deductions from the remaining 75 percent
of the total value of the service may be made for defects relating to
quality. For most services, however, the PRS provides for an allowable
deviation -- a permissible number of defects -- for which no deductions
will be taken.
Dynalectron maintains that these provisions have been fixed without
reference to the probable actual damages that would be suffered as a
result of defective performance and, therefore, that they constitute an
unenforceable penalty. In its initial protest of August 8, Dynalectron
generally alleged that the deduction bases -- the percentages of the
contract value apportioned to each RS -- bore no reasonable relation to
the contractor's actual costs or to the prices upon which the contractor
based its offer. In addition, Dynalectron identified the entries in the
PRS relating to the three specific RS' discussed below as examples of
its contention that the PRS imposes an unenforceable penalty.
First, Dynalectron noted that while the entry for RS-30 required the
contractor to provide audiovisual review materials and approval
screenings, meeting certain specifications, "within scheduled completion
date," the entry for RS-30A required the contractor to provide those
services within a "(r)esponse time in accordance with" the delivery
schedule and specified a deduction of up to 25 percent of the total
value of RS-30 for untimely performance. Dynalectron expressed concern
that the references to timeliness in both entries permitted two
deductions for the same period of lateness.
Dynalectron also alleged that the PRS 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 includes 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 PRS 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 or RS value.
Dynalectron further contended in its initial protest that DAVA will
suffer little or no damage if many of the listed products are late,
citing RS-20 as an example. Under RS-20 and RS-20A, the contractor is
required to provide in conformity with the delivery schedule -- at least
24 workdays prior to the release print shipping date -- a timed and
color corrected print, a soundtrack, four video cassettes, and a script
for the monthly film "Air Force Now" for screening and editing by DAVA
and Air Force officials. Once these officials have drawn up a list of
required corrections, the contractor will incorporate the corrections
and will produce the final answer print at least 10 workdays prior to
the release print shipping date as required in RS-21. Dynalectron
argues that RS-20 merely relates to an intermediate review step and that
so long as the actual delivery of the final print pursuant to RS-21 is
timely, the government will have suffered no damage from the untimely
performance of RS-20.
In response to the initial protest, DAVA issued amendment No. 6
revising the PRS. DAVA deleted the fixed percentage of the contract
price apportioned to each RS, leaving that value to be subsequently
negotiated. Where the PRS had included separate entries for both the
quality and timeliness of performance, DAVA deleted any reference to
timeliness in the quality entry.
In addition, DAVA increased the number of RS deduction categories
from 66 to 84, not counting the separate entries for timeliness. Thus,
RS-48 for graphic art services was broken out into 10 separate tasks or
deduction categories.
DAVA, however, maintains that further breakout of tasks is
inappropriate here. It contends that the remaining categories are
comprised of work which is similar in regards to both the manpower and
material required for performance and explains that, in any case, it
lacks the personnel required to conduct separate quality assurance
surveillance for each of the approximately 200 tasks for which the
solicitation includes separate workload estimates.
DAVA has also refused to delete the separate deduction provisions --
RS-20 and RS-20A -- relating to the delivery of the initial print,
soundtrack, video cassettes and script for the monthly film "Air Force
Now" for purposes of screening and review. DAVA maintains that even if
the final "Air Force Now" print required under RS-21 is delivered on
time, the untimely delivery of the initial print and other material for
screening and editing by DAVA and Air Force officials will increase the
administrative burden on the government by compressing the review period
and may cause a decline in quality by depriving the government of an
opportunity for a full review and discouraging changes in order to
regain schedule.
The provisions here for deductions in case of defective performance
constitute liquidated damages, that is, predetermined amounts fixed in
the contract which one party to the contract can recover from another
for a contract violation without proof of actual damages sustained.
Eldorado College, B-213109, Feb. 27, 1984, 84-1 C.P.D. Paragraph 238.
FAR provides that liquidated damages should be used only where both the
government may reasonably expect to suffer damage if the delivery or
performance is delinquent and the extent or amount of such damage would
be difficult or impossible to ascertain or prove. Moreover, the rate of
liquidated damages must be reasonable since liquidated damages fixed
without reference to probable actual damages may be held to be a penalty
and, therefore, unenforceable. FAR Section 12.202(a) and (b).
Before our Office will object to a liquidated damages provision as
imposing a penalty, the protester must show that there is no possible
relation between the liquidated damages rate and the reasonably
contemplated losses. Richard M. Walsh Associates, Inc., B-216730,
supra, 85-1 C.P.D. Paragraph 621 at 3.
DAVA's deletion of the percentage of the contract price apportioned
to each RS and its deletion of any reference to timeliness in the
quality entries in the PRS render Dynalectron's allegations in these
regards academic. See TeOcom, Inc., B-218512, May 2, 1985, 85-1 C.P.D.
Paragraph 495.
Likewise, the breakout of the work under RS-48 into 10 separate
deduction categories as requested by Dynalectron renders Dynalectron's
initial allegation in this regard academic. We recognize that
Dynalectron, apparently referring to the fact that all 10 of the
categories have the same allowable deviation and the same method of
surveillance by random sampling, now argues that each of the 10 tasks
should have its own allowable deviation and own method of surveillance.
Since, however, Dynalectron has presented no evidence demonstrating that
DAVA's selection of the allowable deviation and method of surveillance
for each RS was arbitrary, unreasonable or otherwise improper, we find
no basis upon which to object. See also Eldorado College, B-213109,
supra, 84-1 C.P.D. Paragraph 238 at 3.
Nor will we object to the provision for a payment deduction if the
contractor fails to deliver on time the preliminary "Air Force Now"
print, soundtrack, video cassettes and script for screening and editing
by DAVA and Air Force officials. We recognize that Dynalectron argues
that the government will suffer no damage from an untimely delivery of
the preliminary materials since the review period is "simply the amount
of time it takes to project and review the film, which is nominally 30
minutes in length." The possibility, however, that the review of the
preliminary materials might in a particular instance require only a
relatively short period of time in no way demonstrates that it was
unreasonable for DAVA to expect that in other instances the government
might suffer administrative inconvenience or insufficient time for a
meaningful review should there be an untimely delivery of preliminary
materials requiring more than a cursory review. See also Eldorado
College, B-213109, supra, 84-1 C.P.D. Paragraph 238 at 3.
We note that Dynalectron, in its September 30 comments, identifies
(1) additional RS' which contain dissimilar tasks, (2) additional RS'
which are only intermediate steps in the creation of a final product and
the defective performance of which allegedly may have no relation to the
timeliness and quality of the final product, and (3) other alleged
defects in the surveillance procedures. Dynalectron did not, however,
identify these additional, specific RS' and additional, specific alleged
defects in the surveillance procedures until after the August 9 closing
date for receipt of initial proposals, even though they were apparent
prior to that closing date. Since, as previously indicated,
improprieties apparent prior to the closing must be protested prior to
closing, 4 C.F.R. Section 21.2(a)(1), and our Bid Protest Regulations do
not contemplate a piecemeal presentation or development of protest
issues, we consider these additional allegations to be untimely.
Undue Risk and Burden
Dynalectron alleges that the provisions of the solicitation relating
to workload assignment, compensation for variations in workload and the
contractor's liability for the loss of exposed film impose an undue risk
and burden upon the contractor.
The solicitation warns that the estimated annual workload for each RS
"will not necessarily be assigned to the contractor equally over a
twelve month period" and requires the contractor to "adjust resources
and work force during peak periods to maintain (the) response times"
required under the delivery schedule.
Dynalectron objects that this provision makes the contractor
responsible for accomplishing an unlimited amount of work in a finite
period of time, with any untimeliness in performance resulting in
reductions in the contract price pursuant to the deduction provisions of
the PRS.
DAVA denies that the solicitation leaves the contractor unprotected
against significant fluctuations in workload. The agency points to the
"WORKLOAD VARIATIONS" clause, which provides, in pertinent part, that:
(d)uring workload peaks when the Contractor determines that the full
capacity of the Government's supplied equipment or facility is or will
be used, he will notify the Contracting Officer to discuss the delivery
times or other solutions. If the quantity variation is such as to cause
an increase in the time necessary for completion, the Contractor may
request, in writing, an extension of time . . . . Upon the receipt of a
written request for an extension, the Contracting Officer will ascertain
the facts and may make an adjustment for extending the completion date
as, in the judgement of the Contracting Officer, is justified.
We note that Dynalectron considers the Workload Variations clause to
be insufficient protection arguing that it does not define when
saturation occurs, that the contracting officer may deny a request for
an adjustment and that the clause may not take into account the capacity
of Dynalectron's personnel as opposed to the capacity of the equipment
or facility.
We are, however, aware of no requirement that agencies set forth in
their solicitations the precise basis for adjustments. Cf. Capitol
Services, B-217505, Aug. 1, 1985, 85-2 C.P.D. Paragraph 112. Moreover,
nothing in the provision interferes with the contractor's right to seek
relief under the disputes clause incorporated in the solicitation by
reference. See FAR, Section 52.233-1. Finally, we note that some risk
is inherent in most types of contracts; the mere fact that a
solicitation may impose a risk does not render the solicitation
defective. See Richard M. Walsh Associates, Inc., B-216730, supra, 85-1
C.P.D. Paragraph 621 at 7; Edward E. Davis Contracting, Inc., B-211886,
Nov. 8, 1983, 83-2 C.P.D. Paragraph 541. Offerors are instead expected
to allow for such risk in formulating their offers. Edward E. Davis
Contracting, Inc., B-211886, supra, 83-2 C.P.D. Paragraph 541 at 9.
Since Dynalectron has neither alleged nor shown that the general
requirement for timely performance notwithstanding variations in
workload is not part of the agency's requirements, and, in view of the
provisions for an adjustment to the performance schedule where the
variation in quantity is such as to cause an increase in the time
required for performance, we find no basis to object. See Richard M.
Walsh, B-216730, supra, 85-1 C.P.D. Paragraph 621 at 7 (requirement to
perform despite fluctuations in workload); see also Ray Service
Company, B-217218, May 22, 1985, 64 Comp. Gen. 528, 85-1 C.P.D.
Paragraph 582 (GAO will not object to agency determination of actual
minimum needs in the absence of a showing that the determination has no
reasonable basis).
Dynalectron also objects to those provisions of the Workload
Variations clause providing for an equitable adjustment in the contract
price to the extent that the actual workload exceeds 115 percent or
falls below 85 percent of the estimated workload. In particular,
Dynalectron objects to the provision for determining the net variation
in workload by dividing the actual workload for each RS by the workload
estimate and multiplying the result by the value apportioned to that RS
in the PRS, since it believes that those RS values bear no relation to
the contractor's costs or price. Dynalectron also complains that the
use of the allegedly defective workload estimates in conjunction with
the Workload Variations clause "virtually assures" that the government
will receive up to 15 percent of the services free.
Since DAVA has deleted the percentages apportioned to each RS in the
PRS, leaving the relative value of each to be determined by subsequent
negotiation, we consider Dynalectron's allegation in this regard to be
academic. As for the use of the allegedly defective estimates,
Dynalectron, as previously indicated, has not demonstrated that the
specific workload estimates which it timely protested were in fact
defective. Finally, we point out that the intent of such variation in
workload clauses is to enable the contractor (or the government) to seek
an equitable adjustment in the event of a catastrophic, as opposed to a
merely normal, variation in workload. Cf. Talley Support Services,
Inc., B-209232, June 27, 1983, 83-2 C.P.D. Paragraph 22.
Dynalectron further objects to the provision in the solicitation
imposing liability on the contractor for film lost during processing.
The solicitation provides that:
(i)n the event the contractor destroys or loses exposed film, the
contractor is liable for costs reasonably incurred by the Government as
the result of this loss or destruction.
In response to a question as to whether the contractor would be
responsible for the cost of relaunching a missile where the film of the
original launch was lost, DAVA clarified the contractor's liability,
stating that:
(w)e do not expect you to restage an event but it is the intention of
the Government that the contractor will be responsible for the cost of
re-shooting film due to loss of film during processing if it is the
Government's desire to take this action.
Dynalectron objects that DAVA has neither placed a definite ceiling
on the liability of the contractor nor specified the value of the film
to the government. Dynalectron argues that the failure to limit or
quantify the potential liability prevents the contractor from making
adequate provision for the potential liability, such as by purchasing
insurance. Dynalectron points out that FAR, Section 45.505-2(b)(2),
requires that "(t)he Government shall determine and furnish to the
contractor the unit price of Government-furnished property."
FAR generally provides, however, that contractors are responsible and
liable for government property in their possession unless otherwise
provided by the contract. FAR, Section 45.103(a). Moreover, we point
out that FAR, Section 45.505-2(b)(2), cited by Dynalectron, also
provides that:
(n)ormally, the unit price of Government-furnished property will be
provided on the document covering shipment of the property to the
contractor. In the event the unit price is not provided on the
document, the contractor will take action to obtain the information.
Assuming this provision is applicable to the situation where the
government furnishes exposed film to the contractor for processing,
since the government has neither chosen the new contractor nor provided
it with any exposed film. Dynalectron's argument that the government
has failed to furnish the unit prices of the exposed film as required
under FAR, Section 45.505-2(b)(2), is premature at best.
We recognize that FAR also provides that:
(s)olicitations shall specify material that the Government will
furnish in sufficient detail . . . to enable offerors to evaluate it
accurately. FAR, Section 45.303-2.
DAVA, however, has provided estimates in the solicitation as to its
annual requirements in minutes of different types of productions and
offerors are required to propose a specific cost for each of the 91 most
frequently used elements in completing such audiovisual productions.
Dynalectron has failed to demonstrate that it was unreasonable for
the government not to have also specified the total cost of reshooting
film for productions for which no production orders have been issued.
There is no requirement that a solicitation be so detailed as to
completely eliminate all performance uncertainties or address every
possible eventuality. As previously indicated, the fact that the
solicitation may impose some risk on the contractor does not render it
improper. See also Richard M. Walsh Associates, Inc., B-216730, supra,
85-1 C.P.D. Paragraph 621 at 6-7.
In any case, we question the extent to which Dynalectron may have
been prejudiced by any failure to provide more detailed information
since the protester, as the incumbent contractor, would have a special
knowledge of the nature of the productions. Cf. Linda Vista Industries,
Inc., B-214447, B-214447.2, Oct. 2, 1984, 84-2 C.P.D. Paragraph 380.
Minimum Manning Requirements
The solicitation provides that the price negotiated for an individual
audiovisual production will be subject to an equitable adjustment
downward if the contractor in fact fails to meet the minimum manning
requirements agreed to during the negotiations, that is, fails to use
the number of personnel which it proposed to use during negotiations and
which formed the basis of the agreed price for the audiovisual
production.
Dynalectron argues that the provision for a downward adjustment in
the production price penalizes the contractor for management
efficiencies and ignores the fact that a fixed price had been negotiated
for the audiovisual production.
DAVA, on the other hand, defends the provision as necessary to
protect the government from being overcharged. The agency claims that
Dynalectron, under its contract with DAVA, has consistently utilized
fewer resources and less time than it had originally insisted were
necessary when negotiating a price for a particular audiovisual
production. In support of its contention, DAVA has provided our Office
with documentation relating to a number of productions where Dynalectron
allegedly used fewer personnel and took less time than it had originally
estimated were necessary.
We are aware of no basis for objecting to a provision for adjusting
downwards the price of a production order where that price is based on
the use of one level of resources and the use of a different level of
resources, not previously foreseen by the agency, subsequently proves
necessary.
We recognize that Dynalectron denies that it has overestimated the
required resources. Nevertheless, we conclude that Dynalectron has not
shown that DAVA was unreasonable in determining that, given the prior
history of disputes with the contractor in this regard, it was necessary
in order to accommodate the agency's minimum needs to include provisions
reducing the incentive for the contractor to overestimate its
requirements when negotiating production orders. Cf. Eldorado College,
B-213109, supra, 84-1 C.P.D. Paragraph 238 at 3-4.
Finally, we note that DAVA has not only amended the solicitation to
provide that the "cost of support personnel for production periods . . .
may entitle the contractor to an equitable adjustment," but, in
addition, has also amended the solicitation to permit alternate offers
excluding the disputed provision.
Production Carryover Program
Dynalectron also objects to a provision in the solicitation requiring
the contractor to subcontract completion of certain productions during
the last 2 months of the contract to the successor contractor. Since,
however, DAVA has stated that it will delete this provision, we consider
Dynalectron's protest in this regard to be academic.
The protest is denied.
B-219666, 65 Comp. Gen. 87
Matter of: Defense Forecasts, Inc., Dec. 5, 1985
Contracts - Negotiation - Offers or Proposals - Rejection
An agency may reject an offer, which proposes a social government
employee of that agency as a major consultant, even though no actual
conflict of interest is found to exist. Because of the longstanding
policy against contracting with government employees, the agency has a
reasonable basis for application of this restrictive policy to the
protester's offer, even though notice of this policy was not given in
statute, regulation or the Request for Proposal (RFP).
Contracts - Negotiation - Offers or Proposals - Discussion With All
Offerors Requirement - Exceptions - Offers Not Within Competitive Range
Even where discussions are conducted with the sole remaining offeror
in the competitive range, no discussions need be held with the
protester, who had previously been determined in the competitive range,
in a case where the protester's offer proposing an agency employee as a
major consultant is rejected because of a potential conflict of interest
and the agency reasonably determines that the employee was a primary
factor in the protester's high ranking and is integral to the
protester's proposal, which cannot readily be changed through
negotiations.
Defense Forecasts, Inc. (DFI), protests the rejection of its proposal
under request for proposals (RFP) No. 85-06, issued by the United States
Arms Control and Disarmament Agency (ACDA). We deny the protest.
The RFP requested proposals for a research project on alternative
approaches to arms control. Thirteen proposals were received and three
were found to be within the competitive range. The ACDA source
selection board ranked the three competitive proposals in the following
order: (1) Systems Planning Corporation (SPC); (2) DFI; (3) The BDM
Corporation (BDM).
Although this matter was not mentioned in the solicitation, questions
were raised by the board regarding potential conflicts of interest in
making award to either SPC or DFL. The board was concerned over SPC's
use of the National Institute of Public Policy (NIPP) as its major
subcontractor because the NIPP's president is a member of ACDA's General
Advisory Committee. See section 26 of the Arms Control and Disarmament
Act, 22 U.S.C. Section 2566 (1982). The board also was concerned over
DFI's proposed use of Thomas J. Hirschfeld as a major consultant. Mr.
Hirschfeld periodically performs consultant work for ACDA and is
currently a special government employee of ACDA. ACDA's contracting
officer and counsel determined that there would be no actual conflict of
interest in making award to any of the three competitive offerors.
However, they recommended that the Director of ACDA make a policy
decision on this matter because of the possible appearance of a conflict
of interest if award were made to SPC or DFI.
The Director of ACDA recommended BDM for selection as the only
competitive offeror which did not have an apparent conflict of interest.
He found that the subcontract and consultant arrangements of SPC and
DFI were a primary factor in their high technical evaluations and were
integral to their proposals. He based his decision to reject SPC's and
DFI's proposals on Federal Acquisition Regulation (FAR), 48 C.F.R.
Section 3.601 (1984), which provides:
. . . a contracting officer shall not knowingly award a contract to a
Government employee or a business concern or other organization owned or
substantially owned or controlled by one or more Government employees.
This policy is intended to avoid any conflict of interest that might
arise between the employees' interests and their Government duties, and
to avoid the appearance of favoritism or preferential treatment by the
Government toward its employees.
DFI protested to our Office that its proposal should not have been
rejected because DFI is not "owned or controlled" by Mr. Hirschfeld or
any other government employee and, thus, did not fall under the FAR,
Section 3.601, proscription. DFI contends that in the absence of an
applicable statute, regulation or solicitation provision, offerors
cannot be rejected for a potential conflict of interest. DFI further
states that its proposal can only be rejected if there are "hard facts"
showing an "actual" conflict of interest -- a situation which ACDA
concedes does not exist -- and that a proposal cannot be rejected on the
basis of a theoretical or potential conflict of interest. DFI finally
contends that this matter should have been negotiated with it in any
case, particularly since negotiations were admittedly conducted with BDM
to revise its proposal after it was selected. SPC did not protest the
rejection of its proposal.
We have consistently held that the responsibility for determining
whether a firm has a conflict of interest and to what extent a firm
should be excluded from competition rests with the procuring agency; we
will overturn such a determination only when it is shown to be
unreasonable. Iris International, Inc., B-216084.2, May 10, 1985, 85-1
C.P.D. Paragraph 524. It is also established that a contracting agency
may impose a variety of restrictions, not explicitly provided for in
applicable law or regulations, when the needs of the agency or the
nature of the procurement dictates the use of such restriction, even
where the restriction has the effect of disqualifying particular firms
from receiving an award because of a conflict of interest. R. W. Beck &
Associates, B-218457, July 19, 1985, 85-2 C.P.D. Paragraph 60.
Mr. Hirschfeld, DFI's consultant, is an independent consultant who
had reportedly never previously been employed in any capacity by DFI.
His work as a special employee for ACDA has been sporadic; he had
performed no work for a year before the proposal was submitted although
he performed some work for ACDA after proposal submission. It appears
that none of Mr. Hirschfeld's work directly related to the subject
matter of this contract, and that he was not in a position to exercise
any authority or influence at ACDA over this procurement. There is no
allegation that Mr. Hirschfeld's activities in this case violate the
sanctions contained in 18 U.S.C. Sections 205, 208 (1982) against
improper outside employment by government employees. Moreover, ACDA is
not concerned with "organizational conflict of interest" problems in
making an award to DFI. That is, ACDA did not find that DFI or Mr.
Hirschfeld had any special inside information which would give DFI an
unfair competitive advantage. Moreover, ACDA is not concerned about
DFI's objectivity in performing the contract work. FAR, subpart 9.5
(1984).
The statutes governing the conduct of government employees do not
expressly prohibit contracts between the government and its employees
except where the employee acts for both the government and the
contractor in a particular transaction or where the service to be
rendered is such as could be required of the government in his capacity
as a government employee. 18 U.S.C. Sections 205, 208 (1982); Ernaco,
Inc., B-218106, May 23, 1985, 85-1 C.P.D. Paragraph 592. FAR, Section
3.601, clearly does not preclude the acceptance of DFI's proposal in
this case, since DFI is not owned or controlled by a government
employee. The policy statement in the second sentence of the regulation
only explains the reasons for this preclusion and does not specifically
prevent government employees from serving as independent consultants to
government contractors which they do not own or control.
Nevertheless, the policy against contracting with government
employees is deep-seated and longstanding because such awards invite
criticism as to alleged favoritism and possible fraud. See 55 Comp.
Gen. 681 (1976) and cases cited therein. Since such allegations or
beliefs by competitors for government contracts can adversely affect the
integrity of the procurement system, we have held that awards to firms
controlled by government employees should not be made except for the
most cogent reasons. 41 Comp. Gen. 569, 571 (1962); Capitol Aero,
Inc., 55 Comp. Gen. 295 (1975), 75-2 C.P.D. Paragraph 201. Contrast
Chemonics International Consulting Division, 63 Comp. Gen. 14 (1983),
83-2 C.P.D. Paragraph 426, and Edward R. Jareb, 60 Comp. Gen. 298
(1981), 81-1 C.P.D. Paragraph 178 (government policy on proposing former
government employees). We have drawn no distinctions between special
and regular government employees with regard to the application of this
policy. Ernaco, Inc., B-218106, supra.
ACDA reports that it is a very small independent agency, which
significantly aggravates the allegations of conflict of interest if its
employees can be proposed by offerors on competitive solicitations. In
this regard, ACDA references BDM's comments on the DFI protest, which
include a number of allegations about the "cozy" relationship, including
access to inside information, that Mr. Hirschfeld had with ACDA
officials. These allegations are denied by ACDA and DFI.
The nature of the appearance of a possible conflict of interest in
making award to firms owned or controlled by government employees as
compared to award to firms which propose current government employees of
the procuring agency as major subcontractors or consultants can be
reasonably found to be indistinguishable. The apparent pecuniary
interest of the government employees and the potential adverse affect on
the integrity of the procurement system may be found to be the same in
both situations. Therefore, we believe that it is within ACDA's
discretion to establish a stricter policy with regard to the eiigibility
for award of firms which propose to use ACDA employees as major
consultants on ACDA procurements. Cf. 41 Comp. Gen. 569, 570, supra (an
agency may reasonably establish a policy which precludes the use of
government employees as subcontractors on its contracts). Contrast
B-144482, Feb. 20, 1961 (voucher for contract performance may be paid to
a contractor which used a government employee as a major subcontractor
where the employee received assurances from the agency before performing
the subcontract work that the work was not illegal or improper.)
Due to the type of the apparent conflict of interest, which concerns
the activities of a current government employee, no "hard facts" of an
actual or potential conflict of interest need be shown for an agency to
reject an affected proposal because the "policy is intended to avoid
even the appearance, much less the fact, of favoritism or preferential
treatment." Valiant Security Agency, B-205087, Dec. 28, 1981, 81-2
C.P.D. Paragraph 501. Contrast, CACI Inc. -- Federal v. United States,
719 F.2d 1539 (Fed. Cir. 1983) (protester must show "hard facts" of the
likelihood of a conflict of interest to overturn an agency determination
to make an award).
DFI contends that since it was not given notice of ACDA's restrictive
policy on proposing government employees, that policy cannot be
retroactively employed to reject DFI's proposal. FAR, Section 9.504
(1984), requires agencies to determine what potential conflicts of
interests may exist in a procurement and to include notice of such
restrictions in the solicitation. In this case, the RFP did not
indicate that proposals could be rejected because of potential conflicts
of interest. ACDA claims that FAR, Section 9.504, is inapplicable since
it only concerns organizational conflicts of interest. However, FAR,
Section 3.603(b) (1984), provides that the contracting officer shall
comply with FAR, subpart 9.5, with regard to the application of agency
policy on the use of agency employees by government contractors. ACDA
explains that it did not put a specific provision in the solicitation
announcing its policy on proposing government employees because no
previous offerors on its competitive solicitations had proposed using
government employees. ACDA proposes to specifically announce this
policy in future solicitations.
Ordinarily, proposals cannot be rejected because of an appearance of
a conflict of interest unless there is a solicitation provision or other
notice in laws or regulation which so provides. PRC Computer Center et
al., 55 Comp. Gen. 60, 81 (1975), 75-2 C.P.D. Paragraph 35. However, in
appropriate circumstances, we have recognized the propriety of rejecting
bids or proposals because of an actual or potential conflict of
interest, even though the affected offeror or bidder had not been
previously apprised that its bid or proposal may be rejected on this
basis. See Nelson Erection Company, Inc., B-217556, Apr. 29, 1985, 85-1
C.P.D. Paragraph 482; L W Planning Group, B-215539, Nov. 14, 1984, 84-2
C.P.D. Paragraph 531; Acumenics Research and Technology, Inc.,
B-211575, July 14, 1983, 83-2 C.P.D. Paragraph 94.
We believe the instant situation is one where no prior notice is
necessary. DFI was cognizant of Mr. Hirschfeld's status with ACDA when
it submitted its proposal and did not inquire of ACDA regarding the
propriety of proposing him as a principal consultant. In our opinion,
DFI reasonably should have been aware that proposing a government
employee could present a problem. ACDA acted in good faith and has a
reasonable basis for the application of its restrictive policy on the
use of ACDA employees. Consequently, we find that ACDA's failure to
announce this restriction in the solicitation would not justify
resolicitation of this requirement or nonapplication of the policy to
DFI.
Finally, DFI argues that since ACDA conducted discussions with BDM
after selection concerning its staffing mix and cost proposal, ACDA was
required to conduct discussions with all offerors within a competitive
range. DFI states that had it been apprised of ACDA's concern with Mr.
Hirschfeld, it would have replaced him with an equally competent
consultant.
However, ACDA's Director, in selecting BDM, concluded that Mr.
Hirschfeld was a primary factor in DFI's high ranking and an integral
part of DFI's proposal, which could not readily be changed through
negotiations. That is, ACDA eliminated DFI from the competitive range
because the apparent conflict of interest could not be resolved through
meaningful discussions without changing an integral part of DFI's
proposal.
We agree that changing DFI's proposal to replace Mr. Hirschfeld would
be a major change to its proposal. DFI has provided no evidence, other
than its bare assertion, that it would be able to provide a consultant
with the same strengths and reputation of Mr. Hirschfeld, as evaluated
by ACDA, or that its proposal would not have to be significantly
modified to accommodate the abilities and strengths of an alternative
consultant. Therefore, we conclude that ACDA's determination to hold no
further discussions with DFI was reasonable.
Since SPC was eliminated from the competitive range for the same
basis reason and the other offerors had already been eliminated, only
BDM remained in the competitive range. A procuring agency may reverse
its competitive range decision, eliminating a proposal formerly
considered to be within the range, if it later reasonably determines
through discussions and/or evaluation that the proposal is unacceptable,
even if only one proposal then remains in the competitive range. SDC
Integrated Services, Inc., B-195624, Jan. 15, 1980, 80-1 C.P.D.
Paragraph 44. WASSKA Technical Systems and Research Company, B-189573,
Aug. 10, 1979, 79-2 C.P.D. Paragraph 110. In such circumstances, the
unacceptable offeror need not be provided an opportunity to submit a
revised proposal. Pettibone Texas Corporation, B-209910, June 13, 1983,
83-1 C.P.D. Paragraph 649.
Since DFI's protest is denied, its claim for proposal preparation
costs and attorney's fees is denied. 4 C.F.R. Section 21.6(d) (1985);
Santa Fe Engineers, Inc., B-218268, June 3, 1985, 85-1 C.P.D. Paragraph
631.
B-218844, 65 Comp. Gen. 84
Matter of: Starflight, Inc., Nov. 26, 1985
Transportation - Bills of Lading - Government - Rate on Bill of Lading
v. Applicable Rates
"Deferred Service Requested" annotation on each of several Government
Bills of Lading (GBL) satisfied an air carrier's Tender No. 17
requirement for application of relatively low deferred service rates.
The carrier, however, applied higher rates published in Tender No. 14
applicable to regular air service allegedly because ambiguities in the
GBL caused it to conclude that the shipper really did not desife
deferred service. The General Services Administration's determination
that deferred service rates (Tender No. 17) were applicable is
sustained. The precise deferred service annotation on the GBL's
required by Tender No. 17 was strong evidence of the shipper's intention
to procure deferred service. If the carrier was confused by the
shipper's actions it had a duty to clarify the shipper's intent.
Starflight, Inc., a certified air charter and air freight carrier,
asks the Comptroller General, pursuant to 31 U.S.C. Section 3726 (1982),
to review action taken by the General Services Administration in the
exercise of the agency's transportation audit responsibilities. The
General Services Administration, based on a technical rate determination
that Starflight collected overcharges on bills relating to three
Government shipments, /1/ caused the overcharge amounts to be deducted
from monies due the carrier on other bills.
We sustain the General Services Administration's audit action.
Facts
The dispute involves several small shipments Starflight picked up in
October 1983 and February 1984 at the Army Ammunition Plant, McAlester,
Oklahoma, which were consigned to different installations. The
shipments, consisting of special fireworks (class B explosives), were
tendered to the carrier on Government Bills of Lading which contained
the annotation "DEFERRED SERVICE REQUESTED," in the "Marks" block and
the annotation "STFF 0018" in the "Tariff" block.
A "Deferred Service Requested" annotation on a Government Bill of
Lading satisfies a requirement in Uniform Rate Tender No. 17. Tender
No. 17 applies to requests for a particular type of air service,
referred to as deferred service. The distinguishing feature of this
service appears to be that the carrier reserves the right to defer
pickup of shipments for up to 72 hours after being notified of a
shipment's availability. The notation "STFF 0018" on the bills of
lading refers to Tender No. 18, which offers lower rates for air/truck
service. However, the lower air/truck service rates were not applied
because the bills did not contain an annotation "Air/Truck Service
Requested," as specifically required by note 4 of Tender No. 18.
The carrier indicates that it doubts that the Government had any
intention of requesting "deferred" service, despite the "deferred
service" annotation, because Tender No. 18, which was referred to on the
bills of lading offers lower rates than the rates offered by Tender No.
17 for deferred service. Also, the carrier alleges that oral requests
for air/truck service were made by the shipper when the carrier was
called to pick up the shipments.
The carrier billed and was paid charges derived from its Tender No.
14, which applied to regular air service. While the record is not
entirely clear it appears that, notwithstanding any doubts as to the
shipper's intent, the carrier actually provided deferred service --
rather than the less expensive air/truck service it alleges was orally
requested or the higher cost regular air service for which it billed
under Tender No. 14.
In its audit the General Services Administration applied the rates in
Tender No. 17 on the theory that the Government Bill of Lading
notations, "Deferred Service Requested," satisfied the prerequisite for
applicability required by note 3 of that tender. Note 3 reads:
These rates apply only when Bill of Lading is annotated:
"Deferred Service Requested."
The General Services Administration contends that Tender No. 14 does
not apply because the bills here contain requests for deferred service,
and Tender No. 14 expressly states that:
This Tender is being offered for shipments that do not meet the
requirements of Deferred Service or Weapons Service.
As further support for its position, the General Services
Administration refers to another case involving conflicting annotations
on the face of the Government Bills of Lading. Starflight, Inc.,
B-213733, July 23, 1984. The General Services Administration points out
that in that case -- which involved a conflict between a "Deferred
Service Requested" annotation and a commodity description of palletized
explosives, an item expressly excluded by the deferred-service tender --
we held the carrier was bound by the lower deferred-service rates on the
premise that the Army intended deferred service and the carrier
neglected its duty to inquire to resolve the ambiguity on the Government
Bill of Lading before it performed more expensive, emergency air
service.
Discussion
The carrier has the burden of establishing the validity of its claim.
See Starflight, Inc., B-210740, September 27, 1983. The contract of
carriage under which an air carrier transports goods includes the terms
of the bill of lading and the applicable tariff or tender, including its
rules, and it is settled that ambiguities in the contractual terms are
to be resolved against the carrier, which is responsible for the
document, and in favor of the shipper. Eastern Airlines, Inc., 55 Comp.
Gen. 958 (1976).
It is our opinion that Starflight has not established the validity of
its claim. The Government Bill of Lading annotations, "Deferred Service
Requested," strongly indicate that the intent of the Government was to
procure deferred air service and should have served to put the carrier
on notice in that regard. While the reference to Tender No. 18 in the
tariff block could have caused the carrier some confusion, if it was
unsure as to the type of service it was to perform, it had the
obligation of clarifying that with the shipper in advance. Starflight,
Inc., B-213773, supra, at 3-4.
We have held that the insertion of a tender number of a bill of
lading, while providing some indication of the parties' intent, is not
conclusive as to the agreement and is not necessarily determinative of
the Government's obligations at law. American Farm Lines, B-200939, May
29, 1981. Thus, in this case the mere reference in the bill of lading
tariff block to Tender No. 18 is not sufficient to overcome the clear
annotation that deferred service was requested.
Accordingly, we agree that Tender No. 17, which applies to deferred
service, is applicable, and on that basis we sustain the General
Services Administration's audit action.
FOOTNOTES
(1) Starflight's request and the General Services Administration's
report relate to three Government Bills of Lading, S-4683092, S-4683107,
and S-463109. Subsequently, the carrier asked for review of action
taken by the General Services Administration on Government Bill of
Lading S-4683624. On the representation that it is identical to the
other three, our decision applies, as well, to it.
B-216821, 65 Comp. Gen. 81
Matter of: Delivery of Vendor Checks, Nov. 26, 1985
Checks - Delivery - Direct to Payee
Generally, Treasury Department Financial Centers should deliver
vendor checks directly to payees using United States Postal Service
first class mail. However, the Centers may deliver vendor checks to
involved agencies for forwarding to payees in cases in which the
forwarding agencies determine that there is an administrative,
litigative, contractual or ceremonial reason for doing, provided that
the interests of the United States are adequately protected. 16 Comp.
Gen. 840 (1937) discussed and explained.
The Director of the Washington Financial Center, Bureau of Government
Financial Operations, Fiscal Service, Department of the Treasury, has
asked for guidance concerning the requirement that "vendor checks" /1/
be delivered directly to payees. Specifically, we are asked whether it
would be legally objectionable for Treasury Financial Centers to deliver
checks to Government agencies at their request for forwarding to the
payees in certain cases.
Based on our review of applicable decisions, we find that, as a
general proposition, vendor checks should be mailed directly to payees.
However, this has never been an absolute requirement. It is not
necessary that Treasury disbursing officials send vendor checks directly
to payess in all cases. The Department may deliver vendor checks to
involved agencies for forwarding to payees in cases in which the
forwarding agencies determine that there is an administrative,
litigative, contractual or ceremonial reason for so doing, provided that
the interest of the United States are adequately protected as outlined
below.
BACKGROUND
The Treasury Regional Financial Centers issue miscellaneous vendor
checks (nearly 15 million in fiscal year 1983) for Federal agencies to
pay amounts due corporations, financial organizations, Federal Reserve
Banks and state and local governments. The funds come from the "owing"
agency's appropriations. The Centers issue the checks based on
certified vouchers. The names and addresses of payees are specified on
the vouchers or, by bulk payments, on magnetic tapes which accompany the
vouchers. Checks are mailed directly to the named payees at the
addresses given, using first class United States mail.
The Department's practice of sending checks directly to payees stems
from its interpretation of our decision at 16 Comp. Gen. 840 (1937),
which it views as requiring that procedure in all cases.
Tbe Director believes, however, that there are cases in which it is
more appropriate for Centers to send vendor checks to agencies for
forwarding to payees. Agencies often ask the Centers to send checks to
them so that they can deliver the checks along with other pertinent
documents. Examples are checks issued in connection with litigation and
checks for ceremonial presentation. Also, agencies occasionally request
that checks be returned to them for special handling or so they can
employ special mailing methods to meet a specified need. The Director
suggests that in light of current check issuance procedures and the
needs of Federal agencies to pay their obligations in a timely manner,
agencies should be allowed to decide how the delivery of specific
miscellaneous vendor payments should be made when circumstances known to
the agency warrant action different from direct mailing by the Centers.
DISCUSSION
As noted, Treasury attributes its practice of sending checks directly
to payees to 16 Comp. Gen. 840 (1937). In that decision (16 Comp. Gen.
842), we stated:
As a general rule, checks issued in payment of obligations of
the United States should be delivered direct to the payees. The
reason for this is that in time it may become important to show
that the check was delivered to and received by the person
entitled to payment, particularly if the endorsement or
negotiation of the check should come into question.
The "general rule" established in 16 Comp. Gen. 840 has been
reiterated in several later decisions, for example, A-93726, April 3,
1942; A-89775, November 14, 1938. See also A-44019, November 30, 1935.
The situation involved in 16 Comp. Gen. 840 was proposal by an agency
that all checks be routed through the agency as a matter of routine
procedure. The agency's concern in that case was keeping a correct
record of expenditures. A procedure which could increase the risk of
irregularities (the risk increases in direct proportion to the
complexity of the payment process) was simply not necessary to achieve
the desired objective. In the context of that particular proposal, our
answer was correct then and is still correct now. However, that
decision was not intended to say, and should not be construed as saying,
that direct mail to payees is a rigid requirement from which there can
be no deviation.
There is precedent for check delivery through a responsible
Government official when warranted by the needs of a particular
situation. For example, checks issued in satisfaction of United States
distric court judgments are mailed in care of United States Attorneys to
assure proper release and satisfaction of the judgments. This
arrangement was developed jointly by GAO and the Department of Justice
shortly after the passage in 1956 of the permanent, indefinite
appropriation for the payment of judgments against the United States
(now codified at 31 U.S.C. Section 1304). /2/ The Government is
protected under this procedure because the United States Attorney's
Office obtains a signed release from the payee in exchange for the
check. Also, although never addressed in a formal decision, we have
occasionally authorized the delivery of judgment checks at ceremonial
presentations. See also B-214446, October 29, 1984.
Accordingly, unless otherwise required by statute, if an agency has
an administrative, litigative, contractual or ceremonial need which is
clearly best met by having a vendor check delivered through the agency
rather than directly to the payee, the agency may do so provided the
procedure it follows adequately protects the Government's interests.
This includes compliance with any applicable Treasury Department
requirements. Whenever possible, the agency involved should obtain the
payee's prior written authority for such indirect deliveries.
Having approved "indirect" deliveries in certain cases, we note
several considerations of which agencies should be mindful when check
deliveries are made through Government officials instead of directly to
payees. Any agency employee who has custody of Government funds by
reason of his employment is an accountable officer. 59 Comp. Gen. 113
(1979). Thus, officials holding vendor checks for subsequent transfer
to payees would be accountable officers with respect to the funds the
checks represent. As such they would assume all of the liabilities and
responsibilities imposed upon accountable officers, including strict
liability for fund replacement in the event of a loss while in the
employee's custody.
Moreover, cost effectiveness should be taken into consideration.
Agencies should be cognizant of the provisions of the Prompt Payment
Act, 31 U.S.C. Sections 3901-3909 (1982), when deciding if check
delivery through an agency official is appropriate. The Act provides
generally that an agency must make an interest penalty payment to a
vendor if the agency fails to pay for a delivered property or service by
the required payment date. 31 U.S.C. Section 3902 (1982). With respect
to prompt payment discounts, the Treasury Fiscal Requirements Manual
states:
When a cash discount has been offered for prompt payment, every
effort should be made to process the invoice within the discount
period, if the discount is cost effective to the Government * * *.
1 TFRM Section 4-2025.60. Absent some overriding justification, an
"indirect delivery" would generally be inappropriate if it results in an
interest payment under 31 U.S.C. Section 3902 or in the loss of a
discount.
In addition, as we noted in A-89775, November 14, 1938, any payment
procedure in which checks are sent to the same individual who incurred
the obligation and approved the voucher "might result in the gravest
irregularities." See also A-86840, September 2, 1941. Accordingly, this
practice should be avoided.
As a final note, this decision relates solely to the method of
delivery. Nothing we have said should be construed as authorizing
checks to be drawn in favor or anyone other than the person legally
entitled to receive payment unless expressly authorized by law.
FOOTNOTES
(1) For purposes of this decision, "vendor checks" are defined as
checks written to persons or organizations other than Federal employees.
(2) This agreement was recorded in an internal memorandum
B-63622/B-90307-O.M., August 15, 1956.
B-206699, 65 Comp. Gen. 78
Matter of: Military Reserve Technicians' Pay, Nov. 25, 1985
Compensation - Double - Concurrent Military Reservist and Civilian
Service
A statutory provision limiting the combined military and civilian
compensation of military Reserve technicians to the rate payable for
level V of the Executive Schedule should have been applied on a biweekly
pay period basis rather than an annual basis, since the statutory
language and legislative history indicate that it is to be applied
similarly to related statutory pay rate limitations for other employees
which are applied on a pay period basis.
The issue presented in this matter is whether the pay limitation
imposed by section 775 of the Department of Defense Appropriation Act,
1982, which operated to restrict the combined military and civilian
compensation of Reserve and National Guard technicians to the rate
payable for level V of the Executive Schedule in 1981 and 1982, should
have been applied on a biweekly pay period basis rather than on an
annual basis. /1/ We conclude that this limitation on compensation
should have been applied on a biweekly basis.
Background
Persons employed in a civilian capacity by the Departments of the
Army and the Air Force as technicians for the support of certain Reserve
component programs are required to maintain a concurrent military status
as reservists. /2/ They receive salaries as fulltime civilian employees
and, in addition, they receive military pay and allowances for duty they
perform under orders as members of the Reserve. With respect to those
persons, section 775 of the Department of Defense Appropriation Act,
1982, provides that:
SEC. 775. None of the funds appropriated by this Act for the
pay of Reserve and National Guard technicians based upon their
employement as technicians and their performance of duty as
members of the Reserve components of the Armed Forces shall be
available to pay such technicians a combined compensation in
excess of the rate payable for level V of the Executive Schedule:
Provided, That for purpose of calculating such combined
compensation, no military compensation other than basic pay will
be included. /3/
The pertinent congressional committee report relating to the
enactment of section 775 contains this explanation concerning its
purpose:
PAY CAP FOR GUARD AND RESERVE TECHNICIANS
The committee recommends a new general provision * * * which
would limit the pay of Guard and Reserve technicians to $50,112
annually. This is the same level at which all other government
employees are capped.
Currently some Guard and Reserve full time technician personnel
in GS grades 14 and 15 earn in compensation considerably more than
$50,112 annually which is the rate of pay at which most other
government employees are capped. These technicians do what is
essentially one job, even though the conditions of their
employment require they be uniformed members of the Unit in which
they serve as "full-time" technicians. In other words, they
cannot hold the one job without the other. This is also different
from the Government employee who is a member of a Reserve or a
Guard unit. In this case his membership is purely voluntary and
this represents a second job. Personnel who support the Navy
Reserve and Marine Corps Reserve do not receive two separate pay
checks for performing one job.
The continuation of the pay cap has led to a situation where
high level technicians, serving in GS grades 14 and 15 receive
maximum pay or nearly the maximum of $50,112 in pay for a full
time job and then receive anywhere from 60 to 100 additional days
of pay at the Lt. Colonel or Colonel level. This has the effect
of making their total pay level from the Federal Government more
than that provided to high ranking generals and top ranking
civilian officials of the Department of Defense. /4/
This provision limiting the combined compensation of the technicians
to the rate payable for employees at level V of the Executive Schedule
became effective upon its enactment on December 29, 1981, and was
continued in effect into the beginning of fiscal year 1983 on October 1,
1982, by operation of a continuing appropriations resolution. /5/
Authority under that continuing resolution expired on December 17, 1982,
and the Department of Defense Appropriation Act, 1983, enacted on
December 21, 1992, contained no similar technician pay limitation. /6/
The rate payable for employees holding positions at level V of the
Executive Schedule, as prescribed by 5 U.S.C. Section 5316, is "the rate
determined with respect to such level under chapter 11 of title 2, as
adjusted by section 5318 of this title." /7/During the period in
question, per annum level V basic pay was set at $50,112, until January
1, 1982, when it was increased to $57,500. /8/ As indicated in the
congressional report, with certain exceptions the maximum compensation
of Federal employees is limited by law to the rate of pay prescribed for
level V of the Executive Schedule. /9/
A biweekly pay period of fixed by law for employees of Federal
executive agencies. /10/ We have consistently held that the statutory
provisions described in the previous paragraph, limiting pay to the rate
prescribed for level V of the Executive Schedule, are to be applied on a
pay period basis rather than on a calendar or fiscal year basis for
agency employees, including those employed temporarily or
intermittently. /11/
Nevertheless, in a memorandum dated January 26, 1982, the Office of
the Secretary of Defense advised the Departments of the Army and the Air
Force that the compensation limitation at issue prescribed by section
775 of the Department of Defense Appropriation Act, 1982, should be
applied on an annual rather than a pay period basis. The memorandum
noted that if the compensation limitation were applied on a biweekly pay
period basis, the technicians would be limited to combined compensation
of $2,221 per pay period. It was indicated that this would affect about
3,250 Air National Guard and Air Force Reserve technicians and 1,420
Army National Guard and Army Reserve technicians, and it was asserted
that "(a)n impact of * * * (this) magnitude would * * * cause * * *
unnecessary turbulence surely not intended by the Congress." It was also
noted that because the technicians served on active military duty
intermittently, the compensation limitation would have a minimal effect
if it were instead applied on an annual basis. The memorandum contained
statements to the effect that because section 775 did not specifically
direct that the compensation limitation be applied on a pay period
basis, and because it appeared desirable to minimize the pay limitation
required by the provision, the limitation should instead be applied on
an annual basis.
Air Force officials report that doubts arose concerning the propriety
of applying the limitation on an annual basis. In a June 1984 opinion
of the Office of the Judge Advocate General of the Air Force stated that
"the cap should have been properly applied on a 2-week pay period rate,"
and recommended that the issue be referred here for resolution. The
Secretary of the Air Force now requests our decision in the matter.
Analysis and Conclusion
Congress did not state specifically in section 775 of the Department
of Defense Appropriation Act, 1982, whether the limitation of the
technicians' compensation was to be applied on a pay period basis, or an
annualized basis, or on some other basis. We observe, however, that
section 775 did place the cap on the "rate payable" for level V
employees, and under law level V employees are not paid annually but are
paid on a 2-week pay period basis. Moreover, as indicated previously,
statutes capping the pay of other employees at the level V rate are
applied on a pay period basis. Thus, our view is that a consistent
construction placed on the related provisions of section 775 of the
Department of Defense Appropriation Act, 1982, required that the
limitation on the technicians' pay be applied on a biweekly pay period
basis rather than on some other basis.
In addition we note that, prior to this limitation being adopted,
these technicians were already subject to the level V pay limitation on
their civilian salaries under 5 U.S.C. Section 5308, applicable on a
biweekly pay period basis. What the additional limitation did, in our
view, was include both military and civilian compensation within the
limitation. This view is consistent with the legislative history's
explanation that the limitation was adopted because technicians "do what
is essentially one job," whether in a civilian or military capacity,
and, therefore, their combined compensation should be limited to "the
same level at which all other government employees are capped."
We conclude, therefore, that the limitation on the technicians'
compensation contained in section 775 should have been applied on a
biweekly pay period basis, and that the alternative method used was
improper.
FOOTNOTES
(1) This action is in response to a request for a decision dated
April 16, 1985, from the Secretary of the Air Force. The Secretary's
request has been assigned control number SS-AF-1452 by the Department of
Defense Military Pay and Allowance Committee.
(2) See, generally, 32 U.S.C. Section 709; and 53 Comp. Gen. 493
(1974).
(3) Public Law 97-114, Section 775, approved December 29, 1981, 95
Stat. 1565, 1590-91.
(4) H.R. Rep. No. 333, 97th Cong., 1st Sess. 287-288 (1981).
(5) Public Law 97-276, approved October 2, 1982, 96 Stat. 1186.
(6) Public Law 97-377, approved December 21, 1982, 96 Stat. 1830,
1833.
(7) That is, the rate fixed under the quadrennial review provisions
of 2 U.S.C. Sections 351-361, as adjusted yearly following the
comparability increases in rates payable under the General Schedule.
(8) By Public Law 97-92, Sections 101(g) and 141, approved December
15, 1981, 95 Stat. 1183, 1190, 1200. Per annum level V pay was again
increased to $63,800 4 days after the technicians' pay cap expired on
December 17, 1982. Public Law 97-377, Section 129, December 21, 1982,
96 Stat. 1830, 1914.
(9) See, e.g., 5 U.S.C. Sections 5308, 5547.
(10) See 5 U.S.C. Section 5504.
(11) See, e.g., Jerome E. Hass, 58 Comp. Gen. 90, 93-94 (1978);
Donald Bodine, 60 Comp. Gen. 198, 199 (1981); Lieutenant Colonel Robert
C. McFarlane, USMC (Retired), 61 Comp. Gen. 221, 222-223 (1982); and
Lieutenant General Ernest Graves, Jr., USA (Retired), 61 Comp. Gen. 604,
606 (1982).
B-220083, 65 Comp. Gen. 76
Matter of: Marsellis-Warner Corporation, Nov. 22, 1985
Bids - Ambiguous - Two Possible Interpretations - Clarification
Prejudicial to Other Bidders - Rejection of Bid
Bid which contains an inconsistency between item prices and total bid
price and is therefore susceptible to more than one bid price
interpretation, one of which may make the bid high, must be rejected as
ambiguous.
Marsellis-Warner Corporation (MWC) protests the rejection of its bid
and the award of a contract to C.J. Hesse, Inc. (Hesse) made pursuant to
the Department of the Navy's invitation for bids (IFB) N62472-85-B-3990
for paving Normandy Road at the Naval Weapons Station Earle, Colts Neck,
New Jersey.
The protest is denied.
The IFB requested prices on three bid items and a total bid price.
Only one award at the total bid price was authorized by the IFB. MWC
submitted its bid as follows:
Bid Item #1 ................... $257,500
Bid Item #2 ................... 255,000
Bid Item #3 ................... 255,000
Total Bid .................... 257,500
The contracting officer rejected MWC's bid because he found that it
was subject to differing interpretations.
MWC states that its intended total bid of $257,500 was approximately
$14,000 lower than Hesse's bid, and that MWC should therefore have been
awarded the contract. MWC argues that since the solicitation called for
bids to be evaluated solely on the total bid price and individual item
awards were not contemplated, it was irrelevant what bidders quoted on
the individual bid items. MWC contends that the Navy should therefore
have resolved the perceived ambiguity by adopting MWC's total bid price.
MWC states that since the government's estimate for the total of the
three items was $125,000 to $500,000, MWC's total bid could not
reasonably be construed as being the total of the three items it bid as
that sum would be $767,500.
MWC states that during bid opening it realized that its bid item
allocations were erroneous and it so advised the contracting officer.
The following day MWC informed the Navy that its individual item prices
were in error because it had detached a particular sheet during the
prebid process which contained a diagram allocating the bid items as
different percentages of the total work. MWC supplied the corrected bid
items as follows: Item #1 -- $182,250, Item #2 -- $54,650, and Item #3
-- $20,600, and stated that the total bid of $257,500 was correct. This
breakdown is consistent with the government estimate for this work.
A bid which is subject to two reasonable interpretations may not be
accepted if under one interpretation the bid is low and the other is
not. Broken Lance Enterprises Inc., 57 Comp. Gen. 410 (1978), 78-1
C.P.D. Paragraph 279. On the other hand, where an alleged ambiguity in
a bid admits of only one reasonable interpretation substantially
ascertainable from the face of the bid, the bid may be accepted. Ideker
Inc., B-194293, May 25, 1979, 79-1 C.P.D. Paragraph 379, affirmed, Aug.
21, 1979, 79-2 C.P.D. Paragraph 140. We have also held in a
substantially similar case that the fact that the individual item prices
were not the basis for award does not negate the existence of ambiguity
and possible error in the bid. Miama Corp., B-204554, Dec. 28, 1981,
81-2 C.P.D. Paragraph 499.
We believe that MWC's bid is subject to more than one reasonable
interpretation and thus was properly rejected. Even assuming that MWC
may be correct that it was unreasonable to interpret its bid as being
$767,500, there is still more than one other reasonable interpretation
of its bid. MWC's bid could have been interpreted that the total price
was correct and the individual prices were incorrect as MWC argues, or
that Item 1 was correct but that Items 2 and 3 were incorrect thus
resulting in an unknown total price. In any event, it was impossible
for the Navy to know from the bid itself which figures given were wrong,
and, if so, by how much. That is, given the amounts on the bid items it
was unclear what MWC's total bid was meant to be. See Miama Corp.,
B-204554, supra.
Accordingly since the ambiguity could not be resolved from the bid
itself, but only through MWC's post opening explanation, the bid was
properly rejected.
The protest is denied.
B-220961, 65 Comp. Gen. 74
Matter of: R.S. Systems, Nov. 21, 1985
Contract - Small Business Concerns - Awards - Responsibility
Determination - Nonresponsibility Finding - Certificate of Competency
Requirement
Protest that contracting officer failed to comply with Federal
Acquisition Regulation 19.602-1(c)(2), by not including a letter from
the protester with the agency referral to the Small Business
Administration (SBA) for a certificate of competency (COC) determination
is dismissed because the contracting officer is not required to refer to
SBA information which does not support the contracting officer's
determination that the prospective contractor is nonresponsible and
because the burden is on the contractor to prove its competency to the
SBA through its application for a COC.
Bids - Preparation - Costs - Noncompesable
When a protest is without merit, GAO will deny a claim for attorney's
fees and bid preparation costs.
R.S. Data Systems (RSD), a section 8(a) minority contractor, protests
the rejection of its bid under invitation for bids (IFB) No. 85-877
issued by the Department of Housing and Urban Development (HUD).
We dismiss the protest without receipt of a contracting agency report
for the reasons indicated below. See section 21.3(f) of the Bid Protest
Regulations, 4 C.F.R. Section 21.3(f) (1985).
HUD conducted a preaward survey of RSD's facility and the contracting
officer determined that RSD was not a responsible contractor for this
procurement. In accordance with the Federal Acquisition Regulation
(FAR), 48 C.F.R. Section 19.602-1(c) (1984), to assist the Small
Business Administration (SBA) in making a certificate of competency
(COC) determination, the contracting officer forwarded information that
supported his determination that RSD was not responsible. After RSD
applied for a COC, the PhiladelHia Regional Office of the SBA decided
that RSD was not competent to perform the contract work and refused to
issue a COC to RSD.
After RSD learned that SBA refused to issue a COC, RSD allegedly
discovered that the referral from HUD to SBA did not include a copy of
the solicitation and a letter which RSD gave to the members of the HUD
preaward survey team which in RSD's opinion would support RSD's view
that it is a responsible contractor. RSD contends that the contracting
officer's failure to forward to SBA the letter favorable to RSD and a
copy of the IFB violated FAR, Section 19.602-1(c)(2).
FAR, Section 19.602-1(c)(2), requires a contracting officer to refer
to SBA for a COC determination:
A copy of the solicitation, drawings and specifications,
preaward survey findings, pertinent technical and financial
information, abstract of bids (if available), and any other
pertinent information that supports the contracting officer's
determination.
The protester argues that the intent of this provision is for the
contracting officer "to provide the SBA with every piece of data which
is relevant to the decision of the contracting officer" and, therefore,
the contracting officer should have included the RSD letter in its
referral to SBA. However, we view this provision to merely require a
contracting officer to supply the SBA with "pertinent information that
supports the contracting officer's determination" that the contractor is
not responsible. Therefore, the contracting officer was not required to
supply the SBA with information tending to show that the contractor is
responsible, such as the RSD letter, since the burden is on the
contractor to prove through its COC application to SBA that it is
responsible. See FAR, Section 19.602-2(a); JBS Construction Co.,
B-187574, Jan. 31, 1977, 77-1 C.P.D. Paragraph 79; Shiffer Industrial
Equipment, Inc., B-184477, Oct. 28, 1976, 76-2 C.P.D. Paragraph 366.
Concerning the alleged failure of the SBA to receive a copy of the IFB,
FAR, Section 19.602-1(c)(2), does require the contracting officer to
send a copy of the solicitation to SBA. However, if none was sent, we
do not consider it material, since we are not aware of anything that
would have precluded SBA from obtaining a copy from HUD if it was
necessary for its COC determination.
The protester has requested that it be paid attorney's fees and bid
preparation expenses. However, since we find the protest to be without
merit, we deny the claim for costs. Monarch Engineering Company,
B-218374, June 21, 1985, 85-C.P.D. Paragraph 709.
B-218634.2, 65 Comp. Gen. 72
Matter of: Resource Consultants, Inc. Nov. 21, 1985
Equipment - Automatic Data Processing Systems - General Services
Administration - Responsibility Under Brooks Act
When a Brooks Act procurement is the subject of a protest to the
General Services Administration Board of Contract Appeals (GSBCA),
General Accounting Office (GAO's) Bid Protest Regulations effectively
provide for the dismissal of any protest to GAO involving that same
procurement in deference to the binding effect of a GSBCA decision on
the federal agency involved, subject to appeal to the United States
Court of Appeals for the Federal Circuit. The clear intent of the
Competition in Contracting Act of 1984 is to provide for an election of
mutually exclusive administrative forums to resolve challenges to Brooks
Act procurements.
Resource Consultants, Inc. (RCI) protests the proposed award of a
contract to Tidewater Consultants, Inc, (Tidewater) under request for
proposals (RFP) No. N00600-84-R-2359, issued by the Department of the
Navy for the acquisition of automatic data processing (ADP) equipment
support services. The proposed award would be made pursuant to a
decision by the General Services Administration Board of Contract
Appeals (GSBCA) that held that RCI had been improperly awarded a
contract under the solicitation. We dismiss the protest.
Background
Contract award under the RFP was originally made to RCI. Tidewater
protested to the GSBCA that the award was improper, and the GSBCA
agreed. Tidewater Consultants, Inc., GSBCA No. 8069-P, Sept. 4, 1985.
Specifically, the GSBCA found that the protest presented "a clear case
of prohibited technical leveling," because, in a request for a second
round of best and final offers, RCI and a third offeror received
explicit suggestions from the agency for improving their technical
proposals, but the protester did not. Accordingly, the GSBCA ordered
the Navy to immediately terminate RCI's contract for the convenience of
the government and to award any continuing requirements the Navy might
have under the original solicitation to Tidewater. The Navy then filed
a motion for reconsideration of the GSBCA decision, which the GSBCA
denied. Tidewater Consultants, Inc., GSBCA No. 8069P-R, Sept. 27, 1985.
The Navy subsequently filed a motion for relief from the September 27
decision, asking the GSBCA to suspend temporarily its order to terminate
RCI's contract for convenience and to award any continuing requirements
to Tidewater. In its decision in Tidewater Consultants, Inc., GSBCA No.
8069-P-R, Oct. 3, 1985, the GSBCA found no reason to stay in order to
terminate RCI's contract and affirmed that order. (The Navy then
immediately terminated the contract.) However, the GSBCA temporarily
stayed its order to award any continuing requirements to Tidewater
because of a protest filed by RCI with the Small Business Administration
(SBA) challenging Tidewater's small business size status, and because
the Navy was investigating a possible improper relationship between
Tidewater and a former member of the technical review board that had
evaluated and scored the technical proposals, who is now in Tidewater's
employ. The stay order is still in effect.
RCI never intervened in any of the proceedings before the GSBCA, but
filed this protest with our office on September 20, asserting that the
GSBCA's decision of September 4 on the issue of technical leveling was
erroneous in light of prior precedent of this Office, and, therefore,
that the GSBCA's order to terminate RCI's contract for the convenience
of the government was legally insupportable. Moreover, RCI strenuously
urges that the order to award any continuing requirements to Tidewater
would constitute a prohibited sole-source award. Hence, RCI contends
that even if the GSBCA's order to terminate RCI's contract is allowed to
stand, the remaining requirements should instead be recompeted rather
than awarded to Tidewater. RCI also asserts that the GSBCA lacked
jurisdiction to hear the original protest filed by Tidewater.
Analysis
Section 2713(a) of the Competition in Contracting Act of 1984 (CICA),
40 U.S.C.A. Section 759(h) (West Suppl 1985), provides that, upon the
request of an interested party, the GSBCA shall review any decision by a
contracting officer regarding a procurement conducted under the
authority of the Brooks Act, 40 U.S.C. Section 759 (1982) (including
procurements conducted under delegations of procurement authority) which
is alleged to violate a statute or regulation. /1/ CICA also provides
that an interested party who has filed a protest with this Office with
respect to a procurement or proposed procurement under the Brooks Act
may not file a protest with respect to that procurement or proposed
procurement with the GSBCA. Concomitantly, our Bid Protest Regulations,
which implement section 2741(a) of CICA, 31 U.S.C.A. Sections 3551-3556
(West Supp. 1985), provide that after a particular procurement is
protested to the GSBCA, that procurement may not be the subject of a
protest to this Office while the protest is before the GSBCA. 4 C.F.R.
Section 21.3(f)(6) (1985). Therefore, this language effectively
provides that once the GSBCA has exercised jurisdiction, any protest to
this Office involving the same procurement issue will be dismissed
without consideration in deference to the binding effect of a GSBCA
protest decision on the federal agency involved, subject to appeal to
the United States Court of Appeals for the Federal Circuit. Comdisco,
Inc., B-218276.2, Apr. 4, 1985, 85-1 CPD Paragraph 391.
It is clear that the intent of CICA is to provide for an election of
mutually exclusive administrative forums to resolve challenges to
procurements subject to the Brooks Act, whether the forum selected by
the challenging party is the GSBCA or this Office. Since Tidewater
chose to elect the GSBCA rather than this Office to resolve the matter,
RCI should have intervened before the GSBCA to protect its interests and
should have raised any questions regarding the GSBCA's jurisdiction at
that time. Moreover, since CICA specifically provides that the proper
avenue of appeal of a GSBCA decision is to the United States Court of
Appeals for the Federal Circuit, 40 U.S.C.A. Section 759(h)(6)(A) (West
Supp. 1985), our consideration of RCI's protest would be inconsistent
with the legislative intent because we would, in effect, become an
appellate body to review the GSBCA's decision in this matter.
The protest is dismissed.
FOOTNOTES
(1) The Brooks Act grants exclusive procurement authority to the
Administrator of General Services to provide for the economic and
efficient purchase, lease, and maintenance of ADP equipment by federal
agencies. The Administrator may, in turn, delegate such authority to
the various federal agencies.
B-220497, 65 Comp. Gen. 71
Matter of: Arnold Rooter, Inc., Nov. 20, 1985
Contracts - Protests - Conflict in Statement of Protester and
Contracting Agency
When the only evidence of the time that the bidder's representative
arrived at the contracting office consists of a statement of the
protester that the representative arrived prior to the bid opening time
and a statement of the contracting agency that the representative
arrived after that time, the protester has failed to sustain its burden
of proving that the bid was not late.
Bids - Late - Bidders Responsibility for Delivery
It is the bidder's responsibility to assure timely arrival of its bid
at the place of bid opening, and a bid that is late because the bidder
failed to allow sufficient time for delivery of the bid may not be
considered for award. The fact that bids had not been opened when the
late bid was received is irrelevant, since the importance of maintaining
the integrity of the competitive bidding system outweighs any monetary
savings that might be obtained by considering a late bid.
Arnold Rooter, Inc. (ARI) protests the rejection as late of its bid
under invitation for bid (IFB) No. F11623-85-B-0053, issued by the
Department of the Air Force to test and seal the sanitary sewer system
at Scott Air Force Base, Illinois. We deny the protest.
Bid opening was scheduled for 3 p.m. on September 16, 1985. ARI
alleges that its representative was present at the base contracting
office prior to the 3 p.m. deadline and tendered its bid to the
procurement clerk. The clerk informed ARI's representative that a MSgt
Koegle would have to be called from the bid opening room. According to
the protester, it was 3.01 p.m. when MSgt Koegle came out, and he
refused to accept the bid because the exact time for the opening of bids
had passed.
ARI contends that the bid should have been accepted since it was
offered to the clerk before 3 p.m. ARI, whose representative went to the
bid opening room and noted that no bid had yet been opened, further
argues that no advantage could have been gained by ARI if its bid were
accepted, and that by putting form over substance the government loses
the $47,000 by which ARI's bid allegedly is below the low accepted one.
(The firm's attorney holds the bid which the government never opened.)
According to the Air Force procurement clerk, who was the first
person contacted by ARI, ARI's representative arrived at 3:03 p.m. When
ARI offered its bid, the Air Force states, the procurement clerk advised
ARI that the bid was late, but called MSgt Koegle to the office to talk
to ARI's representative. MSgt Koegle also advised ARI that the bid was
late and could not be accepted. The Air Force further alleges that the
ARI representative acknowledged to several people at the bid opening
that he was late because of traffic conditions and difficulty in finding
the building and room.
When the only evidence on an issue of fact consists of conflicting
statements of the protester and the agency, the protester has not
satisfied its burden of proof. Unico, Inc., B-216592, June 5, 1985,
85-1 D.P.D. Paragraph 641. Therefore, although ARI contends that its
representative arrived at the contracting office prior to the bid
opening time, we are constrained to accept the Air Force's statement
that the representative first arrived at the reception desk 3 minutes
after the time for bid opening, and that the bid thus was late.
Moreover, it is not relevant that bids had not yet been opened when
ARI's bid was received. The bidding rules and regulations are clear
that it is the bidders's responsibility to assure timely arrival of its
bid at the place of bid opening, and a bid that is late because the
bidder failed to allow sufficient time to deliver the bid may not be
considered for award. See James L. Ferry and Sons, Inc., B-181612, Nov.
7, 1974, 74-2 C.P.D. Paragraph 245; Federal Acquisition Regulation, 48
C.F.R. Section 14.304 (1984). We consistently have taken the position
that these guidelines must be enforced strictly, since maintaining
confidence in the integrity of the competitive bidding system outweighs
any monetary savings that might be obtained by consideration of a late
bid. 51 Comp. Gen. 173 (1971); Chestnut Hill Construction, Inc.,
B-216891, Apr. 18, 1985, 85-1 C.P.D. Paragraph 443.
The protest is denied.
B-219730, 65 Comp. Gen. 66
Matter of: CoMont, Inc., Nov. 14, 1985
Contracts - Protests - Authority to Consider - Housing and Urban
Development Department Procurements
Under the Competition in Contracting Act of 1984, the General
Accounting Office's bid protest authority extends to procurements by the
Department of Housing and Urban Development for management of properties
acquired through insurance of mortgages or loans under the National
Housing Act.
Bids - Invitation for Bids - Amendments - Failure to Issue by Agency
Where a material change occurs after issuance of a solicitation for
area management broker services, the procuring agency, i.e., the
Department of Housing and Urban Development, is required to issue a
written amendment to the solicitation so that bidder are properly
apprised of the change. Oral advice at prebid conference and/or at bid
opening is not sufficient for this purpose.
CoMont, Inc., protests the Department of Housing and Urban
Development's (HUD) award of a contract for area management broker
services /1/ to James T. Ewing Real Estate Management Company. The
services are required in connection with property acquired by HUD
through its insurance of mortgages or loans under the National Housing
Act, 12 U.S.C. Section 1701, et seq. (1982). CoMont contends that there
were numerous irregularities in the procurement process, including a
failure by HUD to notify potential bidders of a material modification to
the solicitation.
We find that our Office has jurisdiction over this procurement, and
we sustain the protest.
Jurisdiction
A threshold issue involves our authority to consider this protest.
Before the January 15, 1985, implementation of the bid protest
provisions of the Competition in Contracting Act of 1984 (CICA), 31
U.S.C.A. Sections 3551-3556 (West Supp. 1985), we decided bid protests
based upon our authority to adjust and settle government accounts and to
certify balances in the accounts of accountable officers under 31 U.S.C.
Section 3526 01982).
The enactment of CICA both strengthened and, for the first time,
expressly defined our bid protest authority: we are to decide protests
concerning alleged violations of procurement statutes or regulations.
31 U.S.C.A. Section 3552. This bid protest authority is not related to
account or claim settlement authority over the contracting agency
involved.
Before CICA, we declined to consider protests of procurement actions
under the National Housing Act. Seed, for example, Edward H. Pine
Insurance, B-211065, Apr. 11, 1983, 83-1 CPD Paragraph 377; Hanson
Realty Co., B-186033, July 8, 1976, 7602, CPD Paragraph 23. Our
position was based on a statutory provision authorizing the Secretary of
HUD to make such expenditures as are necessary to carry out the disposal
of property and other functions without regard to any other provisions
of law governing the expenditure of public funds. 12 U.S.C. Section
1702. In view of this extraordinary authority, we concluded that there
was no legal basis for us to question expenditures of funds under the
National Housing Act.
Under CICA, however, we concluded that protests of National Housing
Act procurements are subject to our authority. HUD and, specifically,
the Secretary's authority under the National Housing Act are clearly
included within the definition of "federal agency" in the bid protest
provisions of CICA, which is given the same meaning as that given by
section 3 of the Federal Property and Administrative Services Act of
1949 (FPASA) (40 U.S.C. Section 472), 31 U.S.C.A. Section 3551(3). That
definition includes any "executive agency," which is in tern defined to
mean any "department . . . in the executive branch of the Government,
including any wholly owned Government corporation." The Secretary, when
carrying out duties and powers related to the Federal Housing
Administration Fund, which are at issue here, is among the entities
defined as wholly owned government corporations under the Government
Corporation Control Act, 31 U.S.C. Section 9101(3)(L). /2/
Since the solicitation in question was issued June 6, 1985, after the
effective date of the bid protest provisions of CICA, we will consider
the merits of CoMont's protest. /3/
CoMont's Protest
The HUD's field office in Santa Ana, California, issued the
solicitation, No. HC-3-85-046, seeking bids to provide real estate
management broker services in the Santa Ana area for 3 years. CoMont,
as the incumbent contractor, had been furnishing photographs of
properties comparable to those for which, as part of its contractual
duties, it had provided HUD with estimated fair market values. CoMont
had not been paid separately for these photographs.
On June 11, officials at HUD's Washington, D.C., headquarters
notified field offices that all area management broker contracts must in
the future require photographs of comparable properties and stated that
HUD would pay $10 to $15 for each form 9516 (filed for each property
assigned to the contractor) for this service. The agency states that
the contracting officer advised the attendees at a prebid conference,
including CoMont, that the successful contractor would have to provide
the photographs and would be compensated for the additional effort.
While CoMont acknowledges that the contracting officer informed
prospective bidders of the new requirement, it contends that she did not
indicate that HUD would provide separate compensation until bid opening
on July 8. At bid opening, Ewing was low bidder, and CoMont was second
low.
In its protest, CoMont contends that in orally modifying the
solicitation to require the contractor to provide the photographs, HUD
failed to disclose that the contractor would be paid $10 for each
assigned property and that this amount would be in addition to the
contract price for management broker services. CoMont states that in
calculating its bid for the new contract, it had included costs for the
photographs that it planned to continue to provide to the agency. Had
it known of the separate payment before bid opening, Co Mont states, it
would not have done so, and its bid therefore would have been low.
CoMont argues that HUD's oral modification of the solicitation
violated the Federal Acquisition Regulation (FAR), 48 C.F.R. Section
14.208 (1984), which requires agencies to make amendments to invitations
for bids in writing, using standard form 30, and to provide the
amendments before bid opening to everyone to whom invitations have been
furnished.
The protester also argues that HUD improperly failed to provide it
with a copy of the solicitation 30 days before bid opening; that when
it was provided, the solicitation was illegible, incomplete, and
ambiguous; and that the contracting officer sought to discourage bids
by operating management companies and expressed a preference for newly
formed companies. In addition, CoMont asks that we not consider matters
presented in the agency's administrative report, since it was not filed
within the 25-day period specified in our Bid Protest Regulations, 4
C.F.R. Section 21.2(c) (1985).
HUD responds that the solicitation contained a number of provisions
indicating that, upon government request, the contractor would be
expected to obtain or arrange for such services as test reports
concerning the condition of the properties (e.g., soil, foundations, and
roofs), pest inspections, and certain repairs. In each case, the
solicitation stated that these services would be "at government
expense." The only photographs required by the solicitation, however,
were those of the properties being managed. HUD acknowledges that
photographs of comparable properties were not among the reimbursable
expenses listed in the solicitation, but seems to argue that since
similar costs would be reimbursed, bidders could have assumed that the
required photographs of comparable properties would also be at
government expense.
GAO Analysis
HUD has broad procurement authority under the National Housing Act.
See 40 U.S.C. Section 474(11); 12 U.S.C. Sections 1710(g), 1713(l),
1748b(h) 1749hh, and 1750(f). Nevertheless, absent a determination by
HUD that the procurment procedures set forth in the regulations
implementing the FPASA would impair or affect the carrying out ot
National Housing Act programs, those requirements are applicable. See
45 Comp. Gen. 277,278-9 (1965) (discussing the regulations applicable to
the Federal Housing Administration in exercise of the National Housing
Act authorities that currently reside in the Secretary of HUD); cf.
Monarch Systems, Inc., supra (when Tennessee Valley Authority has not
advised us that it has determined not to follow the FAR, we will apply
it in deciding a protest).
Therefore, we will apply the FAR provisions in deciding CoMont's
protest. /4/
We do not agree that bidders reasonably should have assumed that they
would be reimbursed for the photographs in question. Some, like CoMont,
may have included an amount in their bid prices sufficient to cover
these photos -- in which case the government, by reimbursing them, would
in effect be paying twice for the same photographs.
As the protester points out, the FAR requires written solicitation
amendments. In addition, it specifically cautions agencies that the
"fact that a change was mentioned at a pre-bid conference does not
relieve the necessity for issuing an amendment." FAR, 48 C.F.R. Section
14.208(a). This requirement for a written amendment serves to avoid the
very type of dispute that has arisen here; it ensures that bidders
compete on an equal basis by responding to the same terms and
conditions, so that the government's needs can be met at the lowest
price. See Informatics, Inc., 56 Comp. Gen. 388 (1977), 77-1 CPD
Paragraph 152. Consequently, we have sustained protests where
protesters deny that they were orally advised of material changes in
solicitations. Id.; I.E. Lovick and Associates, B-214648, Dec. 26,
1984, 84-2 CPD Paragraph 695.
Here, the contracting officer estimates that the requirement for
photographs will result in payment of $4,500 to the contractor; CoMont,
however, estimates that the additional payment will be $9,000. Even if
we use the lower amount, it is not clear from the record that the
relative standing of bidders would not change or that CoMont's bid would
only have been second low if it had known of the additional payment for
the photographs. HUD has not suggested that CoMont's bid would not have
been low or provided information on this point; for whatever reason,
its report does not even include an abstract of bids. Consequently, we
consider the amendment of the solicitation to have been material.
Because HUD's failure to issue a written amendment resulted in
prejudice both to the protester and to the agency, corrective action is
warranted. By separate letter of today, we are recommending to the
Secretary of HUD that the management broker services subject to this
protest be resolicited and that the current contract with Ewing be
terminated for the convenience of the government. In view of our
recommendation that corrective action be taken, we need not address the
other issues in CoMont's protest.
The protest is sustained.
FOOTNOTES
(1) Management brokers inspect and secure property that has been
assigned or on which mortgages have been foreclosed. They contract for
necessary cleaning and repair, assist in selling or leasing the
property, and provide other services as may be required.
(2) Although the term "wholly owned Government corporation" is not
itself defined in the FPASA, we read it to include organizations so
designated in the Government Corporation Control Act. See Monarch Water
Systems, Inc., B-218441, Aug. 8, 1985, 64 Comp. Gen. 756, 85-2 CPD
Paragraph 146; aff'd sub nom. Tennessee Valley Authority --
Reconsideration, B-218441.2, Sept. 25, 1985, 85-2 CPD Paragraph 335.
(3) HUD states that it believes that we may still lack jurisdiction
over National Housing Act procurements, and that it is continuing to
study the question. The agency does not contest our jurisdiction in
this case, but states that it may do so in later cases. Our opinion is,
therefore, reached without the benefit of the agency's views on the
issue.
(4) HUD adopted the Federal Procurement Regulations, predecessor to
the FAR, for application to National Housing Act procurements in its
Property Disposition Handbook, Contracting (4320.1, May 1973). We
understand that the agency plans to revise this policy to incorporate
the FAR.
B-219582, 65 Comp. Gen. 62
Matter of: American Electronic Laboratories, Inc., Nov. 13, 1985
Contracts - Negotiation - Offers or Proposals - Best
16)and Final - Mistakes - Correction
Where, before award, a protester points out that its best and final
offer may have been erroenously evaluated and argues that cost and
pricing data submitted with its initial proposal clearly establishes
what price it intended to offer, the protester is in effect a mistake in
its proposal and the contracting agency should follow the regulatory
procedures applicable to such claims.
Contracts - Negotiation - Offers or Proposals - Best and Final -
Ambiguous - Clarification Propriety
When protester, claiming that its price was erroneously evaluated, as
shown by cost and pricing data submitted with initial proposal, does not
submit additional cost and pricing data during several rounds of best
and final offers, it is not possible without reopening discussions to
determine exactly what price the protester intended to offer in its
final submission. Since this would result in the use of prohibited
auction techniques, the proposed award to an alledgedly higher priced
offeror is not subject to objection.
American Electronic Laboratories, Inc. protests the proposed award of
a contract to the Raytheon Service Company under request for proposals
(RFP) No. N60921-85-R-A270, issued on December 10, 1984, by the Naval
Surface Weapons Center, Dahlgren, Virginia. American argues that the
contracting officer erroneously added $15,000 to its offered price,
displacing the firm as the low offeror and putting Raytheon in line for
the award.
We deny the protest.
The RFP solicited offers to provide metrology services (i.e., to
test, calibrate, and repair electronic equipment) at the Naval Surface
Weapons Center and other field facilities for a base and 2 option years.
/1/ Offerors could submit proposals for either or both of two
alternatives: one for a contractor-owned, contractor-operated facility
(COCO) and the other for a government-owned, contractor-operated
facility (GOCO). Award is to be made to the responsible offeror
submitting the lowest price.
Section B of the RFP requested separate fixed prices for three line
items, covering labor and materials at each typr of facility for each
year. For one additional line item, the Navy inserted the figure
"$15,000," indicating that it would reimburse the contractor for travel
costs up to this amount.
The pertinent part of Section B appeared in the RFP as follows:
0001 The contractor shall provide all labor and materials
necessary to provide metrology services to the Naval Surface
Weapons Center as defined in the Performance Work Statement at
Section C and accompanying Exhibits.
0001AA The services described above shall be accomplished at
contractor owned, contractor opreated facilities. 1 EA $ (blank)
0001AB The services described at CLIN 0001 shall be
accomplished at Government owned, contractor operated facilities.
1 EA $ (blank)
0002 Travel
0002AA Travel costs to field facilities (Wallops Island,
Virginia; Brighton Dam, Maryland; Indian Head, Maryland; and
Dam Neck, Virginia) will be reimbursed in accordance with
provision G.1. 1 LOT $15,000.00 Not-to-exceed
The remaining line items (Nos. 0003 and 0004) involved the 2 option
years for each type of facility and referred back to the services
covered by subitems Nos. 0001AA and 0001AB. Section B provided no
"bottom line" where a total figure for either type of facility could be
placed, and it did not include a line item for travel for either of the
option years. The Navy now states that the $15,000 was intended to
cover the entire 3-year contract term.
The agency received five proposals, including the government's, and
held discussions with the private contractors. After requesting and
receiving three rounds of best and final offers, the last on June 11,
1985, the agency prepared an abstract showing offerors' prices for each
year and determined that the following total prices, exclusive of
travel, had been offered for operation of a GOCO facility (which it had
decided to use):
Raytheon ................... $1,602,180
American .................... 1,611,897
Government .................. 2,295,103
(The other two offers exceeded the estimated cost of performing
in-house.)
Upon learning of the Navy's intent to make an award to Raytheon at
the above price, American notified the agency that item No. 0001AB of
its best and final offer had inlcuded $15,000 for travel costs. Based
on this, American argued that its total evaluated price should have been
$1,596,897 ($1,611,897 minus $15,000) for the GOCO facility. The Navy,
however, responded that it had evaluated the offer properly because none
of American's submissions indicated that its price included travel
costs. When American learned of the Navy's decision, it protested to
our Office, arguing that information submitted with its initial proposal
clearly establishes its intended price.
In effect, American is claiming that it made a mistake in formulating
its offer -- that is, it erroneously included travel costs in the line
item. The Federal Acquisition Regulation (FAR), 48 C.F.R. Section
15.607 (1984), provides specific procedures for a contracting officer to
follow when a mistake is suspected or alleged before award in a
negotiated procurement. In general, it contemplates that the mistake
will be resolved through clarification or discussions. Id. Sections
15.607 (a) and (b). Discussions are required if communication with the
offeror, id. Section 15.607(a), or if 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. Id. Section 15.607(c)(5).
The regulation does not specifically cover the situation here -- a
mistake claimed before award but after the agency has completed
discussions and announced the proposed contract price. Nevertheless, we
believe the principles inherent in the regulation are applicable. An
examination of American's SF 1411 and attachments make it clear that
American made a mistake in its initial offer, as well as what price the
firm intended to offer.
American's intended treatment of travel costs appears in its cost and
pricing data, attached to Standard Form (SF) 1411, "Contract Pricing
Proposal Cover Sheet." Offerors submitted this information to comply
with paragraph L.2.2.2 of the RFP, which instructed them to provide
"full cost and pricing data: as required by the Federal Acquisition
Regulation (FAR) 48 C.F.R. Section 15.804-2 (1984). American's
attachments, in which labor, materials, overhead, profit -- and travel
costs -- are broken out, indicate that its price, as inserted for the
alternate approaches under line items Nos. 0001, 0003, and 0004 in its
Section B price proposal, and as typed on its SF 1411 cover sheet,
includes $15,000 a year for travel costs. In other words, it appears
that at least in its initial proposal, American did not include just
$15,000 for travel costs, as its protest indicates, but $45,000 ($15,000
a year for each of 3 years). Although American revised its prices in
subsequent best and finals, it did not submit revised cost and pricing
data.
It appears that in Raytheon's initial proposal, that firm also
mistakenly included an additional $30,000 to cover travel costs for the
2 option years. In its Section B price proposal, prices for both the
COCO and GOCO approaches under line items Nos. 0003 and 0004 are
followed by an asterisk. A typewritten note at the bottom of Raytheon's
Section B states that these line items included "same estimated $15,000
(NTE) of travel as for Base Year." Raytheon's initial cost and pricing
data confirms this. Thus, Raytheon at first did exactly what American
did and included travel costs as part of its price. Raytheon, however
excluded the $15,000 a year in travel costs for the second and third
years from its subsequent best and finals, as is shown by revised cost
and pricing data submitted with them.
However, since American, unlike Raytheon, never submitted updated
cost and pricing data during the three rounds of best and final offers,
it is unclear whether its pattern of including $15,000 a year in travel
costs as part of its proposed price continued. This uncertainty is
increased by the fact that American's prices went up during the rounds
of best and final offers, thus making it even more difficult to
determine how American actually reached its final price, i.e., whether
it continued to include travel costs in its total price or eventually
dropped them as Raytheon did. Another difficulty in determining
American's intended final price is the fact that it only claims a
$15,000 mistake, when its cost and pricing data shows that it had
actually added a total of $45,000 in travel costs to its initial
proposed price.
Normally, our recommendation here would be that the Navy reopen
discussions and request another round of best and final offers. This is
because correction of the mistake would displace Raytheon. In addition,
in our opinion, it is impossible to determine American's intended price
from the proposal itself. It would therefore be necessary to refer to
documents, worksheets, or other data outside the American proposal
before correction could be accomplished. Applying the FAR principles,
discussions with all offerors in the competitive range, i.e., Raytheon
and American, would be appropriate. In this case, however, since the
prices of both have now been exposed, such action would result in the
use of prohibited auction techniques, see FAR, 48 C.F.R. Section
15.601(d)(3), and in our opinion would compromise the integrity of the
competitive system. Therefore, we do not believe further discussion
would be appropriate, and we will not object to the award to Raytheon.
We deny the protest.
FOOTNOTES
(1) The solicitation was part of a cost comparison under Office of
Management and Budget Circular No. A-76. However, because the
government's estimated cost of performing in-house was more than the
cost of contracting with either Raytheon or American, the cost
comparison itself is not at issue here.
B-219532, 65 Comp. Gen. 61
Matter of: Veterans Administration -- False Alarm Charges, Nov. 4,
1985
Fines - Government Liability
Unless expressly waived by statute, a Federal agency is not liable
for a civil fine or penalty by reason of sovereign immunity. Therefore,
appropriated funds cannot be used to pay a penalty imposed by the Boston
City Fire Department for answering false alarms resulting from a
malfunction of a fire alarm system in a Veterans Administration Medical
Center.
The Veterans Administration (VA) has requested an opinion as to its
liability for fees charged by the City of Boston for malfunctions of a
fire detection/suppression system in the West Roxbury Veterans
Administration Medical Center which result in needless responses by the
Boston Fire Department. The VA takes the position that the fee is
actually a penalty from which the Federal Government is "insulated" as a
matter of sovereign immunity. We agree that the VA is not liable for
the fees for the reasons discussed below.
The City of Boston allows private fire alarm systems to be directly
connected to the Fire Alarm Division of the Boston Fire Department.
City of Boston Code, Ordinances, Title 14, Section 426, clause 262a. In
addition to providing for the connection of fire alarm systems, the
clause also provides:
an additional fee * * * (f)or every (private) alarm system
malfunction resulting in a fire department response in the then
next prior licensed year, $100.00 for each such through the fifth
malfunction; $200.00 for each such in excess of five but less
than eleven; $400.00 for each such in excess of ten but less than
sixteen; and $800.00 for each such in excess of fifteen. For the
purpose of this ordinance, a malfunction is defined as the failure
of an alarm system to operate in the normal or usual manner, due
to improper installation and/or maintenance of the system,
resulting in the transmittal of a needless alarm signal to the
fire department.
Thus every private alarm licensee is potentially liable under this
clause for the payment of "fees" when its fire alarm goes off and the
Boston Fire Department responds to the false alarm.
As a general proposition, no authority exists for the Federal
Government to use appropriated funds to pay fines or penalties incurred
as a result of its activities or those of its employees. B-191747, June
6, 1978. In order for a Federal agency to be liable for a fine or
penalty, there must be an express statutory waiver of sovereign
immunity. Cf. Hancock v. Train, 426 U.S. 167(1976). The VA can pay for
the reasonable cost of services provided by the city, provided all
property owners within the jurisdiction pay for such services under
similar circumstances. See 24 Comp. Gen. 599; 49 Comp. Gen. 284(1969).
The issue therefore is whether the fee imposed by the Boston Fire
Department is a penalty fee or a fee for services. In our view, the
assessment against the VA is a fine or penalty rather than a fee for
services. First, the fee structure itself indicates that it is a
penalty. The obvious intent behind the ascending fee schedule based on
the number of violations is to offer incentives to the owner of the
malfunctioning fire alarm system to correct the problem. There is also
no apparent relation between the ascending fee structure and the actual
cost of the City of Boston of responding to a malfunction. Although we
recognize that the fee could have the indirect effect of defraying the
cost of answering such calls, the primary nature of the fee appears to
be that of a fine or penalty. It is also apparent that the Boston Fire
Department itself considers these fees to be penalties. In its notice
to the VA, the Boston Fire Department consistently refers to the fee as
a "penalty fee." For example, in a notice dated March 13, 1985, the City
of Boston notified the VA that:
The property you own located at 1400 VFW Parkway had a total of
41 malfunctions during the period 1 January 1984 to 31 December
1984. The penalty fee for these malfunctions is $24,300. (Italic
supplied.)
We know of no statutory authority which would operate as an express
waiver of sovereign immunity and permit the payment of this penalty to
the City of Boston for the malfunction of the VA's fire alarm system.
Accordingly, appropriated funds cannot be used to pay the fee that has
been charged against the VA in this case.
B-219803, 65 Comp. Gen. 59
Matter of: Martin Electronics, Inc., Nov. 1, 1985
Contracts - Negotiation - National Emergency Authority - Competition
Consideration
In procurements conducted under provisions of the Competition in
Contracting Act of 1984 pertaining to mobilization base producers, 10
U.S.C.A. 2304(b)(1)(B), 2304(c)(3), the usual concern for obtaining full
and free competition is subject to the needs of industrial mobilization.
Agencies properly may exclude a particular source or restrict a
procurement to predetermined sources in order to create or maintain
their readiness to produce critical supplies in case of a national
emergency or to achieve industrial mobilization.
Contracts - Negotiation - National Emergency Authority - Restriction on
Negotiation
Agency's refusal to accept protester as an approved mobilization base
producer, so that it can compete in a procurement restricted to such
producers, is proper, since the solicitation to be issued is to support
the existing mobilization base and there is no need to expand this base.
There is no legal requirement that all qualified firms be accepted as
mobilization base producers without regard to whether the agency's
anticipated needs will be sufficient to support additional producers.
Martin Electronics, Inc. protests its exclusion from competition
under request for proposals (RFP) No. DAAA09-85-5-1442, to be issued by
the United States Army Armament, Munitions and Chemical Command, Rock
Island Illinois. This proposed acquisition, which was submitted to the
Commerce Business Daily for synopsis on July 15, 1985, is for 58,400 MJU
8/B infrared flares and is to be restricted to five listed mobilization
base producers. Although Martin is not such a producer for this flare,
it insists that it is qualified to manufacture the flares and contends
that by not permitting it to compete, the Army is violating the intent
of the Competition in Contracting Act of 1984 (CICA), 10 U.S.C.A.
Sections 2301-2306 (West Supp. 1985).
We deny the protest.
Specifically, Martin states that it is currently under contract for
the production of MK-46 infrared flares and that it is equally qualified
to manufacture the MJU 8/B flare. Martin adds that the Army told it on
March 20 that it could not be added to the mobilization base for the
specified flare because of a temporary freeze on the issuance of DD Form
1519s. /1/ Martin seeks our recommendation that it be added to the
mobilization base and allowed to compete for the contract.
The Army responds that while there is indeed a temporary moratorium
on processing DD Form 1519s, with exception on a case-by-case basis,
Martin was actually denied inclusion in the mobilization base for this
flare because the agency perceives no need to expand the existing base.
The Army further states that the proposed RFP is restricted so as to
maintain this base.
Recently, we rendered a decision on a protest filed by Martin
regarding its exclusion from the competition under a similar
solicitation issued by the Army. See Martin Electronics, Inc.,
B-219330, Sept. 20, 1985, 85-2 CPD Paragraph 314. The RFP, for a
quantity of MJU 7/B infrared flares, was also restricted to existing
mobilization base producers. Issued on or about January 18, 1985 and
thus before the effective date of the applicable provisions of CICA, the
solicitation was restricted under authority of 10 U.S.C. Section
2304(a)(16)(1982). The Army had restricted the procurement because it
determined there was no need to expand the existing mobilization base;
rather, its intent in issuing the RFP was to maintain the base. In
challenging the procurement, Martin raised the same two arguments as it
has here: Martin questioned the Army's decision to restrict the
procurement and argued that as a qualified manufacture of flares, it
should have been accepted as a mobilization base producer.
In deciding these two issues, we recognized that in procurements
negotiated under authority of 10 U.S.C. Section 2304(a)(16), the normal
concern of maximizing competition is subject to the needs of industrial
mobilization. Thus, award to a predetermined contractor or contractors
-- in order to create or maintain their readiness to produce military
supplies in the future -- is proper. In rejecting Martin's contention
that it should have been accepted as a mobilization base producer, we
stated that there is no legal requirement that all qualified firms be
accepted as mobilization base producers. Decisions on how many
producers are to be included must be left to the discretion of the
military agencies, and our Office questions those decisions only if the
evidence convincingly shows that the agency has abused its discretion.
No such evidence was presented by Martin, and we therefore denied the
protest.
Although the proposed solicitation that Martin is currently
challenging will be issued under authority of CICA, rather than 10
U.S.C. Section 2304(a)(16), our September decision is nevertheless
dispositive. Enacted in 1984 as part of amendments to the Armed
Services Procurement Act, the CICA provisions do not make any
substantive changes with regard to mobilization base producers.
Agencies continue to have authority to conduct procurements in a manner
that enables them to establish or maintain sources of supply for a
particular item if the agency determines that to do so would be in the
interest of the national defense in having facilities available to
furnish such items for industrial mobilization purposes. See 10 U.S.C.
Sections 2304(b)(1)(B) and 2304(c)(3). /2/
Here, the Army has again stated that it is restricting the proposed
procurement for the stated quantity of MJU 8/B infrared flares because
there is no need to expand the existing base and the procurement must be
restricted to maintain this base. Martin has not demonstrated that the
Army is abusing its discretion in restricting the proposed procurement
to the five listed producers.
The protest is denied.
FOOTNOTES
(1) DD Form 1519 is an agreement between the government and the
mobilization base producer concerning what is needed to sustain the
latter's production capability.
(2) Before the enactment of CICA, the preferred method of procurement
under the Armed Services Procurement Act was formal advertising.
Agencies were permitted to negotiate procurements only if one of the 17
stated exceptions to the requirement for formal advertising applied.
One such exception was where the agency head determined that it was
necessary to restrict competition on a particular purchase for the
purpose of establishing an industrial mobilization base. CICA
effectively eliminated this preference for formal advertising and
therefore also repealed the exception to its use.
CICA requires that agencies, except in limited circumstances, obtain
full and open competition when conducting procurements either through
the use of sealed bidding (formerly referred to as formal advertising)
or, where appropriate, competitive proposals (formerly referred to as
negotiation). Agencies, however, need not obtain full and open
competition where the procurement is conducted for industrial
mobilization purposes. In these instances, agencies, depending on their
unique requirements, can use competitive procedures, but exclude a
particular source from the competition, 10 U.S.C.A. Section
2304(b)(1)(B), or use other than competitive procedures where it is
necessary to award the contract to a particular source or sources, 10
U.S.C.A. Section 2304(c)(3). Thus, CICA, while labeling certain
procedures as either competitive with the exclusion of a particular
source or noncompetitive, rather than as negotiation, does not
substantively alter the authority of agencies to conduct procurements
for industrial mobilization base purposes.
B-220084, 65 Comp. Gen. 54
Matter of: Kiewit Western Co., October 31, 1985
Bonds - Bid - Form Variances
The use of a commercial form bid bond instead of Standard Form 24 is
not per se objectionable; rather, the question is whether the
commercial form represents a significant departure from the rights and
obligations of the parties set forth in the standard form.
Bonds - Bid - Deficiencies - Bid Rejection
A commercial form bid bond which limited the surety's obligation to
only the difference between the protester's bid and the lowest amount at
which the government might be able to award the contract was properly
determined to be inadequate, thus requiring rejection of the protester's
bid as nonresponsive, since Standard Form 24 is reasonably read as
allowing the government to recover "any cost" of procuring the work from
another source, including the additional costs associated with a
reprocurement.
Kiewit Western Co. protests the rejection of its apparent low bid as
nonresponsive under invitation for bids (IFB) No. CO-MVNP 1-B(4), issued
by the Department of Transporation, Federal Highway Administration
(FHWA) for the construction of a retraining wall at the Coloardo-Mesa
Verde National Park. FHWA rejected the bid because it determined that
Kiewit's bid bond was inadequate. Kiewit asserts that its bond is in
fact sufficient to protect the government's interest, and accordingly
urges that it is entitled to the award as the low, responsive bidder.
We deny the protest.
At the outset, we note that we have granted Kiewit's request that the
express option provision of our Bid Protest Regulations be invoked in
this instance. Because of the nature of the issue involved, the case
appeared suitable for our resolution within 45 calendar days, and FHWA
also concurred in the request due to the extreme urgency of the project
which is to prevent further landslides at the park. See 4 C.F.R.
Section 21.8 (1985).
Background
The IFB required the submission of a bid guarantee of not less than
20 percent of the amount of the bid in the form of a bid bond or other
suitable instrument, /1/ and bidders were cautioned that failure to
furnish the bid guarantee with the bid might be cause for rejection.
Bids were opened on September 12, 1985, and Kiewit was the apparent
low bidder with a bid of $704,182.50. Nielson's Inc. was the apparent
second low bidder with a bid of $720,825.00. However, an examination of
Kiewit's bid documents revealed that the firm had not submitted its bid
bond on Standard Form 24 (SF-24), which had been included with all
solicitation packages, but rather on a commercial form drafted by its
surety. FHWA determined that the bond was unacceptable because it did
not afford the government the same protection as that afforded by SF-24,
and accordingly rejected Kiewit's bid as nonresponsive.
Kiewit urges to the contrary that its bond is sufficient to protect
the government's interest. Although the bond was not on SF-24, Kiewit
asserts that even if there is any greater limitation on its surety's
obligation under the bond furnished, this is of no consequence because
the stated penal sum far exceeds the difference between the firm's bid
and Nielson's. In this regard, Kiewit refers to the Federal Acquisition
Regulation (FAR), 48 C.F.R. Section 28.101-4 (1984), which provides that
noncompliance with a solicitation requirement for a bid guarantee
requires rejection of the bid, except that the noncompliance shall be
waived in certain stated situations, such as where the amount of the bid
guarantee is less than that required but is equal to or greater than the
difference between the bid price and the next higher acceptable bid.
FAR, 48 C.F.R. Section 28.101-4(b). Kiewit asserts that this situation
is present here, and that FHWA, therefore, is required to waive the
defect and accept the firm's bid. We do not agree with Kiewit's protest
position.
Analysis
A bid bond (or other suitable type of bid guarantee) assures that the
bidder will not withdraw its bid within the time specified for
acceptance and, if required, will execute a written contract and furnish
performance and payment bonds. The purpose of the bid bond is to secure
the liability of a surety to the government if the bidder fails to
fulfill these obligations. O.V. Campbell and Sons Industries, Inc.,
B-216699, Dec. 27, 1984, 85-1 CPD Paragraph 1.
It has been our view that a bidder's use of a commercial form bid
bond instead of SF-24 is not per se objectionable; rather, the question
is whether use of the commercial form represents a significant departure
from the rights and obligations of the parties set forth in SF-24.
Perkin-Elmer, B-214040, Aug. 8, 1984, 63 Comp. Gen. 529, 84-2 CPD
Paragraph 158.
As we see it, the sole matter for resolution is whether Kiewit's
surety bound itself to reimburse the government in the event of Kiewit's
default /2/ to the same extent that it would have been bound if the bond
had been submitted on SF-24. SF-24 is reasonably read as providing that
the surety is obligated to pay "any cost" of procuring the work from
another source, /3/ whereas Kiewit's bond specifically stated:
The Surety shall in no event be liable for a greater amount
hereunder than the difference between the amount of the
Principal's bid or proposal, and the lowest amount in excess of
said bid, or proposal, for which said Obligee may be able to award
said contract within a reasonable time.
Since this clause in Kiewit's bond limits the surety's liability only
to the difference Kiewit's bid and the amount of the contract which is
ultimately awarded, and not to any other costs that might be incurred in
making that award, we view this as a "significant departure" from the
rights and obligations of the parties under SF-24. Perkin-Elmer,
B-214040, supra.
As FHWA informs us, its experience has been that the majority of
defaults occur after award when the successful bidder is unable to
secure performance and payment bonds, and the other bids have usually
expired. FHWA states that a total reprocurement is thus often necessary
with the attendant costs of printing, mailing, publication, and the
salaries of those personnel who prepare the reprocurement solicitations.
In this regard, FHWA refers to the FAR, 48 C.F.R. Section 52.228-1,
supra n.1, as incorporated into the IFB, which provides that in the
event the contract is terminated for default, the bidder is liable for
"any cost" of acquiring the work that exceeds the amount of its bid, and
the bid guarantee is available to offset the difference. Thus, FHWA
believes that Kiewit's bond was materially defective because it did not
afford the government the right to recover all reprocurement cost as
would have been afforded if SF-24, had been used. We concur in that
view.
We do not agree with Kiewit's assertion that the greater limitation
on its surety's obligation is rendered immaterial by the fact that the
penal sum of the bond exceeds the difference between Kiewit's bid and
Nielson's bid. It is true that the FAR, 48 C.F.R. Section 28.101-4(b),
supra, provides for the acceptance of a bid guarantee which is deficient
in amount but which nonetheless equals or exceeds the difference between
the bid and the next higher acceptable bid. See AVS Inc., B-218205,
Mar. 14, 1985, 85-1 CPD Paragraph 328. The rationale for this provision
is that the government is protected from excess costs if award to the
next bidder become necessary. Young Patrol Service, Inc., B-210177,
Feb. 3, 1983, 83-1 CPD Paragraph 125. However, this provision is only
an objective administrative standard for determining the sufficiency of
a bid bond since it presumes that the government will not be faced with
the necessity for a reprocurement action.
However, the sufficiency of Kiewit's bond in terms of any necessary
award to the next bidder was never in question, since the penal sum
amount is clearly adequate to protect the government in that situation.
Rather it is the limitation on its surety's obligation to reimburse the
government for all costs in the event of the firm's default after the
expiration of bids that is in question. Under Kiewit's bond the
government would not be able to recover additional costs associated with
any subsequent reprocurement because the surety's obligation was limited
to only the difference between Kiewit's bid and the amount of the
ultimate award. Therefore, we do not believe that the exception
allowing for waiver under the FAR, 48 C.F.R. Section 28.101-4(b), is
applicable here because that provision only defines the sufficiency of a
bid bond under the presumption that the award can be made to the next
bidder, and not the full measure of damages otherwise available to the
government.
We conclude that FHWA properly rejected Kiewit's bid as nonresponsive
because of the inadequacy of the firm's commercial form bid bond. See
Perkin-Elmer, B-214040, supra. Although this works an unfortunate
result, the possibility of a monetary savings to the government does not
outweigh the important of maintaining the integrity of the sealed
bidding system by rejecting a nonresponsive bid. Id. Moreover, the
situation could easily have been avoided if Kiewit had used the SF-24
bid bond provided with the IFB.
The protest is denied.
FOOTNOTES
(1) See the Federal Acquisition Regulation, 48 C.F.R. Section
52.228-1 (1984), which provides that a bid guarantee is a firm
commitment such as a bid bond, postal money order, certified check,
cashier's check, irrevocable letter of credit or, under Treasury
Department regulations, certain bonds or notes of the United States.
(2) "Default" as used here means the successful bidder's failure to
execute any postaward contractual documents and furnish performance and
payment bonds. Trans-Alaska Mechanical Contractors, B-204737, Sept. 29,
1981, 81-2 CPD Paragraph 268.
(3) SF-24, FAR, 48 C.F.R. Section 53.301-24, states that the surety's
obligation becomes void when either the principal, upon acceptance of
its bid within the specified period, executes further contractual
documents and gives the required performance and payment bonds within
the specified period after receipt of the bond forms, or, in the event
of the principal's failure to fulfill these obligations, the principal
pays the government for "any cost" of procuring the work which exceeds
the amount of the bid.
B-217644, 65 Comp. Gen. 53
Matter of: Prompt Payment Discount When Payment is due on Local
Holidays, October 31, 1985
Contracts - Discounts - Prompt Payment - Computation Basis - Saturday,
Sunday, and Holidays
When Federal government offices are closed because of a legal holiday
and government business is not expected to be conducted, payments
falling due on the legal holiday may be made the following day,
including payments that are decreased by prompt payment discounts.
Where government offices are open, on Inauguration Day or local
holidays, payments must be made on the holiday if due.
The Government Printing Office (GPO) asks whether it is legally
entitled to prompt payment discount if the last day of the payment
period falls on a local public holiday and payment is made on the
following day. Specifically the GPO mentions Inauguration Day, which in
1985 was observed on Monday, January 21, but only in the District of
Columbia and surrounding jurisdictions. For the reasons given below, we
conclude that, except as otherwise provided by contract, when a local
holiday is authorized by law, government agencies which are closed for
that holiday are entitled to prompt payment discounts if they pay on the
next business day following the holiday.
It is a well-established rule of Federal contract law that when an
act is to be performed within a certain number of days and the last day
falls on a Sunday or a legal holiday, performance on the following day
is proper. Street v. United States, 133 U.S. 299, 305 (1889); 20 Comp.
Gen. 310, 311 (1940); 18 Comp. Gen. 812, 814 (1939). The rule is based
primarily on the ground of impossibility, either practical or legal,
Sundays and legal holidays being days on which business generally is not
conducted. A-98462, Apr. 26, 1943. More particularly, we have held
that when a government contract provides a discount for payment within a
certain number of days and the last day of the discount period falls on
Sunday, the Government is entitled to the discount if payment is made on
the following business day. 20 Comp. Gen. 310, 311 (1940). Consistent
with the general rule, we think the same conclusion would apply to legal
holidays. See 18 Comp. Gen. 812, 814 (1939).
Whether these principles apply to Inauguration Day and other local
holidays that are authorized by law depends on whether it is expected
that the usual government functions will be performed. When Federal
government offices are closed and government business is not expected to
be conducted, payments falling due on such days may be made on the
following day; however, when the contrary is true, payments must be
made on the day of the holiday.
Although Federal law designates Inauguration Day as a legal holiday
only for limited purposes, 5 U.S.C. Section 6103, /1/ the District of
Columbia describes it as a holiday for all purposes. D.C. Code Ann.
Section 28-2701 (Supp. 1984). Moreover, both Federal and District laws
provide that when Inauguration Day falls on Sunday, it will be observed
on the succeeding Monday. What this means in practical terms is that in
the District of Columbia and some adjacent suburbs, Federal government
offices are closed on Inauguration Day. Accordingly, except as
otherwise provided by contract, contractual payments that were to be
made by Federal government offices that were closed on Inauguration Day
could have been made on the next business day. As the GPO has told us
that its payments normally are made from offices in the District of
Columbia and its offices were closed on Inauguration Day, contractual
payments which included the benefit of prompt payment discounts could
have been made on the succeeding day. In those parts of the country
where Federal government business was expected to proceed as usual,
contractual payments that fell due on Inauguration Day should have been
made on that day.
As far as we know, the problem raised by the GPO has not been
recurring. Nevertheless, if it persists, to avoid ambiguity we would
suggest that agencies include a provision in their contracts consistent
with our views herein.
FOOTNOTES
(1) Section 6103 describes it as a holiday only "for the purpose of
statutes relating to pay and leave of employees. * * * "
B-217502, 65 Comp. Gen. 49
Matter of: Overtime Compensation -- Work Performed At Home, October
31, 1985
Compensation - Overtime - Irregular, Unscheduled - "Call-Back" Overtime
The minimum 2-hour credit for unscheduled overtime work performed by
Federal employees under the "call-back" overtime provisions of 5 U.S.C.
5542(b)(1) is for the purpose of assuring adequate compensation to
recalled employees for the particular inconveniences involved in their
having to prepare for work and travel back to their work stations.
Hence, the minimum 2-hour credit is not available on every occasion an
employee performs unscheduled overtime work, notwithstanding that
generally all unscheduled work inherently involves a certain amount of
personal inconvenience, and employees who are called upon to perform
unscheduled overtime work entirely within their homes are therefore
ineligible for the statutory 2-hour minimum work credit.
Compensation - Overtime - Work at Home
Federal employees may be allowed overtime compensation based on the
actual time involved for unscheduled overtime work they are called upon
to perform at their places of residence, provided the work is of a
substantial nature, and procedures are established for verifying the
time and performance of the work. Federal Aviation Administration
employees may be paid overtime compensation on that basis on occasions
when they are called upon to use automated data processing equipment in
their homes to adjust malfunctioning navigation instruments located
elsewhere.
The question presented in this matter is whether employees of the
Federal Aviation Administration who use automated data processing
equipment in their homes to adjust malfunctioning navigation instruments
located elsewhere may be credited on each occasion with the performance
of a minimum of 2 hours' overtime work under the "call-back" overtime
provisions of 5 U.S.C. Section 5542(b)(1). /1/ We conclude that the
provisions of statute in question cannot properly be construed to permit
the crediting of overtime in that manner.
Background
The Federal Aviation Administration is in the process of adapting its
navigational aids to a new technology that will enable agency employees
to monitor and adjust navigation instruments remotely, over telephone
lines through the use of automated data processing equipment. This will
allow employees to make the necessary adjustments from their homes in
many instances, and will thus reduce the need when malfunctions occur
during their off-duty hours for the employees to leave their homes and
travel to airports and other places where the navigation devices are
located.
On the occasions when agency employees are called upon to adjust the
navigation instruments from their homes, it is anticipated that the work
required of them will normally take less than 2 hours to complete.
Since these employees are not required to remain at their homes or duty
stations when on call they are not eligible for standby premium pay as
authorized under 5 U.S.C. Section 5545(c)(1). However, the agency
suggests that this work may be inconvenient especially if sleep or
personal plans are interrupted, and that overtime pay based solely on
the amount of time the work is actually performed may prove to be
inadequate compensation in light of this inconvenience. The agency
therefore questions whether the employees may be credited with the
performance of at least 2 hours' work on those occasions, as generally
authorized under the "call-back" overtime provisions of 5 U.S.C. Section
5542(b)(1) for Federal employees who are recalled to perform unscheduled
overtime work.
Overtime Compensation under 5 U.S.C. Section 5542(b)(1)
Subsection 5542(b)(1) of title 5, United States Code, provides that:
(1) unscheduled overtime work performed by an employee on a day
when work was not scheduled for him, or for which he is required
to return to his place of employment, is deemed at least 2 hours
in duration; * * *
This is derived from a law enacted by the Congress in 1954. /2/ The
congressional reports relating to the enactment of that law state that
this was designed to cover an "employee called back to perform
unscheduled overtime work after he has gone home." /3/ The provision was
sponsored before the Congress by the Civil Service Commission, in
furtherance of findings and recommendations resulting from a study
conducted jointly by the Commission and the Bureau of the Budget. The
findings and recommendations as presented to the Congress stated that
the minimum credit was warranted because "call-back overtime assignments
are usually inconvenient." Aside from the interruption of an employee's
normal pursuits, this inconvenience was described primarily as the
burden imposed on an employee recalled on unscheduled occasions "to
spend considerable time in preparing for work and traveling to his place
of duty. /4/
Consistent with the legislative history of 5 U.S.C. Section
5542(b)(1), we have adopted the view that the primary purpose of the
2-hour minimum work credit is to assure adequate compensation for
employees for the inconvenience of having to prepare for work, leave
their homes, and travel to their work stations to perform unscheduled
overtime work. /5/ Thus, we have held that under the statute employees
who are called away from their homes to perform unscheduled overtime
work are entitled to the 2-hours' minimum work credit, even though they
may not actually perform any work and may instead be sent home from the
worksite immediately after their arrival. /6/ Also, we have held that
employees who do perform unscheduled periods of overtime work that merge
with their regularlay scheduled tours of duty for the day are not
entitled to the minimum 2-hour credit, essentially since that situation
involves no travel to a worksite induced solely by a recall for
unscheduled overtime work. /7/
Concerning overtime compensation for work performed at home, we have
interposed to objection to Federal employees being paid for work
undertaken at their places of residence in certain circumstances,
provided the work is of a substantial nature and the employing agency is
able to verify that the work has in fact been performed. /8/ Thus, for
example in a case involving Passport Office employees required to
receive and make lengthy telephone calls at their homes outside their
regular office hours to resolve problems associated with emergency
passport requests, we concluded that the employees could be credited
with the performance of compensable overtime work. The conclusion was,
however, that the credit was limited to the actual time worked during
the telephone calls, as shown in the official logbooks and other
records, and that the 2-hour minimum overtime credit provisions of 5
U.S.C. Section 5542(b)(1) did not apply to the work performed over the
telephone from their homes. /9/ Although not specifically stated in the
text of that decision, the employees' eligibility for the minimum 2-hour
credit for "call-back" overtime work was consequently determined to be
limited to the occasions when a problem could not be resolved by
telephone, and the employees were instead required to travel from their
homes back to their offices to take care of the emergency.
Conclusion
Whenever an employee is called upon to perform unscheduled overtime
work, there is inherently involved a certain amount of inconvenience to
the employee resulting from the interruption of personal plans or
pursuits. As indicated, however, the provisions of 5 U.S.C. Section
5542(b)(1) do not authorize a 2-hour minimum work credit on every
occasion unscheduled overtime work is performed. Rather, we have
repeatedly and consistently expressed the view that personal travel
outside the home to a worksite located elsewhere for the sole purpose of
performing unscheduled overtime work is a necessary prerequisite to
eligibility for the minimum 2-hour work credit authorized under the
statute. Moreover, we have specifically held that compensation for
unscheduled overtime work performed by employees inside their homes is
to be based on and limited to the length of time they are actually
engaged in that work.
In the present matter, therefore, our view is that the employees
called upon to perform unscheduled overtime work in their homes in the
circumstances described may be allowed overtime compensation for the
work actually done, provided procedures are established for recording
and verifying the performance and the duration of the work. It is also
our view that they cannot properly be allowed the 2-hours' minimum work
credit authorized under 5 U.S.C. Section 5542(b)(1) in the absence of a
recall to work requiring them to travel from their homes to worksites
located elsewhere.
The question presented is answered accordingly.
FOOTNOTES
(1) This action is in response to a request for a decision received
from the Director of Personnel and Training of the Federal Aviation
Administration. The request was submitted by the agency under 4 C.F.R.
Part 22 as a matter of mutual concern to it and a labor organization,
the Professional Airways Systems Specialists. The agency served the
labor organization with a copy of the request for a decision, and the
labor organization has agreed to be bound by this decision, subject to
applicable appeal rights. See 4 C.F.R. Sections 22.4 and 22.7(b).
Although decisions of the Comptroller General are not subject to
administrative appeal or review, the Federal courts are under no
requirement to follow or uphold them.
(2) Section 205 of Public Law 763, 83d Cong., September 1, 1954, ch.
1208, 68 Stat. 1105, 1110.
(3) See S. REP. NO. 1992, 83d Cong., 2d Sess. 8, reprinted in 1954
U.S. CODE CONG. & AD. NEWS 3816, 3823. See also H.R. REP. NO. 2665
(CONF.), 83d Cong., 2d Sess., reprinted in 1954 U.S. CODE CONG. & AD.
NEWS 3861, 3869.
(4) See Compensation for Overtime and Holiday Employment: Hearings
on S. 354 before the Subcomm. on Civil Service of the Senate Comm. on
Post Office and Civil Service, 82d Cong., 1st Sess. 4, 20-21 (1951)
(statement of Robert Ramspect, Chairman, Civil Service Commission). See
also S. REP. NO. 1992, supra. at 17, reprinted in 1954 U.S. CODE CONG. &
AD. NEWS at 3832; and 35 Comp. Gen. 448, 449 (1956).
(5) See 40 Comp. Gen. 379, 381-382 (1960).
(6) 40 Comp. Gen. 379, supra.
(7) See 45 Comp. Gen. 53 (1965).
(8) See, generally, B-214453, December 6, 1984; B-182851, February
11, 1975; and B-131094, April 17, 1957.
(9) See B-169113, March 24, 1970. Compare also Charles F. Callis,
B-205118, March 8, 1982, concerning the application of the de minimus
doctrine to claims for overtime compensation for unscheduled official
telephone conversations made at home which are not long enough in
duration to meet the minimum accrual standards established for overtime
compensation.
B-218819, 65 Comp. Gen. 47
Matter of: John P. Butt -- Dependent Relocation Travel, October 30,
1985
Travel Expenses - Constructive Travel Costs - Actual Expenses Less
A transferred employee secured a one-way airfare ticket for his
dependent daughter to travel from her college location to his new
permanent duty station to effect her change of station. He exchanged
that ticket for a roundtrip excursion airfare ticket for her at a lesser
cost than the initial one-way ticket, thus, permitting her to return to
college at no additional expense. Since the record shows that no
one-way airfare ticket between the two points could be issued at a cost
less than the round-trip excursion airfare ticket the expense claimed
may be paid in its entirety under authority of the Federal Travel
Regulations pertaining to indirect travel, which limits reimbursement to
the constructive cost by the usually traveled route.
This decision is in response to a request from an Authorized
Certifying Officer, National Finance Center, United States Department of
Agriculture. It concerns the entitlement of one of its employees to be
reimbursed the expenses of his dependent's travel incident to a
permanent change-of-station transfer in October 1984. We conclude that
the employee may be reimbursed for the following reasons.
BACKGROUND
The claimant, Mr. John P. Butt, an employee of the Forest Service,
was stationed in Warren, Pennsylvania. By Travel Authorization, dated
July 20, 1984, he was transferred to Ogden, Utah, effective October 28,
1984. Such transfer included travel and transportation rights of his
immediate family, who were identified in the authorization as his spouse
and 20 year old daughter, who at that time was a student at Pennsylvania
State University.
Pursuant to that authorization, an airfare ticket was issued for Mr.
Butt's daughter on August 22, 1984, to travel one-way from State
College, Pennsylvania, to Salt Lake City, Utah, on December 20, 1984, to
effect her change of station. The cost of that one-way ticket was $463.
On August 23, 1984, the one-way ticket was exchanged by Mr. Butt for a
roundtrip excursion airfare ticket, thus, permitting his daughter to
travel from State College, Pennsylvania, to Salt Lake City, Utah, on
December 20, 1984, and return to State College, Pennsylvania, on January
13, 1985. The cost of the roundtrip excursion ticket was $461.
The certifying officer points out that since the Federal Travel
Regulations only authorize a one-way relocation trip, the payment of the
full amount of the roundtrip ticket is in doubt.
DECISION
The laws governing reimbursement for employee expenses incident to a
transfer of official duty station are contained in 5 U.S.C. Sections
5724 and 5724a (1982). Among the various expenses authorized are the
costs of transporting an employee's immediate family to his new duty
station.
Part 2 of Chapter 2, Federal Travel Regulations, (FTR), incorp. by
ref., 41 C.F.R. Section 101-7.003 (1984), provides the rules governing
basic entitlement to per diem, travel and transportation allowances for
employees performing permanent change-of-station transfers. More
specifically, FTR para. 2-2.2a provides that travel of the immediate
family may begin at the employee's old official station or some other
point selected by the employee. However, the cost to the Government for
transportation of the immeidate family cannot exceed the allowable cost
by the usually traveled route between the employee's old and new
official stations.
Further, FTR para. 1-2.5b provides in part:
b. Indirect-route or interrupted travel. When a person for
his/her own convenience travels by an indirect route or interrupts
travel by direct route, the extra expense shall be borne by
him/her. Reimbursement for expenses shall be based only on such
charges as would have been incurred by a usually traveled route.
* * *
We have consistently applied the above rule, that absent official
justification for the need for circuitous travel, when an employee
travels by an indirect route, he is entitled to reimbursement for such
travel, but not to exceed the cost by the usually traveled route.
B-178535, June 21, 1973; John F. Brady, B-182927, July 2, 1975. We
also stated in B-178535, above, that when personal and official travel
is combined, we would not require cost proration of any transportation
savings that may accrue which result solely from the fact that the
employee performed some personal travel in addition to the required
official travel.
In order to preclude the possibility that the expense associated with
the issuance of the initial ticket was in error, we sought additional
information to confirm the correctness of the charges made. We have
been advised that the charge for the one-way airfare ticket as issued
was correct; that the charge for the excursion airfare ticket was
correct; and that no one-way airfare ticket for travel between the two
points was issuable at a cost less than the roundtrip excursion airfare
ticket actually issued.
We realize that there is no authority to reimburse the employee for
his dependent's return travel, and in effect the travel was not
indirect. Compare Willenburg and Ham, B-211775, October 5, 1983.
However, in the present case, the fact that the special fare package
included a return trip by which the dependent was able to return to
college, does not negate the employee's reimbursement right for
dependent relocation travel. The fact remains that the dependent did
travel to the employee's new permanent duty station and residence, and
at a lesser cost than it would otherwise have been on a one-way airfare
ticket. The record also indicates, as stated above, that at the time
the ticket was purchased, it was lowest fare available. See Marlene
Boberick, B-210374, July 8, 1983. Thus, we believe that under the
circumstances of this case, the rules following indirect travel should
be followed, and reimbursement limited to the lower or constructive
cost.
Accordingly, Mr. Butt may be reimbursed for the full fare paid.
B-218695, 65 Comp. Gen. 45
Matter of: ABF Freight System, Inc. (East Texas Motor Freight),
October 30, 1985
Transportation - Overcharges - Set-Off
A motor carrier that delivered a Government shipment and billed for
the services contends that since another carrier picked up and
transported the shipment before transferring it for further
transportation and delivery, the transportation constituted a joint-line
movement requiring the application of joint-line rates. The General
Services Administration's audit determination, that the delivering
carrier's lower single-line rates were applicable, is sustained because
the record shows that the delivering carrier, having the necessary
operating authority, agreed to transport the shipment from origin to
destination at single-line rates. The fact that the billing carrier
elected to allow another carrier to pick up the shipment is irrelevant.
ABF Freight System, Inc. (ABF), asks the Comptroller General to
review deduction action taken by the General Services Administration
against ABF to recover an overcharge collected by East Texas Motor
Freight Lines for transportation of a Government shipment. We sustain
the General Services Administration's action.
Facts
The record contains a copy of Government Bill of Lading S-4081164,
issued July 20, 1982, by the transportation officer, Anniston Army
Depot, Alabama, to procure the transportation of two pallets of
machinery parts, weighing 815 pounds, from Anniston to Ford Ord,
California. The name of the transportation company shown on the
Government Bill of Lading is "East Texas Motor Freight Lines." It shows
the shipment was routed "via ETMF" and the notation "per ETMF" appears
with a signature indicating receipt by that carrier.
East Texas Motor Freight Lines billed and collected freight charges
for transporting the shipment from origin to destingation. The charges
apparently were based on joint-line rates (more than one carrier) on the
assumption that another carrier picked up the shipment and provided
line-haul transportation before transferring it to East Texas for
further transportation and delivery. The General Services
Administration stated an overcharge against East Texas using lower
single-line rates offered in their Tender No. 668 on the theory that if
another carrier was involved it acted merely as an agent of East Texas
rather than as a joint interline carrier. The General Services
Administration represents that East Texas had the necessary operating
authority to transport the shipment from origin to destination.
Collection action was taken against ABF Freight System which,
apparently, accepts responsibility for claims against East Texas /1/ but
contests the validity of the overcharge. ABF disputes the General
Services Administration's premise that the other carrier, which ABF
identifies as AAA Cooper, was East Texas' agent. ABF represents that
AAA Cooper advised that it was acting as a principal when it picked up
the shipment and transported it to Birmingham, Alabama, where it was
transferred to East Texas, apparently on interline account.
DISCUSSION
The relevant inquiry in this case is whether East Texas agreed with
the Government to transport the shipment from origin to destination at
single-line rates offered in Tender No. 668.
The bill of lading operates as the contract of carriage between the
shipper and the initial carrier. See Navajo Freight Lines, Inc.,
B-189382, January 6, 1978. The carrier is responsible for
transportation at the agreed rates. The Government Bill of Lading shows
that it was issued to East Texas; that the shipment was intentionally
routed via East Texas and that it was received "per ETMF." These facts
present compelling evidence that East Texas was the initial carrier
under the Government Bill of Lading contract as well as the delivering
carrier. East Texas apparently had the requisite operating authority to
transport the shipment from Anniston to Fort Ord. This record thus
establishes that East Texas agreed to transport the shipment from origin
to destination, and its Tender No. 668 represented a continuous offer to
perform such transportation at the single-line rates published therein.
The operational details East Texas selected to perform the
transportation, including the use of another carrier, have no legal
effect on the mutual obligations of East Texas and the Government under
the contract of carriage. Thus, regardless of the number of carriers
East Texas engaged for the actual transportation, the record shows
convincingly that East Texas agreed to transport the shipment from
origin to destination at single-line rates. B-144154, April 2, 1962.
Accordingly, the single-line rates used by the General Services
Administration in its audit were applicable and the overchage notices
were valid; thus, the General Services Administration's action is
sustained.
FOOTNOTES
(1) The General Services Administration advises that ABF Freight
System has formally adopted East Texas' operations and has the
responsibility for settling all of East Texas' claims.
B-219430, 65 Comp. Gen. 41
Matter of: Contract Services Company, Inc., October 28, 1985
Contracts - Protests - What Constitutes Protest
Protest challenging agency's decision not to award a contract under a
solicitation issued in accordance with the procedures set out in OMB
Circular A-76 falls within the definition of protest in the Competition
in Contracting Act since the act does not require that an award be
proposed at the time a protest is filed and a proposed award within the
statutory definition is contemplated when a solicitation is issued for
cost comparison purposes. Review of such a protest is consistent with
congressional intent to strengthen existing General Accounting Office
(GAO) bid protest function.
Contracts - Protests - Allegations - Unsubstantiated
The fact that historical data contained in an IFB may have been
inaccurate and thus not suitable alone as a basis for estimating
performance costs is not a sustainable protest where it is not shown
that data provided was not the best objective data available at that
time.
Neither government nor bidders are required to base their costs on
historical data alone since both may rely on the experience and
expertise of their employees and managers to determine the least costly
method of performing the statement of work.
Contracts - In-House Performance v. Contracting Out - Cost Comparison -
Adequate Documentation Requirement
Government is not bound to utilize historical cost data for materials
where estimate of additional savings generated by switch to new
procurement method is not found unreasonable.
Contract Services Company, Inc. (CSC), protests the Department of the
Navy's determination to retain in-house the Transportation, Special and
Heavy Equipment Operations and Maintenance function at the Public Works
Center, San Francisco Bay, Oakland, California. This determination,
made in accordance with Office of Management and Budget (OMB) Circular
A-76 procedures, was based on a comparison of CSC's bid submitted in
response to invitation for bids (IFB) No. N62474-85-B-1655, with the
Navy's cost estimate. The cost comparison showed that continuing
in-house performance would cost the government approximately $124,000
less than contracting with CSC. CSC argues that the Navy's computation
of its in-house estimate contains several errors which warrant the
reversal of this determination. We disagree, and deny the protest.
Jurisdiction
Initially, we note that the Navy has not submitted a substantive
report addressing the issues raised by CSC. Rather, the Naval
Facilities Engineering Command (NAVFAC) responded to our request for an
agency report by asserting that our Office lacks jurisdiction to
consider this matter. NAVFAC argues that a protest concerning an
agency's failure to award a contract does not fall within the statutory
definition of "protest" contained in the competition in Contracting Act
of 1984 (CICA), Pub. L. No. 98-369, 98 Stat. 1187 (1984). The Navy
contends that any objection to the cancellation of a solicitation,
including those issued in connection with an OMB Circular A-76 cost
comparison, is no longer within our jurisdiction, therefore, and should
not be considered.
CICA defines protest as:
* * * a written objection by an interested party to a
solicitation by an executive agency for bids or proposals for a
proposed contract for the procurement of property or services or a
written objection by an interested party to a proposed award or
the award of such a contract. 31 U.S.C. Section 3551(l), as added
by section 2741 of the Competition in Contracting Act of 1984,
Pub. L. No. 98-369, title VII, 98 Stat. 1175, 1199.
NAVFAC, in effect, is arguing that by canceling a solicitation or
deciding to retain a function in-house, there is no longer a "proposed
award" and, therefore, there is no statutory basis to consider the
protest. However, we do not interpret CICA so narrowly as to require
that an award be proposed at the time a protest is filed in order to be
considered by our Office. In issuing a solicitation, an agency proposes
to award a contract under the terms and conditions set forth in the
solicitation and bids are submitted on that basis. In our view, a
"proposed award" within the statutory definition is contemplated under
these circumstances and, therefore, a timely protest of an agency's
action concerning the solicitation, including its cancellation, will be
considered. /*/
Furthermore, we believe that in enacting the bid protest provisions
of the Competition in Contracting Act, Congress intended that our Office
continue to decide protests involving the cancellation of solicitations
in general as well as those involving A-76 cost comparisons. We note
that CICA defines an interested party as a bidder or offeror whose
economic interest is not only affected by an award, but also by the
failure to award a contract. See 31 U.S.C. Section 3551(2) as added by
CICA. Before the enactment of CICA, our Office routinely reviewed bid
protests involving cancellations and faulty cost comparisons and one of
the express purposes of the act was to strengthen our existing bid
protest function. See e.g. Crown Laundry and Dry Cleaners, Inc.,
B-194505, July 18, 1979, 79-2 CPD Paragraph 38; H.R. Rept. No. 861,
98th Cong., 2d Sess. 1435 (1984). In view of the continuing potential
for adverse impact on the competitive system if, after an agency induces
the submission of bids, there is a faulty or misleading cost comparison
which materially affects the award decision, we will continue to review
such matters. Cf. Alliance Properties, Inc., B-219407, Sept. 18, 1985,
85-2 CPD Paragraph 299.
Cost Comparison
CSC first questions the Navy's estimate for personnel staffing and
overtime. CSC states that its cost estimate was based on the historical
data provided by the Navy in the IFB. CSC asserts that the data showed
that in fiscal year (FY) 1983 the Navy had 28 full-time employees (FTEs)
in the Crane Rigging Branch (CRB), 13 FTEs in the Construction Equipment
Branch (CEB) and needed 17.25 percent in additional overtime hours to
meet the requirements in the CRB. CSC states that the Navy's estimate
included only 20 FTEs in the CRB, 5 FTEs in the CEB and estimated 6.58
percent for overtime in the CRB. CSC argues that as a result, the
Navy's estimate was not based on the same statement of work (SOW) that
bidders utilized to calculate their costs.
CSC also contends that the 12-percent discount used by the Navy in
calculating its material costs for FY 1985 was excessive. CSC argues
that the value of this discount is approximately $200,000, that it was
based on only one vendor's estimate and that there is not sufficient
evidence to show that the required material can actually be purchased at
that cost. In addition, CSC argues that the Navy improperly deducted
the residual value of assets from asset acquisition costs, that the Navy
did not include an estimate for the repair and maintenance of certain
vehicles and that the Navy unreasonably attributed no general and
administrative (G&A) overhead to the cost of in-house performance. CSC
asserts that a recalculation will clearly demonstrate that it was the
low bidder and that it should be awarded the contract.
Due to NAVFAC's failure to submit a report addressing the issues
raised by CSC, our review is confined to the record established by the
protester, which consists of CSC's agency appeal, the Navy's response
and limited additional documentation. However, the protester still
bears the burden of proof and must demonstrate not only that the agency
failed to follow mandated procedures, but that the failure materially
affected the cost comparison's outcome. JL Associates, Inc., B-218137,
May 6, 1985, 85-1 CPD Paragraph 501; Serv-Air, Inc.; AVCO, 60 Comp.
Gen. 44 (1980), 80-2 CPD Paragraph 317. Although under these
circumstances the protester may meet its burden by presenting sufficient
evidence to raise a reasonable doubt as to validity of the cost
comparison's result, see e.g. MAR, Inc., B-205635, Sept. 27, 1982, 82-2
CPD Paragraph 278, we find that CSC has not met this burden and are
unable to conclude that the Navy's cost comparison deviated materially
from applicable cost comparison procedures.
The record shows that the Navy's personnel estimates were based on
the most efficient organization (MEO) necessary to accomplish the
requirements of the SOW. Also, the decreased overtime percentage was
based on FY 1984 data derived from MEO tracking reports. Although the
Navy's estimate for both categories differed from the historical
estimates provided in the IFB, neither CSC nor the Navy was required to
base its cost on historical information alone. Pacific Architects and
Engineers, Inc., B-212257, July 6, 1984, 84-2 CPD Paragraph 20. The
Navy is not prohibited from using available techniques to calculate the
most efficient, least costly organization for performing the SOW and the
record indicates that this was the approach utilized by the Navy.
Concerning the 1983 overtime percentage which was provided CSC, although
it may have been inaccurate, there is no evidence that it was not the
best estimate available. The SOW, not historical data, is the principal
tool for use in calculating contract costs and CSC has not shown that
the in-house estimate in these areas does not accurately reflect the
in-house costs which will be incurred by the Navy to perform the SOW.
See E.C. Services Co., B-218202, May 23, 1985, 85-1 CPD 594; Joule
Maintenance Corp., B-208684, Sept. 16, 1983, 83-2 CPD Paragraph 333.
With respect to the 12-percent discount for material costs, the Navy
states that the savings were generated by a switch to a more efficient
method of procurement. The record shows that the Navy intends to use an
indefinite-delivery-type contract and that two major vendors were
surveyed and responded by providing signed written quotes as to the
discounts which would be applicable. Based on an analysis of the
information obtained, the Navy determined that the 12-percent discount
for materials was justified. Although CSC argues that the Navy should
be required to utilize historical data, the Navy need not use such data
where it would not accurately reflect the costs which would be incurred.
D.C. Services Co., B-218202, supra. CSC has submitted no evidence
which disputes the Navy's determination and, based on the record, we
cannot conclude that the estimate of the savings generated by the new
procuring method is inaccurate.
We also find the remaining issues raised by CSC to be without merit.
The Cost Comparison Handbook, Page IV-20, para. F.2.c., only states that
the residual value of assets may be carried at zero, but does not
prohibit its calculation. The Navy states that the assets in question
are normally sold by auction and the Useful Life and Disposal Value
Table, appendix "C" of the Cost Comparison Handbook, was used to
calculate residual value. That table indicates the disposal value as a
percent of acquisition cost for a variety of assets, and we find nothing
improper in the Navy's estimating the residual value of its assets or in
using appendix "C" as a basis for its calculations.
Concering CSC's contention that the in-house estimate did not include
certain maintenance and repair costs, the Navy states that these costs
were included in the estimate for personnel and material costs. In
addition, the Navy may properly attribute no G&A to the cost of in-house
performance unless it is determined that contracting out would eliminate
a whole man-year of work from the outside supporting offices. Samsel
Services Co., B-213828, Sept. 5, 1984, 84-2 CPD Paragraph 257. Absent
such an impact, the government's cost essentially is viewed as the same
whether or not a contract was awarded. The Navy states that all
affected departments that would provide support were surveyed and in
every case there was not one position which could be eliminated. While
CSC argues that this determination is unreasonable, we have no basis to
take legal objection to the Navy's computation of its G&A as zero.
Samsel Services Co., B-213828, supra.; Facilities Engineering &
Maintenance Corp., B-210376, Sept. 27, 1983, 83-2 CPD Paragraph 381.
Finally, we note that we have also reviewed the other areas of
disagreement between CSC and the Navy as evidenced by CSC's appeal and
the Navy's appeal decision. However, in no case are we able to conclude
that the Navy deviated materially from the applicable cost comparison
procedures.
The protest is denied.
FOOTNOTES
(*) NAVFAC also asserts that it is precluded from implementing any
corrective action recommendation issued by our Office because, by
regulation based on the Supplement to OMB Circular A-76, part I, ch. 2,
para. I, the A-76 appeal decision is not subject to negotiation,
arbitration or agreement. We have previously concluded that this
provision does not preclude our Office from considering a protest from a
bidder alleging that its bid had been arbitrarily rejected. Alliance
Properties, Inc., B-219407, Sept. 18, 1985, 64 Comp. Gen. 854, 85-1 CPD
Paragraph 299. Moreover, the Navy decision to follow our recommendation
is irrelevant in defining our authority to hear the matter.
Furthermore, we do not believe that the regulation can be applied to
prevent agencies from acting in accordance with our recommendation.
Under CICA, agencies are required to consider our recommendation and
file a report with our Office within 60 days if they are not followed.
31 U.S.C. Section 3554(e)(1) as added by section 2741 of the Competition
in Contracting Act of 1984, Pub. L. No. 98-369, Title VII, 98 Stat.
1175, 1202. In our view, this provision obligates agencies to consider
our recommendation in good faith and a regulation cannot be construed to
relieve agencies of this responsiblity.
B-218335.2; .3; .4, 65 Comp. Gen. 34
Matter of: DLI Engineering Corporation -- Reconsideration, October
28, 1985
Contracts - Protests - General Accounting Office Procedures -
Reconsideration Requests - Eligible Part Requirement
A contract awardee adversely affected by a prior General Accounding
Office (GAO) decision is not eligible to request reconsideration of that
decision where the firm was notified of the original protest but chose
not to exercise its right to comment on the issues raised in the
protest.
Contracts - Protests - General Accounting Office Procedures -
Reconsideration Requests - Error of fact or law - Not established
Prior decision, which held that the agency's source selection
improperly deviated from the solicitation's established evaluation
scheme absent a compelling justification in the record to support the
selection, is affirmed where the agency's request for reconsideration
fails to establish convincingly that the prior decision contains errors
of law or of fact which warrant its reversal or modification.
Contracts - Negotiation - Offers or Proposals - Evaluation - Cost
Realism Analysis - Reasonableness
An offerors' proposed cost as adjusted for cost realism cannot be
said to be unreasonable where it is virtually identical to the
government's original estimate and apparently would be in line with
other offerors' proposed costs if those costs were also to be adjusted
for cost realism.
The Department of the Navy requests reconsideration of our decision
in DLI Engineering Corp., B-218335, June 28, 1985, 85-1 CPD Paragraph
742. In that decision, we sustained DLI's protest asserting that the
Navy had improperly awarded a cost-plus-fixed-fee contract to Integrated
Systems Analysts, Inc. (ISA) for engineering and analytical services to
support the Navy's resolution of shipboard machinery vibration problems
under request for proposals (RFP) No. N00140-84-R-0191. We concluded
that the Navy's source selection deviated from the solicitation's
established evaluation criteria, which placed primary importance on
technical capability over cost, where ISA's proposal, although
significantly lower in cost, was also markedly inferior to DLI's in
terms of technical merit. Accordingly, we recommended that if DLI's
proposed costs were determined to be reasonable, the Navy should
consider the feasiblity of terminating ISA's contract for the
convenience of the government and awarding the balance of the
requirement to DLI.
The Navy requests reconsideration on the grounds that our prior
decision failed to apply established precedent of this Office and was
based upon an erroneous factual assumption. Furthermore, the Navy
indicates that DLI's proposed cost, as now adjusted for cost realism in
response to our recommendation, is unreasonable. We affirm our prior
decision.
Preliminary Matters
At the outset, we note that ISA, the awardee, and ROH and Ocean
Environmental Systems (OES), two disappointed offerors, have joined in
the Navy's request for reconsideration. We will not consider the
arguments raised by those firms during our reconsideration.
Our Bid Protest Regulations, 4 C.F.R. Section 21.12 (1985), provide
that this Office will entertain a timely request for reconsideration of
a previous decision filed by the protester, any interested party which
participated in the protest, and any federal agency involved in the
protest. We have held that where an interested party was on notice of
the protest, but did not choose to file any comments with regard to the
issues raised therein, that party is not eligible to request
reconsideration. Jervis B. Webb Co., et al. -- Reconsideration,
B-218110.2, Feb. 11, 1985, 85-1 CPD Paragraph 181. Here, the Navy
confirms that ISA was properly notified of DLI's protest and was
furnished a copy. Since ISA did not exercise its right to file comments
on the protest during our original resolution of the matter, we will not
entertain its present request for reconsideration.
The Navy informs us that it did not notify ROH and OES of the
protest. Although the firms, therefore, technically may be entitled to
request reconsideration, see R.A. Schemel & Associates, Inc. --
Reconsideration, B-209707.2, Sept. 2, 1983, 83-2 CPD Paragraph 291, we
believe that the arguments raised by the firms are untimely or otherwise
properly not for consideration.
ROH challenges our recommendation that the balance of the requirement
be awarded to DLI on the ground that ROH might have been the successful
offeror but for the Navy's improper evaluation of proposals, and
suggests that its proposal should now be reevaluated. However, it is
clear that any basis for protest in this regard arose no later than
ROH's April 10, 1985 debriefing. Since our regulations require that
protests be filed within 10 working days after the basis of protest is
known or should have been known, 4 C.F.R. Section 21.2(a)(2), ROH may
not raise the issue some 4 months after that debriefing took place. See
Professional Review of Florida, Inc., et al., B-215303.3, et al., Apr.
5, 1985, 85-1 CPD Paragraph 394.
OES also challenges our recommended corrective action and urges that
we should instead recommend that the procurement be recompeted. OES
contends that because more than a year has passed between the time
proposals were initially submitted under the RFP and issuance of our
decision, changed technical and financial circumstances dictate that the
original offerors in the competitive range be given the opportunity to
submit revised proposals. The firm also complains that the RFP's
requirements were unduly vague and that the Navy failed to apply the
evaluation criteria properly with respect to its proposal, thus
resulting in an improper award. Furthermore, OES asserts that our
decision should be reconsidered because the firm, by not being notified
of the protest, was unfairly deprived of an opportunity to be heard in
the matter.
There is no indication that the Navy's requirements as set forth in
the RFP have changed, and the Navy in fact has determined that
acquisition of the contemplated services is urgent. Therefore, we fail
to see how the passage of time in this instance has any bearing upon the
propriety of our recommendation, and a recompetition at this point
clearly would not be in the government's best interest. To the extent
OES alleges that the RFP was defective, the basis for this allegation
was apparent to OES from the face of the document itself, and,
therefore, should have been protested prior to the closing date for
receipt of initial proposals. 4 C.F.R. Section 21.2(a)(1); see also
CBM Electronic Systems, Inc., B-215679, Jan. 2, 1985, 85-1 CPD Paragraph
7.
Although the Navy did not inform OES of DLI's protest, the agency did
notify the firm by letter of February 25, 1985, that an award had been
made to ISA. Accordingly, if OES believed that it had grounds for
protest regarding the propriety of that award, it should have raised the
matter well before this time. Even though OES asserts that it only now
has learned through our decision of its relative standing among the
other offerors, a firm which is challenging an award must diligently
pursue information which may provide additional support for its
challenge. See General Electric Co., B-217149, Jan. 18, 1985, 85-1 CPD
Paragraph 60. Since OES upon learning of the award, could have
requested a debriefing from the Navy (the record is unclear whether one
was actually afforded the firm due to its low relative standing among
the offerors), or could have initiated a Freedom of Information Act
request, the necessary information concerning the evaluation of its
proposal would have been available to the firm much earlier. Id.
Therefore, we will not consider the matter now as part of our present
reconsideration.
With respect to OES' last point, the Federal Acquisition Regulation,
48 C.F.R. Section 33.104(a)(3) (as added by Federal Acquisition Circular
84-6, 50 Fed. Reg. 2268, 2271 (Jan. 15, 1985)), specifically provides
that the agency shall give immediate notice of a protest filed with this
Office to the contractor, if the award has been made or, if no award has
been made, to all parties who appear to have a reasonable prospect of
receiving an award if the protest is denied. Since DLI's protest was
not filed until after the award had been made, the Navy was only
required to notify ISA, the contract awardee. And, even if the protest
had been filed prior to award, there was no requirement to notify OES
because the firm, with the lowest technical rating and the highest
offered cost, had no reasonable chance of being awarded the contract if
DLI's protest were denied. Therefore, OES cannot legally complain that
it was not notified of the protest. Moreover, since our prior decision
did not question the Navy's overall evaluation of proposals, but rather
the propriety of the agency's specific selection of ISA over DLI, we
cannot conclude that OES was prejudiced by the lack of notice to the
extent that we must now address the arguments raised in its
reconsideration request.
Analysis
In order to prevail in an request for reconsideration, the requesting
party must convincingly show either errors of law or of fact in our
prior decision which warrant its reversal or modification. Department
of Labor -- Reconsideration, B-214564.2, Jan. 3, 1985, 85-1 CPD
Paragraph 13.
The Navy contends that our prior decision failed to apply established
precedent of this Office concerning the broad discretion afforded to
contracting officers in selecting among competing proposals for the
contract award. The Navy states that the contracting officer here fully
recognized that the solicitation had placed primary importance on
technical considerations over cost, but that he was well within his
discretion in determining that the superior technical merit of DLI's
proposal did not warrant an award to the firm at a much higher cost.
The Navy notes that DLI's offered cost, unadjusted for cost realism, was
59 percent higher than ISA's offered cost as adjusted for cost realism,
but DLI's technical ranking was only 26 percent higher (96 versus 76
points out of a possible 100). Therefore, the Navy urges that our
decision improperly disregarded the cost/technical tradeoff made by the
contracting officer in selecting the offer most advantageous to the
government. We do not agree with the Navy's position.
Our prior decision did not fail to acknowledge the broad degree of
discretion afforded to source selection officials in determining the
manner and extent to which they can make use of the technical and cost
evaluation results, see Stewart & Stevenson Services, Inc., B-213949,
Sept. 10, 1984, 84-2 CPD Paragraph 268, nor did it ignore the general
rule that selection officials are not necessarily bound either by
technical point scores or by the recommendations of technical evaluators
in selecting the most advantageous offer. See RCA Service Co.,
B-208871, Aug. 22, 1983, 83-2 CPD Section 221. It simply reflected the
well-settled principle that a cost/technical tradeoff for source
selection purposes is ultimately governed by the tests of rationality
and consistency with the solicitation's established evaluation scheme.
See Grey Advertising, Inc., 55 Comp. Gen. 1111 (1976), 76-1 CPD
Paragraph 325.
The RFP provided that cost, although important, ranked fifth among
five stated evaluation factors, the other factors being technical
considerations: corporate past experience; personnel; management
plan/approach; and contractor facilities. Under the established
evaluation scheme, each of the four technical factors, by itself, was
more important than cost. Our decision that the award to ISA was
inconsistent with the evaluation scheme was in large part based upon the
narrative comments of the Navy's evaluators who concluded that DLI's
proposal was technically far superior to the other proposals received.
In this regard, the evaluators found that DLI's proposed analytical
methodology for the resolution of vibration problems was so unique that
it would fully satisfy the agency's requirements with a minimum degree
of risk. As noted by the evaluators, the great risk associated with
performance by a contractor using diagnostic techniques less
sophisticated than DLI's was that erroneous machinery repair
recommendations could lead to unnecessary costs far exceeding the total
amount of the contract. Therefore, since DLI's proposal, although
acceptable and ranked third among the six competitive range offerors,
also contained numerous technical weaknesses as noted by the evaluators,
it was our view that the selection of ISA had to be supported by a
compelling justification. See EPSCO, Inc., B-183816, Nov. 21, 1975,
75-2 CPD Paragraph 338.
We did not find such a justification in the record. The contracting
officer's cost/technical tradeoff determination was that DLI's marked
technical superiority would have been worth a cost premium of up to 40
percent over ISA's evaluated cost, but was not worth a cost premium of
59 percent. However, the Navy never provided any underlying rationale
for that determination, such as a finding that the low cost of ISA's
offer would more than offset the monetary risk of erroneous repair
recommendations associated with ISA's performance of the contract.
Instead, the Navy placed an undue importance on cost. In its request
for reconsideration, it states that the contracting officer "was fully
prepared to pay hundreds of thousands of dollars more for the technical
superiority of the DLI proposal." In our view, the impropriety of the
Navy's source selection lies in the fact that the agency has never
established why that superiority was worth "hundreds of thousands of
dollars more" but not worth the 59 percent cost premium originally at
issue here. It is also misleading for the Navy to argue that the 59
percent cost premium negates DLI's 26 percent technical supriority
because, as already noted, technical considerations were paramount.
Accordingly, since the technical percentage differential is of much
greater weight, the two differentials should not be compared on an
equivalent basis. In short, since the Navy invited competition on the
basis that technical capability to meet its urgent needs was of primary
importance over offered cost, we continue to believe that it was an
abuse of the agency's discretion not to select DLI for the award for the
sole apparent reason that the firm's technical superiority involved a
substantial cost premium. /1/
The Navy also asserts that our prior decision is based on the
erroneous assumption that ISA had proposed a diminished level of effort
from that estimated in the RFP. In our decision, we stated that the cost
differential between the two offers could reflect ISA's underestimation
of the effort needed to perform the work rather than any excessive
premium for DLI's technical superiority. The Navy points out that the
RFP had provided that an estimated 44,000 man-hours by various labor
categories would be required to perform the contract. Accordingly,
since both ISA and DLI prepared their cost proposals in accordance with
the RFP's level of effort, the Navy asserts that we erred in assuming
that ISA may have proposed a lesser level of effort than that necessary
to meet the Navy's requirements.
We think the Navy has misconstrued our use of the word "effort" in
our decision. We fully recognized that both offerors had proposed in
accordance with the 44,000 man-hours estimate in the RFP. However, as
DLI correctly notes, the Navy was not acquiring a set number of
man-hours, since those provided in the RFP were only estimates, but
rather was acquiring particular engineering and analytical services to
meet its needs. Therefore, our use of the word "effort" was meant in
the broader sense, to indicate that ISA may have underestimated the
nature and scope of the contract's engineering and analytical
requirements.
Furthermore, in this regard, we questioned the validity of the Navy's
cost/technical trade-off analysis which had hypothesized that ISA could
perform on a qualitatively equal basis to DLI and the use of additional
contractor and government man-hours and still be lower in ultimate cost
than DLI. We did not, as the Navy now asserts, believe that the
contracting officer had automatically concluded that ISA would in fact
be able to accomplish the same results as DLI if afforded more
man-hours, or that performance of the contract by ISA would require a
level of effort beyond the 44,000 man-hours estimated in the RFP.
Rather, we were concerned that the cost/technical tradeoff analysis
purported to establish that performance by ISA, all things considered,
would still result in a lower final cost to the government.
We believe that tradeoff analysis to be flawed because it failed to
recognize that only DLI had been found as offering a unique technical
approach (as opposed to one that was only more efficient) that would
satisfy the contract's requirements with a minimized risk of erroneous
repair recommendations. Accordingly, because the tradeoff analysis only
addressed perceived levels of efficiency, we concluded that it did not
serve to establish that acceptance of ISA's offer would prove to be most
advantageous to the government.
As a final issue, the Navy indicates that we should withdraw our
recommendation for corrective action because DLI's proposed cost, as now
adjusted for cost realism, is unreasonable. The Navy relates that it
performed a cost realism analysis with respect to DLI's proposal in
response to our recommendation, and, as a result, has calculated that
DLI's best and final offer should be upwardly adjusted from $1,467,175
to $1,662,055 due to DLI's apparent understatement of certain cost
elements, versus ISA's evaluated cost of $923,175. The Navy asserts
that the technical superiority of DLI's proposal does not warrant such a
cost premium.
We have reviewed the Navy's cost realism determination, and we cannot
conclude that it is erroneous. See Dynamic Science, Inc., B-214111,
Oct. 12, 1984, 84-2 CPD Paragraph 402. However, although we are
concerned that performance by DLI may now entail a greater cost
expenditure than that which was in issue during our original resolution
of the matter, we do not believe that the Navy has established that
DLI's evaluated cost /2/ is now unreasonable per se.
The issue of cost unreasonableness generally relates to a finding
that a firm's proposed cost is so high (in relation to the government's
estimate or to the proposed costs of the other offerors) that the firm
almost certainly has no chance of being awarded the contract. See,
e.g., Informatics General Corp., B-210709, June 30, 1983, 83-2 CPD
Paragraph 47.
In this matter, the Navy has informed us that the government's
original estimate for the work, based upon the costs incurred by OES in
performing similar services, was $1.6 million. Clearly, since DLI's
proposed cost as now adjusted for cost realism is virtually identical to
the government's estimate, it cannot be said to be unreasonable in that
respect. Moreover, the cost realism analyses performed for ISA and DLI
caused upwards adjustments of 18 and 13 percent, respectively, in their
proposed costs, and we are therefore of the impression that the proposed
costs of the remaining competitive range offerors would be adjusted to a
similar degree if the Navy performed additional analyses. Since DLI's
unadjusted cost was in line with the proposed costs of those other
offerors, and in fact was not the highest, the result of the cost
realism analysis has not demonstrated that DLI's evaluated cost is now
unreasonable in relation to the other offers received, or the kind of
effort proposed.
Accordingly, since the Navy has not shown that our prior decision
contains errors of law or of fact, that decision, with its
recommendation that corrective action be taken, is affirmed.
FOOTNOTES
(1) The Navy states for the first time in its request for
reconsideration that its technical evalutors concurred in the award to
ISA. The Navy has furnished no documentation in support of this
statement, and, in any event, we generally will not consider newly
presented arguments by an agency where the agency failed to present such
arguments in its administrative report on the original protest, and the
information which forms the basis for the arguments was availbale at
that time. See Griffin-Space Services Co. -- Reconsideration, 64 Comp.
Gen. 64 (1984), 84-2 CPD Paragraph 528; Swan Industries -- Request for
Reconsideration, B-218484.2, et al., May 17, 1985, 85-1 CPD Paragraph
569.
(2) We note that the 80 percent differential between DLI's and ISA's
evaluated costs is largely based on the Navy's adjustment of DLI's
overhead rate from 125 to 140 percent for cost realism purposes.
However, DLI has offered to cap its overhead rate at 130 percent, which
should mean a $56,069 reduction in its evaluated cost so as to decrease
the present 80 percent differential.
B-220705, 65 Comp. Gen. 33
Matter of: Teco, Inc., October 22, 1985
Bids - Responsiveness - Failure to Furnish Something Required - Small
Business Representation
Bid under small business set-aside which fails to indicate that
supplies to be furnished will be manufactured or produced by a small
business concern is nonrespondive. Moreover, information obtained after
bid opening may not be used to make bid responsive.
Teco, Inc., protests the rejection of its bid as nonresponsive under
solicitation No. DAAE07-85-B-J446, a total small business setaside
issued by the United States Army Tank-Automotive Command for the
procurement of 38 aerial lift devices. The bid was rejected because,
although Teco represented in its bid that it was a small business
concern, the firm failed to indicate that the supplies to be furnished
would be manufactured or produced by a small business.
We dismiss the protest.
The bidding certification concerning the bidder's obligation to
furnish products manufactured by a small business concern is a matter of
bid responsiveness because it involves a performance commitment, i.e.,
to furnish small business products. Thus, a bidder's intention to
furnish such products must be established at the time of bid opening.
See J-MAR Metal Fabricating Co., B-217224, Mar. 21, 1985, 85-1 C.P.D.
Paragraph 329. Otherwise, if the bid were accepted as submitted, the
small business contractor would be free to provide the supplies from
either small or large business manufacturers as its private business
interests might dictate, thus defeating the intent of the set-aside
program. See Hauser Products Incorporated, B-218140, Feb. 22, 1985,
85-1 C.P.D. Paragraph 227.
Teco's failure to indicate in its bid that the products to be
furnished would be manufactured by a small business thus constituted a
failure on Teco's part to submit a binding promise to meet the small
business set-aside requirement. Therefore, its bid properly was found
nonresponsive. See Hanson Industrial Products, B-218723, et al., May 9,
1985, 85-1 C.P.D. Paragraph 521.
Teco contends that the contracting officer nevertheless was aware of
its alleged intention to furnish small business products because (1)
subsequent to bid opening a preaward survey was conducted at which time
production and delivery, among other things, were discussed, and (2)
Teco is currently working on two other contracts for the same item.
Postopening explanations, however, cannot be used to make a
nonresponsive bid responsive even if, as here, the government could
obtain a lower price by accepting the bid. See Basic Marine, Inc.,
B-215236, June 5, 1984, 84-1 C.P.D. Paragraph 603. Further, regardless
of Teco's status under its other two contracts, the fact remains that
its failure to certify that it would supply items manufactured by a
small business under the present contract would, if the bid were
accepted as submitted, leave the firm free to supply an item from a
source other than a small business if it chose to do so. See Automatic
Limited, B-214997, Nov. 15, 1984, 84-2 C.P.D Paragraph 535.
The protest is dismissed.
B-219463, 65 Comp. Gen. 29
Matter of: Priority of payment of unexpended contract balances on
contract between United States Fish and Wildlife Service and Yu
Corporation, October 22, 1985
Contracts - Payments - Conflicting Claims - Surety v. Internal Revenue
Service
The order of priority for the payment of remaining contract balances
held by a contracting Federal agency are first, the surety on its
performance bond, including taxes required to be paid under the bond,
minus any liquidated damages owed the Government as provided in the
contract; second, the IRS for the tax debt owed by the contractor;
and, last, the surety on its payment bond.
Contracts - Payments - Conflicting Claims - Assignee/Surety v.
Government
As there was no formal takeover agreement between the performing
surety and the contracting Federal agency providing therefore, the
surety's priority over the Government to unexpended contract balances
for satisfying its performance bond obligations would not include unpaid
earnings due the contractor that accrued prior to the surety taking over
performance of the defaulted contract.
A contracting officer with the United States Fish and Wildlife
Service, Department of the Interior, has asked us to determine the order
of priority of payment of approximately $155,000 of remaining proceeds
of a contract between the Service and Yu Corporation (Contract No.
14-16-00005-82-025). The parties are the Internal Revenue Service and
the surety, the Fidelity and Deposit Company of Maryland, on its
performance and payment bonds. For the reasons given below, we find the
order of priority to be the surety on its performance bond, the IRS, and
the surety on its payment bond.
BACKGROUND
The record shows that the contract in question was awarded to the Yu
Corporation on May 12, 1982 for $570,485. The contract was to be
completed by September 18, 1982. Subsequently, the contract was
modified to increase the contract price to $600,041.65, and to extend
performance time to November 11, 1982. Consistent with the Miller Act,
40 U.S.C. Sections 270a-270d, performance and payment bonds were issued
by the Fidelity and Deposit Company of Maryland. The bonds were
executed on May 21, 1982. On November 19, 1982, Yu Corporation assigned
monies due under the contract to Guaranty-First Trust Company of
Waltham, Massachusetts. By trust agreement of December 23, 1982, the
assignee bank agreed to the surety's priority for payments the surety
made on its bond obligations.
Apparently work did not progress well on the contract and problems
arose regarding nonpayment of subcontractors and suppliers. To further
complicate matters, on February 9, 1983 the contracting officer was
served with an IRS Notice of Levy stating that Yu Corporation owed the
IRS $52,263.88. The tax liabilities arose in 1980, 1981 and 1982.
Several months later, the United States Department of Labor requested
withholding of $2,971.24 from contract monies for violation of the
Davis-Bacon Act, 40 U.S.C. Section 276a. Subsequently, the surety
instituted an interpleader action in the United States District Court
for the District of Massachusetts, Fidelity and Deposit Co. v. A.J.
Concrete Service, Civ. Action No. 83-1822-K (D.C. Mass. June 23, 1983),
listing claims from subcontractors and suppliers. As a result of
satisfying its payment bond obligations, by Order of November 30, 1984,
the surety was discharged from liability for making further payments
under the payment bond.
On March 30, 1983, the contract with Yu was terminated for default.
(In this regard, the contract provided for liquidated damages to the
Government at $400 per day for each calendar day of inexcusable delay.)
Several weeks later the Fidelity and Deposit Company agreed to complete
the project. The contracting officer informs us that in view of the
diverse claims to remaining contract funds no formal takeover agreement
was executed with the surety. The contracting officer subsequently
informed us that the surety has completed the project.
As of December 20, 1984, Fidelity and Deposit Company claimed it had
made payments of $400,229.82 on its performance and payment bonds, but
did not provide specific totals for its payments on each of the bonds.
It is estimated that as of May 13, 1985, the remaining contract proceeds
totalled $155,000.
Based on the facts described, the Fish and Wildlife Service asked us
to render an advance decision about the appropriate distribution of
remaining contract funds. Several weeks later the service informed us
that we should limit our consideration to the priorirites between the
IRS and the surety on its performance and payment bonds.
LEGAL DISCUSSION
It is established that when a surety completes performance of a
contract, the surety is not only a subrogee of the contractor but also a
subrogee of the Government and entitled to any rights the Government has
to the retained funds. Trinity Universal Ins. Co. v. United States, 382
F.2d 317, 320 (5th Cir. 1967), cert. denied 390 U.S. 906 (1968);
Security Ins. Co. of Hartford v. United States, 428 F.2d 838, 841-43
(Ct. Cl. 1970), overruling in pertinent part, Standard Accident Ins. Co.
of United States, 97 F. Supp. 829 (Ct. Cl. 1951); B-217167, Aug. 13,
1985, 64 Comp. Gen. 763. Thus, a surety completing a defaulted contract
under a performance bond has a right to reimbursement from the
unexpended contract balance for the expenses it incurs, free from setoff
by the Government of the contractor's debts to the Government (Security
Ins., 428 F.2d at 842-43), less any liquidated damages to which the
Government is entitled under the contract. B-192237, Jan. 15, 1979. We
have held that the surety's expenses, for which it is entitled to be
reimbursed, include payments of withholding taxes required to be paid
under a performance bond. /1/ B-189679, Sept. 7, 1977; See United
States v. United States Fidelity and Guaranty Co., 328 F. Supp. 69 (E.D.
Wash. 1971), aff'd, 477 F.2d 567 (9th Cir. 1973). The surety's priority
avoids the anomalous result whereby if setoff were permitted the surety
frequently would be worse off for having undertaken to complete
performance. Security Ins., 428 F.2d at 844; B-217167, Aug. 3, 1985,
64 Comp. Gen. 763, supra.
When there is a takeover agreement between the Government and the
surety, the money available to the surety generally would include all
funds remaining in the hands of the Government under the contract,
including withheld percentages and progress payments, whether earned
prior to or subsequent to the original contractor's default, less any
liquidated damages to which the Government is entitled under the
contract. See B-192237, Jan. 15, 1979. /2/ Absent a formal takeover
agreement providing therefore, however, a performing surety is not
entitled to recover free from setoff, amounts earned by, but not paid
to, the contractor before the date the surety took over performance of
the contract. In this situation a surety is limited to payment from all
other retained contract blanaces. Security Ins., 428 F.2d at 844.
Consistent with these principles, after the Fish and Wildlife Service
deducts the liquidated damages owed it, we think Fidelity and Deposit
Company, as a performing surety, would have first priority to the
unexpended contract proceeds up to the amount it expended for satisfying
its performance bond obligations, including payment of the withholding
taxes it was required to pay under its performance bond. The priority
over the IRS for the unexpended contract proceeds would include priority
to all retained percentages and progress payments except those earned by
Yu prior to Fidelity and Deposit taking over performance of the
contract. The IRS has priority to the unpaid earnings due the Yu
Corporation because there is no formal takeover agreement providing that
these proceeds also would be paid to Fidelity and Deposit.
Unlike the priority on its performance bond, Fidelity and Deposit
does not have priority over the IRS for expenditures made under its
payment bond. It is well-settled that the Government has the same right
belonging to every creditor to apply undisbursed moneys owed to a debtor
to fully or partially extinguish debts owed the Government. /3/ United
States v. Munsey Trust Co., 332 U.S. 234, 239 (1947); Gratiot v. United
States, 40 U.S. (15 Pet.) 336, 370 (1841); B-214905.2, July 10, 1984.
Thus, absent a "no setoff" clause in a contract, the Government may
satisfy by setoff any tax claim it has against a contractor,
notwithstanding that all or part of the tax claim does not pertain to
the contract under which the parties are contesting payment. The
Government's right to setoff has been held to be superior to that of a
payment bond surety who has paid the claims of laborers and materialmen,
United States v. Munsey Trust Co., 332 U.S. at 239-44. Thus, a payment
bond surety is subrogated to the rights of a contractor, rather than to
the rights of the Government, and, as subrogee of the contractor cannot
claim rights the contractor did not have. Security Ins., 428 F.2d at
841. Accordingly, the IRS has priority over Fidelity and Deposit, for
payments the surety made to laborers and materialmen on its payment
bond, to the unexpended contract proceeds in the amount of the $52,264
tax debt owed by Yu Corporation to the United States.
In sum, we concluded that after deducting liquidated damages owed the
government, the remaining unexpended contract balance should be
distributed first to Fidelity and Deposit for its performance bond
payments, then to the IRS to satisfy Yu Corporation's $52,204 tax debt
and, if anything remains, to Fidelity and Deposit for its payment bond
disbursements. As the record only provides a total sum for the monies
spent by the surety on both its bonds, and that as of December 20, 1984,
the Fish and Wildlife Service will have to determine the precise amounts
paid out on each of the bonds so that it can make the proper
distributions consistent with the described priorities.
FOOTNOTES
(1) Section 1 of the Miller Act, as amended, 40 U.S.C. Section
270a(d), requires every performance bond to "specifically provide
coverage for taxes imposed by the United States which are collected,
deducted, or withheld from wages paid by the contractor in carrying out
the contract with respect to which such bond is furnished."
(2) In situations where there is a formal takeover agreement the
Federal Acquisition Regulation provides that "unpaid earnings of the
defaulting contractor, including retained percentages and progress
estimates for work accomplished before termination, shall be subject to
debts due the Government by the contractor, except to the extend that
such unpaid earnings may be required to permit payment to the completing
surety of its actual costs and expenses incurred in the completion of
the work * * * ." FAR Section 49.404(e)(1) (Apr. 1, 1985).
(3) Of course, the Government also has a right to enforce its tax
lien, 26 U.S.C. Sections 6321, 6322.
B-219136, 65 Comp. Gen. 25
Matter of: Washington National Arena Limited Partnership, October
22, 1985
Appropriation - What Constitutes Appropriated Funds - User Fees
Where Congress authorizes the collection or receipt of certain funds
by an agency and has specified or limited their use or purpose, the
authorization constitutes an appropriation, and protest arising from
procurements involving those funds are subject to GAO bid protest
jurisdiction.
Contracts - Modifications - Beyond Scope of Contract - Subject to GAO
Review
Where a contract for visitor reservation services has expired, the
contractual relationship which existed is terminated and the issuance of
an amendment 4 months after the expiration date to retroactively extend
and modify the contract as if it had not expired amounts to a contract
award without competition, contrary to the requirements of the
Competition in Contracting Act. A protest challenging the amendment is
sustained, therefore, and General Accounting Office (GAO) recommends
that a competitive procurement for the requirement be conducted.
Contracts - Protests - Preparation - Costs - Compensable
Protester is entitled to recover the costs of pursuing its protest,
including attorneys' fees, where agency, in effect, made an improper
sole-source award; GAO considers the incentive of recovering the costs
of protesting an improper sole-source award to be consistent with the
Competition in Contracting Act's broad purpose of increasing and
enhancing competition on federal procurements.
Washington National Arena Limited Partnership (TicketCenter) protests
the issuance by the National Park Service (NPS), Department of the
Interior, of amendment 3 to contract No. CX-0001-3-0046 with Ticketron
Corporation (Ticketron), which added the sale of performance tickets for
the Carter Barron Amphitheatre in Washington, D.C., to the contract
requirement for campsite reservation services. TicketCenter argues that
NPS was required to conduct a competition for the added services. We
sustain the protest.
On November 10, 1982, NPS issued a request for proposals (negotiation
authority being based on visitor reservation contracting authority in 16
U.S.C. Section 460L-6a(f) (1982)) to develop and operate a reservation
system to permit the public to make advance reservations for the use of
various campground facilities. The solicitation contemplated award of a
1-year contract with four 1-year options for exercise by the government.
Award was made to Ticketron on January 28, 1983. NPS extended the
original contract to January 25, 1985, by amendment 2, but never
exercised an option prior to that new expiration date to further extend
the contract. Instead, NPS allowed the contract to expire. NPS
thereafter issued a request for proposals for Carter Barron ticket
sales, but canceled it on May 20. On June 10, 1985, NPS issued
amendment 3 purporting to extend Ticketron's expired contract to January
25, 1986, and adding the Carter Barron ticket sales to the contract.
TicketCenter protests the extension of Ticketron's contract on two
grounds. First, it argues that the Carter Barron ticket sales were
outside the scope of the original contract, which covered campsite
reservation services. TicketCenter believes the two types of
reservation services are sufficiently different to warrant a separate
competitive procurement of the Carter Barron services. Second,
TicketCenter maintains that since Ticketron's original contract expired
in January 1985, NPS could not retroactively extend the term of that
contract and add other services by an amendment issued more than 4
months later. It is TicketCenter's position that NPS instead was
required to conduct a competitive procurement for the award of a new
contract covering all of the required ticket reservation services, and
that NPS's failure to do so contravened the competition requirements of
the Competition in Contracting Act of 1984 (CICA), 41 U.S.C. Section
253, et seq. (West Supp. 1985).
NPS responds only to TicketCenter's first argument, arguing that the
Carter Barron ticket sales were within the scope of Ticketron's contract
since that contract contained a provision allowing NPS to add further
reservation services to the contract as they would be identified by NPS
during the contract term. NPS does not comment on TicketCenter's
position that, once Ticketron's contract expired, it could not be
extended and services could not be added. NPS does argue, however, that
this protest is not subject to the Federal Acquisition Regulation (FAR)
or to review by our Office since the contract does not involve the
expenditure of appropriated funds (contractor payment is through
commissions deducted from the ticket sale proceeds before the proceeds
are turned over to the government), and because we have held in our
prior decisions that contract modifications and amendments are matters
of contract administration outside the purview of the General Accounting
Office.
We do not agree that the funds received in connection with visitor
reservation services are not appropriated funds. We have held that
where Congress has authorized the collection or receipt of certain funds
by an agency and has specified or limited the purposes of those funds,
the authorization constitutes an appropriation, and protests arising
from procurements involving such funds are subject to our review in
accordance with the provisions of the FAR. See Fortec Constructors --
Reconsideration, 57 Comp. Gen. 311 (1978), 78-1 C.P.D. Paragraph 153;
Monarch Water Systems, Inc., B-218441, Aug. 8, 1985, 64 Comp. Gen. 756
85-2 C.P.D. Paragraph 146.
Here, section 4601-6a(b) of Title 16 authorizes federal agencies to
"provide for the collection of daily recreation use fees" in furnishing
outdoor recreation facilities and services. Section 4601-6a(f) provides
that fees collected by agencies are to be "covered into" a special
account in the United States Treasury and administered in conjunction
with, but separate from, revenues in the Land and Water Conservation
fund. In view of NPS' authority to collect the funds and the limitation
on the use of the funds, the funds received by NPS for visitor
reservations constitute appropriated funds, and procurements for visitor
reservation services therefore fall within the scope of the FAR and
GAO's bid protest jurisdiction. See Monarch Water Systems, Inc.,
B-218441, supra.
Contrary to NPS'S belief that the propriety of modifying Ticketron's
contract is a matter of contract administration not for review by GAO,
we will review allegations such as TicketCenter's that a modification
constituted a cardinal change outside the scope of the original
contract. Wayne H. Coloney Co., Inc., B-215535, May 15, 1985, 85-1
C.P.D. Paragraph 545. The fact that we will review such matters is
inapposite here, however, since we agree with TicketCenter's second
argument that Ticketron's expired contract could not be extended or
otherwise modified.
The record shows, as TicketCenter alleges, that the original contract
term was extended to January 25, 1985, by issuance of amendment 2 to the
contract. While there remained options under the contract which could
be exercised by NPS to extend the contract term further, neither NPS nor
the record indicates that NPS ever exercised another option before the
contract ended on the amended January 25, 1985, expiration date. NPS
states in its report that it did extend the contract term to January 25,
1986, and that it added the Carter Barron ticket sales by the same
modification. NPS neglects to state in its report, however, that this
modification, in the form of amendment 3 showing a January 25, 1985,
effective date, was not executed by NPS and Ticketron until June 10,
1985, more than 4 months after Ticketron's contract had expired. In
other words, amendment 3 appears to have been an attempt by NPS to
revive Ticketron's expired contract by retroactively extending and
modifying it.
We agree with TicketCenter that this attempt was improper. Upon
expiration of Ticketron's contract, neither the government nor Ticketron
was obligated by any of the contract terms; Ticketron no longer was
bound to provide visitor reservation services, and the government no
longer was bound to pay Ticketron commissions for such services. The
unexercised option provisions were part of the contract and, thus,
necessarily expired when the contractual relationship was terminated.
Thus, the attempted retroactive extension of Ticketron's contract was
not an extention at all -- there was no contract to extend -- but the
noncompetitive creation of a new contractual relationship with
Ticketron.
Under CICA, agencies are required to "obtain full and open
competition through the use of competitive procedures" in procuring
property or services. 41 U.S.C. Section 253. Certain exemptions from
the competition requirement are listed, but it does not appear from the
record, and NPS does not argue, that any of these exemptions would apply
to justify a noncompetitive award to Ticketron under the circumstances
here. Consequently, we sustain the protest on the ground that NPS
should have conducted a competitive procurement for these visitor
reservation services.
Interior notes in its report that the 1983 contract was awarded to
Ticketron pursuant to section 460L-6(f) of Title 16, which provides that
the agency may "contract with any public or private entity to provide
visitor reservation services" under terms and conditions it deems
appropriate. As for the applicability of this provision to the
extension of the contract, the legislative history of the section
indicates that it was intended to clarify the authority to contract for
reservation services by permitted the contractor to deduct a commission
from the proceeds of sales to the public. S. Rep. No. 93-745, 93d
Cong., 2d Sess. 8 (1974). Although the section authorizes Interior to
enter into this type of contract with any public or private entity under
the terms and conditions it deems appropriate, we do not interpret the
section as permitting the agency to enter into these contracts without
obtaining competition. Indeed, Interior has not argued that the section
exempts these contracts from the requirement for competition.
By separate letter to the Secretary of the Interior, we are
recommending that Ticketron's contract be terminated for convenience and
that NPS's requirement for these services be satisfied through a
competitive procurement.
In addition, we are advising the Secretary that we find TicketCenter
is entitled to recover the costs of filing and pursuing its protest,
including attorney's fees. Our Bid Protest Regulations, implementing
CICA, provide for the recovery of these costs by a protester where the
agency unreasonably has excluded the protester from the procurement,
except where our Office recommends that the contract be awarded to the
protester, and the protester ultimately receives the award. 4 C.F.R.
Section 21.6(d)-(e) (1985). We have not recommended an award to
TicketCenter, and NPS' improper extension of Ticketron's expired
contract, a de factor sole-source award, clearly had the effect of
precluding TicketCenter from competing for or receiving the contract
awarded to Ticketron in June.
We previously have denied recovery of protest costs where we
recommend recompetition of a procurement under which the protester's
proposal improperly was rejected. In our decision, The Hamilton Tool
Co., B-218260.4, Aug. 6, 1985, 85-2 C.P.D. Paragraph 132, for example,
we concluded that while other potential contractors benefitted from
resolicitation, the protester's interest was sufficiently protected so
that there was no need to allow protest costs. Here, however, the
protest does not involve the rejection of a proposal but, rather, the
improper award of a sole-source contract. It was the broad purpose of
CICA to increase and enhance competition on federal procurements, and we
consider the incentive of recovering the costs of protesting an improper
sole-source award to be consistent with this purpose.
The protest is sustained.
B-220578, 65 Comp. Gen. 23
Matter of: TCI, Limited, October 21, 1985
Bids - Responsiveness - Pricing Response - Minor Deviations From IFB
Requirements
Where prices were provided for all items and subitems on a bidding
schedule, the fact that the contracting officer had to add the
individual item prices and fill in the totals the bidder had left blank
does not mean the bid was nonresponsive, as the bidder showed his intent
to be bound by the pricing of all items and subitems. Failure to add
the prices of the items was only a mere clerical error, and the mere
mechanical exercise of addition shows the total bid amount intended.
Bids - Mistakes - Waiver, etc. of Error
Failure to provide a duplicate copy of the bid is a minor informality
or irregularity.
Bids - Correction - Initialing Requirement
A bidder's failure to initial changes in a bid is a matter of form
that may be considered an informality and waived if the bid leaves no
doubt as to the intended price.
TCI, Limited (TCI), protests the award of a contract under invitation
for bids (IFB) No. DACA85-85-B-0059, issued to the Steenmeyer
Corporation (Steenmeyer) by the United States Army Engineer District,
Alaska, for the renovation of Buildings 1001 and 1004, Fort Wainwright,
Alaska. TCI argues that since Steenmeyer failed to fill in the blanks
provided for the total of additive items and the total of base and
additive items, the intent of the bid cannot be discerned, and the bid
therefore should have been rejected as nonresponsive.
We dismiss the protest.
The bidding schedule called for prices on items 1 and 2, the latter
of which was subdivided into numerous sub-items, and on 13 additive
items, Steenmeyer's bidding schedule shows that it inserted prices on
item 1, on all of the subitems in item 2, and on all of the additive
items, both as to the unit prices and their extended total amounts.
TCI, however, failed to insert grand totals for all of the extended
total amounts it had bid; the contracting officer himself calculated
those totals in order to evaluate the bid.
Generally, where any substantial doubt exists as to whether a bidder
upon award could be required to perform all the work called for if he
chose not to, the integrity of the competitive bid system requires
rejection of the bid unless the bid otherwise affirmatively indicates
that the bidder contemplated performance of the work. 51 Comp. Gen.
543, 547 (1972). This rule, however does not prohibit the correction of
a price omission in a bid when the figure intended is established by the
bid itself. 52 Comp. Gen. 604, 609 (1973). Where the bid iteslf
establishes both the existence of the error and the bid actually
intended, to hold that bid nonresponsive would convert an obvious
clerical error of omission to a matter of responsiveness. Ebonex, Inc.,
B-211557, Aug. 9, 1983, 83-2 C.P.D. Paragraph 192.
Here, Stennmeyer bid on all items and subitems merely omitting the
mathematical totals of these items. We do not agree with the protester
that there really is any reasonable doubt as to Steenmeyer's intention
to be bound to all items if the bid were accepted, and we therefore see
no basis to object to the contracting officer's evaluation of the bid by
totaling Steenmeyer's item and subitem bids.
TCI also complains that Steenmeyer failed to provide a duplicate copy
of its bid documents at the time of bid opening as required by the
solicitation. The Federal Acquisition Regulation (FAR), however,
specifically provides that the failure to return the number of copies of
signed bids required by an IFB is a minor informality or irregularity
which may be cured by the bidder or waived by the contracting officer,
whichever is advantageous to the government. FAR, 48 C.F.R. Section
14.405(a) (1984).
Finally, TCI protests that Steenmeyer failed to initial erasures on
its bidding schedule.
We have held that a bidder's failure to initial changes is a matter
of form that may be considered an informality and waived if the bid
leaves no doubt as to the price intended. R.R. Gregory Corporation,
B-217251, Apr. 19, 1985, 85-1 C.P.D. Paragraph 449. The record shows
that Steenmeyer made several changes to its bid and, with the exception
of one extended price, all of the changes were initialied. We note that
although the one changed extended price was not initialed, the unit
price for that item, also changed, was initialed. Since the required
quantity for that item is one, and the extended price is the same as the
unit price, $6,658.00, it is clear that Steenmeyer intended to bid one
unit of that item at $6,658 for the total item price of $6,658.
The protest is dismissed.
B-218705, 65 Comp. Gen. 21
Matter of: Nathaniel C. Elie -- Reemployed Annuitant -- Compensation
-- Lack of Appointment, October 21, 1985
Retirement - Civilian - Reemployed Annuitant - Annuity Deduction
Mandatory
A Civil Service annuitant claims entitled to full compensation, in
addition to his annuity, for temporary full-time duties allegedly
performed following his retirement. Under the provisions of 5 U.S.C.
8344(a), the salary of a retired Civil Service annuitant must be reduced
by the amount of his annuity during any period of actual employment.
However, since the claimant states that he was not appointed to a
position following retirement, which statement has been confirmed by the
agency's personnel office, he is not entitled to any compensation,
reduced or otherwise, for the period in question.
Appointments - Absence of Formal Appointment - Reimbursement for
Services Performed - Denied
A Civil Service annuitant claims entitlement to compensation in
addition to his annuity for temporary full-time duties allegedly
performed following his retirement. He states that he was never
appointed to a position following his retirement, but contends that his
supervisor accepted his offer to continue working after retirement, and
said that he would find a way to pay him. The claim is denied. Under
31 U.S.C. 1342, an officer or employee of the government is prohibited
from accepting the voluntary services of an individual. Further, the
government is not bound by the unauthorized acts of its agents, even
where the agent may be unaware of the limitations on his authority.
This decision is in response to a letter from Mr. Nathaniel C. Elie,
in which he requests further consideration of his claim for compensation
as a Federal employee during the period of September 2, 1980, through
October 10, 1980. We conclude he is not entitled to compensation for
the following reasons.
BACKGROUND
Mr. Elie's claims was the subject of a settlement by our Claims
Group, Z-169652, February 20, 1985, which disallowed his claim. The
basis for the disallowance was a finding that there was no evidence to
show that he worked as a Federal employee during the period claimed.
The basis for his request for further consideration is his contention
that there were various persons who could confirm that he was promised
that, if he worked, efforts would be made to pay him. Further, he
contends that there were others who could confirm the number of hours he
worked through informal records they kept.
The facts in the case are brief. Mr. Elie was employed as a
Supervisory Supply Technician with the 193rd Infantry Brigade, United
States Army, Fort Clayton, Republic of Panama. On August 29, 1980, he
was retired from the Civil Service with more than 40 years of Federal
service. Information received from the Civilian Personnel Office (CPO),
Headquarters Command, 193rd Infrantry Brigade, indicates that they have
no record that he was reappointed to a position following his
retirement, or that he performed any duties during the period claimed.
Mr. Elie states that shortly before he retired, he and his supervisor
discussed the possible temporary continuation of his employment
following retirement because there was apparently no one to replace him.
Arrangements supposedly were made by his supervisor through the CPO to
rehire him as a reemployed annuitant on a temporary basis. Mr. Elie
states that on September 2, 1980, a CPO representative explained the
compensation structure of that type of employment to him. He states
further that, after receiving this information, he informed his
supervisor that he would not accept reemployment on that basis since he
would not receive his full pay for any period he worked. In spite of
that, he stated that he offered to continue working until a replacement
could be found. He contends that his offer was accepted and that it was
agreed by his supervisor that every attempt would be made to find a way
to pay him the full pay for the work he did. He does admit, however,
that he was never appointed to any position following his retirement.
DECISION
The employment of an individual by an agency of the Federal
government and the entitlement to receive compensation for the position
to which he is appointed and serving are matters strictly governed by
statute.
As noted, Mr. Elie retired from the Civil Service on August 29, 1980.
Section 3323(b) of Title 5, United States Code, provides that retired
annuitants under the Civil Service Retirement Act may be reemployed to
serve in an appointive position. If he was so employed, the only basis
upon which Mr. Elie could have been compensated would be under the
provisions of 5 U.S.C. Section 8344. That section authorizes
reemployment of Civil Service annuitants. However, subsection (a)
provides, in part, that during the period of such employment an amount
equal to the annuity which an individual could otherwise receive during
the period of actual employment "shall be deducted from his pay."
In other words, the maximum amount of compensation Mr. Elie could
have received, if he had been actually reemployed following his
retirement, would be the difference between the annuity he was receiving
and the salary authorized for the position to which he was appointed.
See 28 Comp. Gen. 693 (1949); and Adrian D. Nelson, B-188520, April 21,
1977. We are not aware of any basis upon which Mr. Elie could have been
reemployed on a temporary fulltime basis by the Federal government and
receive full compensation in addition to his Civil Service annuity.
With regard to Mr. Elie's assertion that his supervisor agreed to
accept his offer to continue working without appointment and would find
a way to pay him, 31 U.S.C. Section 1342 (1982) -- formerly 31 U.S.C.
Section 665(b) -- prohibits an officer or an employee of the United
States from accepting the voluntary services of an individual. This
would include permitting Mr. Elie to perform the duties of a position
without being properly appointed to that position. As for the alleged
agreement between Mr. Elie and his supervisor, it is a well settled rule
that the government is not bound by the acts of its agents which go
beyond the actual authority conferred by statute and regulations. This
is so even though the agent may have been unaware of the limitations on
his authority. Further, the government is not prevented from
repudiating any such unauthorized acts. See Dr. Frank A. Peak, 60 Comp.
Gen. 71, 74 (1980) and cases cited. See also Schweiker v. Hansen, 450
U.S. 785 (1981); and Federal Crop Insurance Corp v. Merrill, 332 U.S.
380 (1947).
Since the record shows that Mr. Elie rejected the only basis upon
which he could have been reemployed and no attempt was ever made to
initiate the necessary paperwork to reemploy him in any capacity during
the period in question, it is our view that he never achieved any
employment status following his retirement. Therefore, he is not
entitled to any compensation for the period involved.
Accordingly, the action taken by our Claims Group, is sustained.
B-217996, 65 Comp. Gen. 19
Matter of: U.S. Nuclear Regulatory Commission -- Certification of
long distance telephone tolls, October 21, 1985
Telephone - Long Distance Calls - Government Business Necessity -
Certification Requirement - Statistical Sampling Use.
Administrative certification by head of agency or designee that long
distance telephone calls are necessary in the interest of the Government
may be made on an estimate of the percentage of similar toll calls in
the past that have been official calls provided the verification process
provides reasonable assurance of accuracy and freedom from abuse.
Vouchers and Invoices - Sampling Procedures - Use of Statistical
Sampling
Administrative certification of long distance telephone calls under
31 U.S.C. 1348(b) does not carry with it financial responsibilities
attendant to the certification of a voucher for payment, but may be
relied on by certifying official who does certify voucher for payment.
63 Comp. Gen. 241 (1984); 57 Comp. Gen. 321 (1978) explained.
An authorized certifying officer for the United States Nuclear
Regulation Commission (NRC) has requested an advance decision on whether
a percentage of a bill for a large number of long distance telephone
calls may be certified based on an estimate of the number of official
calls that are derived from past agency experience. For the reasons
given below, we think such a certification may be used if steps are
taken to reasonably assure that the calls paid for meet the statutory
requirements.
FACTS
Under the Prompt Payment Act, 31 U.S.C. Section 3901 et seq., Federal
Agencies must pay interest on late payments for services. The NRC
incurs such expenses regularly with regard to its long distance
telephone calls. Under 31 U.S.C. Section 1348(b) (1982), before
appropriated funds become available for payment for long distance
telephone calls, the calls must be certified as "necessary in the
interest of the Government." 31 U.S.C. Section 1318(b). In his letter
the certifying officer explains how the NRC's certification/collection
procedures cannot be completed within sixteen days of the required
payment date, as prescribed by the Prompt Payment Act, 31 U.S.C. Section
3902(b)(3) (1982). As pointed out, in the past we have allowed agencies
to certify official calls based on a statistical sample. See 63 Comp.
Gen. 241 (1984) and 57 Comp. Gen. 321 (1978). The certifying officer
contends that the NRC, although it makes many long distance toll calls,
does not place enough toll calls to make statistical sampling feasible.
Therefore, the NRC would like to certify a percentage of its long
distance tolls as "official" based on the historical experience of
"official" toll calls made and verified in the past year.
The NRC currently produced a printout of all long distance telephone
calls covering a billing period and distributes a copy to its various
organizational units. NRC asks employees from whose telephones the
calls were made to state whether they were official or personal calls.
During the 12-month period official calls amounted to 94.26 percent of
the calls on one telephone number and 98.55 percent of the calls on the
second number covered by the bill. Significantly less than 1 percent of
all the calls were uncertified as either official or personal. NRC
proposes to pay 95 percent of the toll charges based on this historical
record pending completion of the internal verification process. The
formal verification process, once completed, will be the basis for a
final adjustment of payment in subsequent months. The NRC also proposes
that it will review its payments at least once a year to determine its
most recent experience as to the level of unofficial toll calls.
According to the NRC, since the adjustments that affect the unpaid
portion of the telephone charges relate primarily to charges for
personal calls collected by the agency but for which it is not liable,
it does not anticipate that the telephone company will charge NRC
interest for these late payments.
DISCUSSION
In reviewing this proposal, we agree with the conclusion that the
proposal does not satisfy the statistical sampling standards we have
approved for certification of telephone toll calls in the past. Rather,
the proposal appears to be partial payment under a service contract
where the services have been received but the amount due cannot be
immediately determined. We see no practical reason why the NRC cannot
implement its proposed plan. However, we think it may be useful to
clarify our view of the certifications involved.
While it may have been assumed in our decisions that each long
distance call must be separately certified as being necessary and in the
Government interest, we do not believe that 31 U.S.C. Section 1348(b)
requires this when one bill is submitted for a large number of calls.
In approving the statistical sampling device as a means of certifying
each call without actually reviewing the purpose of each call, we have
already recognized this principle. We think an agency head or his or
her designee, based on the agency's experience, may reasonably certify
that a certain percentage of a total number of long distance calls meets
the requirements of 31 U.S.C. Section 1348(b). However, in order to so
certify, we think he must be confident that the system in place for
verifying that calls are in the Government interest has a high degree of
accuracy.
We think it is appropriate to allow the NRC proposal because it
appears to us to achieve a practical result. Not only is it more
economical, but it may better carry out the purposes of 31 U.S.C.
Section 1348(b). Since erroneous certifications are possible, we think
it is important to note that a certification made under 31 U.S.C.
Section 1348(b) does not carry with it financial responsibility for
errors as do certifications under 31 U.S.C. Section 3528. Section 3528
creates financial responsibility for erroneous payments on the part of
an official designated to certify the corrections of vouchers upon which
moneys are to be paid by disbursing officers in discharge of debts or
obligations of the Government. Even where the section 1348(b)
certification appears on the face of a payment voucher, it is not
certified for payment. 56 Comp. Gen. 29 (1976). The certifying
official who certifies a long distance telephone voucher for payment can
rely on an administrative certification that the calls in question were
for Government business without incurring financial responsibility for
errors in the administrative certification. Id.
B-220293.2, 65 Comp. Gen. 17
Matter of: Milwaukee Industrial Clinics, S.C. -- Reconsideration,
October 18, 1985
Contracts - Protests - General Accounting Office Procedures -
Constructive Notice
Protester's assertion that it was unaware of the requirement to file
protest with General Accounting Office (GAO) within 10 working days
after protester learned of adverse agency action on its protest
initially filed with procuring agency is not a basis for consideration
of the protest since the protester is charged with constructive notice
of GAO's Bid Protest Regulations through their publication in the
Federal Register.
Milwaukee Industrial Clinics, S.C. (Milwaukee) requests
reconsideration of our notice of September 19, 1985, which dismissed its
protest that a provision in invitation for bids No. RO-V-86-0001, issued
by the Department of Health and Human Services (HHS), was restrictive.
We dismissed the protest as untimely because it was not filed with
our Office within 10 working days following initial adverse agency
action on a protest filed with HHS. Our action was in accordance with
our Bid Protest Regulations, 4 C.F.R. Section 21.2(a)(3) (1985), which
provide that, when a protest has first been filed with the contracting
agency, any subsequent protest to this Office must be filed within 10
working days after the protester knew or should have known of initial
agency action on its protest to the agency.
We affirm the dismissal.
The record shows that Milwaukee initially filed a protest against the
solicitation specification with the contracting agency on August 19,
1985, and that the contracting officer denied the protest by letter of
August 21. Milwaukee then requested that the contracting officer
reconsider its protest, and, on September 18, it filed its protest with
this Office. Since Milwaukee's protest to our Office was not filed
until September 18, almost 1 month after the initial adverse agency
action on its protest to HHS, we dismissed it as untimely under section
21.2(a)(3), supra.
In its request for reconsideration, Milwaukee asks that we waive our
timeliness rules here because it was not familiar with our procedures
and it consequently followed the advice of its congressman in pursuing
its protests to the agency and our Office. Our regulations do provide
for consideration of protests that are not timely filed when a
significant issue is raised or "for good cause." See 4 C.F.R. Section
21.2(c). This protest does not, in our judgment, raise a significant
issue, and the good cause exception is reserved for circumstances where
some compelling reason beyond the protester's control prevented the
filing of a timely protest. Vycor Corp. et al., B-212687 et al., Feb.
15, 1984, 84-1 C.P.D. Paragraph 205. That is not the situation here.
The protester simply did not meet its responsibility to assure that the
timeliness requirements were met. In this connection, we point out
that, since our regulations are published in the Federal Register (see
49 Fed. Reg. 49,417 (1984)), protesters are charged with constructive
notice of their contents, and therefore, a protester's professed
unawareness of these published regulations is not a proper basis for
waiving their requirements. Agha Construction -- Reconsideration,
B-218741.3, June 10, 1985, 85-1 C.P.D. Paragraph 662.
B-218672, 65 Comp. Gen. 16
Matter of: Provision of Meals on Government Aircraft, October 17,
1985
Meals - Furnishing - Airplane Travel
Absent specific statutory authority, a Federal agency may not provide
meals at Government expense to its officers, employees, or others. This
general prohibition extends to in-flight meals served on Government
aircraft, although it does not apply to government personnel in travel
status, for whom there is specific statutory authority to provide meals.
Hence, the National Oceanic and Atmospheric Administration may not
provide cost-free meals to those aboard its aircraft on extended flights
engaged in weather research, except for Government personnel in travel
status.
A certifying officer of the National Oceanic and Atmospheric
Administration (NOAA) requests a decision concering whether NOAA may
provide meals at Government expense to persons on Government aircraft
during extended flights while engaged in severe weather research. /1/
We conclude that NOAA may not provide cost-free meals to persons aboard
these flights except for Government personnel in travel status.
Background
The National Oceanic and Atmospheric Administration maintains and
operates a fleet of aircraft for the purpose of severe weather research
and forecasting. During severe weather situations, such as hurricane
warnings, NOAA aircraft participate in extended flights, sometimes 8
hours or longer. Persons on these flights include civilian NOAA
employees, NOAA Commissioned Corps personnel, and other individuals who
are not employed by the Government, such as media and research people.
The National Oceanic and Atmospheric Administration has requested a
decision concering the propriety of serving free meals to those aboard
these aircraft.
Analysis and Conclusion
We have consistently held that, absent specific statutory authority,
an agency may not provide free meals, beverages, or other refreshments
to Government personnel because this is not a necessary expense of the
agency. /2/ Similarly, we have disallowed the provision of free food
and drink, absent specific statutory authority, to individuals who are
not Government personnel. 57 Comp. Gen. 806 (1978).
The appropriation statute applicable to NOAA provides for "necessary
expenses of activities authorized by law for the National Oceanic and
Atmospheric Administration, including acquisition, maintenance,
operation, and hire of aircraft." Public Law 98-411, approved August 30,
1984, 98 Stat. 1547. This appropriation does not provide for the
serving of free in-flight meals to NOAA personnel or others.
Furthermore, we can find no authority to classify the serving of free
meals as a necessary expense of the agency.
Specific statutory authority does exist, however, for the Government
to pay for the meals of Government personnel in travel status. /3/
Thus, we have permitted a contracting officer to procure lodgings and
meals for civilian personnel on temporary duty (in travel status) and
furnish them to the personnel at no charge, provided that the total cost
does not exceed the maximum per diem allowance. 60 Comp. Gen. 181
(1981). We applied the same rule to the uniformed services, in a case
involving the NOAA Corps. Lieutenant Commander William J. Harrigan, 62
Comp. Gen. 308 (1981). Thus, we conclude that NOAA may provide meals to
Government personnel aboard its aircraft who are in travel status. /4/
The agency may not provide cost-free meals to Government personnel not
in travel status or to other individuals, however.
The certifying officer inquired as to the effect of providing
cost-free meals on the claims for travel expenses of NOAA personnel.
Where meals are furnished without charge by a Federal Government agency
(at a temporary duty station), an appropriate deduction shall be made
from the authorized per diem rate. /5/
The issues presented are addressed accordingly.
FOOTNOTES
(1) This decision is issued in response to a request from Auke Hart,
Certifying Officer of the Department of Commerce, for a decision
concering the providing of free meals, beverages or other refreshments
on NOAA's weather research aircraft.
(2) See 47 Comp. Gen. 657 (1968), and B-188078, May 5, 1978.
(3) Civilian personnel, traveling on official business away from
their designated post of duty, are entitled to a per diem allowance for
travel. 5 U.S.C. Section 5702. Similarly, members of the uniformed
services are entitled to travel allowances for travel performed under
orders. 37 U.S.C. Section 404.
(4) The determination of which employees are in travel status and
entitled to travel allowances, and hence eligible for free in-flight
meals, is a matter of agency discretion within applicable regulations.
Thus, no per diem shall be allowed for travel periods of less than 10
hours, unless the travel period is 6 hours or more and beging before 6
a.m. or ends after 8 p.m. Federal Travel Regulations, paragraph
1-7.6d(1), incorp. by ref., 41 C.F.R. Section 101-7003. The uniformed
services have a similar 10-hour rule. Joint Travel Regulations, Vol. 1
(1 JTR), paragraph M4201-17. Agencies have discretion not to pay per
diem allowances at all for travel of less than 24 hours. Baker and
Sandusky, B-185195, May 28, 1976. Thus, for example, on NOAA flights of
10 hours or less which depart from and return to Miami, NOAA personnel
whose permanent duty station is Miami would not be eligible for per diem
-- or free meals -- but personnel stationed elsewhere may be.
(5) FTR, para. 1-7.6f; 1 JTR para. M4205-4.
B-219455.5, 65 Comp. Gen. 15
Matter of: NJCT Corporation -- Request for Reconsideration, October
7, 1985
Contracts - Protests - General Accounting Office Procedures --
Reconsideration Requests -- Timeliness
Protester alleges that request for reconsideration was untimely
because it relied on the caption on the first page of a decision of the
Comptroller General of the United States and the caption provided an
insufficient address for protester's courier to effectuate delivery.
Nevertheless, dismissal of request for reconsideration is affirmed
because protester did not use the address prescribed in our Bid Protest
Regulations, 4 C.F.R. 21.1(b).
NJCT Corporation (NJCT) requests reconsideration of our decision in
NJCT Corporation -- Request for Reconsideration, B-219455.3, August 21,
1985, 85-2 C.P.D. Paragraph 206, in which we held that NJCT's request
for reconsideration of NJCT Corporation, B-219455, July 22, 1985, 85-2
C.P.D. Paragraph 70, was untimely filed. We deny the request for
reconsideration.
NJCT states that its request for reconsideration was untimely because
it used the caption, "Comptroller General of the United States,
Washington, D.C. 20548," which is printed on the first page of our
decisions, as our address for its request for reconsideration. NJCT
states that the address was insufficient for the private mail courier
which NJCT employed to effectuate delivery. Accordingly, NJCT had to
send its request for reconsideration again and that was untimely filed.
The address NJCT used the second time was "Office of Gen Acct, US Gen
Acct Office, Room 1029, 441 G Street, N.W., Washington, D.C. 20548."
NJCT states that its reconsideration request should be considered since
it relied on the above-quoted caption to address its request for
reconsideration.
Our Bid Protest Regulations, 4 C.F.R. Section 21.1(b) (1985), state
that protests must be addressed as follows: "General Counsel, General
Accounting Office, Washington, D.C. 20548, Attention: Procurement Law
Control Group." This address is specified in our regulations in order to
assure protesters that mail will be correctly received and routed to the
office within the General Accounting Office which is responsible for
handling these matters. Gary's Disposal, Inc., B-207864, July 23, 1982,
82-2 C.P.D. Paragraph 72. It is our experience that protests so
addressed are properly delivered.
NJCT did not use the address specified in our regulations. We have
found that protests which are not addressed to the address contained in
our Regulations and not received within the prescribed 10 working days
are untimely. Gary's Disposal, Inc., B-207864, supra. Maryland T
Corporation, B-192247, July 19, 1978, 78-2 C.P.D. Paragraph 52. This
rule also applies to requests for reconsideration. 4 C.F.R. Section
21.12(b).
The prior decision is affirmed.
B-219573.2, 65 Comp. Gen. 13
Matter of: Pacific Lighting Energy Systems, October 4, 1985
Contracts - Protests - General Accounting Office Procedures -
Timeliness of Comments on Agency's Report
General Accounting Officer (GAO) will not consider a new protest of
solicitation improprieties prior to bid opening where an earlier,
essentially identical protest was dismissed for failure to comment on
the agency report.
Pacific Lighting Energy Systems (Pacific) protests invitation for
bids (IFB) No. N62474-85-B-5545 issued by the Department of the Navy
(Navy) for the procurement of electrical and steam energy. Pacific
objects to the use of advertised, rather than negotiated, procurement
procedures as well as to several requirements of the IFB, and has
incorporated, by reference, two prior protests involving the procurement
of these services, one closed after withdrawal of a prior solicitation
and the other dismissed after Pacific failed to comment timely on the
agency report. We dismiss the protest.
Bid opening for this solicitation originally was set for July 16,
1985. Pacific first filed a protest with our Office on July 11. The
protest essentially restated a prior Pacific protest concerning another
soliciation for the same services (solicitation No. N62474-83-B-2934).
Pacific received the agency's report on August 29; however, the firm
failed to comment on the report until September 5, well after the 7
working day comment period provided in our Bid Protest Regulations. See
4 C.F.R. Section 21.3(e) (1985). We therefore dismissed Pacific's
protest.
During the exchange of submissions to our Office in connection with
Pacific's first protest of this solicitation, the Navy extended bid
opening several times, ultimately selecting September 12 as the bid
opening date. On September 9, Pacific filed this protest, restating, in
substantial part, the arguments it asserted in its untimely comments to
the agency report. Under a separate submission, also filed on September
9, Pacific requested that we incorporate the record for the two earlier
protests and invoke our express option provisions (4 C.F.R. Section
21.8), and it waived an agency report.
The protest system endorsed by the Competition in Contracting Act of
1984, 41 U.S.C. 251 note (CICA), implemented by our Regulations, is
designed to provide for the expeditious resolution of protests with only
minimal disruption to the orderly process of government procurement.
See 31 U.S.C. Section 3554 (West Supp. 1985). To that end, CICA
requires, generally, that the agency withhold contract award or, if a
contract was awarded within 10 days prior to the protest, direct the
contractor to cease performance while the protest is pending. The
agency is required to report within 25 working days from its receipt of
notice of the protest from our Office, 31 U.S.C. Section 3553, and the
protest must be resolved by our Office within 90 working days. 31
U.S.C. Section 3554.
Our Regulations technically permit the filing of a protest against
apparent solicitation improprieties before bid opening, as Pacific has
done here. Neither those Regulations nor CICA, however, contemplate the
pre-bid opening resubmission and reconsideration of a protest identical
to one already dismissed by our Office for the protester's failure to
meet the 7-day comment requirement. Accepting such as refiling would,
for example, permit a protester that neglected its obligation to comment
or express interest in the protest to forestall a contract award or
otherwise delay a procurement simply by resubmitting its comments on the
eve of bid opening as a protest. This clearly would be inconsistent
with the fair, orderly and expeditious procurement of services and
resolution of protests intended by Congress and set forth in CICA. A
protester that fails to comment on the agency report or express interest
in the protest in a timely fashion in effect has abandoned its protest
for our purposes, and will not be permitted to resubmit previously
untimely comments as a new protest or otherwise revive the complaint.
As stated above, Pacific has raised no new protest issues; it merely
has resubmitted its previously untimely comments to the agency report
and sought to include its prior protests in this complaint. Under these
circumstances, we will not consider the merits of Pacific's protest.
The protest is dismissed.
B-216753, 65 Comp. Gen. 10
Matter of: Eugene J. Maruschak -- Transportation Expenses Incurred
to Obtain Meals While on Temporary Duty, October 3, 1985
Subsistence - Actual Expenses - Meals
Employee was authorized actual subsistence expenses to perform
temporary duty in Washington, D.C. He incurred transportation expenses
to obtain meals for distances ranging from 2 to 112 miles, roundtrip.
Federal Travel Regulations (FTR) allow expenses of travel to obtain
actual subsistence expenses, but such expenses must be necessarily and
prudently incurred and reasonable in nature. Where the expenses claimed
appear largely unnecessary and unreasonable, and the employee failed to
provide additional justification, the agency acted properly in denying
the employee's claim.
This decision is in response to an appeal by Mr. Eugene J. Maruschak,
an employee of the Internal Revenue Service (IRS), Department of the
Treasury, from the settlement action by our Claims Group, dated July 1,
1982. The settlement sustained the determination by IRS that Mr.
Maruschak is not entitled to reimbursement of transportation expenses
incurred to obtain meals while on temporary duty. For the reasons
stated hereafter, we affirm the settlement action by our Claims Group.
BACKGROUND
Mr. Maruschak was detailed from Philadelphia, Pennsylvania, to
perform official duty at the IRS National Office in Washington, D.C.,
during the period June 22 through December 4, 1981. Reimbursement for
his expenses on temporary duty was authorized on the actual subsistence
expense basis at the maximum rate of $75 per day. Mr. Maruschak was
authorized to use his privately owned vehicle (POV) while performing his
temporary duty assignment. Mr. Maruschak claimed reimbursement for
travel in his POV, including mileage and parking expenses, to obtain
lunches and dinners on 17 occasions. The roundtrip distances driven to
obtain the lunches and dinners were 7, 10, 23, 16, 10, 20, 6, 29, 27, 2,
112, 28, 28, 5, 8, 9, and 23 miles. The total claim for transportation
expenses to obtain meals was $76.32.
Mr. Maruschak's contention is that when reimbursement is on the
actual subsistence expense basis, the expenses of transportation between
places of lodging or business and places where meals are taken are
allowable when claimed as part of subsistence, rather than as necessary
transportation, provided the total amount claimed on the days the
expenses were incurred does not exceed the applicable daily rate. He
also states that only when travel to places where meals are obtained is
claimed as necessary transportation, not as subsistence, is there a
requirement for specific justification of expenses incurred. The
claimant says that, since the total amount he spent for meals,
transportation to obtain meals, and other miscellaneous expenses on a
daily basis did not exceed 45 per cent of the maximum amount allowed for
a high rate geographical area, such expenses should be accepted as being
reasonable without further justification.
Mr. Maruschak contends, in summary, that reimbursement of the claimed
expenses is allowed under the Federal Travel Regulations (FTR) and the
IRS Travel Regulations and that the action by the IRS in disallowing his
claim is arbitrary and capricious.
The position taken by IRS is that, taking into consideration the
location where the temporary duty was performed, Washington, D.C., and
the fact that Mr. Maruschak was able to obtain meals throughout the
majority of the temporary duty assignment without incurring
transportation expenses, the transportation expenses to obtain meals
apparently were incurred as a personal choice and were not necessary to
the detail. The IRS further states that Mr. Maruschak has failed to
provide the agency with a statement explaining the necessity for driving
to obtain meals.
OPINION
Under the provisions of section 5702(c) of Title 5, United States
Code (1982), and the FTR, an agency is authorized to reimburse employees
for the actual and necessary expenses of official travel where the
employees perform temporary duty at a high rate geographical area.
Actual subsistence expense reimbursement in FTR para. 1-8.2b covers the
same type of expenses, including meals, lodging, and transportation
between places of lodging or business and places where meals are taken,
as are normally covered by the per diem allowance provision in FTR para.
1-7.1b.
The FTR also provides that an employee traveling on official business
is expected to exercise the same care in incurring expenses that a
prudent person would exercise if traveling on personal business. FTR
para. 1-1.3a. Further, para. 1-1.3b of the FTR states that traveling
expenses which will be reimbursed are confined to those expenses
essential to transacting official business.
Paragraph 1-8.3b of the FTR outlines the responsibilities of an
agency in authorizing and reimbursing actual subsistence expenses
incurred by employees of the agency. In essence, those responsibilities
are to establish necessary administrative arrangements for an
appropriate review on the justification for travel on the actual
subsistence expense basis and of the expenses claimed by a traveler.
The stated purpose of the administrative arrangements is to assist the
head of the agency or his designee in determining whether (1) the
claimed expenses are allowable subsistence expenses, and (2) whether
they were necessarily incurred in connection with the specific travel
assignment. Thus, an agency determination as to the reasonableness of
actual subsistence expenses is required.
Applying the above-stated law and regulations to Mr. Maruschak's
claim, the employee's travel to obtain meals while performing temporary
duty on the actual subsistence basis is an allowable subsistence
expense. However, travel expenses to obtain meals must be necessarily
and prudently incurred in connection with the temporary duty assignment
and must be reasonable in nature. An employee is entitled to
reimbursement only for reasonable expenses incurred incident to a
temporary duty assignment since, as stated earlier, FTR para. 1-1.3a
requires travelers to act prudently in incurring expenses.
Here, Mr. Maruschak's temporary duty site was Washington, D.C. While
performing temporary duty in Washington, D.C., Mr. Maruschak stayed at
the Oakwood Garden Apartments in Alexandria, Virginia, and at the
Georgetown Mews Apartments in Washington, D.C. There are numerous
restaurants and eating facilities located in close proximity (within
walking distance) of the Georgetown Mews Apartments at which Mr.
Maruschak could have eaten his meals. Therefore, there was no apparent
necessity for him to have incurred any expenses in traveling to obtain
meals while staying at the Georgetown Mews. Some travel to obtain meals
during the employee's stay at the Oakwood Garden Apartments may have
been necessary. However, many of the distances involved appear to be
excessive for this purpose.
As stated earlier, under the provisions of FTR para. 1-8.3b, IRS is
required to determine whether actual subsistence expenses, including
travel to obtain meals, were necessarily incurred and were reasonable.
The IRS requested Mr. Maruschak to furnish information as to the
necessity for his travel to obtain meals but he has not provided the
agency with this information. In order for IRS to make the required
determination, it is incumbent upon Mr. Maruschak to offer an
explanation as to the necessity for and reasonableness of his travel to
obtain meals.
CONCLUSION
Given the questionable nature of the expenses claimed here by Mr.
Maruschak and his failure to provide more detailed justification when
requested, we conclude that IRS did not act arbitrarily in denying his
claim in full. Therefore, based on the record before us, the settlement
action by our Claims Group dated July 1, 1982, is affirmed.
B-219161, 65 Comp. Gen. 4
Matter of: Department of Education: Recording of obligations under
the Guaranteed Student Loan Program, October 2, 1985
Appropriation - Deficiencies - Anti-Deficiency Act - Loans Guaranteed
in Excess of Appropriations
The Department of Education administers a variety of entitlement
programs within the Guaranteed Student Loan Program. In recording and
reporting obligations, the Department should: (1) treat loan guarantees
as contingent liabilities, recording obligations as default payments are
required; and (2) record obligations under subsidy provisions of the
program based on best estimates of payment requirements, making any
adjustments as they become necessary. Since both types of obligations
are authorized by law, recording such mandatory obligations, even if in
excess of available funds, would not violate the Anti-Deficiency Act.
This responds to a request by the Deputy Under Secretary for
Planning, Budget and Evaluation, Department of Education (Department)
for our opinion as to the proper method for recording and reporting
obligations for certain program activities under the Guaranteed Student
Loan Program. Specifically, the Department has requested that we review
its traditional method of recording and reporting obligations for the
"mandatory" or entitlement portions of the Guaranteed Student Loan
Program, and that we determine whether current practices are consistent
with the requirements of the Anti-Deficiency Act, 31 U.S.C. Section 1341
(1982). As discussed in further detail below, it is our view that the
Department should cease its current practice of limiting the recording
and reporting of actual and estimated obligations for entitlement
payments to the level of available budgetary resources. The Department
would not violate the Anti-Deficiency Act if the total obligations it
records for these mandatory payments exceed available resources.
BACKGROUND
The Student Loan Guaranteed Program, was established by the Congress
in part B of title IV of the Higher Education Act of 1965, as amended,
20 U.S.C. Sections 1071-87-2 (1982). Through the program, the Federal
Government provides a variety of assistance to qualifying borrowers,
lenders, and to State and nonprofit institutions, through loan
guarantees, interest subsidies, payment of benefits, and allowances.
Some program activities are carried out at the discretion of the
Secretary of Education. See, e.g., 20 U.S.C. Section 1078(f) (special
payments to State and nonprofit institutions for administrative costs).
Others, although administered by the Secretary, constitute entitlements,
for which beneficiaries qualify by meeting the criteria specified in the
Act. See, e.g., 20 U.S.C. Section 1078 (interest subsidy); 20 U.S.C.
Section 1080 (default payments under loan guarantee agreements); 20
U.S.C. 1087 (loan repayments at death, disability or bankruptcy of
borrower).
The Department's submission, in describing its current practices for
recording and reporting obligations under the mandatory provisions of
the Guaranteed Student Loan Program, distinguishes between obligations
arising from loan guarantees and thos arising from subsidies:
1. Sections 430 and 431 (of the Higher Education Act of 1965,
20 U.S.C. Sections 1080-81) direct the Secretary to pay the lender
upon the default of student borrowers. Section 437 directs the
Secretary to repay loans in case of the death, disability, or
bankruptcy of student borrowers. Obligations are recorded and
reported upon the receipt and approval of claims for payment.
Obligations are not made and are not recorded or reported in
excess of available budgetary resources.
2. Section 428(a)(3)(A) (20 U.S.C. Section 1078(a)(3)(A))
directs the Secretary to pay a portion of the interest due to the
lender on behalf of student borrowers. Section 438(b)(1) (20
U.S.C. Section 1087-1(b)(1)) directs the payment of special
allowances to lenders. Recorded and reported obligations are
estimates based on an estimate of outstanding loans at the end of
each quarter. Payments occur in the following quarter, at which
time adjustments are made to the amounts of previously recorded
estimated obligations. Obligations in excess of resources are not
reported. (Emphasis in original)
The Department states that obligations are considered "recorded" when
posted in the Department's financial accounting system, and are
"reported" by inclusion in the official reports of the Department.
According to the Department, it is difficult to estimate in advance
the specific amount that it will be required to pay out under the
mandatory portion of the Guaranteed Student Loan Program, as costs of
the program are directly affected by changes in economic conditions.
The Department states that it frequently seeks -- and is provided --
supplemental appropriations in cases where its estimates prove to be
low. Where supplemental appropriations are not provided in sufficient
amounts, or are not timely enacted, the Department (1) ceases all
obligational activity and payments under its discretionary programs, and
(2) limits the recording and reporting of obligations for mandatory
activities to the amount of available budgetary authority. The
Department's submission seeks our views as the propriety of this latter
action and whether it may obligate funds for mandatory expenditures in
excess of availbale budgetary authority without violating the
Anti-Deficiency Act.
DISCUSSION
The first issue concerns the manner in which the Department has been
and should be recording actual and, where appropriate, estimated
mandatory obligations arising under the Guaranteed Student Loan Program.
These mandatory obligations are of two types -- loan guarantees and
subsidies -- and each will be considered in turn.
Recording Obligations Arising From Loan Guarantees. This Office has
previously addressed the question of obligating funds under Federal loan
guarantee programs. In a recent case involving the Farmers Home
Administration's guaranteed loan programs, we stated the rule that loan
guarantees are to be accounted for as contingent liabilities, with no
recordable obligation arising until a default has occurred and the
Government's liability established:
* * * Our Office has taken the position that a loan guarantee
is only a contingent liability that does not meet the criteria for
a valid obligation under 31 U.S.C. Section 200. Ordinarily, when
a loan is guaranteed by the Federal Government, an obligation is
only recorded if, and when, the borrower defaults -- and a Federal
outlay is necessarily required to honor the guarantee. This will
not usually take place, if at all, in the same fiscal year in
which the loan guarantee was initially approved. * * * Thus, we
have held that it is not necessarily required that funds be
available in the underlying revolving fund, or elsewhere, before
the agency may approve a loan guarantee so long as the guarantee
itself is authorized and within whatever annual monetary limits
Congress has placed on it. 60 Comp. Gen. 700, 703 (1981).
See also B-214172, February 20, 1985, 64 Comp. Gen. 282; 58 Comp.
Gen. 138, 147 (1978).
As we understand the Department's procedures for recording and
reporting obligations arising out of its loan guarantee program, they
conform in part to the principles set forth in the quoted decision.
That is, the Department does not record an obligation until one of the
contingencies set forth in the statute (loan default, or the death,
disability, or bankruptcy of the borrower) has occurred. This is the
correct procedure. However, we do not believe that the Department can
legitimately refuse to record an obligation once one of the
contingencies has occurred, even if the Department does not have
sufficient budgetary resources to liquidate the total obligations so
recorded. Under the terms of the statute (and presumably the loan
guarantee agreement as well), the Department becomes legally obligated
to reimburse the beneficiary 8 the guarantee for any loss it has
suffered once it has verified that the borrower had defaulted, or that
any one of the other contingencies has occurred. The nature of the
Department's obligation in this respect is clearly set forth in 20
U.S.C. Section 1080 as follows:
Upon default by the student borrower on any loan covered by
Federal loan insurance pursuant to the part * * * , the insurance
beneficiary shall promptly notify the Secretary, and the Secretary
shall if requested (at that time or after further collection
efforts) by the beneficiary * * * pay to the beneficiary the
amount of the loss sustained by the insured upon that loan as soon
as that amount has been determined. /1/
Our holding in 39 Comp. Gen. 422 (1959), which involved a similar
issue, is relevant here. In that decision we said the following:
The general rule is that expenditures are properly chargeable
to the appropriation for the fiscal year in which the liablity
therefore was incurred. There can be no doubt but that when
administrative action is taken to grant pay increases effective on
a specified date, there is imposed a legal liability upon the
Government for payment of the additional compensation. Such
action is sufficient to create an obligation against the
appropriation current at the time the liability is incurred. The
fact that the appropriation thereby obligated may be insufficient
to discharge the obligation is immaterial insofar as determining
when the oglibation arises and the appropriation properly
chargeable therewith. See 17 Comp. Gen. 664; 18 id. 363; 31 id.
608, 38 id. 81. 39 Comp. Gen. at 424-25.
The decision also stated that an agency's failure to properly record
and report obligations as they occur "would violate the reporting
requirements" of 31 U.S.C. Section 1501(b). Id. at 425.
Similarly, when the borrower of a guaranted student loan defaults,
the Department becomes legally liable to pay the beneificiary of its
guarantee and a valid obligation is thus created. The Department does
not have the authority or the discretion, for whatever reason, to alter
the date on which the Government's obligation to honor its guarantee
actually arises by artificially changing the manner in which the
obligation is recorded.
Recording Subsidy Payments. The second category of obligations at
issue here are those resulting from mandatory program payments to
lenders, including interest subsidies, under 20 U.S.C. Section 1078(a),
and special allowances, under 20 U.S.C. Section 1087-1(b)(1). Unlike
loan guarantees which are contingent liabilities until loan default or
some other triggering event has occurred, these subsidy payments are in
the nature of firm obligations of an indeterminate amount. As is true
of other entitlement programs, these obligations arise by operation of
law. Because, however, the number of eligible beneficiaries will vary
-- depending on external factors -- the exact amount of the Government's
obligation cannot be determined in advance (although it may of course,
be estimated). Under the statute, the Department is legally obligated
to pay these amounts to the lender. See 20 U.S.C. Sections
1078(a)(3)(A), 1087-1(b)(3).
In similar cases involving subsidy or other entitlement programs, our
decisions have emphasized that the Government's "obligation" is the full
amount required for payment under the applicable statute, even though
that actual amount may not be finally determined until later. Thus, in
B-164031(3).150, September 5, 1974, we held in essence that the
obligation of the Secretary of Health, Education, and Welfare to make
quarterly grant entitlement payments to States arose by operation of
law, and that an erroneous estimate recorded by the Secretary did not
alter this obligation. Similarly, in 63 Comp. Gen. 525 (1984) we held
that when amounts are payable to recipients based on a statutory
formula, the actual amount that is ultimately determined to be payable
under the formula may be treated as obligated whether or not formal
recordation has occurred. It has been our underlying position in these
and other cases that under 31 U.S.C. Section 1501(a)(5)(A), /2/ the
appropriate amount to be recorded initially as an obligation is the
agency's best estimate of the Government's ultimate liability under the
relevant entitlement legislation. See B-212145, September 27, 1985; 63
Comp. Gen. 525 (1984). Subsequent adjustments to the recorded estimate
should be made if necessary. /3/
In accordance with the foregoing, it is our view that henceforth the
Department should record obligations for mandatory subsidy payments
(including special allowances) based on its best estimate of what those
obligations are, even if the total of all such obligations exceeds
available budgetary resources. Furthermore, if the estimate
subsequently proves to be erroneous, the Department should make whatever
adjustments are necessary so that the total of recorded obligations
accurately reflects the actual amount of obligations incurred.
ANTI-DEFICIENCY ACT
The remaining issue is whether the Department would violate the
Anti-Deficiency Act's prohibition on obligating or expending funds in
excess of available appropriations if the obligations it records for
either type of mandatory payment -- guarantees or subsidies -- exceeds
available budgetary resources. /4/ As indicated in the submission, the
Department's past reluctance to record obligations for both types of
activities in amounts exceeding available recourses resulted from its
desire to avoid any possible violation of the Anti-Deficiency Act. The
relevant portions of the Anti-Deficiency Act are set forth at 31 U.S.C.
Section 1341(a)(1) as follows:
An officer or employee of the United States Government * * *
may not --
(A) make or authorize an expenditure or obligation exceeding an
amount available in an appropriation or fund for the expenditure
or obligation; or
(B) involve (the) government in a contract or obligation for
the payment of money before an appropriation is made unless
authorized by law.
The prohibitions contained in the Anti-Deficiency Act are not
intended to ensure compliance with the provisions of 31 U.S.C. Section
1501, which govern the largely ministerial task of recording obligations
as they arise. See, e.g., B-133170, January 29, 1975. In fact, if an
agency incurs obligations in excess of available appropriations without
authority to do so, the agency would be in violation of the
Anti-Deficiency Act regardless of whether the obligations were recorded
by the agency. 62 Comp. Gen. 697, 700 (1983). Nevertheless, we do not
believe that the Department would violate the Anti-Deficiency Act if the
obligations in question are incurred to fulfill the mandatory provisions
of the Guaranteed Student Loan Program.
The prohibitions contained in the Anti-Deficiency Act are directed at
discretionary obligations entered into by administrative officers. See,
e.g., 42 Comp. Gen. 272, 275 (1962); 63 Comp. Gen. 308, 312 (1984). As
our Office has said, the Anti-Deficiency Act specifically "provides an
exception for obligations which are authorized by law to be made in
excess of or in advance of appropriations." B-196132, October 11, 1974.
See also 61 Comp. Gen. 586 (1982); B-156932, August 17, 1965.
Both types of mandatory obligations at issue here fall into the
category of obligations authorized by, or perhaps even mandated by, law.
Thus, when Congress authorizes the Department to extend loan guarantees
in face amounts which may at any time far exceed available funding, and
then requires the Department to promptly pay beneficiaries of those
guarantees upon default by the borrower, it is expressly authorizing the
Department to incur obligations in excess of or in advance of
appropriations. /5/
In clear recognition of the possibility that default payment
obligations may exceed available resources, 20 U.S.C. Section 1081(b)
provides that if, at any time, moneys in the Student Loan Discount Fund
(from which default payments are to be made) "are insufficient to make
payments in connection with the default of any loan insured by the
Secretary (of Education)", the Secretary is authorized, to the extent
provided in advance in an appropriation act, to borrow needed funds from
the Secretary of the Treasury. Thus, the statutory language itself
contemplates the existence of a possible deficiency situation, providing
another indication that the Anti-Deficiency Act does not apply. See 61
Comp. Gen. 644, 650 (1982).
The situation with respect to subsidy payments is essentially the
same. As stated earlier, the Department's obligation to pay interest
subsidies (including special allowances) to lenders arises by operation
of law and is mandated by the statute. None of the Department's
administrative officers has any control over the amount the Department
will be required to pay under the statutory provisions which state that
the holder of a loan has a "contractual right" against the United States
to receive these payments. 20 U.S.C. Sections 1078(a)(3)(A),
1087-1(b)(3). This is definitely not the type of discretionary expense
the Anti-Deficiency Act was intended to restrict, and clearly falls
within the "unless authorized by law" exception contained in that Act.
To summarize, it is our position that the Department should record
and report both types of mandatory obligations under the Guaranteed
Student Loan Program as they arise regardless of the total amount of
budgetary resources that are available. In doing so, the Department
should record actual obligations or, where appropriate, its best
estimate of what those obligations will be, making any adjustments that
are subsequently required. The recording of such obligations by the
Department, even if in excess of available funding, would not violate
the Anti-Deficiency Act.
FOOTNOTES
(1) Of course, even under this provision the Department might not be
able to make the required payment on a defaulted loan until sufficient
funds were available for it to do so. The unavailability of funds,
however, should not have any impact on the agency's responsibility to
record obligations as they occur.
(2) This section reads as follows:
(a) An amount shall be recorded as an obligation of the United
States Government only when supported by documentary evidence of
--
(5) a grant or subsidy payable --
(A) from appropriations made for payment of, or contributions
to, amounts required to be paid in specific amounts fixed by law
or under formulas prescribed by law * * * .
(3) In an earlier case, we stated that we had no objection to the
Civil Aeronautics Board's recording of obligations for mail rate subsidy
payments at the time of payment rather than as obligations arose.
B-126372, September 18, 1956. We stated that estimates of finalized
obligations should not be recorded as obligations under the predecessor
to 31 U.S.C. Section 1501(a)(5). To the extent that decision is
inconsistent with our opinion herein, it is overruled.
(4) Since the analysis of this issue is essentially the same whether
guarantee payments or subsidy payments are involved, they are discussed
together.
(5) In this regard, we note that the Congress has historically
provided supplemental appropriations to the Department to cover
obligations in excess of amounts provided under the regular
appropriation acts. See, e.g., H.R. Rep. No. 402, 97th Cong. 2d Sess.
11 (1982); S. Rep. No. 224, 96th Cong., 1st Sess. 83 (1979). See also
H.R. Rep. No. 911, 98th Cong., 2d Sess. 122 (1984), which reads as
follows:
It is possible that the amount requested will not be adequate
to cover the full year cost of the program as presently authorized
due to changes in program participation and interest rates. Since
this is an entitlement program, a supplemental budget request will
be required if program appropriation levels are inadequate.
B-219361.2, 65 Comp. Gen. 1
Matter of: EHE National Health Services, Inc., October 1, 1985:
Contracts - Protests - General Accounting Office Procedures -
Timeliness of Protest - Solicitation Improprieties - Apparent Prior to
Bid Opening/Closing Date for Proposals
A protest of the use of an oral solicitation and of deficiencies in
the oral solicitation should have been filed either prior to the time
protester's proposal was submitted or within 10 days of receiving
inquiries on its proposal from the agency.
Contracts - Architect, Engineering, etc. Services - Procurement
Practices - Brooks Bill Applicability
Brooks Acts procedures for contracting are only to be used for
architect-engineer solicitations and are not to be used to procure
health support services.
Contracts - Protests - Preparation - Costs - Compensable
Recovery of the costs of filing and pursuing a protest, including
attorney's fees, and proposal preparation costs is appropriate where
General Accounting Office (GAO) recommends that option to exceed
contract not be exercised since the protester does not thereby get an
opportunity to compete for the basic contract period. Federal
Properties of R.I., Inc. B-218192.2 May 7, 1985, 85-1 C.P.D. 508 and The
Hamilton Tool Company, B-218260.4, Aug. 6, 1985, 85-2 C.P.D. 132,
distinguished.
EHE National Health Services, Inc. (NHS) protests the award of
contract No. GR 85-0008 to provide occupational health services at the
National Science Foundation (Foundation). NHS asserts that the
Foundation improperly used procedures contained in the Federal
Acquisition Regulation (FAR) applicable to architect-engineer (A-E)
services and improperly used an oral solicitation for this contract.
The protest is sustained.
In response to a November 16, 1984 oral solicitation for health care
support services at the Foundation's headquarters for an indefinite
period beginning on or about February 1, 1985, NHS submitted a proposal
to the Foundation on December 28, 1984. On two subsequent occasions in
January 1985, NHS responded to inquiries from the Foundation, supplying
additional information on the medical director and the nursing and
secretarial staff that NHS was proposing to provide.
On February 14, 1985, NHS was informed by the Foundation that a
contract had been awarded to another offeror on February 1. NHS was
informed at that time that the award was made on factors other than
price.
NHS filed a protest on February 26 with the contracting officer,
alleging that the Foundation had failed to comply with the FAR. By
letter of May 23, the Foundation denied the protest and NHS protested to
our Office on June 5.
NHS objects to the oral solicitation, asserting primarily that its
use was improper because the Foundation knew in mid-November 1984 of its
contracting needs and therefore had adequate time, 2 1/2 months, to
issue a written solicitation, conduct negotiations and make an award.
NHS contends that the Foundation failed to identify the factors other
than price that were major considerations in awarding the contract.
Further, NHS contends that the oral solicitation was not documented as
required, that NHS was not notified whether its proposal was in the
competitive range, that no discussions were held with NHS and best and
final offers were not requested, and that no preaward or post award
notice was given to NHS. Finally, NHS disputes the Foundation's
contention that certain negotiated procurement procedures in Part 15 of
the FAR did not have to be followed because the Foundation had the
authority to procure the health care support services under the
procedures applicable to the procurement of A-E services (FAR Part 36).
Portions of this protest are untimely. Our Bid Protest Regulations
require that protests of solicitation deficiencies be filed prior to the
closing time for receipt of proposals, 4 C.F.R. Section 21.2(a)(1)
(1985), while all other protests must be filed within 10 days of when
the basis for protest was known or should have been known. 4 C.F.R.
Section 21.2(a)(2). Here, the protester knew at the outset that an oral
solicitation was being used, and we find that at least by the time it
received and responded to the Foundation's inquiries in January, NHS was
on notice of the fact that the oral solicitation was not resulting in an
immediate award. Thus, we think NHS' objection to the use of an oral
solicitation should have been filed either prior to the time it
submitted its proposal or, at the latest, within 10 days of receiving
the Foundation's inquiries in January. Similarly, the protester's
objection to the absence of evaluation factors other than price also
should have been filed prior to proposal submission.
Regarding the merits of the protest, it appears that the Foundation
thought that it could contract for the health/medical support services
using the procedures in Part 36 of the FAR relating to contracting for
A-E services. The contracting officer stated that health services are
similar to A-E services as they are professional in nature and thus
should be treated similarly. The contracting officer determined that
certain requirements in Part 15 of the FAR concerning procedures to be
used for negotiated contracts were not to be followed. For example, the
Foundation planned to rate the proposals technically and then to
negotiate with the highest ranked proposer. This procedure is
consistent with Part 36 of the FAR, but not Part 15 relating to
negotiated contracts generally.
Part 36 of the FAR prescribes policies and procedures peculiar to
contracting for construction and A-E services and implements provisions
of the Brooks Act, 40 U.S.C. Section 541 et seq. (1982), which by their
express provisions are restricted to A-E firms. See Work System Design,
Inc., B-213451, Aug. 27, 1984, 84-2 C.P.D. Paragraph 226. They do not
apply to anything other than A-E Services, and thus their use in
contracting for health or medical services was totally inappropriate.
The fact that both A-E and medical services may be supplied by
professionals provides no basis for using Brooks Act procedures when
medical services are being procured.
Although admitting that it used A-E procedures to conduct this
procurement, the Foundation contends that its actions may be construed
as fulfilling the requirements for negotiated procurements in Part 15 of
the FAR. For example, the Foundation states that NHS was always
considered to be in the competitive range, that discussions were held
when resumes of the proposed medical director, and nursing and clerical
staff were requested, and that the resume request was, in fact, a
request for best and final offers.
We do not agree that the procedures used here complied with
regulatory requirements. First, it is evident that the Foundation did
not consider price in evaluating proposals, even though agencies may not
ignore price in evaluating proposals. FAR, Section 15.610(a). Also,
even assuming that the Foundation's requests for additional information
constituted adequate discussions, the Foundation did not comply with
FAR, Section 15.611 concerning best and final offers. Agencies are
required to conclude discussions by notifying offerors that discussions
are concluded and calling for best and final offers, with a common
cutoff date and time that allows a reasonable opportunity for the
submission of written best and final offers. These requirements simply
were not met here, and thus we cannot conclude that NHS had a meaningful
opportunity to submit a best and final offer or that all offerors were
given a common cutoff time for their final submissions. Accordingly, we
sustain NHS' protest.
The Foundation informs us that the current contract covers the period
through September 30, 1985, and provides for the negotiation of
additional 1-year options. We are recommending that the Foundation not
negotiate an additional 1-year contract with the incumbent but rather
resolicit using the appropriate procedures.
NHS requests reimbursement of the costs of preparing its proposal and
the costs of filing and pursuing its protest, including attorney's fees.
We will allow a protester to recover its 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 is not one delineated in 4 C.F.R. Sections
21.6(a)(2-5). In light of the recommendation here, and since NHS, by
the agency's own admission, was one of three firms in line for the
award, we believe it had a substantial chance for receiving the award.
Therefore, the recovery of proposal preparation costs is granted. 4
C.F.R. Section 21.6(e).
Our Regulations limit the recovery of the costs of filing and
pursuing a protest to situations where the protester unreasonably is
excluded 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). We have constued this to mean that
where the protester is given an opportunity to compete for the award
under a corrected solicitation, the recovery of the costs of filing and
pursuing the protest are generally inappropriate. See Federal
Properties of R.I., Inc., B-218192.2, May 7, 1985, 85-1 C.P.D. Paragraph
508 and The Hamilton Tool Company, B-218260.4, Aug. 6, 1985, 85-2 C.P.D.
Paragraph 132.
In this case, however, the basic 1-year contract has almost expired.
Therefore, although pursuant to our recommendation NHS will have an
opportunity to compete for subsequent contracts, it has lost any
opportunity to compete for and be awarded the contract for the basic
contract period. Accordingly, the basis for our denial of the costs of
filing and pursuing a protest, the opportunity to compete for
essentially the same solicitation, which was present in Federal
Properties and The Hamilton Tool Company, supra, is not present here.
Therefore, we allow recovery of NHS' costs of filing and pursuing the
protest, including attorney's fees.
B-220572.2, 64 Comp. Gen. 919
Matter of: Firearms Training Systems, Inc., September 30, 1985:
Contracts - Protests - General Accounting Office Procedures -
Timeliness of Protest - Solicitation Improprieties - Apparent Prior to
Bid Opening/Closing Date for Proposals
Protest against agency use of allegedly proprietary data in
competitive solicitation, not filed until after proposal due date, is
dismissed as untimely since protest basis was apparent from the face of
the solicitation. 4 C.F.R. 21.2(a)(1) (1985).
Firearms Training Systems, Inc. (FTS), protests the disclosure by the
United States Army of allegedly proprietary data in solicitation No.
DABT60-85-R-0155.
FTS contends that in late 1984, it had discussions with Army
personnel and, in December 1984, submitted an unsolicited proposal
containing proprietary data. On August 6, 1985, the above solicitation
was issued and FTS submitted a proposal in response. FTS states that the
Army intends to award the contract to another firm.
We dismiss FTS's protest as untimely under 4 C.F.R. Section 21.2(a)(
1) (1985), since it was not filed prior to the closing date for receipt
of proposals and is based on an alleged impropriety which was apparent
prior to the closing date. Upon review of the solicitation, FTS should
have known that its allegedly proprietary data was being used, but
participated in the procurement before filing its protest.
B-219348; .2, 64 Comp. Gen. 915
Matter of: Reyes Industries, Inc., September 30, 1985
Bids - Invitation for Bids - Cancellation - Erroneous - Reinstatement
Recommended
Contracting officer's determination to cancel an IFB based on
speculation that a modification which made the protester's bid low may
not have been mailed when a certified mail receipt shows it was mailed
lacks a reasonable basis since the Postal Service found no evidence of
irregularities.
Reyes Industries, Inc. (Reyes), protests the Defense General Supply
Center's (DGSC) cancellation of invitation for bids (IFB) No.
DLA400-85-B-5244, on May 29, 1985, and its resolicitation of the
requirement.
DGSC canceled the solicitation because of its doubt concerning the
authenticity of evidence submitted by the protester to establish the
date of mailing a price modification to its bid. The agency concluded
that, in view of its doubt, the integrity of the competitive system
would be better served by canceling the solicitation than by an award to
the protester. Reyes, on the other hand, argues that the cancellation
is arbitrary.
We sustain the protest.
At bid opening, on March 21, 1985, the low bidder was Sierra
Corporation at $34.17 per unit, f.o.b. destination, for 55,000 folding
cots. Reyes was second low at $34.60 per unit, f.o.b. destination
(Reyes also submitted an f.o.b. origin bid). A few hours after bid
opening, Reyes called the DGSC buyer to advise that on March 12 it had
sent a bid modification which lowered its price. On March 26, the
contracting officer received Reyes' certified letter of March 12,
wherein Reyes lowered its f.o.b. destination price from $34.60 per unit
to $33.95 per unit. Reyes also submitted a receipt for certified mail
with a postmark date of March 12, 1985.
Under the IFB late bid clause, a late bid or late bid modification
may be considered, provided it is received prior to award and it was
mailed by registered or certified mail at least 5 days prior to the bid
opening. The clause further provides that the date of mailing of a late
bid or bid modification sent by registered or certified mail is the
postmark on the envelope or on the original receipt.
Although the Reyes' bid modification qualified for consideration
under the late bid clause, the contracting officer became suspicious of
the circumstances surrounding its submission. He noted that the March
12 modification apparently took 14 days to arrive from Texas to DGSC
Headquarters at Richmond, Virginia, in contrast to the Reyes bid itself,
which took only 3 days to arrive. He further noted that the postage
meter impression on the envelope was from Irving, Texas, dated March 12,
while the receipt showed a Richardson, Texas, postmark dated March 12.
As a result of these suspicions, the DGSC buyer called the Irving,
Texas Post Office, and reports being advised by a Postal Service
employee that a letter metered in Irving and later certified in
Richardson should have been remetered in Richardson.
In addition, the contracting officer noted that a similar situation
involving Reyes and the DGSC installation arose in June 1984 (IFB No.
DLA400-84-B-5824). In that case, when bids were opened on June 6, 1984,
Sierra was low for the same item at $36.53, and Reyes was second low at
$36.60. Both bidders claimed preference as labor surplus area (LSA)
concerns. On June 13, Reyes called the agency to report that its bid
had been revised before bid opening to $36.40, in a bid modification
letter dated May 31. In a confirming letter, Reyes forwarded a copy of
its May 31 letter and a copy of a certified mail receipt dated June 1,
from Richardson, Texas. DGSC never received the original May 31 bid
modification letter. As it turned out, however, it did not matter.
DGSC determined that Sierra did not qualify as an LSA concern for that
procurement, so that its bid of $36.53 was evaluated at $37.33, using
the 2.2 percent factor for non-LSA bidders. This left Reyes the low
bidder at $36.60, and its price reduction was then accepted.
Because of his concerns, the contracting officer asked the Postal
Service to examine Reyes' bid modification mailing to determine if any
irregularities existed. An examination was conducted, and essentially
the Postal Service reported that it did not find any irregularities.
Nevertheless, the contracting officer remained suspicious. He felt
that, in light of all the circumstances, a serious question arose as to
where or when the Reyes bid modification was actually mailed. He
decided to cancel the solicitation and resolicit the requirement under
negotiated procedures.
In its protest to our Office, Reyes states that the facts surrounding
the March 12 mailing are not unusual. It explains that its March 12 bid
modification was metered at a private meter machine in Irving and then
delivered to, and certified at, a United States Post Office in
Richardson, Texas, when Reyes' president dropped the letter off on his
way to take care of other business.
As for the alleged failure of the Richardson Post Office to have
remetered the letter, Reyes has submitted a statement dated July 11,
1985, cosigned by Mr. Rod Currey, the Irving Postal Service employee who
was called by the DGSC buyer, and by Reyes' president. The statement
indicates that the DGSC buyer misunderstood Mr. Currey's response, which
concerned the use of a postage meter for a letter at one post office and
then having the letter certified and mailed at another post office.
According to the statement, Mr. Currey responded that such a letter
should have been certified and mailed at the same post office. The
statement concludes that in the case of a letter metered by a private
meter machine, remetering is not required and that it is "not uncommon
for a piece of mail which is metered in the city to be certified and
mailed at a post office in another city."
A decision to cancel an IFB after bid opening will not be disturbed
unless the decision lacks a reasonable basis. Jackson Marine Companies,
B-218882, et al., April 10, 1984, 84-1 CPD Paragraph 402. We think the
decision to cancel this IFB lacked a reasonable basis.
There is absolutely no evidence of any irregularities connected with
the mailing of Reyes' March 12 bid modification. While Sierra in its
comments to the protest has suggested that it is relatively easy for a
bidder to buy a postmark stamp or to mail a certified letter to itself
and reuse the envelope, the Postal Service investigated these
possibilities and found that the Reyes bid modification envelope had not
been previously used and that the postmark on the Reyes receipt appears
to have been made by a Richardson Post Office stamp.
Specifically, the Postal Service Criminal Laboratory report of May 3,
1985, concluded that the postmark on Reyes' certificate is generally
consistent with the hand stamps used at the Richardson Post Office, but
that variations do exist which require further examination prior to any
positive finding. The contracting officer reported to us that the
laboratory was asked to conduct this examination. DGSC has not reported
to us any further on the matter, but Reyes reports that the Postal
Service investigation was completed and no irregularity in the postmark
was found.
Moreover, Reyes has refuted the agency's position that the March 12
envelope should have been remetered at the Richardson Post Office. Thus
it appears that the letter was properly handled at the post office.
DGSC's refusal to make award to Reyes under the IFB boils down to the
fact that Reyes was involved in a similar bid modification situation
last year. In the agency's opinion, it is extremely unlikely that Reyes
would have mailed a bid modification that was not delivered in 1984, and
then have mailed another bid modification that was delivered 14 days
after mailing in 1985, both of which resulted in Reyes offering the
lowest apparent bid prices. The agency therefore questions whether
Reyes' bid modification was actually mailed on March 12.
We can understand the agency's initial concern with the mailing of
Reyes' bid modification, and its request for an investigation by the
Postal Service. Once the Postal Service completed its investigation and
found no irregularities, the agency's concern should have been resolved
in favor of considering the modification. DGSC's refusal to accept
Reyes' modification at this point is based solely on speculation and
suspicion. Since Reyes has submitted the requisite evidence of timely
mailing, the bid should be considered as modified.
Accordingly, we recommend that the resolicitation be canceled, that
the IFB be reinstated, and that an award be made to Reyes, if otherwise
proper.
B-217403, 64 Comp. Gen. 912
Matter of: Corps of Engineers - Prevailing Rate Employees Effect of
Pay Cap on Pay Changes Resulting From Reassignment Between Wage Areas,
September 30, 1985:
Compensation - Prevailing Rate Employees - Wage Schedule Adjustments -
Statutory Limitation - Applicability
The cap on salary rate increases for prevailing rate employees during
fiscal year 1980 and succeeding years does not restrict the pay changes
required to adjust the appropriate rate of pay for prevailing rate
employees who were "transferred in place" between the Chicago and Rock
Island Districts of the Corps of Engineers as a result of a realignment
of District boundaries on June 29, 1980. These adjustments did not
result from a wage survey and are, therefore outside the scope of the
pay cap legislation.
The issue here is whether the statutory pay cap on the salary rates
of prevailing rate employees in effect for fiscal year 1980 and
succeeding years applies to pay adjustments for prevailing rate
employees of the Army Corps of Engineers who were "transferred in place"
on June 29, 1980, from the Chicago District to the Rock Island District
as a result of a realignment of district boundaries. This adjustment
places such employees on the same wage schedules applicable to the rest
of the employees in their new district. /1/ For the reasons set forth
below, we hold that the pay cap does not apply to the adjustments in
question.
The National Federation of Federal Employees, as the representative
of prevailing rate employees in the Rock Island District, Corps of
Engineers, Rock Island, Illinois, contends that those prevailing rate
employees who were "transferred in place" from the Chicago District to
the Rock Island District on June 29, 1980, as a result of a realignment
of district boundaries were and continue to be erroneously denied their
proper rates of pay since the date of the transfer. This results from
the Corps of Engineers' refusal to apply the wage schedules pertaining
to the Rock Island District to these employees.
During fiscal years 1980 through 1984 there were caps enacted on the
pay increases which could be allowed prevailing rate employees. /2/ The
pay increase cap in effect for fiscal year 1980, and effective at the
time the employees in question were transferred to the Rock Island wage
area, provided:
(a) No part of any of the funds appropriated for the fiscal
year ending September 30, 1980, by this Act or any other Act, may
be used to pay the salary or pay of individual in any office or
position in an amount which exceeds the rate of salary or basis
pay payable for such office or position on September 30, 1979, by
more than the overall average percentage increase in the General
Schedule rates of basic pay, as a result of any adjustments which
take effect during such fiscal year under section 5343 of title 5,
United States Code, if such adjustment is granted pursuant to a
wage survey (but only with respect to prevailing rate employees
described in section 5343(a)(A) of that title)." Section 613(a),
Treasury, Postal Service, and General Government Appropriation
Act, 1980, Public Law 96-74, September 29, 1979, 93 Stat. 559,
576. (Italic supplied.)
Similar restrictions on increases in wage rates of prevailing rate
employees were enacted each year since fiscal year 1979. The
legislative history of the first of these caps on wage increases for
prevailing rate employees, which was for fiscal year 1979, shows that
the cap was enacted so that all federal employees, including prevailing
rate employees and General Schedule employees, would be treated equally.
See S. Rep. No. 939, 95th Cong., 2d Sess. 55-56 (1978).
The Office of the District Engineer, Rock Island District, contends
that section 613 of Public Law 96-74, set forth above, prevents the
reassignment of the transferred employees to the Rock Island District
wage schedule as would normally be the practice under Federal Personnel
Manual Supplement (FPM) 532-1, (Inst. 17 April 14, 1980). Specifically,
section S11-10, "Special Pay Plan For Corps of Engineers, U.S. Army
Navigation Lock and Dam Employees," of FPM Supplement 532-1 provides as
follows:
a. Pay policy Nonsupervisory, leader, and supervisory
prevailing rate employees of the Corps of Engineers, U.S. Army,
who are engaged in operating navigation lock and dam equipment, or
who repair and maintain navigation lock and dam operating
machinery and equipment, are subject to one of the following pay
provisions.
(2) If navigation lock and dam installations under a District
headquarters office are located in more than one FWS wage area,
the operating and repair employees are paid from a special
schedule having rates identical to the regular FWS wage schedule
authorized for the headquarters office.
The Commanding Officer explains that on June 29, 1980, as a result of
a realignment of District boundaries, eight locks and dams on the
Illinois Waterway were "transferred in place" from the Chicago District
to the Rock Island District. Under the FPM Supplement provision quoted
above, when employees under a District headquarters office are located
in more than one federal wage schedule wage area, as is the case here,
the employees all should be paid on the wage schedule for the wage area
containing the Headquarters. The District Corps of Engineers contends
that it was unable to reassign the transferred employees to the Rock
Island District wage schedule, as would be normal practice pursuant to
the cited FPM guidance, because in changing from one wage schedule to
another the employees would receive a pay increase in excess of that
allowed under the pay cap legislation quoted above. The District
Engineer agrees with the National Federation of Federal Employees that
the situation created is inequitable in that employees are performing
similar work within the Rock Island District, but are receiving
substantially different wage rates for the performance of that work.
We note that in addition to section S11-10 of FPM Supplement 532-1,
cited by the District Engineer as providing applicable guidance for
applying proper pay schedules, section S8-8 of the same FPM Supplement
is also relevant. That paragraph deals with employees who are in wage
areas or parts of wage areas that are consolidated with other wage
areas. When that occurs, the employee is placed in the same grade and
step on the new wage schedule as he was in on the old wage schedule,
unless that would result in a lower rate of pay. The paragraph goes on
to set out the rules to follow when there would be a lower rate of pay
in the new wage schedule. Thus, under both of these provisions of the
FPM Supplement, if the pay caps had not been enacted, there is no
question that the employees who were "transferred in place" would have
been placed on the new wage schedules.
The Office of Personnel Management issued FPM Bulletin 532-52,
December 22, 1983, to provide agencies with guidance in applying the
fiscal year 1984 limitations on appropriated and nonappropriated fund
wage schedule pay increases for the Federal Wage System. As noted
earlier, the fiscal year 1984 limitation is substantively the same as
that pertaining for fiscal year 1980. The FPM Bulletin states at
paragraph 5 as follows:
Other Actions Not Affected
It should be noted that this (fiscal year 1984) pay increase
limitation under Public Law 98-151 does not restrict other pay
changes, such as promotions, step increases, transfers or
reassignments between wage areas, and reclassifications. (Italic
in original.)
All of the above sources deal with pay changes that arise for reasons
other than wage surveys, for example, area consolidations or
realignments, step increases, transfers, or reassignments. We believe
that the "transfer in place" that occurred here is more analogous to
these actions than it is to a wage survey change in salary rates. The
legislative pay cap applies to salary rate changes arising from a wage
survey. We recently reviewed the application of pay cap legislation to
the initial establishment of a new wage schedule under the provisions of
the Monroney Amendment, 5 U.S.C. Section 5343(d). In that case, 64
Comp. Gen. 227 (1985), we held that the pay cap applied because the new
wage schedule was the direct result of a wage survey. Here, the
"transfer in place" of the employees from one district to another led,
under provisions of the FPM Supplement 532-1, to application of a
different, but existing wage schedule. Any increase in pay rates
because of the use of the "new" (for these particular employees) wage
schedule is the result of the "transfer in place," not a wage survey.
There is nothing in the express language of the pay caps or in their
legislative histories which would require or support the view that the
restriction on increases in wage rates of prevailing rate employees
contained in the Treasury, Postal Service, and General Government
Appropriations Act of 1980, prohibits the application of the wage
schedules in effect for the Rock Island District to the prevailing rate
employees transferred into that District from the Chicago District on
June 29, 1980. The pay cap language contained in the appropriations
acts is specifically self-limiting to pay increases ("adjustments")
"granted pursuant to a wage survey." The wage adjustments required in
the circumstances of this case are the result of a transfer or
realignment of wage districts and not as a result of any particular wage
survey. Therefore, the maximum salary increase restriction for
prevailing rate employees is not applicable to the employees in
question.
In view of the above, the pay caps do not serve as a bar to applying
the applicable wage rate schedules for the Rock Island District to the
employees transferred thereto on June 29, 1980, and the Corps of
Engineers may legally institute the necessary wage adjustments and make
retroactive pay adjustments effective as of June 29, 1980.
FOOTNOTES
(1) This matter has been presented by Mr. James M. Peirce, President,
National Federation of Federal Employees, under our procedures set forth
at 4 C.F.R. Part 22 for decisions on appropriated fund expenditures
which are of mutual concern to agencies and labor organizations. The
Commanding Officer, Rock Island District Corps of Engineers, submitted
comments for that agency.
(2) For fiscal year 1984, see section 2202 of the Deficit Reduction
Act of 1984, Public Law 98-369, July 18, 1984, 98 Stat. 494, 1058;
section 202(b) of the Omnibus Budget Reconciliation Act of 1983, Public
Law 98-270, April 18, 1984, 98 Stat. 157, 158; and section 110 of
Public Law 98-107, October 1, 1983, 97 Stat. 733, 741. For fiscal year
1983, see section 107 of Public Law 97-377, December 21, 1982, 96 Stat.
1830, 1909; and section 109 of Public Law 97-276, October 2, 1982, 96
Stat. 1186, 1191. For fiscal year 1982, see section 1701(b) of the
Omnibus Budget Reconciliation Act of 1981. Public Law 97-35, August 13,
1981, 95 Stat. 357, 754. For fiscal year 1981, see section 114 of
Public Law 96-369, October 1, 1980, 94 Stat. 1351, 1356. For fiscal
year 1980, see section 613 of the Treasury, Postal Service, and General
Government Appropriations Act, 1980, Public Law 96-74, September 29,
1979, 93 Stat. 559, 576.
B-217274, 64 Comp. Gen. 907
Matter of: Veterans Administration - Debt Collection by Offset
Against Retirement Fund, Final Salary Check, and Lump-Sum Leave
Payments, September 30, 1985:
Debt Collections - Debt Collection Act of 1982 Applicability
Section 10 (administrative offset) of Debt Collection Act of 1982,
rather than section 5 (salary offset) is applicable to offsets against
payments from Civil Service Retirement and Disability Fund (Retirement
Fund). The Office of Personnel Management regulations implementing
section 5 (5 U.S.C. 5514) and the regulations issued jointly by GAO and
the Department of Justice implementing section 10 (31 U.S.C. 3716) both
provide for offsets against Retirement Fund payments to be governed by
administrative offset provisions of 31 U.S.C. 3716. This is a
continuation of long-standing interpretation and there is no indication
that Act was intended to change it. Therefore, administrative offset
provisions of section 10 apply to payments from Retirement Fund.
Debt Collections - Debt Collection Act of 1982 Applicability
Section 10 (administrative offset) of Debt Collection Act of 1982,
rather than section 5 (salary offset) is applicable to offsets against
former federal employee's final salary check and lump-sum leave payment,
unless they represent the continuation of an offset against current
salary initiated under section 5. In regulations (5 C.F.R. Part 550,
Subpart K) issued by Office of Personnel Management implementing section
5 (5 U.S.C. 5514), it is specifically stated that section 10 (31 U.S.C.
3716) applies to offsets against employee's final salary check and
lump-sum leave payment. Historically both of these payments have been
treated differently than employee's current pay account and both have
been available for involuntary offset for debt collection. This
interpretation of statute by agency charged with its administration is
not unreasonable. Therefore, offsets against employee's final salary
check and lump-sum leave payment are governed generally by 31 U.S.C.
3716. In any event, the 15 percent limitation of 5 U.S.C. 5514 does not
apply.
We have been asked by the Administrator of Veterans Affairs, Veterans
Administration (VA), to issue a decision concerning the application of
the Debt Collection Act of 1982, Pub. L. 97-365, October 25, 1982, 96
Stat. 1749 (Act or Debt Collection Act), to the collection of debts owed
to the United States by offset against a former employee's final salary
check, lump-sum leave payment, and Civil Service Retirement and
Disability Fund (Retirement Fund) payments. Specifically, we have been
asked whether section 5 of the Act, codified as 5 U.S.C. Section 5514,
or section 10 of the Act, codified as 31 U.S.C. Section 3716, governs
the procedures to be used in effecting offsets against the above funds.
For the reasons set forth below, we hold that, with one
qualification, section 10 of the Act, 31 U.S.C. Section 3716, governs in
effecting offsets against an employee's final salary check, lump-sum
leave payment, and Retirement Fund payments. The qualification is that
any offset from the final salary check or lump-sum leave payment which
represents a continuation of an offset against current salary initiated
under 5 U.S.C. Section 5514 remains subject to section 5514.
BACKGROUND
Section 5 of the Debt Collection Act of 1982 amended and expanded 5
U.S.C. Section 5514, dealing with the collection of debts by offset from
the salaries of federal employees, i.e., "salary offset." In addition to
its considerably broader scope, the amended version of section 5514
imposes certain procedural requirements. Among other things, employees
are granted an opportunity for a pre-offset hearing conducted by an
individual who is not under the supervision or control of the agency
head, to result in a final decision within 60 days. See 5 U.S.C.
Section 5514(a)(2).
Section 10 of the Act enacted a new provision of law, 31 U.S.C.
Section 3716, captioned "administrative offset," which affords federal
agencies a general right to collect by offset debts owed to the United
States by any person. While section 3716 also imposes certain
procedural requirements, it does not include the specific requirements
noted above governing pre-offset hearings under 5 U.S.C. Section 5514.
Thus, the statutory source for a particular offset affects the specific
procedures required. In addition, separate regulations have been issued
under each of these two statutory provisions. The Office of Personnel
Management has published final regulations implementing 5 U.S.C. Section
5514 at 49 Fed. Reg. 27470 (July 3, 1984), codified as 5 C.F.R. Part
550, Subpart K. The General Accounting Office and the Department of
Justice have jointly published final regulations implementing 31 U.S.C.
Section 3716 at 49 Fed. Reg. 8889 (March 9, 1984), as amendments to the
Federal Claims Collection Standards, codified at 4 C.F.R. Parts 101
through 105 (1985).
We have previously discussed the legislative history and intent of
the Debt Collection Act in our decision 64 Comp. Gen. 143 (1984). There
we described the intent of the Act as follows:
According to its legislative history, the Debt Collection Act
of 1982 (DCA) was intended to "put some teeth into Federal (debt)
collection efforts" by giving the Government "the tools it needs
to collect those debts, while safeguarding the legitimate rights
of privacy and due process of debtors." 128 Cong. Rec. S12328
(daily ed. Sept. 27, 1982) (remarks of Sen. Percy). * * *
The questions presented here have arisen because 5 U.S.C. Section
5514(a)(1) is not absolutely clear as to what payments are covered by
its procedural requirements. That section provides, in part:
(a)(1) When the head of an agency or his designee determines
that an employee, member of the Armed Forces or Reserve of the
Armed Forces, is indebted to the United States for debts to which
the United States is entitled to be repaid at the time of the
determination by the head of an agency or his designee, or is
notified of such a debt by the head of another agency or his
designee the amount of indebtedness may be collected in monthly
installments, or at officially established pay intervals, by
deduction from the current pay account of the individual. The
deductions may be made from basic pay, special pay, incentive pay,
retired pay, retainer pay, or, in the case of an individual not
entitled to basic pay, other authorized pay. The amount deducted
for any period may not exceed 15 percent of disposable pay, except
that a greater percentage may be deducted upon the written consent
of the individual involved. If the individual retires or resigns,
or if his employment or period of active duty otherwise ends,
before collection of the amount of the indebtedness is completed,
deduction shall be made from subsequent payments of any nature due
the individual from the agency concerned. (Italic supplied)
The VA questions whether the phrase "retired pay" as used in section
5514 includes payments from the Civil Service Retirement and Disability
Fund or if it simply retains its usual meaning of payments to retired
military members. The VA also questions the meaning of the last
sentence of section 5514(a), and whether offsets against a former
employee's final salary check or lump-sum leave payment, both of which
are made to employees after their separation, are governed by the
procedures contained in section 5514 or by the procedures contained in
31 U.S.C. Section 3716. We will consider the questions in the order
presented.
OFFSETS AGAINST THE CIVIL SERVICE RETIREMENT FUND
Section 5514 refers to "retired pay" as one source against which a
setoff may be made. As VA points out, "retired pay" is generally
understood to mean benefits received by members or former members of the
uniformed services. For example, "retired pay" is defined by 5 U.S.C.
Section 8311(3) as follows:
retired pay means retired pay, retirement pay, retainer pay, or
equivalent pay, payable under a statute to a member or former
member of a uniformed service, and an annuity payable to an
eligible beneficiary of the member or former member under chapter
73 of title 10 or section 5 of the Uniformed Services Contingency
Option Act of 1953 (67 Stat. 504), * * *
In contrast, payments from the Retirement Fund are made to former
civilian employees of the Federal Government and are distinct from
retired pay.
While "retired pay" is not defined with specific reference to 5
U.S.C. Section 5514, we find nothing to suggest that Congress intended
to depart from the customary meaning of this term for purposes of salary
offset. We note, in this regard, that offset under 5 U.S.C. Section
5514 applies fundamentally to payments made directly by a particular
agency to its employees or former employees. The various forms of
"retired pay" as usually understood fit this description; however,
payments from the Retirement Fund do not since they are made by OPM,
rather than the former employee's agency.
Further, we note that treating offsets from Retirement Fund payments
as subject to 31 U.S.C. Section 3716 instead of 5 U.S.C. Section 5514 is
consistent with the administrative regulations issued under both of
these statutory provisions. Under 4 C.F.R. Sections 102.3 and 102.4,
offsets against the Retirement Fund are specifically stated to be
governed by the procedures set out in 31 U.S.C. Section 3716. Moreover,
under 5 C.F.R. Section 550.1104(m), an agency's regulations governing
debt collection through offset must include within their provisions the
following:
(m) Recovery from other payments due a separated employee.
Provide for offset under 31 U.S.C. 3716 from later payments of any
kind due the former employee from the United States, where
appropriate, if the debt cannot be liquidated by offset from any
final payment due the former employee as of the date of
separation. (See 4 CFR 102.3)
Finally, neither the former nor present versions of section 5514
specifically included payments from the Retirement Fund as a source for
offset for debt collection purposes. We held, prior to the passage of
the Debt Collection Act, that payments from the Retirement Fund were
available for offset for the collection of debts due the government by
virtue of the government's common law rights as a creditor. See 58
Comp. Gen. 501 (1979) and cases cited therein. We find nothing in the
Debt Collection Act or its legislative history that indicates any intent
to change this long-standing interpretation or to include payments from
the Retirement Fund within the scope of salary offset under section
5514. Thus we believe that offsets against payments from the Retirement
Fund are properly governed by 31 U.S.C. Section 3716.
FINAL SALARY CHECK AND LUMP-SUM LEAVE PAYMENT
There are no provisions in the regulations implementing 31 U.S.C.
Section 3716 that specifically deal with offsets against final salary
checks and lump-sum leave payments. However, the OPM regulations
implementing 5 U.S.C. Section 5514 require that an agency's offset
regulations must include the following provision:
(1) Liquidation from final check. Provide for offset under 31
U.S.C. 3716, if the employee retires or resigns or if his or her
employment or period of active duty ends before collection of the
debt is completed from subsequent payments of any nature (e.g.,
final salary payment, lump-sum leave, etc.) due the employee from
the paying agency as of the date of separation to the extent
necessary to liquidate the debt. 5 C.F.R. Section 550.1104(1).
The supplementary information that accompanied the publication in the
Federal Register of the final regulations provides some amplification of
this provision:
(1) Paragraph 550.1104(1) requires paying agencies to provide
for collecting an employee's debt from any final payments due from
their agency. Paragraph 550.1104(m) requires agencies to provide
for collecting an employee's debt from any subsequent payments due
from other government agencies. Two commenters requested guidance
on the application of Section 5514 to collections from a former
employee. We amended the language in both of the paragraphs to
show such collections will come under 31 U.S.C. 3716. Collections
under Section 3716 are not subject to the 15 percent limitation.
49 Fed. Reg. 2747 (1984).
As we interpret it, the OPM regulation is consistent with the
language of 5 U.S.C. Section 5514. The last sentence of 5 U.S.C.
Section 5514(a)(1), quoted previously, provides that if an employee
ceases active duty with an agency "before collection of the amount of
the indebtedness is completed," deduction shall be made "from subsequent
payments of any nature due the individual from the agency concerned."
Clearly, this language means that where offset has been initiated under
section 5514 against the current salary of an employee, that same offset
may reach subsequent final salary and lump-sum leave payments if
necessary to complete the collection action. In this limited
circumstance, an employee's final salary and lump-sum leave payments may
be regarded as subject to offset under section 5514. /1/ On the other
hand, where there has been no antecedent offset against current salary,
nothing in the language of section 5514 requires that section to apply.
Instead, an offset against final salary or lump-sum leave payments here
may be treated as an administrative offset under 31 U.S.C. Section 3716,
as provided by the OPM regulation.
The approach taken in the OPM regulation also conforms to the
practice which preceded enactment of the Debt Collection Act. The final
salary check has historically been distinguished from current pay.
Prior to the enactment of the Debt Collection Act, general debts could
not be offset against a federal employee's current pay account. 29
Comp. Gen. 99 (1949). However, a different rule was applied to the
final salary check and lump-sum leave payment, that is, general debts
could be setoff against both types of payments. 26 Comp. Gen. 907, 909
(1947) (final salary check); 24 Comp. Gen. 522, 525 (1945) (lump-sum
leave payment).
As stated above, the purpose of the Debt Collection Act was to put
teeth into federal debt collection efforts and to provide the tools
needed for that effort, while safeguarding the due process rights of
debtors. Based upon all of the above, we believe that the OPM
regulation placing setoffs against final salary checks and lump-sum
leave payments under the authority of 31 U.S.C. Section 3716 is proper.
It is a well-established rule that regulations implementing a statute
that are issued by the agency charged with administering that statute
are presumptively valid, unless they are unreasonable or plainly
inconsistent with the intent of the statute. Rockville Reminder, Inc.
v. United States Postal Service, 480 F.2d 4, 7 (2nd Cir. 1973). Agency
regulations will be sustained where the statutory language is reasonably
susceptible to more than one interpretation. Udall v. Tallman, 380 U.S.
1 (1965), rehearing denied 380 U.S. 989 (1965).
We believe that OPM's interpretation of the statute, restricting the
scope of 5 U.S.C. Section 5514 to deductions from current pay and other
deductions which are necessary to complete a section 5514 offset, is
consistent with the statutory scheme of the Debt Collection Act which
evidences an intent to treat separately offsets against current pay
accounts, and thus provides dual offset procedures under section 5514
and 3716.
To summarize, offsets from Retirement Fund payments, and offsets
first initiated against final salary payments and lump-sum leave
payments fall under the authority of 31 U.S.C. Section 3716, and the
applicable procedures are those of the Federal Claims Collection
Standards. Accordingly, agencies must provide the individuals, prior to
offset, with the opportunity to obtain review within the agency. 4
C.F.R. Section 102.3(b)(2). In some cases an oral hearing will be
required; in others a "paper hearing" will be sufficient. See 4 C.F.R.
Section 102.3(c). However, these hearings need not be conducted by an
administrative law judge or individual not under the supervision or
control of the head of the agency.
FOOTNOTES
(1) The OPM regulation essentially tracks the language of section
5514 in this respect and thus is consistent with it. In any event, the
source of offset makes no practical difference in this circumstance. No
additional hearing would be required to extend the section 5514 offset
to final salary or lump-sum leave payments. Moreover, we view the 15
percent limitation on periodic deductions from disposable pay as
applicable only to offset against current salary; thus, this limitation
would not apply to the final salary and leave payments.
B-215502, 64 Comp. Gen. 902
Matter of: Algie Horton, Jr. - Temporary Duty Travel -
Non-Commercial Quarters, September 30, 1985:
Subsistence - Per Diem - Temporary Duty - At Place of Family Residence
An employee who was transferred from Chicago to Springfield, Ill.,
thereafter performed temporary duty travel on an "as required" basis
throughout Ill., including Chicago, where his family continued to
reside. His subsistence expenses while staying with his family in
Chicago were administratively disallowed since he stayed at his family's
residence. Since Springfield was the employee's permanent duty station,
the fact that he stayed with his family while on temporary duty does not
bar reimbursement of his travel expenses.
Subsistence - Per Diem - Temporary Duty - Computation
An employee performed temporary duty travel to a high rate
geographical area (HRGA) and stayed with his family while there. He was
authorized reimbursement on an actual expense basis, but claims
reimbursement of one-half of the actual expense rate, as authorized by
agency regulations. Paragraph 1-8.b of the Federal Travel Regulations
(FTR) grants an agency head discretionary authority to authorize special
per diem in lieu of actual expenses in HRGA's under certain
circumstances. Where the agency has established a special per diem rate
for non-commercial quarters in HRGA's, that special rate satisfies the
requirements of the FTR. The determination to apply that rate need not
be made on a case-by-case basis. Jack O. Padrick, B-189317, November
23, 1977, and similar cases will no longer be followed to the extent
that they require a separate determination to apply a preestablished
fixed rate for each individual case.
This decision is in response to a request from the Regional
Administrator, Region 5, Federal Highway Administration, Department of
Transportation, Homewood, Illinois. It concerns the entitlement of an
employee to be paid a special per diem rate while performing temporary
duty in a designated high rate geographical area (HRGA) during
March-April 1984. For the reasons set forth below, we conclude that he
is entitled to be paid at the special per diem rate.
BACKGROUND
The claimant, Mr. Algie Horton, Jr., is a Safety Investigator with
the Federal Highway Administration. His permanent duty station at the
time his claim arose was the Federal Highway Administration's Region 5
Headquarters, Springfield, Illinois. By blanket travel authorization,
dated April 2, 1984, Mr. Horton and about 20 others were authorized to
perform travel on an "as required" basis from that headquarters to
various locations in the State of Illinois and return, during the period
April 1, 1984, to June 30, 1984. This travel authorization specified
various per diem and HRGA rates, but it did not specifically incorporate
the terms of Department of Transportation Notice N 1500.46, March 21,
1984, which is discussed below.
One of the points to which Mr. Horton traveled was Chicago, a
designated HRGA. In his initial travel voucher, Mr. Horton asserted
that he made three separate trips from Springfield to Chicago, and
return. He claimed entitlement to a flat rate per diem of $37.50, which
was 1/2 of the $75 per day maximum daily actual subsistence rate
authorized for the Chicago area. He noted on that travel voucher that
he did not incur any lodging cost because he stayed with his family in
Chicago. His claim was administratively disallowed. The reason given
was that since Mr. Horton had a residence in Chicago, no temporary duty
living expenses were payable unless he could show that he incurred
expenses in excess of comparable expenses he would otherwise have
incurred at his duty station in Springfield.
On reclaim, Mr. Horton contends that the basis for the administrative
disallowance of his claim implies that the Chicago residence was his
official residence. He asserts that such was not the case. He states
that, prior to April 1983, his official permanent duty station was the
Region 5 office in Homewood, Illinois (a suburb of Chicago), and that he
commuted to that duty station from his Chicago residence. In April
1983, about 1 year before his travel expense claim arose, he was
transferred to the agency's Illinois Division Office in Springfield,
Illinois. Incident to that transfer, he moved to an apartment in
Springfield and maintained it thereafter as the residence from which he
commuted to his permanent duty station. Mr. Horton adds that neither
his wife nor his children accompanied him to Springfield. They remained
in the Chicago residence for family reasons.
Subsequent to our receipt of this claim from the agency, Mr. Horton
informally requested that we consider the possible applicability of
decision Durel R. Patterson, B-211818, February 14, 1984, to his
situation.
DECISION
The provisions of law governing the entitlement of Federal employees
to be reimbursed the cost of meals, lodging and other miscellaneous
expenses incident to official travel are contained in 5 U.S.C. Section
5702 (1982) and implementing regulations. Under that Code provision and
paragraphs 1-7.6a and 1-8.1a of the Federal Travel Regulations
(September 1981), incorp. by ref., 41 C.F.R. Part 101-7 (1983) (FTR), an
employee's basic entitlement is reimbursement for expenses incurred
during periods he is performing official travel away from his permanent
duty station and away from his place of abode from which he commutes to
that duty station.
Eligibility for Reimbursement
The threshold question for resolution is whether Mr. Horton may be
reimbursed for his expenses (other than lodging expenses for which no
claim is made) while staying at his family residence during his
temporary duty assignment in the Chicago area.
In our decision Durel R. Patterson, B-211818, February 14, 1984,
affirmed on reconsideration, B-211818, November 13, 1984, we considered
the case of an employee who sought reduced per diem (no lodging cost)
while staying at his family residence which was near Baton Rouge,
Louisiana, one of his temporary duty locations. The facts in that case
showed that the employee's duties were as an itinerant with many
temporary duty locations. However, when he performed duties at his
official permanent station he stayed at his in-laws house and commuted
from that location. Citing to the case of Daisy Levine, 63 Comp. Gen.
225 (1984), we ruled that since he was an itinerant employee, so long as
he performed some duties at his official duty station, he could be paid
per diem for duty performed at various temporary duty points. We
further ruled that he was entitled to per diem (other than lodging) when
temporary duty was performed in the area of his family domicile based on
an agency regulation similar to the DOT regulation involved in Mr.
Horton's case.
In the present case, while Mr. Horton is not an itinerant employee as
in Patterson, the issue regarding residence location for travel expense
reimbursement purposes is similar. Mr. Horton has asserted that at the
time of his permanent change of station to Springfield from the Chicago
area in April 1983, he left his family residence in Chicago and leased
an apartment in Springfield, which he used to commute to his Springfield
duty station. There is nothing in the record which shows that this was
not the case. Therefore, it is our view that, for the purposes of Mr.
Horton's travel entitlements, his apartment in Springfield was his
residence at the times in question.
Per Diem Versus Actual Subsistence
Paragraph 1-7.1 of the FTR provides that per diem allowances shall be
paid for official travel except when an agency determines that
reimbursement should be on the basis of actual subsistence expenses as
provided in Part 8 of Chapter 1, FTR. Paragraph 1-8.1 of the FTR
provides in part:
a. General. * * * A traveler may be reimbursed for the actual
and necessary expenses * * * for travel to high rate geographical
areas. * * *
b. Travel to high rate geographical areas (HRGA's). Actual
subsistence expense reimbursement shall normally be authorized or
approved whenever temporary duty travel is performed to or in a
location designated as a high rate geographical area * * * .
Agencies may, however, authorize other appropriate and necessary
reimbursement as follows:
(1) A per diem allowance under 1-7.3 if the factors cited in
1-7.3a would reduce the travel expenses of an employee provided
the agency official designated under 1-8.3a(1) determines the
existence of such factors in a particular travel assignment and
authorizes an appropriate per diem rate * * *
The Department of Transportation in DOT Notice N 1500.46, March 21,
1984, which supplements the FTR, has provided for special per diem rates
where needed. That notice provides, in paragraph 6(c):
c. Lodging Obtained from Noncommercial Sources. Employees on
official travel who obtain lodging from noncommercial sources,
such as when they stay with friends or relatives, will be
authorized a flat per diem rate. The flat per diem rate will be
equal to 50 percent of the locality per diem rate, or 50 percent
of the actual expense maximum if travel is in a high rate
geographical area. Travel authorizing officials may recommend
lesser flat rates of per diem in individual cases where the costs
of subsistence are known in advance of travel and are anticipated
to be significantly less than the 50 percent rates. These lesser
rates must be approved at the Deputy Assistant Secretary or Deputy
Administrator level. (Italic supplied.)
The general travel order issued to Mr. Horton and other employees
incorporated DOT Notice N 1500.46 by reference. Item 10 of the travel
order states that "Per Diem is Authorized as Provided in the DOT Travel
Manual unless a specific per diem rate is indicated hereon." The travel
order contains a listing in Item 13 of the applicable per diem rates and
actual expense rates for various locations in Illinois and does not
specifically refer to the 50 percent rate for non-commercial lodgings.
However, this listing merely sets forth the otherwise applicable rates
for convenient reference and does not indicate any intent to provide a
special rate for these travelers. Since the DOT Notice N 1500.46
expressly requires a 50 percent rate for employees staying at
non-commercial lodgings, there was no need to specifically refer to it
in the travel order, and its absence from Item 13 does not render it
inapplicable.
The question remaining is whether the DOT notice is valid. As noted
previously, paragraph 1-8.1 of the FTR authorizes a per diem rate for
HRGA travel if the factors cited in paragraph 1-7.3a would reduce the
employee's travel expenses, provided that a designated agency official
"determines the existence of such factors in a particular travel
assignment and authorizes an appropriate per diem rate * * * ."
We do not find the DOT regulation objectionable. Use of
noncommercial lodgings is one of the factors reducing travel expenses
covered by paragraph 1-7.3a of the FTR. /1/ We have recognized the
appropriateness of establishing a fixed per diem rate for general
application where non-commercial lodgings are used, so long as that rate
is not arbitrary or unreasonable. See, e.g., Clarence R. Foltz, 55
Comp. Gen. 856 (1976); Durel R. Patterson, supra; Jack O. Padrick,
B-189317, November 23, 1977. The Padrick decision, discussed hereafter,
specifically approves establishing such a rate for general application
to HRGA travel. Thus, DOT can make a general determination, as it has
in Notice N 1500.46, that a fixed reduced per diem rate is appropriate
when an employee uses non-commercial lodgings. Further, we find no
basis to object to fixing this rate at 50 percent of the full per diem
or the maximum actual expense allowance, depending on which method of
reimbursement would otherwise apply. /2/
It could be argued that paragraph 1-8.1 of the FTR literally requires
that a separate decision of whether or not to apply the fixed rate must
be made each time an employee uses non-commercial lodgings; indeed, our
Padrick decision, supra, does interpret the FTR as requiring such
case-by-case determinations. However, on reflection, we do not regard
this interpretation as reasonable and will no longer follow it.
Requiring a separate determination in each individual case largely
defeats the purpose of having a fixed rate for general application to
use of non-commercial lodgings. Further, it is significant that the DOT
notice provides for departures from the 50 percent rate to account for
the circumstances of particular travel. In effect, therefore, the
notice establishes a presumption that the 50 percent rate is
appropriate, but permits exceptions to be made in individual cases. We
believe that this approach adequately serves both the objective of
administrative efficiency and the need to accommodate the circumstances
of particular travel.
Thus, we hold that DOT Notice N 1500.46 March 21, 1984, is a valid
exercise of agency authority to provide per diem rates in a HRGA. Its
terms were incorporated by reference in Item 10 of Mr. Horton's travel
order. Hence, his travel to Chicago is governed by paragraph 6(c) of
the DOT Notice and he is entitled to be reimbursed at the 50 percent
rate of the actual expense rate for Chicago.
FOOTNOTES
(1) In this regard, paragraph 1-7.3a refers to "(k)nown arrangements
at temporary duty locations where lodging and meals may be obtained
without cost or at prices advantageous to the traveler * * * ."
(2) Cf., Harry G. Bayne, 61 Comp. Gen. 13 (1981); Robert P. Trent,
B-211688, October 13, 1983; Social Security Administration Employees,
B-208794, July 20, 1983. These decisions approve agency regulations
which established general limitations on reimbursement for meals and
miscellaneous expenses alone of 45 to 46 percent of the applicable per
diem or maximum actual expense allowance.
B-213530, 64 Comp. Gen. 901
Matter of: Recording of Obligations for Extensions of Temporary
Quarters Subsistence Expenses, September 30, 1985:
Appropriations - Fiscal Year - Availability Beyond Travel and
Transportation Expenses
Reimbursable expenses due to extension of up to 60 days of temporary
quarters subsistence expenses should be charged against the
appropriation current when valid travel orders are issued. See 64 Comp.
Gen. 45 (1984).
An official of the Drug Enforcement Administration, Department of
Justice, requests our opinion on whether the expenses incurred by a
transferred employee under a 60 day extension of temporary quarters
subsistence expenses should be charged against the appropriation current
in the fiscal year in which the travel is ordered or the fiscal year in
which the expenses are incurred. As will be explained below, the
expenses should be charged against the appropriation current in the
fiscal year in which the travel is ordered.
BACKGROUND
In 64 Comp. Gen. 45 (1984), we overruled a long line of cases holding
that the expenses of relocation were to be charged against the
appropriation current when the expenses were incurred by the transferred
employee. In that decision we ruled "that for all travel and
transportation expenses of a transferred employee, an agency should
record the obligation against the appropriation current when the
employee is issued travel orders."
The submission asks whether this holding in 64 Comp. Gen. 45 is
applicable to the situation in which a transferred employee receives an
extension of temporary quarters subsistence expenses (TQSE) in the
fiscal year following that in which his move took place. A transferred
employee is allowed up to 60 days of TQSE upon his or her relocation.
Federal Travel Regulations (FTR) Para. 2-5.2a(1) (Supp. 10, March 13,
1983), incorp. by ref., 41 C.F.R. Section 101-7.003. Under certain
conditions, the transferred employees may receive up to an additional 60
days of TQSE. See FTR, Para. 2-5.2a(2) (Supp. 10, March 13, 1983). The
extension of TQSE may cause a problem in regard to recording an
obligation, since, as illustrated by the submission, a transferred
employee may receive travel orders in the fiscal year preceding that in
which the employee requests and receives an extension of TQSE.
Furthermore the extension cannot be approved prior to the employee's
occupancy of temporary quarters since an extension may only be
authorized "due to circumstances which have occurred during the initial
60 day period of temporary quarters occupancy and which are determined
to be beyond the employee's control and acceptable to the agency." Id.
ANALYSIS
We do not consider an extension of TQSE as falling outside our
recently announced rule. Our decision at 64 Comp. Gen. 45 relied
heavily on a basic principle of law which mandates the result here.
That principle, the so-called bona fide needs rule, supported our
conclusion since "it is clear that the need for the relocation of the
employee and the resulting benefits and entitlements arises when the
employee is transferred * * * ." 64 Comp. Gen. at 47. Thus, the bona
fide need for the relocation expenses is in the fiscal year in which the
employee is transferred and not when the employee incurs the expense.
Id.
An extension of TQSE flows directly from the transfer of an employee
and the resulting initial entitlement to TQSE. Under these
circumstances, any extension of TQSE relates back to the original
issuance of transfer orders and is a bona fide need of the year in which
the orders were issued. Therefore, the cost should be charged to the
fiscal year in which the transfer order was issued.
B-219353, 64 Comp. Gen. 896
Matter of: InterTrade Industries Ltd., September 27, 1985:
Bids - Responsiveness - Failure to Furnish Something Required -
Delivery Information, Prices, etc.
When low bid does not specify shipping point and information is
necessary to determine transportation costs in evaluation of bids on an
f.o.b. origin basis, the agency may properly reject the bid as
nonresponsive. An exception for bids where the shipping point can be
ascertained by reading the bid as a whole does not apply where there is
no other place designated in the bid from which the protester would
legally be bound to ship.
Contracts - Performance - Suspension - Pending Final Resolution of
Protest
Agency head's failure to make required Competition in Contracting Act
determination for continued contract performance during pendency of
protest does not provide a basis to upset an award.
InterTrade Industries Ltd. protests the rejection of its low bid as
nonresponsive to invitation for bids (IFB) No. N00244-85-B-0510, issued
by the Naval Supply Center, San Diego, California, for 10 large,
cylindrical fenders to be used for mooring ships. In a supplemental
protest, the firm additionally alleges that the Navy violated the
Competition in Contracting Act of 1984, 31 U.S.C.A. Section 3553(d)
(West Supp. 1985), by not suspending performance of a contract awarded
to Seaward International, Inc.
We deny the protests.
The IFB, issued March 29, 1985, required bidders to offer fixed
prices for shipment of the fenders to San Diego on an f.o.b. origin
basis. The bidding form included a space under clause 6(b) for the
bidder to enter the shipping point and cautioned that bids submitted on
any basis other than f.o.b. origin would be rejected as nonresponsive.
Amendment No. 0004, dated May 9, 1985, added an evaluation provision
from the Federal Acquisition Regulation (FAR), 48 C.F.R. Section
52.247-47 (1984), indicating that the cost of transporting the fenders
between the shipping point and the destination would be considered in
determining the overall cost of the fenders to the government.
The procuring activity received three bids at bid opening on May 17,
1985. InterTrade was the low bidder ($132,500), and Seaward
International, Inc. was second-low ($134,032). Because InterTrade's bid
failed to identify a shipping point, the contracting officer rejected it
as nonresponsive and made award to Seaward on May 22, 1985.
In its protest, InterTrade contends that although it failed to
include the required information under clause 6(b), its bid -- when read
as a whole -- reflects its intent to designate Huntington Beach,
California as its shipping point. InterTrade argues that since it
designated Huntington Beach as its place of performance, and since this
is its only place of business, the contracting officer should have used
Huntington Beach to evaluate costs on an f.o.b. origin basis. The
protester also maintains that because its bid stated that the firm was a
small business, the contracting officer had no reason to believe that
the shipping point would be other than the firm's place of business.
According to the protester, the Navy had only to check on previous ship
fender contracts, performed by InterTrade and listed in its bid, to
discover that all items had been shipped from the Huntington Beach
plant. InterTrade emphasizes that it did not take exception to the
60-day delivery requirement or impose a different term than f.o.b.
origin.
Further, the protester argues that the government was required by a
mandatory FAR provision, 48 C.F.R. Section 52.247-46, which was not
included in the solicitation, to use InterTrade's place of performance
for evaluation purposes. That regulation provides that in certain cases
where a bidder does not state a shipping point, the government must
evaluate the bid on the basis of shipment from the place where the offer
indicates that the contract will be performed.
InterTrade also questions the agency's assertion that the shipping
point is a matter of responsiveness. The protester contends that the
information is not material unless the lowest ultimate cost to the
government cannot be determined with certainty. According to the
protester, since it was clear that InterTrade's only place of business
was in California, and since the awardee, Seaward, is located in
Virginia, there was little if any possibility that award to InterTrade
would result in higher costs to the government. Finally, InterTrade
argues that even if the omission of the shipping point was a matter of
responsiveness, it should be waived as a minor irregularity that can be
corrected or waived without prejudice to other bidders.
The Navy responds that although InterTrade designated Huntington
Beach as its place of performance, the bid failed to evidence a firm
commitment to ship the fenders from any specific place. According to
the Navy, in descriptive literature submitted with the bid, InterTrade
represented that it had provided marine fenders to the Canadian Navy and
to commercial users nationwide. The contracting officer therefore
thought it was foreseeable that the firm might ship from a warehouse or
other facility in the Canadian Maritime Provinces, Maine, Florida, or
another location. In that case, transportation costs could displace the
firm's standing as low bidder, since its bid was only $1,532 less than
that of the second-low bidder.
Additionally, the Navy contends that the place of performance
designated in InterTrade's bid cannot serve to provide the requested
information, because the place of performance may legally be changed
after opening of bids, citing 48 Comp. Gen. 593 (1969).
The issue for resolution is whether InterTrade's bid manifested a
firm offer to tender delivery to the government at a particular shipping
point, namely its Huntington Beach plant. We are unable to conclude
that a reading of InterTrade's bid in its entirety evidences such an
offer.
We have held that if a bidder fails to designate an f.o.b. point of
origin where one is required by an IFB, it may, in the proper
circumstances, be ascertained from a reading of the bid as a whole.
B-155429, Nov. 23, 1964; see also 49 Comp. Gen. 517 (1970); The R. H.
Pines Corp., et al., B-209458, et al., Sept. 2, 1983, 83-2 CPD Paragraph
290. This case, however, is distinguishable from that line of cases,
where we held the failure of the bidder to insert a shipping point in
the space provided did not render the bid nonresponsive. For example,
in 49 Comp. Gen. 517, there were multiple places in the bid for a bidder
affirmatively to show compliance with the f.o.b. origin requirement and
thus create a legal obligation to utilize a specific shipping point.
Here, there was only one place for a bidder affirmatively to show
compliance with the f.o.b. origin requirement.
We think this case is more like 48 Comp. Gen. 593 (1969), aff'd. 48
Comp. Gen. 689 (1969), where the bidder left an IFB provision similar to
the one here blank and inserted information as to the location of its
plant only in connection with the "inspection and acceptance" clause.
Since the latter entries were subject to change at the bidder's option
after bid opening, we held that failure to designate a shipping point in
the only place provided rendered the bid nonresponsive.
InterTrade did not, in our opinion, show compliance with the f.o.b.
origin requirement elsewhere in its bid. The insertion of Huntington
Beach under place of performance (producing facilities location) had no
bearing on delivery and was subject to change at the bidder's option.
We therefore do not believe that the place of performance entry can be
substituted for the missing information. Without this information, the
ultimate cost to the government cannot be determined.
Even though InterTrade did not take exception to the 60-day delivery
requirement, we have held that where an IFB REQUIRES an insertion of
material information (such as price, descriptive data, or point of
origin) relating to responsiveness, the failure of the bidder to provide
the information must be treated as if the bidder had taken exception to
a material provision of the IFB, thereby rendering its bid
nonresponsive. 48 Comp. Gen. at 692-3. Accordingly, we find no merit
to the argument that the failure to indicate the shipping point was a
minor irregularity that could be waived without prejudice to other
bidders. We have consistently held that the waiver of deviations that
affect price or go to the substance of the bid is prejudicial to the
other bidders and the competitive system. 48 Comp. Gen. at 598, aff'd.
48 Comp. Gen. 689.
InterTrade relies on our decision in B-155429, supra, in which we
held that it was fair to assume that a small business bidder intended to
designate its only plant in Saratoga Springs, New York as its shipping
point for purposes of evaluation on an f.o.b. origin basis. Although
InterTrade states that it also is a small business, we view this case as
distinguishable from the Saratoga case because InterTrade represented in
its descriptive literature that it provided ship fenders to national and
Canadian points. We agree with the Navy that, given the scope of the
protester's business, it was reasonable to think that InterTrade might
ship the fenders from a location other than Huntington Beach and thus
might not remain the low bidder.
Further, we find no merit to the protester's argument that the
contracting officer should have known from InterTrade's previous
contracts that the firm's shipping point was Huntington Beach. A bid's
responsiveness must be determined from the bid itself. Le Prix
Electrical Distributors, Ltd., B-206552, July 6, 1982, 82-2 CPD
Paragraph 18. The contracting officer could not presume an intention on
the bidder's part with respect to a material term that was not reflected
in the bid. Id.
Additionally, we do not view the alleged mandatory provision, 48
C.F.R. Section 52.247-46, as in fact mandatory. The provision is
required when an agency contemplates evaluation of shipments from
various shipping points. 48 C.F.R. Section 47.305-3(b)(4)(ii). Read as
a whole, the regulation appears to refer to shipments by one offeror
from various shipping points, which was not the case here. In any
event, as the Navy states, a mandatory provision that has been omitted
from an IFB may not be constructively read into the solicitation.
Rainbow Roofing, Inc., 63 Comp. Gen. 452 (1984), 84-1 CPD Paragraph 676.
For the foregoing reasons, InterTrade's protest regarding rejection
of the bid as nonresponsive is denied.
On August 21, 1985, InterTrade supplemented its protest, alleging
that it had just learned, as a result of a Freedom of Information Act
request, that the Navy violated the Competition in Contracting Act of
1984 (CICA) by not suspending performance of the contract pending our
decision on the protest, and that the head of the procuring activity had
not made the required determination that performance should proceed.
The CICA requirements for suspension of award or performance pending
a protest are among provisions of the Act that currently are the subject
of a constitutional dispute. Initially, the Attorney General refused to
recognize the "stay" provisions on the ground that they violated the
separation of powers doctrine; he advised executive branch agencies not
to comply with the provisions. However, on May 28, 1985 in Ameron, Inc.
v. U.S. Army Corps of Engineers, 610 F. Supp. 750 (D.N.J. 1985), the
court held the disputed CICA provisions constitutional and directed
government-wide compliance with CICA. In response to that decision, on
June 3 the Attorney General issued a press release stating that he would
advise executive branch agencies to comply with the "stay" provisions
pending an appeal of Ameron. Notice of the revised Department of
Justice guidance appeared as an amendment to the FAR in the Federal
Register on June 20, 1985. See Federal Acquisition Circular 84-9, 50
Fed. Reg. 26,580 (1985).
It appears from documents that InterTrade submitted in connection
with its supplemental protest that the Navy attempted to comply with the
CICA "stay" provisions 1 day after the Federal Register notice was
published, since it requested the awardee to suspend performance in a
letter dated June 21, 1985. However, it also appears that when the
letter was received by the awardee on June 27, 1985, the fenders already
had been delivered.
Although the CICA "stay" provisions went into effect on January 15,
1985, we have noted previously that pursuant to the Attorney General's
view, executive agencies were not complying with the stay provisions and
that the matter was the subject of litigation. See Lear Siegler, Inc.,
B-218188, Apr. 8, 1985, 64 Comp. Gen. 452, 85-1 CPD Paragraph 403; IBI
Security Services, Inc., B-218565, July 1, 1985, 85-2 CPD Paragraph 7.
While it appears performance would have been suspended here had the Navy
earlier sought to comply with the CICA, an agency's failure to delay
award or, as in this case, to suspend performance prior to final
resolution of a protest, traditionally does not constitute a basis for
upsetting an otherwise proper award. See PNM Construction, Inc.,
B-215973, Nov. 30, 1984, 84-2 CPD Paragraph 590; M. C. Hodom
Construction Co., Inc., B-209241, April 22, 9183, 83-1 CPD Paragraph
440.
The protests are denied.
B-213205.2, etc., 64 Comp. Gen. 888
Matter of: Douglas County Aviation, Inc., Hawkins & Powers Aviation,
Inc., Hemet Valley Flying Service, September 27, 1985:
Contracts - Negotiation - Offers or Proposals - Evaluation Method - Not
Prejudicial
Protest of use of normalized price scoring is denied where record
shows protesters were not prejudiced by the use of this technique.
Contracts - Negotiation - Offers or Proposals - Evaluation - Price
Consideration
Agency did not act improperly in assigning technical scores for past
performance based on prior demonstrated aircraft availability rates.
Offerors were aware of agency's need for best possible availability and
Request for Proposals indicated that performance of less than 90 percent
availability would not be acceptable under the contracts to be awarded.
Apportioning scores as suggested by protesters so that 90 percent
availability would be awarded 90 percent of available points would
dilute importance assigned to past performance by RFP.
Contracts - Negotiation - Offers or Proposals - Evaluation - Criteria
Experience
Contention that agency should not have taken into consideration past
performance for subcontracted work is denied. Record does not show that
protester was released from its obligation as the government's prime
contractor to furnish aircraft in accord with its prior contract which,
for a period of time, it did not do.
Contracts - Negotiation - Offers or Proposals - Evaluation - Criteria
Experience
Contention that government was required to obtain and consider
records of past performance for other government agencies is denied.
The protesters were on notice that the agency did not construe the RFP
as requiring such action.
Contracts - Negotiation - Offers or Proposals - Evaluation - Errors -
Not Prejudicial
Where impact on scoring would be minimal, possible defective
screening of accident and incident data by agency was not prejudicial.
Contracts - Negotiation - Awards - Not Prejudicial to Other Offerors
Where agency had contractual right to allow substitution of aircraft,
decision to make substitution at time of award was not objectionable
because record clearly shows that protesters were not prejudiced.
Contracts - Negotiation - Awards Propriety
Fact that minimum quantity was not ordered from protester does not
entitle that firm to receive additional orders required to make up
minimum. Rather, firm is not entitled to any awards unless it would be
entitled to award of its specified minimum quantity.
Contractors - Responsibility - Determination - Review by GAO -
Affirmative Finding Accepted
Matters relating to agency's affirmative determination of awardees'
responsibility are not for consideration by General Accounting Office.
Douglas County Aviation, Inc., Hawkins & Powers Aviation, Inc., and
Hemet Valley Flying Service protest the award of all line items not
awarded to themselves under Forest Service request for proposals (RFP)
49-83-05 for air tanker services. Under the RFP, offerors are to
provide aircraft which are specially modified and used to aid in
controlling forest fires during the fire season, at which time the
aircraft are assigned to bases established for this purpose by the
government. The aircraft are dispatched, as needed, by the National
Fire Center at Boise, Idaho to meet the combined fire fighting
requirements of several government agencies.
The protested procurement, conducted by the Forest Service, was for
the combined needs of several agencies over a 3-year period. Offerors
were permitted to propose aircraft to meet any of the 42 line items set
out in the RFP; each line item represented one airplane as well as crew
and maintenance support for the airplane. Contracts were awarded for 40
line items. /1/
Collectively, the protesters received four awards. Douglas County,
which offered aircraft under numerous combinations of 39 possible line
items, was awarded 2 line items. Hawkins & Powers offered 11 aircraft
for possible use under 12 line items and received 2 awards. Hemet
Valley offered 8 aircraft under 19 line items, but received no award.
The three protesters received a much greater number of awards under
prior Forest Service solicitations and contend that the Forest Service
improperly denied them awards under the current solicitation. In part,
the protesters assert that the Forest Service's actions were intended to
force them out of the air tanker business.
Based on a thorough review of the record, including an extensive
examination of Forest Service contracting records at its Boise Office,
we deny the protests.
Issues Concerning Scoring Methodology
The RFP stated that price and technical merit were to be accorded
weights of one-third and two-thirds, respectively. The agency was to
evaluate technical merit by considering support capability, past
performance, management effectiveness, aircraft fleet, flight crews and
accident/incident experience. The RFP further stated that support
capability and past performance would be given greater weight than
management effectiveness and aircraft fleet. Flight crews and
accident/incident experience were to be given less weight. Multiple
subcriteria were listed under several of the principal technical
criteria.
The protesters contend that the Forest Service's evaluation of
proposals was fundamentally flawed. They say the agency did not
properly weigh price and technical factors as demonstrated, they state,
by the fact that price was not given a weight of one-third, or technical
merit two thirds, because the lowest priced offer for each line item was
given 900 points while the maximum of 1700 points allowed for technical
merit was not actually awarded to any firm.
Price proposals were scored by using a price normalization method.
The lowest price for any line item was assigned 900 points. Higher
prices were assigned points in inverse proportion to the low price, that
is the low price was divided by the price offered and the result was
multiple by 900. Scores for technical merit were assigned, in part, by
scaling statistical data derived from each vendor's past contract
performance and accident/incident experience. Other technical factors
were scored by assigning points in direct proportion to the evaluators'
perception of the merit of the proposals.
The Forest Service had intended to compute a total score for each
vendor by adding the offeror's composite technical score to its price
score and by then selecting the highest scored proposal under each line
item. In practice, the problem turned out to be much more complex than
anticipated. Twelve offerors submitted proposals, all of which were
included in the competitive range; collectively, the aircraft offered
comprised most of the domestic air tanker fleet. Offerors were free to
propose multiple types of aircraft to meet any combination of the 42
line items they choose. They were free to offer special combination
packages, such as price discounts that varied with the number of
aircraft for which they received awards. They did so, leaving the
Forest Service with the task of picking the best combination -- a nearly
impossible undertaking given the huge number of possible combinations
from which to choose.
The Forest Service, recognizing the magnitude of the task, used a
linear programming mathematical model running at its Fort Collins
Computer Center to select a combination of offers. The model maximized
the composite score of the combination of line items chosen. Eight
computer runs were performed to test the assumptions on which the model
was based.
After reviewing the results of these runs, the Forest Service
concluded that the run it has called "Alternate 4" was most appropriate
and made the awards on that basis. As the Forest Service points out,
Hawkins & Powers was the prospective awardee in all runs for the two
items it was awarded and was not the prospective awardee on any other
items on any run. Douglas County was the prospective awardee for one of
the items it was a rded (Item 38) on all eight runs. That firm was in
line for award of the other item which made up its actual award (Item
18), only under Alternatives 3 or 4. Hemet Valley was not in line for
an award under any of the runs.
Agencies must evaluate proposals in accordance with the criteria
established in the RFP. Telecommunications Management Corp., 57 Comp.
Gen. 251 (1978), 78-1 CPD Paragraph 80. Recognizing that proposal
evaluation involves subjective judgments, our Office has not favored the
use of precise numerical formulas in selecting awardees in negotiated
procurement, preferring instead to encourage their use merely as aids in
assessing the importance of significant differences between proposals.
Grey Advertising, Inc., 55 Comp. Gen. 1111 (1976), 76-1 CPD Paragraph
325. While agencies may use a variety of methods, including methods
similar to those used here in which the lowest priced proposal is
awarded the maximum number of possible points, Francis & Jackson,
Associates, 57 Comp. Gen. 244 (1978), 78-1 CPD Paragraph 79, we have
cautioned agencies that some of the methods in common use, such as the
price normalization method used here can produce distorted scores.
Design Concepts, Inc., B-186125, Oct. 27, 1976, 76-2 CPD Paragraph 365.
In this regard, we have pointed out that evaluators must avoid
misleading results. Umpqua Research Co., B-199014, Apr. 3, 1981, 81-1
CPD Paragraph 254.
Here, we have analyzed the Forest Service's scoring using methods
other than those used by the agency. Our analysis indicates that,
regardless of the Forest Service's choice of price scoring method, in no
instance do any protesters' offers displace any of the awardees' offers.
The protesters further contend that the scoring system used to
evaluate past performance was improper because the Forest Service scaled
the assigned scores. Past performance was calculated by computing the
time each offeror's aircraft was actually available for use under prior
contracts and dividing the result by the time the firm was required to
have aircraft available. Points were assigned based on the resulting
"availability rate," expressed as a percentage, above 90 percent. Extra
points were given for availability rates near 100 percent. According to
the protesters, offerors should have received points in direct
proportion to their availability rates, i.e., a firm which had an
availability rate 95 percent should be entitled to 95 of the total past
performance points. (In fact, a 95 percent availability rate recieved
about a quarter of such points.)
We disagree. Had the Forest Service applied the method proposed by
the protesters, it would not have evaluated the proposals in accordance
with the RFP. The RFP ranked past performance as the second most
important technical factor (after capability). If the protesters'
scoring method were applied, all offerors would receive high scores
under past performance, because all of the offerors had availability
rates in the 90 percent range, even though their prior contract
performance varied considerably. Moreover, the significance of the
point spread adopted is emphasized by the fact that the RFP stated that
an availability rate of less than 90 percent would be a ground for
contract default. Thus, an availability rate only slightly above 90
percent indicates performance that would be only marginally acceptable.
Consideration and Exclusion of Data
The protesters also raise several issues concerning the Forest
Service's inclusion and exclusion of data in compiling availability
rates and accident/incident experience. We consider first their
contentions concerning data used to compile availability rates.
Hawkins & Powers argues that the Forest Service improperly included,
in its evaluation of that firm's proposal, data relating to a 1981 crash
of a tanker assigned to a base known as Goleta. While the contractor
for that base at that time was Hawkins & Powers, it had subcontracted
the operation to Hemet Valley. Neither Hemet Valley nor Hawkins &
Powers provided a replacement aircraft immediately following the crash,
with the result that an air tanker was not available for an extended
period of time. This loss of available time was charged to Hawkins &
Powers in evaluating its offer.
According to Hawkins & Powers, the loss of availability should not
have been charged to it because it had subcontracted the operations at
Goleta and because, it claims, the Forest Service agreed that the
aircraft was not needed pending its repair. Thus, the protester says,
it did not believe the aircraft had to be replaced. Hemet Valley
supports Hawkins & Powers position and cites the alleged agreement to
repair rather than replace the aircraft in arguing that it, also, should
not be charged with the loss.
We think that the Forest Service's decision to include this data was
reasonable. The Forest Service concedes that it accepted Hawkins &
Powers choice of a subcontractor. It does not agree that it released
Hawkins & Powers from its contractual obligations. The protester does
not claim and has not established that it was formally released.
Moreover, the record does not support the protester's contention that it
was relieved of its obligation pending repair of the damaged aircraft.
The protesters also contend that the Forest Service should have
considered performance experience data from other government agencies.
They contend the RFP, which stated that evaluation of this item would be
based on data "taken from Forest Service and other agency records"
required the Forest Service to consider records of other agencies that
would have improved their scores. According to Hawkins & Powers, for
example, its availability rate would have been increased considerably
had its experience with the Bureau of Land Management (BLM) in Alaska
been included.
In our view, the RFP language can be interpreted as merely placing
offerors on notice that other agencies' records could be considered.
The protesters, moreover, appear to have acquiesced in this
construction. The protesters were given the Forest Service's
availability calculations prior to the closing data for receipt of
proposals. The data given Hawkins & Powers, for example, shows annual
availability rates of 97.44, 89.88 and 99.06 percent for the prior 3
years. In view of the data furnished, the protesters knew or should
have known that the data they were given were lower than the figures
they claim their records support.
The protesters also complain that the Forest Service improperly
deducted points for accidents/incidents that did not occur. In the
protesters' view, they should be awarded the full number of points
allowed for this factor.
The record shows that the Forest Service assigned scores by counting
the number of accident/incident reports contained in its files for the
prior contract period and by normalizing the results to take differences
in flight time into account. Accident/incident reports are filed by
Forest Service personnel when they deem such action to be appropriate.
Although it appears that the reports were screened to eliminate
duplication before they were counted, it is not clear how they were
screened for substantive content.
For example, our review of the Forest Service records in Boise
disclosed a number of reported instances where the alledged incident had
no bearing on the contractor's ability to carry out its mission. We
found other instances in which it appeared on the face of the report
that the contractor was not at fault.
While we believe the Forest Service should make sure that any
evaluation of accident/incident reports in connection with future
procurements reflects meaningful differences among offerors, we do not
find that its handling of accident/incident reports in this instance
affected the selection process. Accidents/incidents were allocated 150
out of 1700 possible technical points, with incidents allocated less
points than accidents. Since all protesters received a portion of the
points allowed, any correction of scoring under this evaluation
criterion, would be small. Our evaluation of the Forest Service's
selection process indicates that a shift in accident/incident scores
would not have altered the selections.
Acceptability of Specific Aircraft
The protesters contend that the Forest Service improperly accepted
several aircraft for award. They contend, for example, that the agency
knew that the DC-4 aircraft offered by Ardco, Inc. were overweight and
operate under Federal Aviation Administration restricted airworthiness
certificates that do not permit cargo to be carried. They say that
these aircraft should not have been considered without first determining
that they could operate legally as 2000 gallon tankers and that they
should not have been awarded any line items requiring incidental cargo
hauling. /2/
The protesters also argue that the Forest Service improperly awarded
one line item to TBM, Inc. for a C-123 aircraft. They argue that the
C-123 should not have been considered because it was not a type of
aircraft listed in the RFP and because it cannot qualify as a 2000
gallon tanker.
We disagree with the protesters that the Forest Service improperly
qualified the C-123 as a 2000 gallon tanker. Essentially, the
protesters view the C-123 as less capable of meeting the Forest
Service's needs based on theoretical requirements they posit that,
however, go beyond the literal requirements of the RFP.
While it is true that the RFP did not include the C-123 in its list
of acceptable aircraft, the record shows that the C-123 was accepted
only after the Forest Service determined that TBM was in line for award
based on a DC-6 under the item in question. The C-123 was designated in
lieu of the DC-6, which was not the subject of any other award. Under
the contract terms, the Forest Service may allow contractors to
substitute aircraft where it finds that the substitute is capable of
meeting its needs.
We recognize that an award must be based on the requirements stated
in the solicitation. See International Business Machines Inc.,
B-194365, July 7, 1980, 80-2 CPD Paragraph 12. We will not, however,
object to an award if the record clearly shows that a protester was not
prejudiced by an agency's failure to amend the RFP to allow competition
on its changed requirements. Aul Instruments, Inc., B-199416.2, Jan.
19, 1981, 81-1 CPD Paragraph 31.
Here, we find that the protesters were not prejudiced by the C-123
award. The C-123 substitution does not appear to constitute a
relaxation of the RFP requirements to any significant degree since, in
the particular circumstances of this RFP, allowing a C-123 award
involved only the qualification of a type of aircraft, the C-123, not
listed in the RFP and had no impact on most of the evaluation. /3/
With regard to the Ardco DC-4s, we are unaware of any indication in
Ardco's proposal that it intended to furnish aircraft that were
overweight or were inappropriately certified. The record does show that
Ardco's flight manuals state that cargo is not to be carried, language
the agency construes as precluding carriage of cargo other than that
normally required in connection with air tanker operations. The Forest
Service has also submitted an analysis showing that the aircraft are not
overweight.
Issues Concerning Douglas County Aviation
Douglas has raised issues of unique concern to it. The first
involves the awarding of line items for DC-7 aircraft. Douglas received
one such award and believes it should have received at least three more
because, it says, it proposed DC-7 aircraft only on the basis that at
least four such aircraft be hired.
We agree with Douglas that it did not propose to furnish less than
four DC-7s. Douglas' best and final price proposal included prices for
four, five or six DC-7s only. There was no price proposal for less than
four aircraft, a fact that the Forest Service appears to have
overlooked.
We do not agree with Douglas, however, that it is therefore entitled
to awards for four DC-7s. Rather, Douglas was entitled to no DC-7
awards because our analysis indicates it was in line for only one DC-7
award. Even if we were to agree with Douglas that it was entitled to
some adjustment in its technical scores there is no prospect that it
would be entitled to three additional awards. In view of the advanced
stage of performance under these contracts we do not believe it would be
appropriate for us to recommend any corrective action in connection with
the improper award of the single DC-7 line item to Douglas.
MISCELLANEOUS ISSUES
The protesters have presented a number of other issues we can dispose
of summarily.
The protesters complain that one firm received two line item awards
employing the same airplane. As the Forest Service explains, the period
of required availability for the two line items do not overlap.
Moreover, we find nothing in the RFP precluding two awards under such
circumstances.
The protesters also contend that the Forest Service should have
reevaluated all proposed awards before making them to assure that each
offeror selected would be able to handle the awards made to it. The
protesters say that an offer's ability to perform safely will decline as
the number of aircraft it places increases. While we agree with the
protesters that the Forest Service was required to consider each
offeror's ability to perform the contract awarded, we also agree with
the Forest Service that this is a matter of responsibility which our
Office will not consider absent circumstances that have not been
alleged. Central Metal Products, Inc., 54 Comp. Gen. 64 (1974), 74-2
CPD Paragraph 64.
Finally, the protesters have suggested that the Forest Service has
deliberately excluded C-119 aircraft in favor of aircraft not previously
outfitted for air tanker use and thus has sought to drive them out of
business. The record contains no support for this contention. While no
C-119s were the subject of award, this was because the offerors whose
proposals were based on furnishing C-119s were less competitive than
other offerors.
The protests are denied.
FOOTNOTES
(1) Two line items were canceled after the Forest Service decided
they were not needed; one of the two was later reinstated. None of the
protesters offered aircraft under either of the canceled line items.
(2) Two other arguments raised by the protesters require only brief
comment. The protesters state that certain DC-6s do not qualify as 3000
gallon tankers because they might not be capable of carrying 3000
gallons from some bases. This assertion is unsupported by the record,
which indicates the subject aircraft can operate from the bases to which
they are to be assigned. Likewise, an assertion, that DC-6s and KC-97s
should not have been considered for assignment to bases requiring a 2000
gallon capacity is without merit because the solicitation did not
preclude offers of aircraft with excess capacity.
(3) As indicated, most of the technical evaluation dealt with
evaluating each offeror's capability and demonstrated performance in
supporting air tanker operations. The evaluation of aircraft was given
only limited weight and concerned principally, their condition. The
record indicates the differences in point scores that could have
resulted from listing of the C-123 would not have been substantial.
Likewise, the impact on cost is limited. Much of the government's cost
is fixed because the government specified rates in the RFP to be paid
for flight time depending on the amount of fire retardant (here 2000
gallons) the tanker was required to carry and on fuel price. Offerors'
price proposals were based on a quoted daily price for making an
aircraft of the required capacity available and were heavily dependent
on fixed costs regardless of the type of aircraft offered.
B-219434, 64 Comp. Gen. 883
Matter of: NJCT Corporation, September 26, 1985
Contractors - Responsibility - Determination - Review by GAO -
Nonresponsibility Finding
Protester fails to meet its burden of demonstrating that
nonresponsibility determination lacked a reasonable basis or was made in
bad faith where the contracting officer based the determination on what
he reasonably perceived to be protester's history of significant
problems in meeting the delivery obligations under prior contracts.
Contractors - Responsibility - Determination - Factors for
Consideration - Previous Ratings, etc.
Since a prime contractor is responsible for all the work performed
under its contract with the government, even that performed by a
subcontractor, a delinquency under a prior contract for which the
contractor utilized the services of one subcontractor may properly be
considered by the contracting office in determining the responsibility
of the contractor even though the contractor proposes to utilize a
different subcontractor in performing the proposed contract.
Contractors - Responsibility - Determination - Review by GAO -
Nonresponsibility Finding
The fact that a contractor has been found responsible in other
procurements does not demonstrate that a nonresponsibility determination
lacked a reasonable basis or was made in bad faith. This is true even
where one of the prior affirmative determinations of responsibility was
made, without a preaward survey by the same contracting officer who,
after a preaward survey, found the protester to be nonresponsible here.
Contracts - Protests - Allegations Bias Unsubstantiated
Protester alleging that contracting officials acted in bad faith to
eliminate the protester from competition by setting aside procurements
for small business concerns and by conducting repeated preaward surveys
does not meet its burden of showing by virtually irrefutable proof that
the officials had a specific and malicious intent to injure the
protester where the protested procurement was not set aside for small
business concerns and a preaward survey was requested because of the
protester's unfavorable procurement history.
NJCT Corporation (NJCT) protests the Defense Logistics Agency's (DLA)
award of a contract to Gobe Slicing Machine Co. (Globe), under
invitation for bids No. DLA400-85-B-6233 for the supply of meat slicing
machines. NJCT contends that DLA improperly determined that NJCT was
not a responsible prospective contractor. We deny the protest.
DLA received two bids in response to the solicitation. NJCT
submitted the low bid, offering to supply meat slicers manufactured by
Lan Electric, Limited (Lan), in the United Kingdom.
At the request of contracting officials, the cognizant Defense
Contract Administration Services Management Area (DCASMA) conducted a
preaward survey of NJCT's responsibility as a prospective contractor
under this solicitation. DCASMA concluded that the firm's performance
record, "although improved during the past year," was nevertheless
unacceptable. In particular, the survey indicated that of the 17
bilateral contracts completed by NJCT during the preceding 6 months, 5
were in a delinquent status as the result of vendor-caused delay. In
addition, the survey indicated that NJCT was delinquent on 5 of the 21
bilateral contracts under which it was currently performing and
attributed 4 of the delinquencies to vendor-caused delay. Finally, the
survey indicated that NJCT had been delinquent on 3 of 5 contracts for
"RELATED PREVIOUS PRODUCTION (Government)," including one contract for a
meat slicing machine manufactured by Lan. DCASMA therefore recommended
that, "based solely on the firm's performance record," no award be made
to NJCT under the solicitation.
Based upon the negative preaward survey and upon a "working knowledge
of a history of delinquencies on contracts performed by NJCT," knowledge
acquired through consultation with other contracting officials,
examination of government records and personal knowledge, the
contracting officer found NJCT to be nonresponsible. Since NJCT,
although certifying itself to be a small business concern, offered to
supply a product not produced or manufactured in the United States, DLA
did not refer the matter to the Small Business Administration for
possible issuance of a certificate of competency. 13 C.F.R. Sections
121.5(b)(2)(iv), and 125.5(c) (1985); Federal Acquisition Regulation
Section 19.102-3, 48 C.F.R. Section 19.102-3 (1984).
NJCT challenges DLA's determination that it was nonresponsible,
contending that it was based upon erroneous and incomplete information
and made in bad faith.
The determination of a prospective contractor's responsibility is the
duty of the contracting officer who is vested with a wide degree of
discretion and business judgment. Accordingly, our Office will not
question a contracting officer's nonresponsibility determination unless
the protester, who bears the burden of proof, demonstrates bad faith by
the agency or the lack of any reasonable basis for the determination.
See Lithographic Publications, Inc., B-218263, Mar. 27, 1985, 85-1
C.P.D. Paragraph 357.
NJCT argues that the preaward survey does not accurately reflect the
firm's performance record. Regarding the three contracts for "related
PREVIOUS PRODUCTION" identified in the survey as having been delinquent,
NJCT alleges (1) that the delinquency under contract No. DLA400-84-BA99,
for the supply of a Lan meat slicer, was caused by the agency's failure
to allow sufficient time for the approval and distribution of the
required commercial manuals and by a change in the place of inspection
and in the shipping point, (2) that NJCT in fact met the revised,
delayed delivery schedule adopted under contract No. DLA400-84-C-0123
when the item description was changed, and (3) that the delinquency
under contract No. DLA400-84-C-1535 was caused by DLA's rejection of a
component during a quality review.
We note, however, that in the apparently contemporaneous government
records documenting these delinquencies, the delinquency under contract
No. -BA99 was attributed to "vendor production scheduling problems (Lan
Electric)." In addition, DLA reports that NJCT was on notice as to the
required delivery schedule for the commercial manuals since the schedule
was set forth in the unilateral purchase order accepted by the firm.
DLA also questions whether changing the place of inspection and the
shipping points could have caused the delinquency since production
allegedly was not completed until after the scheduled delivery date.
Likewise, the delay in performance of contract No. -0123 is attributed
in the apparently contemporaneous government records to "scheduling
deficiencies and lack of timely vendor follow-up." DLA reports that the
change in the specifications cited by NJCT as necessitating a delayed
delivery schedule was in fact requested by the contractor. As for the
delinquency under contract No. -1535, government records confirm NJCT's
admission that perceived deficiencies in production caused the delay.
Moreover, we also note that NJCT, while generally observing that
"50-75% of contract delays have government caused contributory reasons,"
has not offered any specific evidence directly refuting DCASMA's
conclusions that vendor-caused delay resulted in NJCT being delinquent
on 31 percent of the bilateral contracts it completed during the
preceding 6 months and 19 percent of the bilateral contracts it was
currently performing. Further, even if we consider NJCT's general
observation to be an allegation that the government contributed to 50-75
percent of the delinquencies under NJCT's contracts with the government,
this does not explain the remaining 25-50 percent of the delinquencies
nor exclude the possibility that the firm also contributed to some of
the delinquencies for which government action was a contributory cause.
We note that NJCT, which attributes its prior delinquencies to
reliance on subcontractors other than Lan, argues that such
delinquencies therefore are irrelevant here since NJCT is offering meat
slicers manufactured by Lan. Since, however, a prime contractor is
responsible for all the work performed under its contract with the
government, even that performed by a subcontractor, see Arvol D. Hays
Construction Company, ASBCA No. 25,122, 84-3 BCA Paragraph 17,661; San
Francisco Bay Marine Research Center, ENG BCA No. 4,787, 84-2 BCA
Paragraph 17,502; Dick Olson Constructors, Inc., ASBCA No. 19,843, 76-1
BCA Paragraph 11,812; Lombard Corporation, ASBCA Nos. 18,206, 18,207,
75-1 BCA Paragraph 11,209, we believe that a delinquency under a prior
contract for which the contractor utilized the services of one
subcontractor may properly be considered by the contracting officer in
determining the responsibility of the contractor even though the
contractor proposes to utilize a different subcontractor in performing
the proposed contract. In any case, we also note that one of the
contracts on which NJCT was considered delinquent was the contract
pursuant to which NJCT supplied a meat slicer manufactured by Lan, the
proposed subcontractor here.
Accordingly, we conclude that NJCT has not demonstrated that the
contracting officer lacked a reasonable basis for finding that the firm
had experienced significant problems in meeting its delivery obligations
under prior contracts. See Lithographic Publications, Inc., B-217263,
supra, 85-1 C.P.D. Paragraph 357 at 3; C. W. Girard, C.M., 64 Comp.
Gen. 175 (1984) 84-2 C.P.D. Paragraph 704; Arrowhead Linen Service,
B-194496, Jan. 17, 1980, 80-1 C.P.D. Paragraph 54; Howard Electric
Company, 58 Comp. Gen. 303 (1979), 79-1 C.P.D. Paragraph 137
(nonresponsibility determination may be made on the basis of what the
government reasonably perceives to be the proposed contractor's prior
inadequate performance even if the contractor disputes the government's
interpretation).
We recognize that NJCT believes that the contracting officer failed
to take into account other information relevant to the firm's
responsibility. Thus, NJCT points out that the preaward survey
apparently was limited to a consideration of bilateral contracts.
DLA, however, reports that the contracting officer considered the
firm's performance record as it relates to both unilateral and
bilaterial contracts. Moreover, we note that not only has NJCT failed
to provide our Office with any comprehensive figures indicating that the
firm's performance record as it relates to unilateral contracts was
substantially better than its performance record as it relates to
bilateral contracts, but, in addition, NJCT's performance on the
contract specifically identified here as unilateral, i.e., unilateral
purchase order No. -BA99 for the supply of the Lan meat slicer, was
considered by DLA to have been delinquent.
NJCT points out that DLA has recently awarded other contracts to the
firm, including one award made by the contracting officer here several
months prior to this procurement.
The fact that NJCT has recently been found responsible in other
procurements does not, however, indicate the unreasonableness of the
determination here, which was based upon a clear history of significant
problems in performing prior contracts. Responsibility determinations
are based upon the circumstances of each procurement which exist at the
time the contract is to be awarded. These determinations are inherently
judgmental and the fact that different conclusions may be reached as to
a firm's responsibility does not demonstrate unreasonableness or bad
faith. See S.A.F.E. Export Corporation, B-208744, Apr. 22, 1983, 83-1
C.P.D. Paragraph 437; Amco Tool & Die Co., 62 Comp. Gen. 213 (1983),
83-1 C.P.D. Paragraph 246; GAVCO Corporation -- Request for
Reconsideration, B-207846.2, Sept. 20, 1982, 82-2 C.P.D.Paragraph 242.
This is true even where the same contracting officer has made an earlier
affirmative determination of responsibility. See S.A.F.E. Export
Corporation -- Request for Reconsideration, B-209491.2, B-209492.2, Oct.
4, 1983, 83-2 C.P.D. Paragraph 413. Moreover, we note that DLA informs
us that the contracting officer here made the earlier affirmative
determination of responsibility without benefit of a preaward survey due
to the small amount of the procurement.
NJCT further points out that the preaward survey indicated that
NJCT's performance had "improved during the past year." We note,
however, that the same survey also recommended against award to NJCT
based upon the firm's overall recent performance record. Given the
significant problems apparent in that record, we believe that there was
sufficient evidence for the contracting officer to conclude that,
despite some unspecified "improvement," there remained a substantial
risk that NJCT would be unable to meet the required delivery schedule.
Cf. S.A.F.E. Export Corporation, B-208744, supra, 83-1 C.P.D. Paragraph
437 at 4 (sufficient evidence to reasonably anticipate deficiencies even
though other evidence favorable to prospective contractor).
NJCT alleges that contracting officials, acting in bad faith, have
undertaken a concerted effort to eliminate NJCT from competition by
setting aside procurements for small business concerns and by conducting
repeated preaward surveys on NJCT. By way of example, NJCT notes that a
preaward survey was conducted here on NJCT but not on the awardee.
A protester bears a heavy burden of proof when alleging bad faith on
the part of government officials. It must show by virtually irrefutable
proof, not mere inference or supposition, that these officials had a
specific and malicious intent to injure the protester. See Ebonex,
Inc., B-213023, May 2, 1984, 84-1 C.P.D. Paragraph 495.
NJCT has not made the required showing. Not only was this
procurement not set aside for small business concerns, but, in any case,
NJCT certified itself to be a small business concern and presumably
could have offered a product manufactured or produced by a small
business concern.
Moreover, DLA indicates that a preaward survey was conducted on NJCT
because NJCT, unlike Globe, had an unfavorable procurement history. We
have previously held that contracting officers have broad discretion
regarding whether to conduct surveys. See Carolina Waste Systems, Inc.,
B-215689.3, Jan. 7, 1985, 85-1 C.P.D. Paragraph 22; PAE GmbH,
B-212403.3, et al., July 24, 1984, 84-1 C.P.D. Paragraph 94. Neither
the fact that an agency may have conducted an unnecessary preaward
survey, see Ebonex, Inc., B-213023, supra, 84-1 C.P.D. Paragraph 495 at
4, nor the failure to conduct a survey on a firm whose record of
satisfactory performance is known to the contracting officer
demonstrates bias, see PAE GmbH, B-212403.3, et al., supra, 84-2 C.P.D.
Paragraph 94 at 4.
Accordingly, we conclude that NJCT has failed to meet its burden of
demonstrating that the nonresponsibility determination lacked a
reasonable basis or was made in bad faith.
The protest is denied.
B-217211, 64 Comp. Gen. 880
Matter of: United Food Services, Inc., September 24, 1985
Advertising - Advertising v. Negotiation - Mess Attendant Services
Agency decision to use a cost-type, negotiated contract in lieu of a
fixed-price, formally advertised contract in procuring mess attendant
services is not justified by variations in meal counts and attendance,
the lack of a contractual history, or the need for managerial and
technical expertise. Although the Competition in Contracting Act of 1984
eliminates the preference for formally advertised procurements (now
"sealed bids"), and would apply to any resolicitation, the implementing
provisions of the Federal Acquisition Regulation (FAR) do provide
criteria for determining whether a procurement should be conducted by
the use of sealed bids or competitive proposals. General Accounting
Office recommends that contracting agency not exercise contract renewal
options, and instead conduct a new procurement according to the
applicable FAR provisions.
Contracts - Negotiation - Cost-Plus-Award-Fee Contracts
Cost-plus-award-fee contract, authorized under the FAR, is not a
prohibited cost-plus-a-percentage-of-cost contract where the award fee,
while based on a percentage of costs, depends on government's subjective
assessment of performance, with entitlement decreasing as costs
increase, and is subject to a ceiling on fees to be paid.
United Food Services, Inc. (United) protests request for proposals
(RFP) No. DABT47-85-R-0010, issued by the Army as a small business
set-aside for staffing, managing and operating 33 food service and
dining facilities at the Army's training base at Fort Jackson, South
Carolina. The solicitation requested pricing proposals, for a base year
and 4 option years, for each of the 33 food facilities on a cost per
month basis. Unlike a fixed-price, formally advertised contract where
award is based on lowest price, here, award was based on an evaluation
of both the technical acceptability and cost realism of the proposals.
Payments under the contract include reimbursements for allowable costs.
The contract has been awarded. United contends that: (1) the services
should have been procured through fixed-price, formal advertising rather
than through negotiation of a cost-type contract; (2) payment under the
contract is on a prohibited "cost-plus-a-percentage-of-cost" basis; and
(3) certain minimum manning requirements contained in the RFP were
excessive.
We sustain the protest as to the first allegation, deny it as to the
second, and dismiss it as to the third.
United contends that the food services should have been procured by
formal advertising with an invitation for bids (IFB) for a fixed-price
contract. United argues that the government has procured such services,
on a fixed-price basis, through formal advertising in the past, and
cites a recent IFB for food and dining services issued by the Army at
Fort Knox, Kentucky. United points out that both Fort Knox and Fort
Jackson are under the same Army command and contends that if it was
practicable to formally advertise for the services at Fort Knox, it is
inconceivable that formal advertising could not have been used at Fort
Jackson.
The Army responds that the services required could not practically be
obtained through formal advertising on a fixed-price basis and that a
cost-type, negotiated procurement was therefore appropriate. The Army
points to the existence of variable factors and unknown risks, based in
part on the lack of a contractual history, such as the number and type
of meals to be served and attendance at the facilities in light of
unpredictable recruitment results and personnel deployment. The Army
reports that Fort Jackson has previously contracted for food services at
only 7 of its facilities and that the instant contract for 33 facilities
is significantly more complex. In addition, the Army maintains that the
level of managerial and technical competence required to meet the base's
food service needs could not be adequately described in an IFB.
We cannot agree that Fort Jackson's needs reasonably required the use
of a cost-type contract which in turn justified the use of negotiation.
A cost-reimbursement contract is to be used only where "uncertainties
involved in contract performance do not permit costs to be estimated
with sufficient accuracy" to permit fixed-price contracting. Federal
Acquisition Regulation (FAR), 48 C.F.R. Section 16.301-2 (1984). The
contracting officer argues that the variations in meal counts and
attendance pose too great a risk to be borne by the contractor, and
concludes that a cost-reimbursement contract was therefore justified. We
have held, however, that bidders for military food services or so-called
"mess attendant" services contracts can take such risks into account
when computing their bids, and submit fixed-price bids on the basis of
costs of individual meals or hourly rates of service to be provided.
Palmetto Enterprises, 57 Comp. Gen. 271 (1978), 78-1 CPD Paragraph 116;
Space Services International Corp., B-207888.4, et al., Dec. 13, 1982,
82-2 CPD Paragraph 525; Logistical Support, Inc., B-197488, Nov. 24,
1980, 80-2 CPD Paragraph 391.
Moreover, we have generally rejected the argument that variations in
meal requirements and attendance justify the use of negotiation instead
of formal advertising, ABC Management Services, Inc., et al., 53 Comp.
Gen. 656 (1974), 74-1 CPD Paragraph 125; Ira Gelber Food Services,
Inc., et al., 54 Comp. Gen. 809 (1975), 75-1 CPD Paragraph 186, and all
three military departments routinely have been able to procure these
mess attendant services through the use of formal advertising. See J.E.
D. Service Co., B-218228, May 30, 1985, 85-1 CPD Paragraph 615 (Army
(Fort Knox)); Military Services, Inc. of Georgia, B-218071, May 21,
1985, 85-1 CPD Paragraph 577 (Navy); Kime-Plus, B-215979, Feb. 27,
1985, 85-1 CPD Paragraph 244 (Air Force). Here, although we recognize
that the Army was expanding the food services under contract at Fort
Jackson, the Army does not explain why its own prior experience in
manning the facilities and in contracting for mess attendant services,
see Space Services International Corp., supra, along with recruitment
and training goals that presumably are established and budgeted for, is
not sufficient to enable it to prepare specifications and structure a
contract suitable for formal advertising. Finally, we also cannot accept
the Army's position that the level of managerial and technical expertise
required precludes adequate specification description, justifying the
use of negotiation, because the Army has only offered its unsupported
conclusion on this matter; it has failed to show that its management
requirements are so unique or complex that they are incapable of
description. We therefore agree with United that Army's use of a
cost-type, negotiated contract does not appear justified.
United also alleges that the cost-plus-award-fee method of
reimbursement described in the solicitation is in fact an improper
cost-plus-a-percentage-of-cost method.
The solicitation directs offerors to include in their cost proposals
a proposed "total available fee amount," the sum of a base fee amount
and a maximum award fee amount. These fees are to be expressed in terms
of percentages of the estimated costs of the contract, which cannot
exceed either the percentage limitations set forth in applicable
regulations (FAR, 48 C.F.R. Section 15.903; Department of Defense
Supplement, 48 C.F.R. Section 216.404-2(b) (1984)), or the offeror's
proposed total dollar fee amount.
Contract payments of the fee amounts, while based on a percentage of
costs incurred under the contract, are to be determined by the
contracting officer in light of recommendations from a performance
evaluation board consisting of agency technical and administrative
personnel. The amount will depend upon the board's subjective evaluation
of the contractor's performance, with higher awards to be made for the
most efficient and economical performance, but subject to the
contractor's proposed total dollar fee amount.
First, we note that a cost-plus-award-fee type of contract is
authorized under the FAR, 48 C.F.R. Sections 16.305 and 16.404-2. It is
distinguished from a prohibited cost-plus-a-percentage-of-cost contract,
as the latter automatically allows the contractor a fee based on a fixed
percentage with increases unchecked as costs increase, thus providing an
incentive for inefficient performance. United has offered no evidence
that this would be the case under the Army's proposed
cost-plus-award-fee method of reimbursement. To the contrary, as
discussed above, the award fee rewards efficient performance and so,
while with increased costs the base for the fee calculation will be
higher, the amount of fee to which the contractor will be entitled will
decrease as contractor costs increase. Also, the total fee is subject to
a fixed dollar ceiling. Accordingly, we do not believe this payment
scheme violates the statutory prohibition of
cost-plus-a-percentage-of-cost contracting.
Finally, we dismiss as academic United's allegation regarding the
minimum manning requirements, as the Army reports these requirements
were in fact deleted by a subsequent amendment to the solicitation.
While we sustain the protest against the use of a cost-type,
negotiated contract, we note that the Competition in Contracting Act of
1984 (CICA) eliminates the statutory preference for formally advertised
procurements (now "sealed bids"). 10 U.S.C. Section 2304, as amended by
Pub. L. No. 98-369, Section 2723(a)(1), 98 Stat. 1175, 1187. However,
the provisions of the FAR, which have been revised to implement CICA
(Federal Acquisition Circular 84-5, Dec. 20, 1984, effective for
solicitations issued after March 31, 1985), do provide criteria for
determining whether a procurement should be conducted by the use of
sealed bids or competitive proposals (FAR, Section 6.401 (a)). We are
therefore recommending that the Army not exercise any options to renew
the contract and instead conduct a new procurement according to the
applicable FAR provisions.
By letter of today, we are advising the Army of our recommendation.
B-216543, 64 Comp. Gen. 871
Matter of: AUL Instruments, Inc., September 24, 1985
Contracts - Negotiation - Sole-Source Basis - Procedures Commerce
Business Daily Notice Procedures
Prohibition in Pub. L. 98-72 against commencing negotiations for the
award of a sole-source contract until at least 30 days have elapsed from
the date of publication in the Commerce Business Daily of a notice of
intent to contract refers to the date of actual publication, and may not
be negated by a regulatory provision, section 5,203 of Department of
Defense Federal Acquisition Regulation Supplement, establishing a
presumption that a synopsis electronically transmitted to the CBD has
been published 2 days thereafter. Harris Corp., B-217174, Apr. 22,
1985, 64 Comp. Gen. 480, 85-2 C.P.D. 455 clarified.
Contracts - Negotiation - Sole-Source Basis - Procedures Commerce
Business Daily Notice Procedures - Failure to Follow Not Prejudicial
Contracting agency's failure to timely publish a synopsis in the
Commerce Business Daily concerning its proposed sole-source procurement
as required by Pub. L. 98-72 does not require cancellation of the
procurement where it has not been shown that the agency acted to
deliberately deny the protester the opportunity to submit a proposal or
that the protester was prejudiced by the lack of timely notice, because
the record indicates that the protester could not have met the agency's
delivery requirements.
Contracts - Awards - Separable or Aggregate - Single Award Propriety
Agency is not required to have separately purchased panel assemblies
for multiplexers, where the agency concluded that its needs could best
be met through a "total package" procurement approach. Protester has
not shown that the agency decision to use a single procurement was
improper.
AUL Instruments, Inc. (AUL), protests the sole-source award of
contract No. DAAB07-84-C-C096 to Bammac, Inc. (Bammac) by the United
States Army Communications Electronics Command, Fort Monmouth, New
Jersey, for the supply of 17,458 panel assemblies, No. 11A23 through
11A29, for the TD-660 B/G multiplexer. The protest is based on the
failure of the agency to timely publish in the Commerce Business Daily
(CBD) a synopsis of its proposed sole-source procurement from Bammac as
required by Pub. L. 98-72 and the implementing regulations set forth in
the Department of Defense (DOD) Federal Acquisition Regulation (FAR)
Supplement. Accordingly, AUL requests that the award to Bammac be
terminated and that the procurement be resolicited.
The protest by AUL is denied.
The agency advises that the TD-660 B/G multiplexer has been procured
by the Army since 1966; that successful production of the subassemblies
(assembly panels) for the TD-660 requires the availability of numerous
integrated circuit devices (IC's); and that the availability of some of
these IC's has been a problem for several current manufacturers.
Although a technology insertion program had been adopted to upgrade the
TD-660 with parts representing current technology, Army officials
determined that an urgent "stop gap" procurement of panel assemblies for
the TD-660 using the older IC's was needed. In anticipation of this
procurement, in April 1984, the Army sent a letter of inquiry to current
producers of the TD-660, including AUL, and producers of TD-660 internal
components, including Bammac. In its letter, the Army stated that it
anticipated purchasing approximately 18,000 subassemblies for the
TD-660; outlined the proposed delivery schedule; expressed concern
about the continued availability of the IC devices needed to manufacture
the units; stated that its intent was "to ascertain prior to contract
solicitation that sufficient quantities of all the required IC's will be
available to complete the contract"; listed all the IC's required and
their current or prior source; and asked each company to submit, in
confidence, with respect to each IC device: (1) the identity of its
proposed vendor/manufacturer; (2) the quantities available from each
proposed vendor/manufacturer; (3) vendor's or manufacturer's lead time
from receipt of purchase orders to delivery; (4) length of time
available from vendors/manufacturers; (5) detailed reasons for the
unavailability of any IC; and (6) any proposed exceptions to the device
requirements shown on applicable drawings together with details
sufficient to demonstrate that the device, with exceptions, would
operate properly in the TD-660 B/G. The Army requested that responses
be submitted in 30 days, but AUL was permitted until June 6 -- almost 2
months -- in which to reply.
In its June 4, 1984, response to the agency inquiry, AUL advised that
there appeared to be only one or no known source for several of the IC's
identified by the Army and that AUL's experience indicated that there
was a high risk of nonconforming units and production variations as to
performance characteristics which may not be consistent with TD-660
specifications. AUL further advised that because of sporadic demand
there was a risk that production of additional IC's were on "engineering
hold" because the manufacturer had encountered technical problems.
Lastly, AUL indicated that delivery time from the manufacturer of one of
the IC's probably would exceed 20 weeks. Although, we we indicated
above, the agency had requested specific information concerning each
company's sources of supply for the IC's and the quantities and delivery
schedules available from each, as well as any proposed exceptions to the
required IC's, AUL did not provide any specific information in its reply
as to the available quantities of IC's. Bammac, on the other hand, had
shown that it already had in its inventory or on order substantial
quantities of all of the IC's required for panel assemblies 11A23
through 11A29 and indicated that with respect to most of these IC's the
number already on hand or ordered met or exceeded the quantities
required by the agency. Bammac further advised that it did not expect
to encounter any difficulties in obtaining the remaining number of IC's
required by the agency. The only other potential offeror to respond to
the agency survey, Emerson Electric Co., indicated considerable
difficulty in obtaining many of the required IC's several of which it
referred to as "obsolete." In addition, Emerson indicated delivery dates
for some IC's of up to 40 weeks and characterized these estimates as
"optimistic."
Based on the results of its survey, the agency determined that the
panel assemblies for the TD-660 should be obtained on a sole-source
basis from Bammac. In its justification for the sole-source award to
Bammac, the agency stated that seven panel assemblies would be in a
critical need status by February 1985; that based on the availability
of IC's only Bammac would be in a position to begin delivery of the
subassemblies within 7 months; and that Bammac even would be able to
accelerate the beginning of deliveries to 3 months of award. The head
of the contracting activity approved the proposed sole-source
procurement of the TD-660 panel assemblies from Bammac on July 21, 1984.
On September 15, 1984, the synopsis of the Army's proposed
sole-source procurement was published in the CBD and the contract to
Bammac was awarded on September 21, 1984.
AUL has protested the sole-source award to Bammac on the basis that
the agency violated the provisions of Pub. L. 98-72 and the implementing
regulations in the DOD FAR Supplement which set forth certain
requirements for advance publication in the CBD of sole-source
requirements. AUL asserts that as a result of this statutory violation,
it was prejudiced. AUL also questions whether Bammac in fact was in a
unique position to supply these items and maintains that, at best, only
one of the seven assemblies may have been appropriate for a sole-source
procurement.
Under Pub. L. 98-72 an agency shall not commence negotiations for the
award of a sole-source contract until at least 30 days have elapsed from
the date of publication in the CBD. See 15 U.S.C. Section 637(e)(2)(c)
(Supp. I, 1983). Furthermore, Pub. L. 98-72 requires that the notice of
intent to contract on a sole-source basis contain a statement that
interested parties are invited to identify their interest and capability
to respond to the procurement requirement or may submit proposals in
response to the CBD notice within the 30-day notice period. See 15
U.S.C. Section 637(e)(3)(c) (Supp. I, 1983). We note that the agency
has not claimed that this procurement was of "such unusual or compelling
urgency" that it was exempt from the requirement that it be synopsized.
See 15 U.S.C. Section 637(e)(1)(b) (Supp. I, 1983).
The facts before us show that the agency issued the sole-source
solicitation of Bammac on August 3, 1984, and received Bammac's proposal
on August 14. The solicitation required initial delivery of the panels
120 days after the date of contract award. On August 9, the agency
electronically transmitted the synopsis of the proposed sole-source
procurement from Bammac to the CBD for publication. However, due to an
apparent backlog at the CBD the notice of the proposed sole-source
procurement was not published until September 15, 6 days prior to the
date of award to Bammac on September 21, 1984. AUL states that it did
not receive the September 15 issue of the CBD until September 25, some 4
days after the contract was awarded.
AUL asserts that if the requirements of Pub. L. 98-72 had not been
violated, AUL would have been interested in competing for the
procurement of the panel assemblies. AUL states that since it has been
prejudiced by the agency's violation of the notice requirement of Pub.
L. 98-72, the sole-source award to Bammac should be terminated and the
procurement resolicited.
In response to AUL's protest, the agency asserts that it made every
attempt to comply with the notice requirements of Pub. L. 98-72 and that
its failure to provide timely notice in the CBD of the proposed
sole-source procurement was not deliberate. The agency in part points
out that section 5.203 DOD FAR Supplement, 48 C.F.R. Section 205.203
(1984), provides in pertinent part that contracting officers may presume
publication in the CBD 2 days after electronic transmittal of the
synopsis. Thus, the agency states that it presumed that the synopsis of
the proposed sole-source procurement was published on August 11. The
agency states that it had been unaware that the synopsis had not been
timely published until AUL brought the matter to its attention.
Although we agree with the agency that the record does not establish
that it sought to deliberately exclude AUL from consideration, we
believe that the agency failed to comply with the requirements set forth
in Pub. L. 98-72 for the advance notice in the CBD of proposed
sole-source procurements. As stated above, that statute specifically
provides that the agency shall not commence negotiations for the award
of a sole-source contract until at least 30 days have elapsed from the
"date of publication" of the synopsis of the proposed procurement.
Given the express language of Pub. L. 98-72 specifying "publication" in
the CBD, we do not believe that the presumptions of publication in the
CBD contained in section 5.203 of the DOD FAR Supplement (1984) operated
to satisfy the requirements of CBD publication where the synopsis had
not in fact been timely published. Thus, in the matter before us, the
date of actual publication of the synopsis in the CBD, September 15, and
not the presumed date of publication, August 11, was the pertinent date
for the purpose of determining whether the advance notice requirements
of Pub. L. 98-72 were met. In any event, since the agency issued the
sole-source solitiation to Bammac 6 calendar days prior to the agency's
transmittal of the synopsis to the CBD, the agency would not have
complied with the statutory 30-day requirement even if the synopsis had
been published promptly upon receipt.
We recognize that our decision in Harris Corp., B-217174, Apr. 22,
1985, 64 Comp. Gen. 480, 85-2 C.P.D. Paragraph 455, may be read as
providing support for the view that the presumption of publication which
was set forth in section 5.203 of the DOD FAR Supplement was proper,
because we cited that provision without criticism. However, in Harris,
supra, our Office did not expressly consider the validity of the
presumption of publication contained in section 5.203 since the agency
made a sole-source award on a date which was prior to the expiration of
the mandatory 30-day CBD notice requirement even if the presumed date of
publication had been the actual date of publication.
Although statutory and regulatory changes have occurred since the
procurement which is the subject of AUL's protest, there remains a basic
conflict between statutory notice requirements founded upon actual
publication and regulatory provisions establishing a presumption of
publication within a certain period after a synopsis has been
transmitted by the procuring agency to the CBD. The provisions of Pub.
L. 98-72 as set forth in 15 U.S.C. Section 637(e) (Supp. I, 1983) have
been superseded by the provisions added by sections 303 and 404 of Pub.
L. 98-577. The new provisions, effective with regard to solicitations
issued after March 31, 1985, provide for advance "publication" in the
CBD of certain procurement actions and direct the Secretary of Commerce
to "publish promptly" the required CBD notices. We further note that
effective with respect to solicitations issued after March 31, 1985, the
FAR provides that unless they have evidence to the contrary, contracting
officers may presume that notice has been published 10 days -- 6 days if
electronically transmitted -- following transmittal of the synopsis to
the CBD. See section 5.203(f) of the FAR, 50 Fed. Reg. 1726, 1728-9
(1985) FAR Circular 84-5 (April 1, 1985) (to be codified at 48 C.F.R.
Section 5.203(f). /1/ Since Pub. L. 98-577 expressly requires
publication in the CBD (as did Pub. L. 98-72), we believe that the
presumption in the FAR, to be codified at 48 C.F.R. Section 5.203(f) is
inconsistent with the statutory requirement of actual publication.
While we are aware of the burden which the lack of a presumption of CBD
publication would place on contracting officers, the statutory
requirements concerning publication are clear and must be followed. We
urge the Director of the FAR Secretariat and the Secretary of Commerce
to develop procedures which would ensure the prompt publication of
procurement synopses in the CBD.
Although the agency's actions violated the requirements of Pub. L.
98-72, we do not believe that the agency's violation of the statute
requires termination of its contract with Bammac since the record before
us shows that AUL was not prejudiced by the agency's failure to follow
the statute's requirements.
Pub. L. 98-72 contains no expression of a congressional intent to
require agencies to terminate otherwise proper awards or to cancel
otherwise valid procurements and reprocure in every instance where the
exact letter of the applicable notice requirement is not met and there
is no indication that this was Congress' intent. See Morris Guralnick
Assoc., Inc., B-214751.2, Dec. 3, 1984, 84-2 C.P.D. Paragraph 597.
Furthermore, we have held that the contracting agency's failure to
properly publish a synopsis in the CBD concerning an intended
procurement, as required by Pub. L. 98-72, does not require a
cancellation of the solicitation and resolicitation where the protester
has not been prejudiced by the failure to give proper notice in the CBD.
See Tri Com, Inc., B-214864, June 19, 1984, 84-1 C.P.D. Paragraph 643.
The agency asserts that AUL was not adversely affected by the failure
to timely publish a synopsis of the sole-source procurement in the CBD
since AUL's response to the agency's April inquiry as to the
availability of IC's required for the TD-660 panel assemblies indicated
that AUL would be unable to timely deliver the panel assemblies due to
the unavailability of certain needed IC's. Furthermore, the agency has
advised that as of the time of its report, AUL was approximately 1 year
behind on its current contract for the production of the TD-660.
Although AUL states in general terms that it would have been
interested in competing for this procurement had it been properly
synopsized, AUL has not stated how it would have met the agency's urgent
delivery requirements despite its June reply to the agency that there
appeared to be some difficulties with obtaining some of the IC's needed
for the panel assemblies. Furthermore, AUL has not disputed the
agency's statement that it was about 1 year behind in delivery under its
existing contract for the production of the TD-660.
In support of its position, AUL has cited the decision in Tri-Com,
Inc., v. National Aeronautics and Space Administration, Civ. Act. No.
84-1058 (D.D.C. Oct. 31, 1984) (Memorandum of Findings and Conclusions)
wherein the court disagreed with our decision in Tri-Com, B-214864,
supra, 84-1 C.P.D. Paragraph 640, in which we held that the contracting
agency's failure to publish a synopsis in the CBD required by Pub. L.
98-72 had not prejudiced the protester where the protester became aware
of the procurement some 17 days prior to award. The court found that
testimony presented by Tri-Com at an evidentiary hearing showed that it
was likely that Tri-Com would have prepared a responsive proposal and
would have been entitled to the contract if notice of the procurement
had been published in the CBD at least 30 days prior to award as was
required by Pub. L. 98-72.
We do not view the court's decision in Tri-Com as supporting AUL's
position that it was prejudiced by the lack of timely publication of the
synopsis of the sole-source procurement. The court did not hold that
the failure to publish a timely CBD notice by itself constituted
prejudice to Tri-Com, but held that evidence presented by Tri-Com
demonstrated a likelihood that Tri-Com would have submitted a responsive
proposal if it had the additional time in which to prepare it, which
publication in the CBD would have provided.
Here, AUL was permitted almost 2 months in which to reply to a letter
in which the Army (1) stated the approximate number of panel assemblies
it anticipated purchasing; (2) set forth its proposed delivery
schedule; (3) expressed its concern about the availability of certain
key components necessary for the manufacture of these items and stated
that its intent was to ascertain whether enough of these components were
available to complete the contract; (4) identified each of these
components and its current or prior source; and (5) requested each
addressee to provide specific information which would establish whether
that firm would have available to it those quantities of the necessary
components in time to meet the proposed delivery schedule. Although a
proper CBD synopsis was not provided, the Army's letter of inquiry would
appear to have provided an equivalent opportunity for interested firms
to demonstrate their "capability to respond" to the Army's needs. /2/
AUL, however, has not presented any evidence to show that it could have
been responsive to the Army's urgent "stop-gap" procurement of the
TD-660 panel assemblies even if it had received timely notice of the
procurement pursuant to the requirements of Pub. L. 98-72. Therefore,
we cannot conclude that AUL was prejudiced by the lack of a proper
synopsis.
AUL also challenges the propriety of the sole-source award to Bammac,
alleging that the difficulties which AUL cited in its June 1984 response
to the agency's inquiry would apply to any prospective contractor,
including Bammac. The protester points out that there is no indication
that the Army independently verified whether Bammac in fact had the
unique ability to perform the contract which it claimed.
The Army disputes AUL's assertion that all prospective contractors
would be in the identical position with respect to the supply of IC's
available to them. The contracting officer states that as of the time
of her report on the protest Bammac was producing the panel assemblies
in question, under an existing contract, on a timely basis. AUL has
presented no evidence which indicates that Bammac could not perform on
schedule; in fact, the Army advises that Bammac has accelerated
delivery. Since the record does not support AUL's assertion that Bammac
was in the same position as any other prospective contractor with
respect to its supply of IC's, this aspect of the protest is denied.
AUL also asserts that Bammac had rejected large quantities of parts,
IC's SM-B-525283-2 and SM-B-525283-3, which are used in subassemblies
11A23 and 11A28, due to nonconformance and that Bammac provided the
manufacturer with a waiver of this nonconformance in October 1984. AUL
points out that the two IC's in question are those which it advised the
agency in its June 4 letter were on "engineering hold" by the
manufacturer because of technical problems. The agency denies AUL's
assertions and advises that Bammac has neither accepted any defective
parts nor issued a waiver for the acceptance of nonconforming parts.
The Army advises that Bammac had resolved the problem of the
availability of the IC's by means of an engineering change proposal.
Once a contract has been awarded the matter as to whether the awardee in
fact supplies items conforming to the terms of the contract
specifications is a matter of contract compliance and administration
which are the responsibility of the contracting agency and not our
Office. MKC Electronics Corp., B-216584, Oct. 22, 1984, 84-2 C.P.D.
Paragraph 438. We note that the agency has advised that Bammac has not
only indicated that it would meet the contract's delivery schedule but
that Bammac has accelerated the delivery schedule by up to 3 months on
most panel assemblies and is planning to maintain this accelerated
delivery schedule throughout the contract.
Finally, AUL asserts that in its letter of June 4, it clearly
indicated that four of the seven panel assemblies, which were eventually
procured from Bammac, were readily available and that two other
subassemblies, panel assemblies which required IC's SM-B-525283-2 and
SM-B-525283-3, allegedly were on "engineering hold" because of technical
problems. Thus, AUL asserts that only one panel assembly, 11A25, which
requires IC-SM-B-525291, might have been properly procured on a
sole-source basis from Bammac if that firm had this subassembly in
stock, since AUL had indicated in the June 4 letter that this particular
IC had been discontinued. AUL contends that there was no proper basis
upon which to include the other panel assemblies in the sole-source
procurement. We disagree.
AUL's June 4 response to the agency's inquiry of availability of IC's
does not clearly indicate that AUL could provide four of the panel
assemblies without any difficulty. Furthermore, as stated above, AUL
omitted in its response to the agency's survey much of the specific
information which had been requested by the agency, including
information on the quantities of IC's available to it. In addition, as
set forth above, the agency has advised that Bammac has successfully
resolved the potential problems with the "engineering hold" on IC's
SM-B-525283-2 and SM-B-525283-3.
Moreover, the agency advises that it is using competitive procedures
to procure these items to the extent feasible. It advises that the
17,458 panel assemblies required under the current contract with Bammac
represent less than half of the total government requirement of 38,292
assemblies. Of the remaining 20,834 assemblies, 20,076 have been
"broken out" for the Technology Insertion Program, which will be
competitively procured, and AUL has submitted a proposal to supply the
remaining 758 Filter Assemblies. In addition, the agency states that it
issued a single solicitation for all the panel assemblies needed under
the "stop-gap" procurement since the majority of the required IC's are
utilized on more than one assembly.
AUL has cited our decision in Intermem Corp., B-212964, July 31,
1984, 84-2 C.P.D. Paragraph 133, in support of its position that panel
assemblies 11A23 through 11A29 should have been procured through
separate solicitations. Our decision in Intermem, supra, is clearly
distinguishable from the situation before us. In Intermem, the agency
not only did not offer any basis for its total package procurement but
in effect agreed that a divisible component of the equipment being
purchased should be procured competitively.
We consistently have held that it is for the contracting agency to
determine whether to procure by means of a total package approach or to
break out divisible portions of the total requirement for separate
procurements. In such cases, we will not disturb the agency's decision
to procure on a total package basis unless the protester shows by
convincing evidence that the agency's approach is clearly unreasonable.
J&J Maintenance, Inc., B-214209, Nov. 2, 1984, 84-2 C.P.D. Paragraph
488. Since AUL has not presented evidence which would show that the
agency's total package approach to the procurement of the panel
assemblies is clearly improper, we will not object to the agency's use
of a single solicitation for this "stop-gap" procurement.
FOOTNOTES
(1) The presumption of CBD publication in section 5.203 of the DOD
FAR Supplement (1984) was deleted effective with regard to solicitations
issued after March 31, 1985.
(2) It does not appear that the CBD synopsis stimulated any response
other than AUL's protest.
B-219021, 64 Comp. Gen. 868
Matter of: American Sterilizer Company, September 20, 1985
Bids - Responsiveness - Brand Name or Equal Procurement
Protest is sustained where the contracting agency cocedes that the
awardee's bid for an "equal" product should have been rejected as
nonresponsive for failing to meet precise dimensions specified in a
brand name or equal purchase description. Where solicitation includes
precise performance or design characteristics, "equal" product must meet
them exactly, and mere functional equivalency will not do.
Bids - Preparation - Costs Recovery
When, in view of the extent of performance and need for
interchangeability, it is not feasible for an agency to terminate an
improperly awarded contract for the convenience of the government, the
protester is entitled to recover both its bid preparation costs and its
costs of filing and pursuing the protest at the General Accounting
Office.
American Sterilizer Company protests the award of a contract to Space
Designs, Inc., under invitation for bids (IFB) No. 640-30-85, issued by
the Veterans Administration Medical Center, Palo Alto, California.
On July 19, 1985, while American Sterilizer's protest was pending in
our Office, the company filed a complaint seeking injunctive and
declaratory relief in the United States District Court for the District
of Columbia. See American Sterilizer Co. v. Harry N. Walters, Civil
Action No. 85-2310. This decision responds to the court's request for
our advisory opinion.
We sustain the protest, but do not find it in the best interest of
the government to recommend termination of the contract. We find,
however, that American Sterilizer is entitled to recover its reasonable
costs of bid preparation and of filing and pursuing its protest at our
Office.
The IFB solicited bids for modular units to be used for the storage
and handling of medical supplies, equipment, and linens. The
specifications called for the "Unicell System," manufactured by American
Sterilizer, or equal. Precise exterior dimensions, based on Unicell
specifications, were included for various line items including the
overall modules and mobile storage and work units. Space Designs offered
units manufactured by the Herman Miller Company at a total price of
$296,052.18, while American Sterilizer offered its Unicell System at
$350,285.53. The contracting officer awarded the contract to Space
Designs on April 22, 1985, after concluding that the Herman Miller-built
units were "equal" to the Unicell System. American Sterilizer disagreed
with this finding and protested to the agency and then to our Office,
arguing that because the units provided substantially less storage
capacity, they did not conform to the salient characteristics of the
brand name system, and Space Designs' bid therefore should have been
rejected as nonresponsive. (The protester also alleged that certain
units are not molded in one piece and lack "stops" to prevent drawers
from being pulled too far out. These allegations, however, are not
repeated in the complaint filed with the District Court.)
In its report to our Office, the VA concedes that in the absence of
any other listed salient characteristics, the specific dimensions of the
storage units must be regarded as such. It also concedes that the Herman
Miller-built units are smaller than those specified. The agency
therefore agrees that it should have rejected Space Designs' bid as
nonresponsive. However, although the agency issued a stop work order on
June 12, Space Designs has already made an initial shipment that
constitutes more than 50 percent of the contract. In addition, after
discussions with Space Designs, the agency estimates that termination
costs might run as high as $57,400. The VA concludes, therefore, that
termination for convenience, at this stage of performance, would not be
practicable or in the best interest of the government. As an
alternative, the agency offers to reimburse American Sterilizer for its
bid preparation costs.
American Sterilizer, however, believes that the VA offer is
inadequate. In the protester's opinion, the agency has violated the
procurement statutes and regulations, improperly deprived American
Sterilizer of an award, and compromised the integrity of the federal
procurement system. It urges that the agency find the awardee in default
on the grounds that Space Designs has delivered goods that do not comply
with specifications. According to the protester, this would allow the
agency to return the noncompliant storage units to Space Designs, at
Space Designs' expense, and then award a contract to American
Sterilizer.
If termination for default is not deemed appropriate, then American
Sterilizer urges that the VA terminate Space Designs' contract for the
convenience of the government, again returning the noncompliant storage
units to Space Designs and awarding a contract to American Sterilizer.
Since the storage units are off-the-shelf items, the protester believes
that the expense to the government of a termination for convenience will
be limited to the costs of shipment, approximately $4,860.
At the outset, we agree with the VA's conclusion that Space Designs'
bid should have been rejected as nonresponsive. When, in a brand name or
equal purchase description, an agency expresses its requirements in
terms of very precise performance or design characteristics, any "equal"
product must meet those characteristics exaclty. See Cohu, Inc.,
B-199551, Mar. 18, 1981, 81-1 CPD Paragraph 207, and cases cited
therein. Since the VA used this type of specification, mere functional
equivalency of the "equal" storage units offered by Space Designs was
not sufficient, and it was improper for the contracting officer to
accept the bid. We therefore must determine what corrective action, if
any, is possible at this time.
Whether a contract should be terminated for default is a matter
cognizable by the contracting officer, not our Office. We point out,
however, that it is not clear that the agency could find the awardee in
default, as American Sterilizer urges, since it accepted Space Designs'
bid and has since accepted units delivered under the contract. By doing
so, the VA arguably has waived or modified the specifications. Cf.
Astubeco, Inc., Armed Services Board of Contract Appeals Nos. 8,727,
9,084, Oct. 31, 1963, reprinted in 1963 BCA Paragraph 3,941 (CCH 1963)
(action under default clause is no longer available to government when
defective goods have been accepted and paid for).
As for termination for the convenience of the government, in
determining whether to recommend such action, we consider, among other
things, the seriousness of the procurement deficiency, the degree of
prejudice to other bidders or to 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 of termination on the procuring agency's mission. Vulcan
Engineering Co. -- Request for Reconsideration, B-214595.2, Feb. 27,
1985, 85-1 CPD Paragraph 243.
After reviewing the facts of this case, we do not believe that it is
in the best interest of the government to recommend termination. As
stated above, more than 50 percent of the storage units have already
been delivered to the VA. In our opinion, the cost to the government of
reprocuring less than half the original requirement is likely to be
disproportionate in relation to the seriousness of the contracting
agency's error. Although the Herman Miller-built storage units do not
meet all the salient characteristics set forth in the IFB, the agency
concedes that they satisfy its minimum needs. In addition, since the
contracting officer's report stresses that the VA seeks
interchangeability of shelves, drawers, and accessories, it appears that
delivery of the remaining Herman Miller-built units under the contract
is necessary to meet this objective. Finally, even though the
contracting officer wrongly concluded that the Herman Miller units were
equal to American Sterilizer's Unicell System, there is no evidence that
he acted in bad faith when he made this determination. Viewed as a
whole, then, we do not believe that the facts of this case justify the
added costs and administrative inconvenience that are likely to result
from a recommendation that Space Designs' contract be terminated for the
convenience of the government.
In its court suit, the protester also seeks attorney's fees and bid
preparation costs. Our Bid Protest Regulations provide that when an
award is contrary to statute or regulation, protesters may recover
reasonable costs of (1) filing and pursuing a protest, including
attorney's fees, and (2) preparing a bid or proposal. 4 C.F.R. Section
21.6(d) (1985). The former are recoverable when the agency has
unreasonably excluded the protester from a procurement unless, pursuant
to our recommendation, the protester has received an award; the latter
are recoverable when the agency has unreasonably excluded the protester
from a procurement and other remedies are not appropriate. Id. Section
21.6(e).
Since we have found that it is not feasible to recommend any
corrective action, and since American Sterilizer's case otherwise falls
within the ambit of our Bid Protest Regulations, we find that the
protester is entitled to reasonable bid preparation costs and the costs
of filing and pursuing the protest at our Office. Should the court find
that some other remedy is appropriate, recovery of these costs would, of
course, not be appropriate.
For the VA's guidance in future procurements, we point out that it
appears the agency's requirement for the Unicell System or equal was
unduly restrictive of competition. Although with less capacity than the
Unicell system and apparently bonded, rather than molded in one piece,
and without drawer and tray stops, the Herman Miller-built units
delivered by Space Designs admittedly satisfy the VA's needs for storage
units. This means, therefore, that the specifications did not accurately
reflect the agency's minimum needs. In any similar procurement, the
agency should use more carefully drafted specifications, and any salient
characteristics should be clearly identified and distinguished from
features of the brand name equipment that are merely desirable.
The protest is sustained.
B-218933, 64 Comp. Gen. 864
Matter of: Griffin Galbraith, September 19, 1985
Contracts - Protests - General Accounting Office Procedures -
Timeliness of Protest - Date Basis of Protest Made Known to Protester
Protest alleging that fuel oil suppliers were improperly excluded
from competing for agency's requirement for heat for family housing
units is untimely where protester is aware of agency's determination to
satisfy its heating needs through natural gas and did not protest within
10 working days.
Contracts - Protests - General Accounting Office Procedures -
Timeliness of Protest - Significant Issue Exception - Not for
Application
General Accounting Office will not consider the merits of an untimely
protest nor invoke "significant issue" exception to timeliness
requirements where untimely protest does not raise issue of first
impression which would have widespread significance to the procurement
community.
Contracts - Protests - Interest party Requirement Protester Not in Line
for Award
Where agency determination to convert family housing units from oil
to natural gas is not subject to question, protester, an oil supplier,
is not an interested party to question the funding of the contract
awarded to a natural gas company since protester would not be eligible
for any award.
Griffin Galbraith protests the award of contract No.
DAKF57-85-C-0019 to Washington Natural Gas (WNG) by the Department of
the Army for natural gas service for heating family housing units at
Fort Lewis, Washington. Griffin Galbraith, a fuel oil supplier, argues
that award to WNG was improper since fuel oil could also be utilized to
satisfy the Army's needs. Griffin Galbraith contends that the Army
should have conducted a formal competitive procurement before deciding
which fuel alternative to use. Also, Griffin Galbraith alleges that the
fuel study performed by the Army which determined that the natural gas
alternative was more advantageous contained several errors. In addition,
Griffin Galbraith contends that the Army has no authority to enter into
this contract because no appropriations have been made available by
Congress for this purpose nor has the Army properly advised the
appropriate congressional committees concerning this contract. Finally,
Griffin Galbraith argues that the contract violates the Anti-Deficiency
Act.
We dismiss the protest.
In September 1983, WNG submitted an unsolicited proposal to the Army
for the conversion of family housing heating from oil to natural gas at
Fort Lewis. Thereafter, the Army conducted a fuel study to determine
whether oil or natural gas was the more economical heating alternative.
That study indicated that conversion to natural gas would be more
economical. In April 1984, the Oil Heat Institute commented on the fuel
study and in July 1984 Griffin Galbraith and one other oil supplier
submitted proposals to the Army for the continued use of fuel oil.
Although the Army revised the fuel study, the determination to convert
the furnaces to natural gas never changed and on November 9, 1984, the
Army approved the conversion.
A utility services contract was executed with WNG on December 20,
1984. This contract was for a 10-year period and was subject to the
approval of the Deputy Army Power Procurement Officer, which was
obtained on March 11, 1985. However, further action on the contract was
withheld, and on March 18 a meeting was held concerning the proposed
Fort Lewis fuel conversion. Griffin Galbraith submitted a written
response to that meeting questioning several aspects of the fuel study,
and on April 24, 1985, the Army prepared a detailed response to the
specific issues which were raised. On May 2, a meeting was held between
Army officials and fuel oil representatives, including the protester,
and the Army states that at that time it again affirmed the validity of
the fuel study and its intention to go forward with the Fort Lewis
conversion. Subsequently, a modification to WNG's contract was issued on
May 13, 1985, which established the effective date of the contract as
May 1, 1985. Under the terms of the contract, WNG is responsible for
supplying Fort Lewis with natural gas and is also required to install
connecting gas lines to the family housing units.
Griffin Galbraith's protest was filed with our Office on May 20,
1985, and the Army argues that the protest is untimely since the grounds
for protest were known at a much earlier date. Griffin Galbraith argues
that the protest should not be dismissed since it was filed within 10
days of the date it was notified of the contract award to WNG.
We find Griffin Galbraith's protest to be untimely. Under our Bid
Protest Regulations, a protest must be filed with our Office within 10
working days of the date the protester was aware or should have been
aware of the basis for protest. 4 C.F.R. Section 21.2(a)(2) (1985). We
have recognized that oral notification of the basis for protest is
sufficient to start the 10-day period running and that a protester may
not delay filing its protest until receipt of the written notification
which merely reiterates the basis for protest. Koenig Mechanical
Contractors, Inc., B-217571, Apr. 4, 1985, 85-1 CPD Paragraph 389.
Here, it appears that Griffin Galbraith was aware of the Army's
intention to go forward with the Fort Lewis conversion after meeting
with the Army on May 2. The basis for this protest is that Griffin
Galbraith was improperly excluded from competing for this requirement.
Therefore, once Griffin Galbraith knew that the Army would proceed with
the conversion to gas and therefore not consider a proposal submitted by
the firm or any other oil supplier, it was required to protest within 10
working days. Morrison-Knudsen Co., B-209609, Mar. 10, 1983, 83-1 CPD
Paragraph 245. Griffin Galbraith's protest, filed more than 10 days
after May 2, was not so filed. We further note that Griffin Galbraith's
initial submission filed on May 20 did not question the fuel study
relied upon by the Army in making its determination to convert to
natural gas. It was not until Griffin Galbraith submitted its comments
to the agency report on July 9 that it challenged the accuracy of the
Army's fuel study findings. The record shows that the particular issues
raised at that time are the same issues that Griffin Galbraith raised
previously in its response to the March 18 meeting with the Army.
Griffin Galbraith has provided no explanation, and we see nothing in the
record, which justifies Griffin Galbraith waiting until July 9 before
seeking to dispute specific aspects of the fuel study.
Griffin Galbraith argues that even if untimely, its protest should be
considered under the significant issue exception to our timeliness
rules. See 4 C.F.R. Section 21.2(c). We will review an untimely protest
under this exception only where it involves a matter of widespread
interest or importance to the procurement community that has not been
considered on the merits in a previous decision. McCabe, Hamilton and
Renny Co., Ltd., B-217021, Mar. 15, 1985, 85-1 CPD Paragraph 312. The
exception is strictly construed and sparingly used to prevent our
timeliness rules from being rendered meaningless. Dixie Business
Machines, Inc., B-208968, Feb. 7, 1983, 83-1 CPD Paragraph 128.
Griffin Galbraith contends that 15 other installations are being
considered for conversion and that resolution of the issues raised here
is necessary in order to permit an orderly treatment of those
conversions. Also, Griffin Galbraith argues that the Army's actions here
violate the specific requirements of the Competition in Contracting Act
of 1984 (CICA), Pub. L. No. 98-369, 41 U.S.C. 251 note, concerning
sole-source awards, and points out that we have not previously
considered the application of those CICA requirements. Finally, Griffin
Galbraith argues that a notice requirement in 10 U.S. C. Section 2394
(1982) has not been complied with and this also raises a significant
issue.
First, we note that CICA is not applicable here. The substantive
provisions of that law apply to solicitations issues on or after April
1, 1985. The contract with WNG was signed on December 20, 1984, and
approved on March 11, 1985. Modification 1, dated May 13, 1985, only
changed the effective date of the contract. Therefore, the requirements
of CICA are not relevant. See Johnson Controls, Inc., B-218316.2, Apr.
10, 1985, 85-1 CPD Paragraph 411. Furthermore, the fact that the Army is
conducting feasibility studies at other locations for possible
conversions does not make this matter one of widespread interest to the
procurement community at large. The issue can be timely raised if,
indeed, it comes up again. See Manville Building Materials Corp.,
B-210414, Mar. 15, 1983, 83-1 CPD Paragraph 258.
Finally, we point out that 10 U.S.C. Section 2394 does not apply to
the present procurement. That law provides in relevant part that:
(a) Subject to subsection (b), the Secretary of a military
department may enter into contracts for periods of up to 30 years
--
(1) under section 2689 of this title;
(2) for the provision and operation of energy production
facilities on real property under the Secretary's jurisdiction or
on private property and the purchase of energy produced from such
facilities.
Section 2394(b)(2) does require that certain congressional committees
to be provided notice of these types of contracts; however, the
provision applies to energy production facilities. See B-214876, Sept.
4, 1984. The Army is neither building nor operating any facility which
will produce energy and the protester's assertion that this provision is
applicable is without merit.
For the above reasons, we see no reason to consider the issues raised
by this protest under the significant issue exception.
Griffin Galbraith also questions the Army's funding for this
contract. The Army will use Operation and Maintenance funds to pay WNG,
and Griffin Galbraith asserts that use of these funds is improper.
Griffin Galbraith argues that the contract is for the conversion of the
furnaces from oil to natural gas and that this constitutes a
construction project for which specific appropriations are required.
Since no specific appropriation was made available for this purpose,
Griffin Galbraith argues that the Army has no authority to enter into
this contract. Also, because no funds are available, Griffin Galbraith
contends that an Anti-Deficiency Act violation will occur.
Initially, we note that a conversion contract is not involved here.
The contract is only for the provision of natural gas and for building a
distribution system at Fort Lewis for the delivery of the gas. The Army
indicates that the conversion of the furnaces from oil to gas will be
subsequently completed and accomplished at a future date. Consequently,
the lack of a specific appropriation for the conversion effort does not
indicate a violation of the Anti-Deficiency Act. Moreover, there is no
evidence which suggests that the Army's Operation and Maintenance
account contains insufficient funds to cover the obligation incurred;
we note that 40 U.S.C. Section 481(a)(3) (1982) specifically authorizes
contracts of up to 10 years for public utility services.
In any event, we find that Griffin Galbraith is not an interested
party to raise these issues. While we agree with the protester that it
has been adversely affected by the Army's decision to switch from oil to
natural gas, since its protest of the Army's determination to do so is
untimely and we are not considering it for that reason, we have no basis
to question the Army's determination. Under our Bid Protest Regulations,
a party must be an actual or prospective bidder or offeror whose direct
economic interest would be affected by the award of a contract or
failure to award a contract. 4 C.F.R. Section 21.0(a); ADB-ALNACO,
Inc., B-218541, June 3, 1985, 64 Comp. Gen. 577, 85-1 CPD Paragraph 633.
Since Griffin Galbraith would not be eligible for any award because it
is an oil supplier, we find that it is not sufficiently interested to
challenge the funding for this contract. Eagle Research Group Inc.,
B-213725, May 8, 1984, 84-1 CPD Paragraph 514.
The protest is dismissed.
B-216517, 64 Comp. Gen. 858
Matter of: Centurial Products, September 19, 1985
Contracts - Protests - General Accounting Office Procedures -
Timeliness of Protest - Initial Adverse Agency Action - Solicitation
Improprieties
Bid opening is not initial adverse agency action on a protest to an
agency where the agency advises the protester that it will consider the
protest notwithstanding bid opening, that it will cancel the
solicitation if the protest is upheld, and that the procurement will not
proceed until the protest is decided. A protest filed with General
Accounting Office within 10 days after the agency decision is therefore
timely.
Bids - Invitation for Bids - Specifications - Restrictive Burden of
Proving Undue Restriction
A solicitation specifying corrugated metal pipe for a closed conduit
waterway, thereby excluding an offer for concrete pipe, is not unduly
restrictive where the contracting agency establishes a prima facie case
that the requirement is reasonable, based upon a comparative cost
analysis, and the protester, although questioning the agency's method of
projecting and comparing costs, fails to show that the method is
unreasonable.
Contracts - Protests - General Accounting Office Procedures -
Timeliness of Protest - New Issues Unrelated to Original Protest Basis
Where a protester initially filing a timely protest later supplements
it with new grounds of protest, the new grounds must independently
satisfy GAO timeliness requirements.
Centurial Products protests the award of a contract to the Beaver
Excavating Company under invitation for bids (IFB) No. SCS-16-WV-84,
issued August 7, 1984 by the Soil Conservation Service, Department of
Agriculture. The IFB called for the installation of a closed conduit
waterway on 3,500 feet of tributaries to Pond Run Channel in Wood
County, West Virginia. Centurial contends that a requirement for the
cost of corrugated metal pipe in this project is unduly restrictive and
that concrete pipe would be more cost effective.
We deny Centurial's protest in part and dismiss it in part.
Centurial protested to the Soil Conservation Service before bid
opening on September 7, 1984, contending that the comparative cost
analysis upon which the agency largely based its determination to use
corrugated metal pipe was in error. Centurial claimed that the Soil
Conservation Service used the wrong method to compare the cost of
concrete and corrugated metal pipe, overestimated the cost of concrete
pipe, calculated certain fixed costs as variable costs, omitted costs
associated with replacing corrugated metal pipe at the end of its
service life, and overestimated that service life.
Following receipt of a September 12, 1984 letter denying its protest
to the agency, Centurial protested to our Office, again challenging the
Soil Conservation Service's method for comparing the relative costs of
concrete and corrugated metal pipe. According to Centurial, a proper
cost comparison establishes that concrete pipe would be less expensive
over the life of the project. By excluding concrete pipe from the Pond
Run project, the protester alleges, the Soil Conservation Service
unreasonably restricted competition.
As a threshold issue, the agency claims that Centurial's protest to
our Office is untimely, since it was not filed until September 24, 1984,
more than 10 working days after the September 7 bid opening. The agency
relies upon the rule that if a protest is filed initially with the
contracting agency, any subsequent protest to our Office must be filed
within 10 working days of initial adverse agency action. 4 C.F.R.
Section 21.2(b)(2) (1984). An agency's opening of bids without
correcting allegedly restrictive specifications generally constitutes
initial adverse agency action. Silent Hoist & Crane Co., Inc.,
B-216826, Oct. 29, 1984, 84-2 CPD Paragraph 477.
We believe the protest is timely. The record shows that on September
7, the contracting officer told Centurial that he would not delay bid
opening while the agency considered the protest because if it were
sustained, the agency would cancel the IFB and redesign the project. He
also indicated that bidders would be told that the procurement would not
proceed until the Soil Conservation Service had decided Centurial's
protest. Giving this strong indication from the agency that bid opening
would not be an indication that the procurement was proceeding in a way
inimical to Centurial's interest, we think Centurial did not have to
view bid opening as adverse action on its protest. Therefore, we will
consider the matter, since Centurial filed its protest with our Office
within 10 days of the actual formal denial.
Turning to the merits of the protest, we note that when a
specification is challenged as unduly restrictive of competition, the
procuring agency must establish prima facie support for its contention
that the restrictions it has imposed are reasonably related to its
needs. Once the agency establishes this support, the burden then shifts
back to the protester to show that the requirements complained of are
clearly unreasonable. Amray, Inc., B-208308, Jan. 17, 1983, 83-1 CPD
Paragraph 43. Thus, our inquiry is whether Centurial has met its burden
of establishing that the agency's cost-effectiveness determination --
and resulting decision to specify corrugated metal pipe -- was clearly
unreasonable.
The dispute over cost comparison methodologies in this protest arises
from the fact that, while corrugated metal pipe is generally less
expensive to install than concrete pipe, its service life is
substantially less than that of concrete pipe. Because of soil acidity
and resistivity and other environmental factors present in the Pond Run
project, the Soil Conservation Service estimates that corrugated metal
pipe will have a service life of 50 years, compared with 100 years for
concrete pipe. Thus, in determining which type of pipe was the most
cost effective, the agency not only considered the initial purchase
price and operation and maintenance expenses, but the additional cost of
replacing corrugated metal pipe in 50 years.
The protester and the Soil Conservation Service agree that a proper
comparison requires that these costs be expressed in terms of their
"present value." A present value analysis, which is based on the fact
that it is generally beneficial to defer spending, expresses projected
future expenditures in terms of current dollars. Its use provides
agencies such as the Soil Conservation Service with a common basis for
comparing projects that will require spending at different times in the
future.
In this case, the agency argues that the method it used to determine
present value is required by the guidelines implementing the Water
Resources Planning Act of 1965, as amended, 42 U.S.C.A. Section 1962a-2
(West Supp. 1984-85). /1/ This Act requires the Water Resources Council
to establish principles, standards, and procedures for the formulation
and evaluation of federal water resources projects. The guidelines are
expressly applicable to Soil Conservation Service projects.
A major aspect of evaluating water resources projects is determining
the present value of (1) deferred installation costs, and (2) operation
and maintenance costs. For this purpose, the Water Resources Council
has established a discount rate to be used in present value calculations
that is based on the interest rate of certain United States securities,
as determined annually by the Secretary of the Treasury. See 18 C.F.R.
Section 704.39 (1984). The Water Resources Development Act of 1974, 42
U.S.C. Section 1962d-17 (1982), made this discount rate mandatory in the
formulation and evaluation of federal water resources projects. /2/
To determine the present value of the cost of replacing corrugated
metal pipe in 50 years, the Soil Conservation Service discounted the
cost of replacing the pipe (estimated to be the cost at the time of
analysis, $242,175) using the applicable discount rate (7 5/8 percent)
established by the Water Resources Council. It also discounted future
operation and maintenance costs of both types of pipe. The agency
concluded that the cost of concrete pipe (installation plus operation
and maintenance over 100 years), expressed in present value terms, was
$293,423, while the cost of corrugated metal pipe (installation,
operation and maintenance, and replacement after the first 50 years) was
$267,426.
In its initial protest to our Office, Centurial contended that the
agency had improperly used a "sinking fund analysis" to arrive at the
present value for replacement of the corrugated metal pipe. This refers
to a present value analysis that assumes that portions of the
replacement cost will be paid in advance (placed in a sinking fund at
specified intervals), rather than paid at the time of replacement. It
is not clear from the record that the agency assumed the use of a
sinking fund in its calculations, and Centurial has not suggested how
such an assumption would change a present value analysis of replacement
costs. In any event, in its report on the protest, the Soil
Conservation Service provided a present value analysis justifying the
exclusion of concrete pipe that was based on a single payment for
replacement in 50 years. It therefore is unnecessary for us to consider
Centurial's protest on this basis.
Centurial next argues that the Water Resources Council guidelines
require the agency to determine the average annual equivalent cost for
future expenditures. We agree. The guidelines provide that, after an
agency determines the total present value of the cost of a project, it
should convert that value to an annual equivalent cost over the period
of analysis. /3/ The Soil Conservation Service calculates an annual
equivalent cost of $22,388 for concrete pipe and a similar cost of
$20,405 for corrugated metal pipe. Centurial argues that the annual
equivalent cost of corrugated metal pipe is actually $29,373, almost
$7,000 higher than that of concrete pipe. The difference between the
figures arrived at by Centurial and by the agency results primarily from
the fact that, in its calculations for metal pipe, Centurial did not
first determine the present value of the replacement cost of the pipe.
Rather, the protester converted the replacement cost of $242,175 to an
annual equivalent cost by treating replacement cost as if it were
already expressed in current dollars. The guidelines clearly require
that agencies determine the present value of future expenditures before
converting them to an annual equivalent cost /4/ and we believe that the
Soil Conservation Service properly did so in this case and that
Centurial's calculations are incorrect.
Centurial's remaining objection to the Soil Conservation Service's
present value analysis is that the agency allegedly neglected to take
inflation into account in determining the replacement cost for
corrugated metal pipe. Centurial would estimate the replacement cost by
increasing the current cost of installation by 5 percent annually. The
protester would then determine the present value of this inflated
figure. Using this method, Centurial calculates the replacement cost
for corrugated metal pipe as $2,777,118 ($242,175 inflated at the rate
of 5 percent a year). The protester argues that this method is required
by the guidelines and that, if it is not required, the guidelines are
unreasonable.
The guidelines direct agencies to:
Base all (National Economic Development) costs on current costs
adjusted by the project discount rate to the beginning of the
period of analysis * * * . Compute all costs at a constant price
level and at the same price level as used for the computation of
benefits. Base current costs on the price level at the time of
the analysis. /5/
The protester argues that, in this context, "current costs" means
costs adjusted for inflation, so that the guidelines require an
adjustment for inflation before discounting. However, this
interpretation ignores the last two sentences quoted above, which
clearly define "current costs" in terms of the price level at the time
of analysis and require the use of a constant price level for computing
costs and benefits. This approach is consistent with the Office of
Management and Budget's instructions to executive agencies to use
constant dollars in determining the present value of future costs for
projects not subject to the guidelines. OMB Circular No. A-94 (March
27, 1972); see also City of Nenana, B-214269, June 21, 1985, 85-1 CPD
Paragraph 708 (interpretation of OMB Circular No. A-104 (June 14, 1972),
governing comparative cost analyses for decision to lease or purchase
general purpose real property).
The Soil Conservation Service, as stated above, estimated the
replacement cost for corrugated metal pipe to be what it would pay for
installation today, then discounted this amount without an increase for
inflation during the next 50 years. The agency states that this method
accounts for inflation by assuming that the resources of the purchaser,
in this case the sponsor of the Pond Run project, will increase, at
about the same rate as inflation. We note that there are also
assumptions about inflation in the particular discount rate selected for
use in evaluation of water resources projects. Economists may differ
regarding the proper discount rate and other aspects of present value
analysis, /6/ but in this case Centurial has the burden of establishing,
not that a different method of comparing the cost of the two types of
pipe might be reasonable, but that the method used by the Soil
Conservation Service was unreasonable and thus unduly restricted
competition. In our opinion, Centurial has not done so, and we deny the
protest on this basis.
In its comments on the agency report, Centurial raises a number of
new issues, several of which had been included in its initial protest to
the agency. The protester contends that the agency failed to take into
account the effects of eliminating concrete pipe on the local economy,
omitted costs associated with replacing corrugated metal pipe after 50
years, overestimated the size and cost of concrete pipe required for the
project, and should have solicited offers to supply concrete pipe
irrespective of estimated costs in order to obtain actual bid prices for
comparison.
When a protester initially files a timely protest and later
supplements it, the new grounds of protest must independently meet our
timeliness requirements. GEO-CON, Inc., B-214503, July 3, 1984, 84-2
CPD Paragraph 13. Here, Centurial was aware of the additional grounds
for protest at least by the time it reviewed the Soil Conservation
Service's September 12 letter denying its protest to the agency. The
additional grounds were not presented to our Office until more than 5
months later, rather than within the 10 days required by 4 C.F.R.
Section 21.2. These grounds of protest, therefore, are untimely.
We deny the protest in part and dismiss it in part.
FOOTNOTES
(1) U.S. Water Resources Council, "Economic and Environmental
Guidelines for Water and Related Land Resources Implementation Studies"
(March 10, 1983) (guidelines).
(2) Although the protester and the Soil Conservation Service consider
the guidelines and the specified discount rate binding, the guidelines
by their own terms do not apply to procurement decisions such as the one
at issue here. Nevertheless, we believe it is reasonable for an agency
to adopt the same method for comparing the cost of materials to be used
in a water resources project that it used to obtain authorization for
the project in the first place.
(3) Guidelines, Sections 2.1.3 and 2.12.4(b).
(4) Id. Sections 2.1.3 and 2.12.4(b).
(5) Section 2.12.4.
(6) Our Office has suggested to the Office of Management and Budget
that an approach different from that established by the guidelines might
generally be more useful. See "Improved Analysis Needed to Evaluate
DOD's Proposed Long-Term Leases of Capital Equipment" at 23, 35-37
(PLRD-83-84, June 28, 1983).
B-219407, 64 Comp. Gen. 854
Matter of: Alliance Properties, Inc., September 18, 1985
Contracts - Protests - Authority to Consider Invitation for Bids
Cancellation
Protest challenging cancellation of an invitation for bids (IFB),
where the contracting agency plans to award a contract under the IFB
when reissued in amended form, falls within the definition of protest in
the Competition in Contracting Act, and General Accounting Office review
of such a protest is consistent with congressional intent to strengthen
existing GAO bid protest function.
Bids - Invitation for Bids - Cancellation - After Bid Opening -
Compelling Reasons Only
Contracting Agency had a compelling reason for canceling IFB for
public works services where, because of provisions setting minimum
performance deadlines for fewer than 100 percent of repair service
calls, agency could not ensure that all service calls would be performed
in a timely manner, as required to meet the agency's minimum needs.
Alliance Properties, Inc. protests the cancellation of invitation for
bids (IFB) No. N62470-84-B-5593, issued by the Navy for public works
services at Fort Story, Virginia. The protester maintains that the Navy
lacked an adequate basis for canceling the solicitation. We deny the
protest.
The IFB calls for maintenance repair and minor construction work for
various facilities at Fort Story. The contractor is to provide a
comprehensive range of services, including pest control, waste
collection, plumbing and electrical work, and work on heating and
air-conditioning equipment. The IFB provides for both maintenance and
repair of the equipment included in the scope of work.
The IFB, part of a cost comparison under Office of Management and
Budget Circular A-76, was issued on August 14, 1984, with bid opening on
January 18, 1985. The protester was the low bidder; its bid price for
the base year and 2 option years ($2,985,000) was $619,135 lower than
the government's estimate of performing the work in-house.
On April 17, 1985, the Navy canceled the IFB on the ground that it
contained defective provisions which could have a significant impact on
the Navy's ability to acquire timely and effective services.
Specifically, according to the Navy's report, two provisions were
considered defective: (1) the IFB did not require the contractor to
respond to and complete all repair service calls; and (2) because of
dollar limits in the IFB on the contractor's liability, the Navy could
not ensure that the contractor would not simply allow equipment to
deteriorate to a point beyond which the contractor would not be liable
for the cost of repair. The protester disagrees with the Navy's
position, arguing that the two provisions are clear and that performance
under the IFB will satisfy the Navy's needs.
Jurisdiction
As a preliminary matter, the Navy maintains that our Office lacks
jurisdiction to decide a protest such as this which involves a challenge
to cancellation of a solicitation. As support for its position, the
Navy relies on a narrow reading of the Competition in Contracting Act,
which defines a "protest" as:
* * * a written objection by an interested party to a
solicitation by an executive agency for bids or proposals for a
proposed contract for the procurement of property or services or a
written objection by an interested party to a proposed award or
the award of such a contract. 31 U.S.C. Section 3551(1), as added
by section 2741 of the Competition in Contracting Act of 1984,
Pub. L. No. 98-369, title VII, 98 Stat. 1175, 1199.
In the Navy's view, a protest challenging cancellation of a
solicitation concerns only the failure to award a contract, and thus
does not fall within the statutory definition.
We believe that, in enacting the bid protest provisions of the
Competition in Contracting Act, Congress intended that our Office
continue to decide protests involving cancellations. As explained in
the conference report on the Act, the purpose of the Act's bid protest
provisions was to strengthen our existing bid protest function in order
to ensure an effective enforcement mechanism for the Act's mandate for
competition. H.R. Rep. No. 861, 98th Cong., 2d Sess. 1435 (1984).
Before enactment of the Competition in Contracting Act, our Office
routinely reviewed bid protests involving cancellations. See, e.g.,
Scotts Graphics, Inc., et al., 54 Comp. Gen. 973 (1975), 75-1 CPD
Paragraph 302. In view of the continuing potential for adverse impact
on the competitive system as a result of the unwarranted use of the
authority to cancel solicitations, /1/ it is consistent with the Act's
goal of strengthening our preexisting bid protest function for us to
continue to review protests involving cancellation of solicitations.
Moreover, in our view, a protest against cancellation of a
solicitation where, as here, the contracting agency plans to reissue the
solicitation in an amended form, in effect concerns the proposed award
of a contract under the new solicitation. Thus, even under the Navy's
narrow interpretation of the Act, a protest concerning cancellation of a
solicitation falls within our bid protest jurisdiction as defined in the
Competition in Contracting Act.
Cancellation of the IFB
Although a contracting officer has broad discretion to cancel an IFB,
he must have a compelling reason to do so after bid opening because of
the potential adverse impact on the competitive bidding system of
cancellation after bid prices have been exposed. Electric Maintenance &
Installation Co., Inc., B-213005, Mar. 13, 1984, 84-1 CPD Paragraph 292.
As a general rule, changing the requirements of a procurement after the
opening of bids to express properly the agency's minimum needs
constitutes such a cogent and compelling reason. Dyneteria, Inc.,
B-211525.2, Oct. 31, 1984, 84-2 CPD Paragraph 484. In this case, the
cancellation was based on the Navy's determination that the contractor's
performance may not meet its minimum needs because of two defective
provisions in the IFB, discussed in detail below. Since we agree that
one of the provisions is defective, and as a result the Navy's needs
will not be met by award under the IFB, we find that the contracting
officer had a compelling reason to cancel the IFB.
Section 00005, para. 4 of the IFB requires the contractor to perform
service calls to repair equipment as needed between scheduled
maintenance work. The IFB establishes three types of service calls --
emergency, urgent, and routine -- classified according to the nature of
the repair problem. In the Navy's view, the IFB is defective with
regard to the time requirements for responding to and completing urgent
and routine service calls. Section 00005, para. 4.2.1 of the IFB
establishes response and completion times for all emergency service
calls. With regard to urgent and routine calls, however, the IFB does
not specify response and completion times for all calls: for urgent
calls, section 00005, para. 4.2.2 requires 90 percent of the calls to be
responded to in 24 hours and 75 percent to be completed in 48 hours;
for routine calls, while response time is specified for all the calls,
para. 4.2.3 specifies a completion time (from 4 to 14 days) for only 92
percent of the calls.
The Navy maintains that the IFB can be interpreted to relieve the
contractor of the obligation to respond to or complete that percentage
of the total service calls for which no response or completion time is
specified. Under this interpretation, for urgent calls, 10 percent
would not have to be responded to and 25 percent would not have to be
completed; for routine calls, 8 percent would not have to be completed.
As a result, the Navy argues, there is no assurance that the contractor
will perform 100 percent of the repair service calls, as is required to
meet the Navy's needs.
The thrust of the protester's argument is that, despite the fact that
not all service calls are subject to specific time limits, the
contractor in fact is obligated to respond to and complete all the
calls. While we agree with the protester's basic position, we do not
believe that that conclusion resolves the defect in the service call
provisions.
The clear intent of the IFB is to acquire comprehensive services for
continuing maintenance and repair of facilities at Fort Story. While a
certain percentage of calls is not subject to the specific response and
completion time limits, there is no indication in any other IFB
provision that the contractor is not obligated ultimately to perform all
the service calls placed by the Navy. See, e.g., section 00005, para.
4.2.4 ("rework calls" requiring performance or reperformance of all
service calls not satisfactorily performed); Attachment I, para. 5
(requiring contractor to perform service calls on all buildings listed
in exhibit 1-A). The service call provisions in particular contemplate
repair of requipment on an as-needed basis, and we think that the only
reasonable interpretation of the IFB is that all service calls must be
responded to and completed. See Dyneteria, Inc., et al., B-210684, et
al., Dec. 21, 1983, 84-1 CPD Paragraph 10.
While the contractor thus would be required to perform all the
service calls placed by the agency which fall within the scope of work
of the IFB, we agree with the Navy that the provisions nevertheless are
defective because, by not specifying response and completion times for
all urgent and routine service calls, there is no way to ensure that
they will be completed in a timely manner, as required to meet the
Navy's needs. As defined in section 00005, para. 4.2.2 of the IFB,
service calls are designated as urgent when the underlying problem
"would soon inconvenience and affect the health or well-being of
personnel or disrupt operational missions." Without specific response or
completion times for a certain percentage of urgent calls, neither the
Navy nor the contractor can be sure that the contractor's performance
time will be adequate to meet the Navy's needs. Similarly with routine
calls, the IFB does not indicate how the adequacy of the contractor's
performance in terms of completion time will be measured for those calls
not covered by the specific time limits. Further, the IFB at paragraph
2 of section 00004 establishes a scheme for penalizing the contractor
for failure to perform or late performance of the specified tasks. The
lack of standards for all urgent and routine calls would render this
scheme ineffective for a significant portion of such calls, and could
give rise to disputes during contract performance.
The protester suggests that the percentage of urgent calls not
covered by specific time limits should be regarded as subject to the
time limits for routine calls. There are two flaws in this approach,
however; first, urgent calls by definition require a quicker response
and completion time than routine calls; and, second, as noted above, 8
percent of routine calls themselves are not subject to specific
completion times.
Based on our finding that the IFB provisions regarding response and
completion times for service calls are defective, and, as a result,
award under the IFB would not meet the Navy's needs, we conclude that
the contracting officer had a compelling reason for canceling the IFB.
In view of our conclusion that the initial deficiency cited by the Navy
justifies the cancellation, we need not consider whether the second
provision was in fact defective.
The protest is denied.
FOOTNOTES
(1) An unwarranted cancellation results in bidders incurring the
unnecessary expense of preparing bids only to have all the bids rejected
and the bid prices exposed.
B-217845, 64 Comp. Gen. 851
Matter of: C. Robert Curran, September 18, 1985
Leaves of Absence - Court - Jury Duty - Entitlement
Employee who commutes to work from a residence in Virginia and
maintains another residence in New Jersey was called upon to serve as a
juror in New Jersey. The employee is entitled to court leave under 5
U.S.C. 6322 even though he might have been excused from jury duty. When
properly summoned to serve as a juror, employee's failure to advise the
court of facts that would have exempted or excused him from jury service
does not defeat his entitlement to court leave. 27 Comp. Gen. 83, 89
(1947).
Leaves of Absence - Court - Jury Duty - Traveltime Between Duty Station
and Court
Employee whose permanent duty station was Washington, D.C., was
summoned to jury duty in New Jersey for a one-week period beginning on a
Monday. Employee is entitled to court leave for the Friday he was
excused from jury duty under holding in 26 Comp. Gen. 413 (1946). In
view of the substantial distance involved, it would have imposed a
hardship to have required the employee to return to his permanent duty
station following a day of jury service on Thursday to report for duty
on Friday.
This action is in response to a request for a decision concerning a
Federal employee's entitlement to court leave for a period of jury
service. The request is submitted by the American Federation of
Government Employees and the Veterans Administration under the
procedures provided in 4 C.F.R. Sections 22.1-22.9 (1985). /1/ We find
that the employee is entitled to court leave for the period he was
summoned to jury duty in New Jersey even though he did not advise the
court of facts that might have excused him from jury service.
Mr. C. Robert Curran is an employee of the Veterans Administration,
Washington Regional Office, Washington, D.C. In September 1984, Mr.
Curran informed the agency that he was required to serve on jury duty in
New Jersey for a one-week period commencing September 17, 1984, and
requested that he be granted court leave.
Because Mr. Curran had a residence in Woodbridge, Virginia, the
agency contacted the Clerk of the Court of Monmouth, New Jersey, and
ascertained that an individual from New Jersey who is now living in
Virginia, could be excused from jury duty. Based on its understanding
that Mr. Curran was not required to serve as a juror, but did so by
choice, the agency denied his request for court leave. Mr. Curran was
charged 32 hours of leave without pay for the Monday through Friday he
served as a juror, and 8 hours of annual leave for the Friday following
his last day of jury service. His claim is for 40 hours of court leave
in lieu of these charges for annual leave and leave without pay.
Mr. Curran asserts that although he had a local address and commutes
to Washington from his Virginia residence, he is a resident of New
Jersey. As evidence of his residency, he has provided copies of his New
Jersey driver's license and New Jersey vehicle and voter registration
cards all indicating an address in Long Branch, New Jersey. The agency
has not questioned Mr. Curran's claim that he maintains a New Jersey
residency. Its position is that Mr. Curran was not required to serve as
a juror in New Jersey since he has a Virginia residence and may be
called upon to serve as a juror in Virginia.
Court leave is the authorized absence of an employee from work
without loss of or reduction in pay or benefits, for jury duty or as a
witness for a State or local government in a nonofficial capacity.
Authority for granting court leave is found at 5 U.S.C. Section 6322
(1982) which provides in pertinent part:
Section 6322. Leave for jury or witness service; official
duty status for certain witness service
(a) An employee as defined by section 2105 of this title except
an individual whose pay is disbursed by the Secretary of the
Senate or the Clerk of the House of Representatives) or an
individual employed by the government of the District of Columbia
is entitled to leave, without loss of, or reduction in, pay, leave
to which he otherwise is entitled, credit for time or service, or
performance of efficiency rating, during a period of absence with
respect to which he is summoned in connection with a judicial
proceeding, by a court or authority responsible for the conduct of
that proceeding, to serve --
(1) as a juror * * *
Under the statute, an employee is entitled to leave without reduction
in pay or benefits for a period of absence during which he is (1)
summoned, (2) in connection with a judicial proceeding by a court, (3)
to serve as a juror. Therefore, it appears that when an individual is
so summoned, the statute entitles him to court leave, regardless of
whether he may be excused from the duty because of the distance he must
travel or for some other reason. We have recognized that an employee's
failure to advise the court of an applicable exemption from the
requirement to perform jury service does not defeat his entitlement to
court leave. 27 Comp. Gen. 83, 89 (1947). A review of the relevant
legislative history shows that the statute was meant to encourage
participation in the judicial process. It does not limit court leave to
jury service in the vicinity of one's permanent duty station but
authorizes leave for jury service in connection with any judicial
proceeding.
The guidelines issued by the Office of Personnel Management /2/
indicated that court leave should be granted to an "employee who is
under proper summons from a court to serve on a jury." Federal Personnel
Manual, Chapter 630, Subchapter S10-2(e). The submission indicates that
there is some question on the part of the agency as to the propriety of
the summons issued by the New Jersey court in view of the fact that Mr.
Curran maintains a Virginia residence. The qualifications for jury
service in New Jersey include the requirement that the person summoned
as a juror be a resident of the county from which he shall be taken.
/3/ The qualifications for jury service in the State of Virginia
similarly require that the employee have been a resident of the
Commonwealth for 1 year and of the county, city or town for 6 months.
/4/ As the agency has noted, it is possible that Mr. Curran may be
summoned as a juror by both jurisdictions since it appears that he
maintains a place of residence in both states.
The concept of residency is not exclusive and one may have more than
one residence. 25 Am. Jur. 2d Domicil 4 (1974). Where, as here, there
is evidence that an employee maintains more than one residence, he
should be granted court leave for jury duty performed pursuant to a
summons issued by any jurisdiction in which he maintains a residence.
Because the standards vary from jurisdiction to jurisdiction, an
employee's qualification as a juror is a matter for judicial
determination.
Since Mr. Curran was issued a proper summons and performed jury duty
from Monday through Thursday, September 17-20, 1984, he is entitled to
32 hours of court leave for his absence on those days. We have held
that an agency should require an employee to return to duty or be
charged annual leave if he is excused from jury service for all or a
substantial part of a day. However, where hardship would result, the
employee may not be required to return to duty and should be granted
court leave. 26 Comp. Gen. 413 (1946); see also Nora Ashe, 60 Comp.
Gen. 412 (1981). Mr. Curran was summoned to jury duty for a one-week
period beginning Monday, September 17, 1984, and he was released after
performing jury duty on Thursday, September 20, 1984. Since the
distance from the Monmouth County Courthouse to Washington, D.C., is in
excess of 200 miles, it would have imposed a hardship on Mr. Curran to
have required him to return to his duty station Thursday night to report
for duty on Friday, September 21, 1984. Accordingly, he should be
granted court leave for this day even though he s excused from jury
duty.
Accordingly, Mr. Curran is entitled to court leave for the 40 hours
for which he was charged leave without pay or annual leave.
FOOTNOTES
(1) The request for a decision s made by M. J. McGo n, Director,
Finance Service, Office of Budget and Finance, Veterans Administration,
Washington, D.C.
(2) While implementing regulations have not been promulgated, the
Office of Personnel Management has issued guidelines for the granting of
court leave. See Federal Personnel Manual (FPM), Chapter 630,
Subchapter S10 (Inst. 168, March 15, 1972) and FPM Supplement 990-2,
Book 630, Subchapter S10 (Inst. 43, March 15, 1972).
(3) New Jersey Statutes Annotated 2A:69-1.
(4) Code of Virginia, Section 8.01-345.
B-219444, 64 Comp. Gen. 848
Matter of: T.L. James & Company, Incorporated, September 17, 1985
Bids - Invitation for Bids - Defective - Evaluation Criteria
Where evaluation method in invitation for bids is structured so as to
encourage unbalanced bidding, the invitation is defective, per se, and
no bid can be evaluated properly because there is insufficient assurance
that award will result in the lowest ultimate cost to the government.
T.L. James & Company, Incorporated (TLJ), protests the proposed award
of a contract to North American Trailing Company (NATCO) under
invitation for bids (IFB) No. DACW60-85-B-0016 issued by the United
States Army Corps of Engineers for maintenance dredging in the
Charleston Entrance Channel, Charleston, South Carolina. TLJ contends
that its low bid was improperly rejected as being materially unbalanced.
We believe that award under this IFB would be improper, but for a
different reason, as explained below.
The bidding schedule in the IFB called for bids on mobilization and
demobilization and dredging of an estimated 426,000 cubic yards (cu.
yds.) of material. The IFB indicated that the contractor was required
to remove 162,000 cu. yds. of the material available to be dredged, with
the remaining 264,000 cu. yds. representing overdepth dredging.
Overdepth dredging is the additional amount of dredging allowed because
the dredging operation is incapable of precise performance.
TLJ and NATCO were the only bidders. The bids and government
estimate (Govt. Est.) were as follows:
'TABLE OMITTED'
After bid opening, NATCO protested to the Corps that TLJ's low bid
should be rejected as materially unbalanced. The Corps sustained the
protest. It first determined that TLJ's bid was mathematically
unbalanced because its bid price for mobilization and demobilization was
more than three times greater than the government estimate and 16 times
greater than NATCO's bid. /1/ Further, TLJ indicated to the agency that
the two dredges it intended to use for this project were located in
Jacksonville, Florida, and Norfolk, Virginia, and the agency estimated
the mobilization and demobilization cost of these two dredges would be
only $334,000. On the other hand, the unit price for dredging bid by
TLJ was extremely low, being only 12.5 percent of the government
estimate and 20 percent of NATCO's bid.
The Corps then analyzed four possible situations, none of which was
the stated method of evaluation in the solicitation, in which less than
the estimated maximum amount of material is removed in order to
determine the true cost impact of the bids and whether TLJ's bid was
materially unbalanced. It determined that in each situation, NATCO's
bid would be low. Consequently, the Corps concluded that TLJ's bid
would not result in the lowest ultimate cost to the government, and it
intends to award the contract to NATCO.
TLJ argues that rejection of its bid was improper because unbalanced
bids on dredging projects are frequently accepted by the Corps. It also
asserts that an unbalanced bid is acceptable if it results in the lowest
cost to the government and, since it is the low responsive bidder, it is
entitled to award.
While TLJ and the Corps have correctly categorized this protest as
one involving the alleged unbalancing of TLJ's bid, we believe the
circumstances require the cancellation of the IFB rather than the
rejection of TLJ's bid.
First, where an IFB fails to include a clause warning bidders of the
possible rejection of unbalanced bids as nonresponsive, the appropriate
action ordinarily is to cancel the IFB rather than to reject the
unbalanced bid. Lear Siegler, Inc., B-205594.2, June 29, 1982, 82-1
C.P.D. Paragraph 632.
Second, the evaluation method used in an invitation must comport with
the statutory requirement for free and open competition. This
requirement means that any bid evaluation basis must be designed so as
to assure that a reasonable expectation exists that an award to the
lowest evaluated bidder will result in the lowest cost to the government
in terms of actual performance. Low Enterprises, B-182147, Dec. 13,
1974, 74-2 C.P.D. Paragraph 340. Thus, our Office has held that an
evaluation basis ch encourages the su ission of unbalanced bids, i.e.,
bids based on speculation as to which items are purchased infrequently
or frequently, is inappropriate. Global Graphics, Inc., 54 Comp. Gen.
84 (1974), 74-2 C.P.D. Paragraph 73; 47 Comp. Gen. 748 (1968); 44
Comp. Gen. 392 (1965).
It is clear that the method of evaluation used here encouraged the
unbalanced bidding to the extent that there is doubt that an award to
the apparent low bidder would result in the lowest ultimate cost to the
government. Under the evaluation scheme, bidders furnished a unit price
for dredging, and that unit price was multiplied by 426,000 cu. yds.,
the estimated maximum amount of material available for dredging. The
Corps indicated by its analysis of TLJ's bid that the estimate of
426,000 cu. yds. is out of line with the agency's experience with
dredging projects and the anticipated overdepth dredging for this
project. For example, the agency advises that, in the three previous
dredging operations in Charleston, the quantity of material actually
removed equaled 76.5 percent of the government's advertised estimate of
available material. While TLJ's bid, if accepted, would be low if the
entire estimate of available material was removed, it would not be low
if only that percentage was removed. It appears that TLJ intentionally
prepared an unbalanced bid, and its apparent low bid would not result in
the lowest cost to the government if the amount of material actually
dredged is less than 95 percent of the amount used for evaluation
purposes, since so much of its bid price is for mobilization and
demobilization. We note that the agency states in its report responding
to the protest that 426,000 cu. yds, was "only an estimate which, based
on historical data from previous contracts, is not sufficiently accurate
to permit a determination that (a) bid is actually the lowest." Thus,
this evaluation method does not provide for bids to be evaluated on the
basis of the government's best estimate.
The evaluation method incorporates more work than is expected to be
performed in the selection of the lowest bidder and, therefore, it does
not obtain the benefits of full and free competition required by the
procurement statutes. See Chemical Technology, Inc., B-187940, Feb. 22,
1977, 77-1 C.P.D. Paragraph 126. Where, as here, the evaluation method
in an IFB is structured so as to encourage unbalanced bidding, the
invitation is defective, per se, and no bid can be properly evaluated
because there is insufficient assurance that any award will result in
the lowest cost to the government. Allied Container Manufacturing
Corp., B-201140, Mar. 5, 1981, 81-1 C.P.D. Paragraph 175; Southeastern
Services, Inc. and Worldwide Services, Inc., 56 Comp. Gen. 668 (1977),
77-1 C.P.D. Paragraph 390. Further, revised evaluation criteria, such
as the agency chose to use here in determining TLJ's bid to be
materially unbalanced, may not be used after bid opening to determine
award, because bidders have not had an opportunity to compete on that
basis. Southeastern Services, Inc., et al., supra; Edward B. Friel,
Inc., 55 Comp. Gen. 231 (1975), 75-2 C.P.D. Paragraph 164.
Since the Corps did not obtain a true and realistic picture of the
actual cost sufficient to assure award to the lowest responsible bidder,
we recommend that the Corps cancel the IFB and resolicit its requirement
on the basis of an evaluation method which reflects its best estimate of
the actual work to be performed.
FOOTNOTES
(1) The entire lump sum price for mobilization and demobilization is
not required to be paid before the dredging work starts. The contract
provides that only 60 percent of the lump sum price will be paid upon
completion of the mobilization unless the contracting officer considers
the payment excessive for mobilization, in which event the payment will
be limited to actual mobilization costs with the remainder being paid in
the final payment under the contract. Cf. Riverport Industries, Inc.,
B-216707, Apr. 1, 1985, 64 Comp. Gen. 441, 85-1 C.P.D. Paragraph 364,
affirmed, B-218656.2, July 31, 1985, 85-2 C.P.D. 108.
B-219263, 64 Comp. Gen. 847
Matter of: George Boeringa -- Real Estate Expenses -- Inability to
Sell Residence, September 17, 1985
Officers and Employees - Transfers - Real Estate Expenses Relocation
Service Contracts
Transferred employee, who has been unable to sell residence at old
duty station for period in excess of 3 years, requests that government
purchase it. Although provisions of 5 U.S.C. 5724c (1982) and FTR,
paras. 2-12.1 et seq., (Supp. 11, Nov. 14, 1983), provide each agency
with discretionary authority to enter into contracts with private firms
to provide relocation services to employees, including arranging for
purchase of a transferred employee's residence, they do not authorize
purchase of employee's residence by the government. In any event, FTR
Supplement 11 only applies to employees whose effective date of transfer
is on or after Nov. 14, 1983. Since claimant transferred on Nov. 29,
1981, the statute and regulations are not applicable to his claim.
This decision is in response to a request by Mr. Virgil D. Elliott,
Controller, Medical Center for Federal Prisoners, Bureau of Prisons,
United States Department of Justice, for a decision as to whether Mr.
George Boeringa, an employee of the agency, is entitled to have his
residence at his old duty station, which he has been unable to sell for
a period in excess of 3 years, purchased by the government. For the
following reasons, the claimed benefit may not be granted.
Mr. Boeringa was transferred from Terre Haute, Indiana, to
Springfield, Missouri. He reported for duty at his new permanent duty
station on November 29, 1981. He listed his residence for sale with a
realtor who has been unable to sell it for a period in excess of 3 years
due to a depressed real estate market.
Mr. Boeringa has been granted two extensions of time in which to sell
his residence, the last extension expiring on November 27, 1984. He
requests that the government purchase his residence under the authority
of 5 U.S.C. Section 5724c (1982). The claimant contends that this is
proper inasmuch as he did not apply for his current position, but was
reassigned to it by the Bureau of Prisons. He also states that the
extension granted to sell his residence was still in effect when Public
Law 98-151, November 14, 1983, 97 Stat. 978, which purportedly permits
the claimed benefit, was enacted.
The statute in question, 5 U.S.C. Section 5724c provides that each
agency is authorized to enter into contracts to provide relocation
services to agencies and employees, including, but not limited to,
arranging for the purchase of a transferred employee's residence.
The implementing Federal Travel Regulations /1/ prohibit payment for
market losses and do not authorize the purchase of the employee's
residence by the government. Further, the provisions of Supplement 11
are effective only for employees whose effective date of transfer is on
or after November 14, 1983, the date of enactment of Public Law 98-151,
cited earlier. The supplement specifically states that the effective
date of transfer is the date on which the employee reports for duty at
the new official station.
Inasmuch as Mr. Boeringa reported for duty at his new official
station, Springfield, Missouri, on November 29, 1981, prior to the
effective date of Public Law 98-151, neither its provisions nor those of
the implementing regulations are applicable to him. See James J.
O'Meara, Jr., B-191485, November 21, 1978.
Accordingly, the request by Mr. George Boeringa, that the government
purchase his residence at his old duty station, may not be granted.
FOOTNOTES
(1) Federal Travel Regulations, para. 2-12.1 et seq., (Supp. 11, July
25, 1984, incorp. by ref., 41 C.F.R. Section 101-7.003 (1984).
B-214203, 64 Comp. Gen. 844
Matter of: Agnes Mansell -- Retroactive Promotion and Backpay,
September 12, 1985
Officers and Employees - Promotions - Retroactive Administrative Delay
An employee was selected from a selection register for promotion and
was orally so notified. She reported to her new position, but was not
actually promoted until 1 month later due to administrative delays in
processing the necessary paperwork. The claim for retroactive promotion
and backpay is denied. In the absence of a nondiscretionary agency
regulation or policy, the effective date of a promotion may not be
earlier than the date action is taken by an official authorized to
approve or disapprove the promotion. The delays here all occurred
before the authorized official had the opportunity to act. Further, the
failure to promote the employee at an earlier date did not violate a
nondiscretionary agency policy.
This decision is in response to a request from the Civilian Personnel
Officer, Fort Ord, California, Department of the Army, concerning the
entitlement of one of its employees to receive a retroactive promotion
and backpay. This matter was submitted under procedures for handling
labor-management relation matters. See 4 C.F.R. Part 22 (1985). We
conclude that the employee is not so entitled for the following reasons.
BACKGROUND
The employee, Ms. Agnes Mansell, a clerk-stenographer, grade GS-4,
was selected for promotion to secretary, grade GS-5, within the U.S.
Army MEDDAC unit at Fort Ord, California. Her selection from the
register was approved by the designated selecting official on October
13, 1983, and she was orally notified by a Civilian Personnel Office
(CPO) representative on the same date. Ms. Mansell was thereafter
informed by her supervisor that she should report to her new position on
October 31, 1983. She did so, but as of that date she had not received
any formal, written notification of her promotion.
On November 21, 1983, upon receiving her first paycheck while in her
new position, Ms. Mansell discovered that it failed to reflect her
expected pay increase. She immediately brought the matter to the
attention of the CPO staffing specialist who handled the matter. She
was informed that due to understaffing in the office, the staffing
specialist had been unable to complete the necessary paperwork so that
her promotion could be effected. According to the submission, if there
had been no processing delay on the part of the staffing specialist, the
approving official would have effected the promotion as originally
intended, i.e., on October 30, 1983. After the staffing specialist
completed all the necessary paperwork, it was sent to the authorized
approving official for signature. That official, Mr. Bruce Dillingham,
Chief, Technical Services Office, was the only person who had been
delegated the authority to approve or disapprove promotion actions.
Upon receipt of the necessary forms in Ms. Mansell's case on November
23, 1983, he exercised his delegated authority and approved her
promotion, effective November 27, 1983.
The claim being made by Ms. Mansell is for the difference between her
pay as a grade GS-4, step 1, and as a grade GS-5, step 1, for the period
October 30, 1983, to November 26, 1983.
DECISION
An employee of the Federal government is entitled only to the salary
of his or her appointed position regardless of the duties actually
performed. Dianish v. United States, 183 Ct. Cl. 702 (1968); Thomas
Davis, B-189673, February 23, 1978. Also, the granting of promotions is
a discretionary matter primarily within the province of the
administrative agency concerned. 54 Comp. Gen. 263 (1974). The
effective date of a change in salary resulting from a promotion is the
date action is taken by the administrative officer vested with promotion
approval authority, or a subsequent date specifically fixed by him. 21
Comp. Gen. 95 (1941). However, backpay may be awarded under the
authority of 5 U.S.C. Section 5596 (1982) as a remedy where unjustified
and unwarranted personnel actions affecting pay or allowances have been
taken.
Our decisions have held that, as a general rule, a personnel action
may not be made retroactive so as to increase the rights of an employee
to compensation. We have made exceptions to this rule where
administrative or clerical error (1) prevented an approved personnel
action from being effected as originally intended, (2) violated
nondiscretionary administrative regulations or policies, or (3) deprived
the employee of a right granted by statute or regulation. See Douglas
C. Butler, 58 Comp. Gen. 51 (1978), and decisions cited therein.
As we stated in Butler with respect to delays or omissions in the
processing of promotion requests which would permit a promotion to
become effective on an earlier date, our decisions have drawn a
distinction between errors that occur prior to promotion approval by the
properly authorized official and errors that occur after such approval,
but before the acts necessary to effect promotions have been fully
carried out. Thus, where the delay or omission occurs before that
authorized official has exercised his discretionary authority with
respect to approval or disapproval of the promotion, administrative
intent to promote at a particular time other than the date of the
approval cannot be established. On the other hand, if, after the
authorized official has exercised his discretionary authority and
approved the promotion request, all that remains to effect that
promotion is a series of ministerial acts which could be compelled by a
writ of mandamus, any administrative or clerical errors which delay or
prevent a promotion from occurring after such approval, do come within
the exceptions outlined above so as to permit a retroactive promotion.
John Cahill, 58 Comp. Gen. 59 (1978); Janice Levy, B-190408, December
21, 1977.
In our decision, Esther Prosser, B-194989, August 8, 1979, we
considered a claim for a retroactive promotion where the administrative
delay occurred before the promotion request documents were forwarded to
the authorized official for approval. Citing to our analysis in Butler,
we concluded that the delay in processing the claimant's promotion prior
to final approval did not constitute administrative error so as to
permit a retroactive promotion, since there was no nondiscretionary
regulation or policy otherwise requiring the promotion.
It has been suggested in the submission that, while there are no
local merit promotion regulations or a labor agreement establishing when
promotions are to become effective, there is a local regulation and
general practice which when considered in combination may qualify as the
requisite nondiscretionary policy. The local regulation provides,
generally, that employees selected for promotion, detail, or
reassignment are to be released from their old positions to report to
their new positions no later than the beginning of the second pay period
after the CPO representative has officially notified the employee of
selection. Additionally, it is asserted that it is the general practice
at Fort Ord to use the release date as the effective date on the SF-50
Notification of Personnel Action.
We do not consider the local regulation and general practice as
establishing a nondiscretionary policy. As noted, promotions may not
intentionally be made retroactive (Butler, above). By using the release
date as the effective date for employee promotion purposes, it would
appear to suggest that the action by the selecting official constitutes
the true determiner of the validity of a promotion and its effective
date, since all actions (release/effective date) occur thereafter.
However, it is stated unequivocally that the Chief, Technical Services
Office, not the selecting official, is the only person within the CPO
vested with the discretionary authority to approve or disapprove all
promotions. Therefore, any delays which antedate such discretionary
action are not administrative errors which qualify under the exceptions
stated in Butler, above.
Also, it appears that the purpose of the regulation is to provide a
reasonable lead time to complete the necessary paperwork and grant the
authorized official the opportunity to exercise his discretionary
authority to approve promotions before the employee is released, thereby
permitting the release date to be used as the effective date for SF-50
purposes. However, if, as in this case, such final action cannot be
accomplished within that time, the release date may not be used as the
effective date for promotion and pay purposes. Until an official vested
with discretionary authority acts, a promotion has not occurred. See
Prosser, above.
Accordingly, Ms. Mansell's claim for a retroactive promotion with
backpay is denied.
B-218840, 64 Comp. Gen. 835
Matter of: National Park Service - Physical Fitness Program,
September 6, 1985
Appropriations - Availability - Medical Fees - Physical Examinations
Billings for the costs of comprehensive physical fitness evaluations
and laboratory blood tests, administered to employees as part of the
National Park Service, Alaska Regional Office, physical fitness program
may be certified for payment. Section 7901 of Title 5, U.S.C., which
authorizes heads of agencies to establish health service programs
providing examinations and preventive programs, and the implementing
regulations issued by the Office of Management and Budget, the Office of
Personnel Management, and the General Services Administration, permit
the use of appropriated funds for the testing, education, and counseling
parts of the fitness programs.
Appropriations - Availability - Health Services for Employees
Billings for employees' use of a private health club for physical
exercise, as part of the National Park Service, Alaska Regional Office,
physical fitness program may not be certified for payment. Although 5
U.S.C. 7901 authorizes agency heads to establish health service programs
providing preventive programs relating to employee health, the
implementing regulations issued by the Office of Management and Budget,
the Office of Personnel Management, and the General Services
Administration, limit the scope of these programs for executive branch
agencies. These regulations do not authorize use of appropriated funds
for physical exercise as part of health service programs.
Payments - Prompt Payment Act - Applicability Determination
Late payment penalties, under the Prompt Payment Act, must be paid
for allowable billings for the National Park Service, Alaska Regional
Office, physical fitness program. Under the Prompt Payment Act, and
implementing regulations issued by the Office of Management and Budget,
an agency must pay late payment penalties if it has not made payment
within 45 days of the receipt of a proper invoice. Neither the Act nor
the regulations provide for any exception for the time during which the
General Accounting Office is considering a certifying officer request
for an advance decision on whether the invoice should be certified for
payment.
Leaves of Absence - Administrative Leave - Physical Exercise
The National Park Service, Alaska Regional Office may not grant
employees excused absence for participation in an agency-sponsored
physical fitness program. Agency discretion to excuse employees from
work without charge to leave must be exercised within the bounds of
statutes and regulations and guidance provided in General Accounting
Office decisions. Office of Management and Budget, Office of Personnel
Management, and General Services Administration regulations, which
exclude physical exercise from the health services which agencies may
provide their employees, should also be interpreted as excluding
physical exercise from the purposes for which agencies may grant excused
absences.
An authorized certifying officer of the National Park Service,
Department of the Interior, has requested an advance decision on whether
he should certify for payment four billings arising from the operation
of a physical fitness program by the Park Service's Alaska Regional
Office. He also asks whether, assuming we answer his first question in
the affirmative, late payment penalty charges may be paid on the
billings under the Prompt Payment Act, 31 U.S.C. Sections 3901-06
(1982). Finally, he asks whether it is proper for the Regional Office
to grant up to 3 hours per week of excused absence to employees for the
purpose of participating in physical exercise programs.
For the reasons indicated below, we conclude that:
1. All billings connected with the Park Service's physical fitness
program may be properly certified, except those for the use of the
facilities of a health club by employees.
2. Late payment penalties under the Prompt Payment Act must be paid
on these billings.
3. The Park Service may not grant excused absences to employees for
the purpose of physical exercise.
BACKGROUND
In November 1980, the Director of the National Park Service issued a
memorandum encouraging Regional Directors and park managers to develop
voluntary health and physical fitness programs for their employees. In
the same memo, the Director indicated that mandatory physical fitness
standards existed or were soon to be implemented for certain Park
Service positions, including firefighters, SCUBA divers, search and
rescue, law enforcement, and other related emergency services.
In response to the memorandum, the Alaska Regional Office began
planning a physical fitness program for its employees. In doing so, it
sought advice both from the President's Council on Physical Fitness and
the Department of Labor. By memorandum of November 16, 1983, the Alaska
Regional Director announced to employees the establishment of a physical
fitness program. The program was to be available to all employees in
the region on a voluntary basis. The program was to include a health
risk analysis, health and fitness education, testing to determine the
employee's physical condition, use of Government-contracted physical
exercise facilities on a 50/50 cost sharing basis between the Park
Service and the employee, and up to 3 hours per week of administrative
leave for exercise.
On February 27, 1984, the Alaska Regional Director wrote to York E.
Onnen, Director of Program Development for the President's Council on
Physical Fitness and Sports. In his letter, the Regional Director
described the program, and asked for assistance in finding facilities
for the exercise part of the program. On March 13, 1984, Mr. Onnen
wrote to the Regional Director, informing him that the President's
Council approved the region's physical fitness program. On the same
date, Mr. Onnen wrote to the Director of the Space Management Division
of the General Services Administration requesting that assistance be
provided to the Alaska Regional Office in implementing the program.
By memorandum of January 30, 1985, the Regional Director announced to
all employees that he had entered into a contract with the Greatland
Golden Health Club in Anchorage to provide the exercise portion of the
fitness program. Under the contract, all participants in the program
were entitled to use the health club facilities. The memorandum
indicated that employees would not be billed for the use of the
facilities, but requested that each employee make a monthly contribution
to the Alaska Regional Employees Association. It is our understanding
that the Alaska Regional Office will pay the full amount of the monthly
bills from the health club. It is hoped, however, that in the future
the employees association will be able to contribute funds to the
Regional Office to partially offset these costs.
The certifying officer has submitted four bills for our review. One
is in the amount of $1,890 to cover the cost of administering
comprehensive physical fitness evaluations to 63 Park Service employees.
The bill indicates that the evaluations included physical fitness and
health questionnaires; coronary risk appraisals; tests for
cardiovascular fitness, muscular endurance, strength and flexibility;
and measurements of blood pressure and body composition. A second bill
is in the amount of $630 to cover the cost of blood tests for the
employees. The third and fourth bills, in the amounts of $1,060 and
$1,020, are for the use of the health club by Park Service employees for
the months of February and March 1985. The certifying officer also
submitted a purchase order for administering health hazard appraisals to
all employees participating in the program. As of the time of the
submission there had been no billing for these services.
DISCUSSION
Statutory and Regulatory Provisions
Generally, the costs of medical or health care or treatment for
civilian Government employees are personal to the employees, and
appropriated funds may not be used to pay them, unless provided for by
statute or in the contract of employment. E.g., 57 Comp. Gen. 62, 63
(1977); 22 Comp. Gen. 32 (1942). However, the Congress has provided
statutory authority for the use of appropriated funds for employee
health in certain circumstances.
Section 7901(a) of title 5 of the United States Code provides:
(a) The head of each agency of the Government of the United
States may establish, within the limits of appropriations
available, a health service program to promote and maintain the
physical and mental fitness of employees under his direction.
Subsection (c) of the section provides:
(c) A health service program is limited to --
(1) treatment of on-the-job illness and dental conditions
requiring emergency attention;
(2) preemployment and other examinations;
(3) referral of employees to private physicians and dentists;
and
(4) preventive programs relating to health. (Italic supplied.)
In our opinion, the second and fourth categories, emphasized in the
above quote, are sufficiently broad to encompass the physical fitness
program operated by the Alaska Regional Office. However, regulations
issued under section 7901, applying to all executive branch agencies,
and which we will discuss below, further limit the parameters of health
service programs.
Under 5 U.S.C. Section 7901(b)(1), heads of agencies are required to
consult with and consider the recommendations of the Secretary of Health
and Human Services (HHS) before establishing a health service program.
Executive Order 12345, 47 Fed. Reg. 5189 (1982), extended the
President's Council on Physical Fitness and Sports as an advisory
committee to the Secretary of HHS on matters pertaining to ways and
means of enhancing opportunities for participation in physical fitness
and sports activities. (The existence of the Council was continued
through September 30, 1985, by Executive Order 12489, 49 Fed. Reg. 38927
(1984).) In our opinion, the Regional Director's consultation with the
President's Council amounts to compliance with the requirement of 5
U.S.C. Section 7901(b)(1).
OMB Circular:
The first of the executive branch regulations issued under section
7901 is OMB Circular No. A-72, June 18, 1965, which establishes criteria
to be followed by agency heads in establishing health service programs.
The Circular, in section 2, "authorizes and encourages" agency heads "to
establish an occupational health program to deal constructively with the
health of the employees of (their) department or agency in relation to
their work." Section 4 of the Circular, however, limits Federal employee
health services to the following six categories:
1. Emergency diagnosis of injury or illness during work hours;
2. Preemployment physical examinations;
3. In-service physical examinations;
4. Administration of prescribed treatments;
5. Preventive services to appraise the work environment,
provide health education, and to provide disease screening; and
6. Referral of employees to private physicians.
In our opinion, the health hazard appraisals, physical fitness
evaluations, and blood tests administered as parts of the Alaska Region
physical fitness program fall within one or more of these categories.
However, we see no way in which the exercise portion of the program is
covered by any of the six categories of permitted health services.
Federal Personnel Manual:
In the Federal Personnel Manual, the Office of Personnal Management
(OPM) has provided more detailed instructions to agencies for employee
health programs. FPM, ch. 792 (Inst. 261, December 31, 1980). Section
1-3.c. limits the health services which agencies are permitted to
provide to the same six categories as in the OMB Circular. Further,
section 4-3 sets out the objectives of employee health programs, two of
which are to provide health education and encourage personal health
maintenance, and to provide medical services such as voluntary
examinations and preventive programs to avoid large scale absences. The
activities specified to achieve these objectives include periodic health
examinations and health education and counseling, but not physical
exercise. FPM, ch. 792, Section 4-4. Federal Personnel Manual
authorizes the testing, educational, and counseling activities of the
Alaska program. It does not, however, authorize physical exercise
programs.
General Services Administration Regulations:
In the Federal Property Management Regulations, the General Services
Administration (GSA) has provided for the establishment of facilities
for Federal employee health services in buildings it manages. These
regulations do not, of course, apply to the portions of the Alaska
program, such as exercise activities, which do not take place in Federal
buildings. However, even if the Alaska Regional Office were to attempt
to set up its own physical fitness facility, rather than using a private
health club, the GSA regulations would not authorize such activity
because they specifically limit the scope of permissible programs to the
same six categories contained in OMB Circular A-72. FPMR, 41 C.F.R.
Section 101-5.304 (1984).
GSA has also issued "Guidelines for Establishment of Physical Fitness
Facilities in Federal Space." Public Buildings Service, Notice
6820-23-M, 43 Fed. Reg. 56733 (1978). These guidelines contain criteria
for the establishment of "various types of physical fitness facilities
for Federal agencies." However, even if the Alaska Regional Office were
to attempt to establish its own facilities, the guidelines do not
authorize the use of appropriated funds for these purposes. Rather,
they merely set forth criteria for establishing these facilities
assuming funds are authorized for that purpose.
Executive Order 12345:
On February 2, 1982, President Reagan issued Executive Order 12345
"in order to expand the program for physical fitness and sports * * * "
47 Fed. Reg. 5189 (1982). In addition to extending the life of the
President's Council on Physical Fitness and Sports, the executive order
directed the Secretary of Health and Human Services to "develop and
coordinate a national program for physical fitness and sports." Among
the activities which the Secretary was instructed to carry out were the
following:
(c) Strengthen coordination of Federal services and programs
relating to physical fitness and sports participation and invite
appropriate Federal agencies to participate in an interagency
committee to coordinate physical fitness and sports activities of
the Federal establishment
(j) Assist business, industry, government, and labor
organizations in establishing sound physical fitness programs to
elevate employee fitness and to reduce the financial and human
costs resulting from physical inactivity.
In our opinion, the executive order, although designed to encourage
physical fitness in Federal employees, as well as others, does not
authorize the use of appropriated funds to pay the costs of physical
exercise activities.
Based on 5 U.S.C. Section 7901 and the executive branch regulations
issued to promulgate that statute, we conclude that the certifying
officer may certify for payment the billings for physical fitness
evaluations and laboratory tests, and any future billings for health
hazard appraisals. He may not certify the billings for use of the
health club because the regulations do not permit the use of
appropriated funds to pay for employee physical exercise activities.
Special Physical Fitness Needs
As we indicated above, the Director of the National Park Service is
establishing -- or has established -- mandatory physical fitness
standards for certain especially strenuous positions in the Service such
as firefighters, divers, search and rescue, and law enforcement. In a
memorandum dated May 18, 1984, the Acting Director announced that a new
Service-wide health and fitness program would include "job related
fitness tests which must be passed prior to allowing individuals to
perform certain hazardous or arduous activities."
In our decision published at 63 Comp. Gen. 296 (1984), we considered
whether the Bureau of Reclamation, Department of the Interior, could use
appropriated funds to purchase exercise equipment for use in a mandatory
physical fitness program for firefighters at the Grand Coulee Project in
the State of Washington. In the submission in that case, we were told:
-- Physical fitness is a requirement of the firefighters' job
as mandated by position description. The program is monitored by
supervisors.
-- Specific levels of physical fitness for each firefighter are
identified and evaluated in an ongoing program relative to
established performance standards. Id. at 297.
In approving the expenditure for the equipment, we said:
Due to the nature of their job, firefighters must maintain an
unusually high level of physical strength and endurance to perform
satisfactorily. The exercise equipment in question appears to be
reasonably calculated to maintain that high level of fitness. The
equipment will be available to all firefighters. It appears that
the Government, rather than the firefighters, receives the
principal benefit from the equipment, in the form of improved
physical capabilities on the part of the firefighters. Id. at
298.
Based on that decision we would approve the use of appropriated funds
to pay the costs of physical exercise, whether for use of private health
clubs or purchase of equipment, for those employees of the Park Service
for which the Director has established special physical fitness
standards, if a physical fitness program was mandatory for all employees
in the designated positions. We would approve the expenditure not as
part of an employee health program under 5 U.S.C. Section 7901, but
rather as a necessary expense of carrying out the activities of the
National Park Service.
Late Payment Penalties
As we have indicated, the certifying officer has asked, with respect
to those billings which he may certify for payment, whether late payment
penalty charges may be paid under the Prompt Payment Act, 31 U.S.C.
Sections 3901-06 (1982).
The relevant provisions of the Act provide:
Section 3902 Interest Penalties
(a) Under regulations prescribed under section 390 of this
title, 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. * * *
(b) * * * However, a penalty may not be paid if payment for the
item is made --
(3) * * * before the 16th day after the required payment date.
Section 3903 Regulations
The Director of the Office of Management and Budget shall
prescribe regulations to carry out section 3902 of this title.
The regulations shall --
(1) provide that the required payment date is --
(A) The date payment is due under the contract for the item of
property or service provided; or
(B) 30 days after a proper invoice for the amount due is
received if a specific payment date is not established by
contract;
(5) require that, within 15 days after an invoice is received,
the head of an agency notify the business concern of a defect or
impropriety in the invoice that would prevent the running of the
time period specified in clause (1)(B) of this section.
The statute is written in mandatory terms. Under section 3902 an
agency must pay an interest penalty if it does not pay the contractor
before the 16th day after the required payment date. Under section
3903, if the contract does not provide a date of payment, the required
payment date is 30 days after the receipt of a proper invoice.
The Director of the Office of Management and Budget (OMB) has issued
Circular No. A-125, August 19, 1982, to implement the Act. The Circular
is also written in mandatory terms. Paragraph 8 of the Circular states:
8. Interest Penalty Requirement
a. An interest penalty will be paid automatically when all of
the following conditions are met:
-- There is a contract or purchase order with a business
concern.
-- Federal acceptance of property or services has occurred and
there is no disagreement over quantity, quality, or other contract
provisions.
-- A proper invoice has been received * * * or the agency fails
to give notice that the invoice is not proper within 15 days of
receipt of an invoice * * * .
-- Payment is made to the business concern more than 15 days
after the due date * * * .
From the record we have received, it appears that all of these
conditions have been met with respect to the billings for the physical
fitness evaluations and the blood tests. There was a purchase order for
each service. The Alaska Regional Office has accepted the services, as
verified by receiving reports in each case. It appears that proper
invoices have been received in each case. Payment will not be made
within 15 days after the due date for either billing.
There is some question of whether the National Park Service should
pay interest for the period this Office has been considering the
certifying officer's request for advance decision. By statute,
certifying officers are pecuniarily liable if they certify an
unauthorized payment. 31 U.S.C. Section 3528(a)(4) (1982). Therefore,
a certifying officer is entitled to a decision from the Comptroller
General before certifying a questionable voucher. 31 U.S.C. Section
3529. To require an agency to pay an interest penalty for the period
vouchers were submitted for our review would penalize the agency for its
certifying officer exercising his statutory rights.
Both the Prompt Payment Act and Circular No. A-125 contain exceptions
to the requirement for late payment penalties. Section 3906(c)
provides:
(c) * * * this chapter does not require an interest penalty on
a payment that is not made because of a dispute between the head
of an agency and a business concern over the amount of payment or
compliance with the contract. A claim related to the dispute, and
interest payable for the period during which the dispute is being
resolved, is subject to the Contract Disputes Act of 1978 * * * .
Likewise, paragraph 8(c) of the Circular states:
c. Interest penalties are not required when payment is delayed
because of a disagreement between a Federal agency and a business
concern over the amount of the payment or other issues concerning
compliance with the terms of the contract; * * * claims
concerning disputes, and any interest that may be payable with
respect to the period while the dispute is being settled, will be
resolved in accordance with the provisions in the Contract
Disputes Act of 1978 * * * .
The only legislative history we were able to find for the statutory
provision does little more than paraphrase it. See H.R. Rep. No. 461,
97th Cong., 2d Sess. 15.
In our opinion, the statutory and regulatory exceptions do not apply
to situations such as this one, in which a certifying officer requests a
decision from this Office on the propriety of a voucher. This situation
does not involve a dispute between an agency and its contractor over the
amount of payment or compliance with the contract. Rather, it is an
internal mechanism whereby a certifying officer may seek assurance that
he may properly certify a voucher.
Under the Prompt Payment Act and Circular A-125, both of which
mandate interest penalties for late payment, and neither of which
provides an exception for a certifying officer seeking an opinion of the
Comptroller General, we conclude that the Alaska Regional Office must
pay late payment charges on the two billings which we have approved for
payment from the required payment date until actually paid.
Excused Absences for Physical Exercise
As we have indicated, the Director of the Alaska Regional Office has
authorized up to 3 hours per week of excused absence for each employee
participating in the program to engage in physical exericse. The
certifying officer questions whether this action is proper.
The question of an agency's authority to grant excused leave to
employees without charge to leave (commonly called administrative leave)
is dealt with neither in statute nor in general regulations. However,
OPM does discuss this matter in the Federal Personnel Manual (FPM)
Supplement 990-2, Book 630, Subchapter S11. For example, Subchapter
S11-1 defines an excused absence as:
(A)n absence from duty administratively authorized without loss
of pay and without charge to leave. Ordinarily, excused absences
are authorized on an individual basis, except where an
installation is closed or a group of employees is excused from
work for various reasons.
Further, paragraph a of Subchapter S11-5 states:
With few exceptions, agencies determine administratively
situations in which they will excuse employees from duty without
charge to leave and may by administrative regulation place any
limitations or restrictions they feel are needed. * * *
Over the years we have recognized that in the absence of a statute an
agency may, at its discretion, excuse employees for brief periods of
time without charge to leave or loss of pay. E.g., 64 Comp. Gen. 171
(1984); 63 Comp. Gen. 542, 544 (1984); 54 Comp. Gen. 706, 708 (1975).
However, agency discretion is not unlimited. It must be exercised
within the bounds of statutes and regulations, and the guidance provided
in decisions. 63 Comp. Gen. at 545. The FPM provisions referred to
above list several instances in which excused absences have been
permitted. See 63 Comp. Gen. at 544; see also 55 Comp. Gen. 510, 512
(1975). These examples have general applicability to employees and are
either work-related or civic in nature.
As we indicated above, in implementing 5 U.S.C. Section 7901, OMB,
OPM, and GSA have chosen not to include physical exercise programs among
the health services that agencies may provide their employees. In our
view, the executive branch regulations must be interpreted as also
excluding physical exercise from the purposes for which agencies may
grant excused absences. We therefore conclude that the Alaska Regional
Director may not grant excused absences to employees for purposes of
participating in physical exercise.
This conclusion does not apply to those instances, which we discussed
on page 8 and 9 above, in which a mandatory physical fitness program is
established for employees serving in especially strenuous positions.
Under such a mandatory program, physical exercise would be a required
part of the employee's job, and it would not be necessary to grant
administrative leave to allow employees to participate in the
activities.
B-219619, 64 Comp. Gen. 830
Matter of: OTKM Construction Incorporated, September 5, 1985
Bids - Mistakes - Correction - Low Bid Displacement
Discrepancy in bid between stated total of lump sum and extended
price items and the correct mathematical total of such items may be
corrected so as to displace another, otherwise low offer where both the
intended bid price and the nature of the mistake are apparent on the
face of the bid.
Bids - Responsiveness - Pricing Response - Minor Deviation From IFB
Requirements
Where the bidder, by entering a bid price for every item, offered to
perform as required under the solicitation and at a price apparent on
the face of the bid, the failure to enter a total price did not render
the bid nonresponsive and, instead, may be considered an informality and
waived.
OTKM Construction Incorporated (OTKM) protests the determination by
the Forest Service, Department of Agriculture, to permit correction of
the bid submitted by Marvin L. Cole General Contractor, Inc. (Cole), in
response to invitation for bids No. R6-85-27C. OTKM alleges that there
is insufficient evidence of the intended bid price to permit correction
and argues that, in any case, Cole's bid is nonresponsive. We deny the
protest.
The solicitation was for the construction of the Mount St. Helens
Visitor Center in the Gifford Pinchot National Forest, Washington. The
solicitation schedule included 33 items divided among five groups: (1)
building and site; (2) sewerage; (3) segment I of road A; (4) segment
II of road A; and (5) road B. For some items, such as excavation,
bidders were to enter unit and extended prices based upon the estimated
quantity involved; other items were bid on a "lump sum" or on an "each"
basis. At the foot of each of the five groups of items a blank was
provided for the entry of a subtotal. These blanks were in the same
column as the prices bid for each item. At the bottom of the last page
of the four-page Schedule was another blank for "TOTAL ALL ITEMS --
BUILDING, SITE, SEWERAGE AND ROAD." This blank was followed by a notice
cautioning all bidders to "(b)e sure to enter TOTAL BID PRICE IN ITEM
(Block) 17 on back of Standard Form 1442," the standard form for the
solicitation, offer and award of construction, alteration or repair
contracts.
Of the six bids received, OTKM submitted the apparent low bid of
$2,924,409.90, while Cole submitted the apparent second low bid of
$2,953,350.
Upon examining Cole's bid, the Forest Service noted that the unit
prices were properly extended, except for the rounding off of some item
prices and a $1 error in one extension. The subtotals of all five
groups were also the correct mathematical totals of the item prices.
The only discrepancy was between the amount Cole entered for "TOTAL ALL
ITEMS" -- $2,953,350 -- and the correct mathematical total of the
subtotals for the five groups -- $2,890,987 -- a difference of $62,363.
In view of the consistency of the rest of the bid, contracting officials
determined that Cole had made an apparent clerical error in calculating
the stated total bid price for all items. Accordingly, they determined
that Cole's bid was subject to correction to reflect an intended bid
price of $2,890,985.16, which is the correct mathematical total of all
the items when the extended prices are not rounded off. When contacted
to verify its bid price, Cole confirmed that the mistake occurred in
adding the item prices rather than in calculating the item prices
themselves.
OTKM, however, then protested to the Forest Service against
permitting correction of Cole's bid and making award to Cole. When that
protest was denied, OTKM filed this protest with our Office.
OTKM alleges that although it is apparent that there is a mistake in
Cole's bid, the bid may not be corrected because the intended bid price
is not apparent on the face of the bid. Moreover, OTKM points out that
Cole failed to enter a total bid price in block 17 of Standard Form
1442, as instructed, and argues that this rendered Cole's bid
unresponsive.
The Forest Service and Cole, on the other hand, maintain that the
consistency of the item prices and of the subtotals indicates that the
item prices -- the individual pay items -- were the prices intended, not
the stated total price. Cole, moreover, also contends that it is
apparent from the bid how the $62,363 discrepancy occurred.
Pages 1 through 3 of the IFB Schedule were arranged as follows:
Page 1 -- unit prices and subtotal, building and site.
Page 2 -- headed "Sewerage and Road," subheaded "Sewerage," unit
prices and subtotal for sewerage.
Page 3 -- headed "Road," unit prices and subtotal for road A, segment
I.
Page 4, as bid by Cole, appears as follows:
SCHEDULE OF ITEMS Page 4 of 4
ROAD A SEGMENT II
'CHART OMITTED'
(1) Unlike the other four groups, no blank was provided for the
subtotal for road B only, an apparent oversight. The abstract of bids,
however, shows that consistent with the structure of the rest of the
Schedule, all bidders other than OTKM interpreted this blank as the
subtotal for Road B only rather than what it literally was -- the
subtotal for all sewerage work plus all road work.
Cole explains that as a result of the fact that two groups appeared
on page 4 of the Schedule, and that the blanks for the subtotals were
placed in the same column as the item prices, it inadvertently added the
item prices and the two subtotals on page 4 in arriving at its total
price -- thus overstating that price by $62,963.
Cole further explains that in adding the item prices under road B it
inadvertently included a price of $363 for construction staking instead
of the intended price of $968. This had the effect of understating its
intended total bid price by $605. The figure $363 does appear on Cole's
bid for this item, but it is lined through, the alteration is initialed
and the figure $968 is written above it. Likewise, the correct
mathematical total for the group if $363 was the intended price for
construction staking appears on Cole's bid, but it is lined through, the
alteration is initialed and the correct mathematical total for the group
if $968 was the intended bid price for construction staking is written
above it.
Finally, Cole states that the total it thus mistakenly calculated --
$2,953,345 -- was rounded up by $5 to arrive at the total of $2,953,350
stated in its bid.
As a general rule, where, as here, a bid contains a price discrepancy
and the bid would be low on the basis of one price but not the other,
then correction is not allowed unless the asserted correct bid is the
only reasonable interpretation ascertainable from the bid itself or on
the basis of logic and experience. The bid cannot be corrected if the
discrepancy cannot be resolved without resort to evidence that is
extraneous to the bid and has been under the control of the bidder, see
Frontier Contracting Co., Inc., B-214260.2, July 11, 1984, 84-2 C.P.D.
Paragraph 40; Harvey A. Nichols Co., B-214449, June 5, 1984, 84-1
C.P.D. Paragraph 597, such as worksheets and sworn statements. See SCA
Services of Georgia, Inc., B-209151, Mar. 1, 1983, 83-1 C.P.D. Paragraph
209.
We have previously considered whether a bid may be corrected so as to
displace an otherwise low bidder where there is a discrepancy between
the correct mathematical total of lump sum and extended price items and
the stated total of such items. In DeRalco, Inc., B-205120, May 6,
1982, 82-1 C.P.D. Paragraph 430, we sustained a protest against the
agency's determination to correct such a discrepancy as an apparent
clerical error where neither the nature of the alleged mistake nor the
bid actually intended could be determined without benefit of advice from
the bidder. We noted that there was no one obvious or apparent
explanation for the discrepancy. The difference did not suggest where
the mistake might have been made and the stated total was not so grossly
out of line with the other bid or with the government's estimate as to
be patently erroneous. We found that the discrepancy could reasonably
be attributed either to a mistake in totaling the items or to an
incorrectly stated item.
By contrast, in Patterson Pump Co.; Allis-Chalmers Corp., B-200165,
B-200165.2, Dec. 31, 1980, 80-2 C.P.D. Paragraph 453, we denied a
protect against the agency's determination to permit correction of such
a discrepancy as an apparent clerical error. As we stated in DeRalco,
Inc., B-205120, supra, 82-1 C.P.D. Paragraph 430 at 5, we permitted
correction because:
the only reasonable interpretation of the discrepancy was that
the bidder had added one of the items as though it were $315,000
instead of the 31,500 stated. This interpretation was based on
three factors: (1) the stated figure of $31,500 was misaligned,
(2) the difference between the stated total and the true total
exactly equal to the difference between $315,000 and $31,500, and
(3) the stated extended price of $31,500 was consistent with the
range of extended prices of the nine other bids received. In
light of these three factors, it was apparent * * * not only that
a mistake had been made, but also what the nature of that mistake
had been. It was therefore possible for the contracting officer
to ascertain the intended bid without benefit of advice from the
bidder.
We conclude that the circumstances here are more analogous to those
in Patterson Pump than to those in DeRalco. Not only are the unit
prices generally properly extended here, but, most significantly, the
subtotal for each group is also the correct mathematical total of the
item prices in that group. Given this internal consistency in Cole's
bid, we are unwilling to question the Forest Service's determination
that the only reasonable interpretation of the discrepancy is that Cole
intended its bid price to be the correct, mathematical total of the item
prices rather than the figure entered opposite the description, "TOTAL
ALL ITEMS."
Moreover, the nature of the mistakes can be determined without
benefit of advice from the bidder. As indicated above, the cause of
$605 of the discrepancy, i.e., the confusion between the price of $363
initially entered for the construction staking and the intended price of
$968 subsequently entered, is apparent on the face of the bid. In
addition, all but $5 of the remaining discrepancy can be explained by
the addition of the item prices and the two subtotals on page 4 in
arriving at the total bid price. As for the remaining $5 of the
discrepancy, not only do we consider this de minimis in a total bid of
nearly 3 million dollars, but, in addition, we note that the rounding
off of Cole's total price is consistent with Cole's rounding off of its
extended item prices.
As for Cole's failure to enter a "TOTAL BID PRICE" in Block 17 of
Standard Form 1442, we note that the test for responsiveness is whether
the bid as submitted is an offer to perform, without exception, the
exact thing called for in the IFB, so that upon acceptance, the
contractor will be bound to perform in accordance with all the terms and
conditions of the IFB. See Hild Floor Machine Company, Inc., B-217213,
Apr. 22, 1985, 85-1 C.P.D. Paragraph 456. Since Cole, by entering a bid
price for every item, offered to perform as required under the
solicitation, its failure to enter a total price in Block 17 did not
render its bid nonresponsive and the failure instead may be considered
an informality and waived. See also R.R. Gregory Corporation, B-217251,
Apr. 19, 1985, 85-1 C.P.D. Paragraph 449; cf. Telex Communications,
Inc.; Mil-Tech Systems, Incorporated, B-212385; B-212385.2, Jan. 30,
1984, 84-1 C.P.D. Paragraph 127 (omitted item price may be corrected
after bid opening).
Accordingly, Cole's bid may be corrected to reflect as its intended
bid price the correct mathematical total of all items and award, if
otherwise proper, may be made to Cole as the low bidder.
The protest is denied.
B-219345.3, 64 Comp. Gen. 828
Matter of: LaBarge Products, B-219345.3, September 5, 1985
Contracts - Protests - General Accounting Office
Procedures - Piecemeal Development of Issues by Protester
Where protester raises broad ground of protest in initial submission
but fails to provide any detail on this protest ground until it comments
on the agency report, so that a further response from the agency would
be needed for an objective review of the matter, the protest, filed in a
piecemeal fashion, will not be considered.
Contracts - Protests - Burden of Proof - On Protester
A protester alleging disclosure of its confidential information to
its competitors by agency personnel bears the burden of proving the
improper conduct, and absent any probative evidence of actual
disclosure, the allegation must be viewed as speculative and the burden
has not been met. Moreover, General Accounting Office will not conduct
investigations to establish the validity of the protester's statements.
Freedom of Information Act - General Accounting Office Authority
GAS has no authority to determine what information must be disclosed
by another agency in response to a Freedom of Information Act request.
LaBarge Products (LaBarge) protests the award of any contract under
invitation for bids (IFB) No. DAAJ10-85-B-A089 issued by the Army for
the procurement of a minimum of 20 and a maximum of 62 tactical water
distribution sets and spare/repair parts. LaBarge asserts that it
submitted the only responsive bid, and that the Army released
confidential information to certain other bidders. We dismiss the
protest in part and deny it in part.
The IFB was issued on March 29, 1985, and bid opening was on May 28.
Of the five bids received, Engineered Air Systems, Inc. (EASI) was low
bidder; Angus Fire Armour Corp. (Angus) was second low; and LaBarge
was third. LaBarge protested to our Office on June 28.
The Army, in reporting on LaBarge's protest, states that all five
bidders were responsive to the solicitation. The agency also contends
there was no disclosure of confidential data to bidders by any
procurement personnel. Any changes to the solicitation, the Army
states, were issued by amendment, and any answers to questions
concerning the solicitation were circulated to all bidders. Finally,
the Army argues that LaBarge has failed to present any specific evidence
of the alleged disclosure of confidential information.
In its response to the agency report, LaBarge argues that neither
EASI nor Angus provided an overpack list for the pump and engine they
offered in their bids, as required by Amendment 3 to the solicitation.
Such failure, LaBarge contends, amounts to a material bidding deficiency
and warrants a finding of nonresponsiveness by our Office. Further,
LaBarge believes its confidential pricing information is being released
to its competitors by Army personnel. The firm cites, to support its
position, a protest which we dismissed earlier this year, Victaulic
Company of America, B-217129, May 6, 1985, 85-1 C.P.D. Paragraph 500,
involving another contract with the Army; many of the same Army
personnel, according to LaBarge; and an allegation that pricing data
was disclosed improperly. Apparently, LaBarge is suggesting that the
disclosure allegation in Victaulic supports LaBarge's allegation in this
case. LaBarge informs us of an investigation of the alleged activity in
the Victaulic procurement that is being conducted by the Army Criminal
Investigation Division (CID), and states that it has sought information
concerning this investigation pursuant to the Freedom of Information Act
(FOIA). Because it has received no response, LaBarge asks that our
Office investigate the allegations independently.
We will not review LaBarge's responsiveness argument as it was
detailed insufficiently as initially filed and, as a piecemeal
presentation, is untimely. In its initial protest submission, LaBarge
failed to indicate why it thought it was the only responsive bidder, or
how the other bidders were nonresponsive. Thus, the firm failed to
comply with section 21.1(c)(4) of our Bid Protest Regulations, which
requires a protest to include "a detailed statement of the legal and
factual grounds of protest including copies of relevant documents."
Datametrics Corp., B-219617, Aug. 1, 1985, 85-2 C.P.D. Paragraph 122.
In its comments on the agency report LaBarge, for the first time,
presented specific details on this issue by raising EASI's and Angus'
failure to provide overpack lists. We will not review the merits of the
specifics noted in LaBarge's comments, however.
The protest system endorsed by the Competition in Contracting Act of
1984 (CICA), implemented by our Regulations, is designed to provide for
the expeditious resolution of protests with only minimal disruption to
the orderly process of government procurement. See 31 U.S.C. Section
3554 (West Supp. 1985). To that end, CICA requires, generally, the
agency to withhold contract award or, if a contract was awarded within
10 days prior to protest, to direct the contractor to cease performance
while the protest is pending. The agency is required to report within
25 working days from its receipt of notice of the protest from our
Office, 31 U.S.C. Section 3553, and the protest must be resolved by our
Office within 90 working days. 31 U.S.C. Section 3554. This process
does not contemplate a piecemeal development of protest issues, since
that would enable a protester to delay our decision and jeopardize our
ability to meet the CICA requirement for a decision within 90 days,
thereby undermining the objectives of the process by delaying an award
that otherwise could have been effected earlier. Protesters therefore
must assert and substantiate all of their grounds of protest as promptly
as possible, and a failure to do so may result in portions of a protest
being dismissed. 4 C.F.R. Section 21.1(f).
It is clear from LaBarge's comments that the basis for the initial
assertion that LaBarge was the only responsive bidder was that the other
bidders did not include overpack lists. Yet LaBarge withheld this
argument until the Army, absent any detail from LaBarge, made a general
response. As a result, we are left with a protest that was not
substantiated until after the agency response, leaving us with no basis
for objective review absent a supplemental report from the agency. We
therefore will not consider this protest ground.
LaBarge's protest that its confidential information is being released
to its competitors by Army personnel is denied. The protester has the
burden of proving improper conduct on the part of government officials.
See Davey Compressor Co., B-215028, Nov. 30, 1984, 84-2 C.P.D. Paragraph
589. Absent any probative evidence of the actual disclosure, the
allegation must be viewed as speculative only, because the protester's
burden would not be met. See Energy and Resource Consultants, Inc.,
B-205636, Sept. 22, 1982, 82-2 C.P.D. Paragraph 258. Here, LaBarge
provides nothing more than its belief that information is being released
based on the protest submission in Victaulic. Without probative
evidence, LaBarge's allegations do not provide a basis for our Office to
object to the award. Id.
Moreover, our Office will not conduct investigations to establish the
validity of a protester's speculative statements, Lion Brothers Company,
Inc., B-212960, Dec. 20, 1983, 84-1 C.P.D. Paragraph 7. As to the
protester's FOIA request to the Army, we point out that we do not have
authority to determine what information must be disclosed by another
agency in response to a FOIA request. A firm's recourse in this respect
is to pursue the disclosure remedies under the procedures provided by
the statute itself. Id.
The protest is dismissed in part and denied in part.
B-217383, 64 Comp. Gen. 825
Matter of: Frank C. Sanders, September 5, 1985
Subsistence - Per Diem - Purpose
A Forest Service firefighter was authorized reimbursement on an
actual subsistence expense basis in lieu of a per diem rate of $5. The
firefighter argues that the Federal Travel Regulations, para. 1-8.1c,
authorize reimbursement on an actual subsistence basis only where
unusual circumstances exist. The Forest Service believes that unusual
circumstances exist because the firefighters were working in remote
areas where food and lodging is not normally available and is provided
by the Forest Service. It believes that reimbursement on an actual
subsistence expenses basis would ensure that only those employees that
actually incurred expenses would be reimbursed and cited further
administrative savings realized by a reduction in the number of travel
vouchers that would have to be processed. The Forest Service may not
authorize the firefighters actual subsistence expenses since FTR para.
1-8.1c provides that actual subsistence expenses may be authorized where
the authorized per diem would be insufficient to cover expected
expenses. Therefore, the firefighter may be paid the claimed per diem.
The issue presented is whether an agency may authorize actual
subsistence for employees in a travel status where the per diem would be
adequate to cover expected expenses. /1/ We read the applicable
regulations and the legislative history as intending that actual
subsistence expenses be authorized only when the employee travels to a
high-cost geographic area or where due to the unusual circumstances of
the travel per diem would not be sufficient to cover expected expenses.
Therefore, we hold that the agency may not authorize reimbursement of
actual subsistence expenses in these circumstances.
The Forest Service states that several of its regions have authorized
reimbursement on an actual subsistence basis instead of on a per diem
basis whenever an employee is assigned to firefighting duties. The
Forest Service believes that this is proper because most fires occur in
remote areas where commercial lodging and meals are not available.
Thus, the Forest Service provides lodgings and meals to most of the
firefighters. The Forest Service indicates that a cost savings results
from reimbursing only actual expenses because only those employees who
have out-of-pocket expenses are paid. Finally, the Forest Service
indicates that administrative benefits accrue to the agency because it
is required to process a smaller number of claims since many
firefighters have no out-of-pocket expenses. The use of a special per
diem rate under paragraph 1-7.3 of the Federal Travel Regulations (May
1973) incorp. by ref., 41 C.F.R. Section 101-7.003 (1980), was
considered and rejected because it would either increase administrative
costs or not fairly reimburse employees for incurred expenses in all
situations.
The Forest Service forwarded a voucher submitted by one of the
firefighters, Mr. Frank C. Sanders, Smokejumper Superintendent. Mr.
Sanders reads FTR paragraph 1-8.1 as authorizing actual subsistence
expenses only when the agency determines that the per diem otherwise
allowable is inadequate -- i.e., less than sufficient to cover expenses
incurred. It does not in his opinion authorize actual subsistence for
the purpose of reducing administrative costs. Mr. Sanders has submitted
four vouchers totaling $174.50, representing his entitlements computed
under the rules applicable to paying the per diem allowance. He
indicates that if he is entitled to reimbursement only on an actual
expenses basis, he will obtain information with respect to such expenses
including the meals he was required to purchase. /2/
The conditions under which an agency may authorize actual subsistence
expenses are set forth in paragraph 1-8.1 of the Federal Travel
Regulations, supra. An employee's entitlement to actual subsistence
expenses is normally contingent upon entitlement to per diem and an
agency determination that the authorized maximum per diem allowance
would be inadequate to cover the actual and necessary expenses of the
traveler. FTR para. 1-8.1a. It is in this context that subparagraph
1-8.1c authorizes actual subsistence expenses due to "unusual
circumstances of the travel assignment." That subsection reiterates that
actual subsistence expenses may be authorized "when it is determined
that the maximum per diem allowance * * * would be inadequate * * * ."
The clear intent of this phrase is reinforced by subsequent rules. One
such rule states that actual subsistence may not be authorized where the
expected expenses exceed the authorized per diem by only a small amount
or where inflated costs are common to all travelers. Additional
examples of unusual circumstances are provided in subparagraph
1-8.1c(3). The common thread in all of the examples is that the cost of
lodging absorbs practically all of the authorized per diem.
The plain meaning of this regulation is that the term "unusual
circumstances" covers only certain situations where the authorized per
diem is not sufficient to cover expected expenses. Reducing
administrative costs is not one of the examples listed as an "unusual
circumstance." Further, in view of the legislative history of the
statute authorizing reimbursement of actual subsistence expenses, as
discussed below, we do not believe the statute contemplated payment of
actual subsistence expenses instead of per diem in these circumstances.
The regulatory provision discussed above implements 5 U.S.C. Section
5702(c) (1982). That subsection provides:
Under regulations prescribed under section 5707 of this title,
the Administrator of General Services, or his designee, may
prescribe conditions under which an employee may be reimbursed for
the actual and necessary expenses of official travel when the
maximum per diem allowance would be less than these expenses,
except that such reimbursement shall not exceed $75 for each day
in a travel status within the continental United States when the
per diem otherwise allowable is determined to be inadequate (1)
due to the unusual circumstances of the travel assignment, or (2)
for travel to high rate geographical areas designated as such in
regulations prescribed under section 5707 of this title.
The language of this subsection is straightforward. Actual
subsistence may be authorized only where the per diem is determined to
be inadequate for one of the two prescribed reasons -- travel in a
high-rate geographical area or where the travel assignment involves
unusual circumstances. Concerning the latter, the legislative history
shows that Congress was concerned only about situations requiring
expenditures well in excess of an employee's per diem entitlements. For
example, the House Report accompanying the bill states that the
authority to authorize actual subsistence in unusual circumstances is
intended to be used "in a very limited number of situations," noting
that occasionally employees are required to travel on assignments that
require "personal expenditures well in excess of the reimbursement which
would be obtained at the (authorized) per diem rates." H.R. Rep. No.
604, 89th Cong., 1st Sess. (1955), reprinted in 1955 U.S. Code Cong. &
Ad. News 2547, 2549-2550.
On the basis of the above analysis, we find that the regulations do
not provide and the statute does not contemplate reimbursement of actual
subsistence expenses where the expected expenses would be far less than
the otherwise authorized per diem. Accordingly, the Forest Service may
not authorize reimbursement of actual subsistence expenses under FTR
paragraph 1-8.1 in this situation. Since the Forest Service did not fix
a per diem rate for firefighters, the travel vouchers of Mr. Sanders
should be processed as submitted using the rules applicable to payment
of per diem when lodging costs are not incurred and meals are furnished
by the Government. In that connection it should be noted that in
addition to meals and lodging the per diem allowance is intended to
cover miscellaneous expenses not specifically identified. While it may
be that firefighters do not incur the usual miscellaneous expenses this
element of cost should not be overlooked in fixing a specific per diem
rate.
FOOTNOTES
(1) The request was submitted by C. E. Tipton, an authorized
certifying officer of the Forest Service, United States Department of
Agriculture.
(2) The Forest Service states that computed under the standard per
diem rate, Mr. Sanders' daily entitlement would be $5 (zero lodging
costs plus $23, minus $6 for each meal provided by the Government).
B-216529, 64 Comp. Gen. 821
Matter of: Lieutenant Mark C. Crocker, AFNG, September 4, 1985
Travel Expenses - Military Personnel - Change of Status - Temporary
Duty in Route
A member of the Reserve components returning home from ordered active
duty for training for over 20 weeks at one location was directed to
perform additional duty for less than 20 weeks at two temporary duty
points en route home. Since travel incident to duty at a single
location for 20 weeks or more is considered permanent change-of-station
travel, the member was entitled to permanent-change-of-station travel
allowances for such travel, including the travel to the temporary duty
points in route.
The question in this case is whether Lieutenant Mark C. Crocker, a
member of the Air National Guard, returning to his home after attending
two courses of instruction that lasted more than 20 weeks, is entitled
to permanent-change-of-station travel allowances under Chapter 4, Part
D, or temporary duty travel allowances under Chapter 4, Part E, of
Volume 1 of the Joint Travel Regulations (1 JTR) for his return travel,
which included two other duty stations en route. /1/ We conclude that
Lieutenant Crocker is entitled to permanent-change-of-station travel
allowances under Chapter 4, Part D, 1 JTR, for his return travel.
Facts
Lieutenant Crocker was ordered to active duty in 1981 from his home
in Kenmroe, New York, to attend two courses of instruction at Mather Air
Force Base, California, of approximately 36 weeks duration, and to
return home at the conclusion of the courses. He drove from New York to
Mather in his privately owned automobile. After he had nearly completed
his schooling at Mather in August 1982, his original orders were amended
to include three additional courses of instruction at different military
installations -- each less than 20 weeks duration -- and a training
period of a little over a month at his regular National Guard unit.
Pursuant to the amended orders and upon completion of his schooling at
Mather, Lieutenant Crocker drove to Fairchild Air Force Base,
Washington, and then to Homestead Air Force Base, Florida, where he
completed two of the additional courses. Then he drove from Florida to
home, arriving October 3, 1982. He reported for training at his regular
National Guard unit in Niagara Falls, New York, the next morning and
remained in a training status until he departed by airplane on November
14, 1982, for his last course of instruction under the amended orders at
Holloman Air Force Base, New Mexico. At Holloman his orders were
further amended to direct another training session at his regular
National Guard unit upon return from Holloman until another course of
instruction could be announced. Lieutenant Crocker departed Holloman by
privately owned automobile on December 14, 1982, and arrived for
training at his regular National Guard unit on December 20. His
original orders were amended there for the last time to include a course
of instruction lasting more than 20 weeks at McConnell Air Force Base,
Kansas. He departed for McConnell by privately owned automobile on
January 20, 1983, and returned home on June 17 the same way after
completing the course and being released from active duty.
Issue
Since the two courses of instruction at Mather Air Force Base lasted
a total of 36 weeks (more than 20 weeks), the original orders effected a
simple permanent change of station from Lieutenant Crocker's home to
Mather and would have effected another simple permanent change of
station upon release from active duty at Mather upon the conclusion of
the courses and return to home. See 1 JTR, App. J. Although these
orders were amended several times to include additional courses of
instruction and periods of training duty at his regular unit location,
which extended the period of continuous active duty to approximately 1
1/2 years, the permanent change of station under his amended orders upon
his return from Mather by way of Fairchild Air Force Base and Homestead
Air Force Base to his home is the only part of Lieutenant Crocker's
travel in question. The permanent-change-of-station travel allowance
when Lieutenant Crocker traveled at his personal expense by privately
owned automobile for official travel was a mileage allowance of 13 cents
per mile for the official distance plus a flat rate of per diem of $50
per day in whole-day increments for each 300 miles of travel. /2/
Lieutenant Crocker was paid mileage and per diem upon the change of
station from his home to Mather, and he argues that these allowances are
also payable for his automobile travel from Mather by way of Fairchild
Air Force Base and Homestead Air Force Base to his home in New York.
His claim is based on specific authorization for such
permanent-change-of-station allowances to be paid for travel by way of
temporary duty points (Fairchild and Homestead) incident to a permanent
change of station. 1 JTR, paragraph M4151 (Change No. 352, June 1,
1982), Chapter 4, Part D. However, Chapter 6, Part A, subparagraph
M6000-1 (Change No. 352, June 1, 1982), which applied to travel of
members of the Reserve components in Lieutenant Crocker's situation,
appears to conflict with Chapter 4, Part D, because Chapter 6 appears to
mandate only temporary duty travel allowances under Chapter 4, Part E,
for such travel which results in a lesser entitlement to Lieutenant
Crocker. The issue is whether Chapter 6, Part A, subparagraph M6000-1,
does in fact mandate temporary duty travel allowances for the questioned
travel, which would preclude the application of the
permanent-change-of-station mileage and per diem allowances. /3/
Analysis and Discussion
The permanent-change-of-station allowances authorized to all members
of the uniformed services under 1 JTR, paragraph M4151, Chapter 4, Part
D, applied to Lieutenant Crocker's automobile travel from Mather Air
Force Base by way of Fairchild Air Force Base and Homestead Air Force
Base to his home unless that paragraph was superseded by subparagraph
M6000-1, Chapter 6, Part A, which pertained specifically to travel of
members of the Reserve components. However, our analysis of
subparagraph M6000-1 indicates that it was written to complement the
rules pertaining to permanent changes of station found in Chapter 4,
Part D, for all members of the uniformed services and that there is only
an apparent rather than an actual conflict between subparagraph M6000-1
and Chapter 4, Part D. Subparagraph M6000-1 literally does not apply to
the disputed part of Lieutenant Crocker's travel. Therefore, when a
member of the Reserve components makes a permanent change of station, he
is subject to the rules and allowances in 1 JTR, Chapter 4, Part D.
In demonstrating that subparagraph M6000-1 does not apply to
Lieutenant Crocker's questioned travel, we will summarily dispose of the
provisions clearly not involved and fully address only the ones that
arguably are involved. Subparagraph M6000-1 is composed of subparts a
through d. Subparts a, d, and subparts c(1) and (2) concern travel
situations that do not apply to the questioned travel. And since
subpart b(1) concerns only travel from home to the first duty station or
from the last duty station to home for situations not involved here, it
does not apply either. The provisions of subpart c(3) and subpart b(2)
remain to be addressed.
Subpart b(2), paragraph M6000-1, provides:
(2) Travel Between Duty Stations. Members of the reserve
components coming within the purview of subpar. c(1) and (2) who
are ordered to perform duty at more than one duty station will be
entitled to travel and transportation allowances as for temporary
duty travel under Chapter 4, Part * * * E * * * for travel between
such duty stations.
Significantly, subpart b(2) is the only part of subparagraph M6000-1
specifically applying to travel between duty stations, such as between
Mather, Fairchild, and Homestead. Although temporary duty travel
allowances rather than permanent-change-of-station allowances are
prescribed for the travel, the travel is limited to situations " * * *
coming within the purview of subpar. (c)(1) and (2) * * * ." Since
subparts c(1) and (2) describe situations where the total amount of
active duty performed is for less than 20 weeks in the considered
period, performing travel between duty stations as described in
subparagraph b(2) within a 20-week period does not apply to Lieutenant
Crocker's questioned travel because that travel occurred during a period
of duty that was greater than 20 weeks, involving a permanent change of
station. Subparagraph b(2) could apply only if the character of
Lieutenant Crocker's entire travel is ignored and certain segments of
the questioned travel are isolated and examined.
Subpart c(3), paragraph M6000-1, provides:
(3) Active Duty for 20 Weeks or More.
(a) General. When a member is called to active duty for 20
weeks or more, no per diem or actual expense allowance are payable
at any location where the duty to be performed is for 20 weeks or
more regardless of the availability of Government quarters and
Government mess.
(b) Active Duty at More Than One Location. When the active
duty is to be performed at more than one location, per diem,
travel and transportation allowances, including miscellaneous
reimbursable expenses, are payable at any location where the duty
to be performed is for less than 20 weeks at the same rates and
subject to the same provisions and deductions as are provided for
temporary duty in Chapter 4, Parts * * * E * * * .
Note that in subpart c(3)(b) there is no language similar to that
found in subpart b(2), which describes the allowances as applying " * *
* for travel between such duty stations." And both subparts describe
situations where members are ordered to perform duty at more than one
duty station. Nowhere in subparagraph M6000-1 is there a specific
provision for travel between permanent duty stations or to or from a
temporary duty station en route to or from a permanent duty station
during a permanent change of station. We believe that the reason is
because of the complementary nature of subparagraph M6000-1 to the
normal permanent-change-of-station rules including temporary duty en
route, found in 1 JTR, Chapter 4, Part D. Under Chapter 4, Part D,
permanent-change-of-station allowances are payable for travel directed
via temporary duty points en route. 1 JTR, paragraph M4151, as provided
at the time of this travel.
Conclusion
Accordingly, Lieutenant Crocker is entitled to reimbursement for the
travel in question under 1 JTR, Chapter 4, Part D. The voucher is being
returned for payment on this basis.
FOOTNOTES
(1) This action is in response to a request for a decision received
from Captain E. R. Cortes, Chief, Accounting and Finance Branch,
Comptroller Division, Griffiss Air Force Base, New York. The Per Diem,
Travel and Transportation Allowance Committee has assigned the request
Control Number 84-16.
(2) 1 JTR, paragraphs M4150 (Change No. 352, June 1, 1982), and
M4151, Chapter 4, Part D, and Joint Determination No. 28-81, July 29,
1981, reprinted in the Table of Contents, 1 JTR, Chapter 4.
(3) The temporary duty travel allowance for Lieutenant Crocker
traveling by privately owned automobile under 1 JTR, Chapter 4, Part E,
would amount to 16 cents per mile for the distance of the ordered travel
but a per diem allowance computed only for the constructive traveltime
that a commercial airplane would require to travel the ordered distance,
since his orders did not state the use of an automobile to be
advantageous to the Government. See 1 JTR, paragraphs M4203-4(a) and
M4204-5(c) (Change No. 352, June 1, 1982). The temporary duty
allowances for automobile travel are considerably lower than the mileage
plus per diem and the traveltime allowed is restricted to the
constructive air traveltime.
B-219781, 64 Comp. Gen. 816
Matter of: Need for Regulations Under 31 U.S.C. 3716, September 3,
1985
Debt Collections - Administrative Action - Procedural Requirements
Agencies are entitled to a reasonable time in which to promulgate
regulations to implement the administrative offset authority of section
10 of the Debt Collection Act of 1982, 31 U.S.C. 3716. During the
interim period, agencies should provide debtors with the rights
specified in section 10 or their substantial equivalent. If agency
provides these rights, offset under section 10 is not precluded solely
because of absence of final agency regulations.
The Acting General Counsel of the United States Department of
Education (USDE) has requested our opinion concerning whether Government
agencies may take administrative offset under section 10 of the Debt
Collection Act of 1982, 31 U.S.C. Section 3716 (1982), before they have
issued their final regulations to implement that act. For the reasons
given below, we conclude that agencies are entitled to a reasonable
period of time in which to promulgate the regulations required by
section 10 of the act, and that so long as a debtor is afforded the
substantial equivalent of the procedural rights conferred by section 10,
an agency may take administrative offset prior to finalizing these
regulations.
BACKGROUND
According to USDE, repeated attempts to collect a debt which arose
under the Federal Insured Student Loan Program, 20 U.S.C. Sections 1071
et seq. (1982), have proven unsuccessful. /1/ However, USDE has now
learned that its debtor has entered into a number of "large procurement
contracts" with the Department of Defense (DOD). It appears that, under
these DOD contracts, the debtor is regularly receiving payments that
exceed the amount of its debt to USDE. USDE proposes to have DOD
collect the debt pursuant to section 10 of the Debt Collection Act of
1982 (DCA), 31 U.S.C. Section 3716(a) by taking offset against the DOD
contract payments. /2/
USDE notes that section 10 appears to require agencies to promulgate
regulations before taking offset. 31 U.S.C. Section 3716(b). Section
10 also requires agencies to afford debtors certain procedural rights
before taking offset. 31 U.S.C. Section 3716(c). Neither USDE nor DOD
have promulgated final regulations to implement section 10. USDE says
that both agencies are diligently working to do so. However, USDE
observes that the development of regulations to implement the Debt
Collection Act of 1982 has proved to be a complex and time-consuming
task. USDE recognizes that section 10 may be read strictly and
literally to prohibit offset under it prior to the issuance of final
regulations. Nevertheless, USDE argues that, so long as an agency
accords its debtors the prescribed procedural protections and is
diligently working to promulgate the required regulations, the agency
should be allowed to take offset before those regulations have been
finalized.
DISCUSSION
The Debt Collection Act of 1982 amended the Federal Claims Collection
Act of 1966. Both acts have been codified in title 31 of the U.S. Code,
chapter 37. According to its legislative history, the DCA was intended
to "put some teeth into Federal (debt) collection efforts" by giving
"the Government the tools it needs to collect these debts, while
safeguarding the legitimate rights of privacy and due process of
debtors." 128 Cong. Rec. S12328 (daily ed. Sept. 27, 1982) (statement of
Sen. Percy). Section 10 of the DCA provides that agencies may collect
claims owed to the United States by means of administrative offset,
after the debtor has been accorded certain procedural rights. 31 U.S.C.
Section 3716(a). Section 10 also provides that:
Before collecting a claim by administrative offset under * * *
this section, the head of an executive or legislative agency must
prescribe regulations on collecting by administrative offset based
on --
(1) The best interests of the United States Government;
(2) The likelihood of collecting a claim by administrative
offset; and
(3) for collecting a claim by administrative offset after the
6-year period for bringing a civil action on a claim under section
2415 of title 28 has expired, the cost effectiveness of leaving a
claim unresolved for more than 6 years. 31 U.S.C. Section
3716(b).
In addition to this requirement for regulations, the Federal Claims
Collection Act of 1966 (which section 10 amended) provides that agency
regulations concerning debt collection, including those pursuant to
section 10, must be consistent with the Federal Claims Collection
Standards (FCCS), 4 C.F.R. ch. II, which are joint regulations issued by
GAO and the Department of Justice under the 1966 act. 31 U.S.C. Section
3711(e) (1982). Agency regulations to implement section 10 could not be
finalized until the joint regulations had been revised to reflect the
1982 act. Those revisions were published on March 9, 1984, with an
effective date of April 9, 1984. 49 Fed. Reg. 8889 (1984).
Under a strict, literal interpretation of section 10, no agency of
the Government could use administrative offset to collect debts until it
has published the final regulations required by section 10. This
interpretation, in our opinion, is an unduly technical reading of the
law, and produces a result which is inconsistent with the stated
purposes of the act.
It is fundamental that statutes are to be construed so as to give
effect to the intent of the legislature. E.g., United States v.
American Trucking Ass'ns, 310 U.S. 534 (1940); 2A Sutherland, Statutes
and Statutory Construction, Section 45.05 (Sands ed. 1973); 55 Comp.
Gen. 307, 317 (1975). It is also fundamental that statutory
constructions which produce absurd or unreasonable results should be
avoided when they are at variance with the purpose and policy of the
legislation as a whole. E.g., Perry v. Commerce Loan Co., 383 U.S. 392
(1966); 2A Sutherland, supra, Sections 45.12, 47.38; 61 Comp. Gen.
461, 468 (1982). In our opinion, the administrative turmoil and
financial losses that might result from the summary suspension of all
offset activities pending promulgation of individual agency regulations
could not have been intended by the Congress.
The DCA made many sweeping, complicated changes in the Government's
basic claims collection authority, including its longstanding common law
authority to take administrative offset. Those changes reflected
congressional balancing of conflicting policies and purposes, including
the desire to substantially improve and accelerate the collection
process, yet simultaneously protect the legitimate privacy and due
process rights of debtors. S. Rep. No. 378, 97th Cong., 2d Sess. 32
(1978). The Congress was alarmed at the "substantial losses" being
suffered in the Government's claims collection programs. E.g., S. Rep.
No. 378, supra, at 2-4. Indeed, the legislative history states that the
"major purpose of this legislation is to facilitate substantially
improved collection procedures in the federal government." S. Rep. No.
378, supra, at 1. At the same time, however, it does not appear that
Congress expected the sweeping changes made by the act to take place
overnight. See 128 Cong. Rec. H8052-53 (daily ed. Sept. 30, 1982)
(remarks of Reps. Kindness and Conable); 128 Cong. Rec. S12334 (daily
ed. Sept. 27, 1982) (remarks of Sen. Sasser). We find it difficult to
believe that the Congress intended to further exacerbate the
"substantial losses" being suffered in the Government's claims
collection programs by requiring collection to halt until lengthy,
complicated regulations could be formulated, proposed, and finalized --
first by GAO and the Justice Department (since the Statute requires
individual agency regulations to be consistent with these joint
standards), and then by each agency.
It seems far more likely that Congress expected the agencies to
develop implementing regulations as quickly as reasonably possible.
During the interim period prior to the finalization of those
regulations, the Congress must have intended that the agencies proceed
with collection under their common law authority but adding the
substantive and procedural protections for debtors added by the new
amendments. In this regard, we refer to the Energy Action Educational
Foundation litigation which reflects the judicial view of the effect of
delayed regulations in similar circumstances.
That litigation concerned the 1978 amendments to the Outer
Contingental Shelf Lands Act, 43 U.S.C. Section 1331 et seq., which
required the Department of the Interior to promulgate regulations
reforming the way in which Interior awarded leases for the exploration
and development of oil and natural gas deposits on the outer continental
shelf (OCS). After the act passed, Interior continued to award leases
for oil and gas exploration under an awards process which reflected
some, but not all, of the reforms mandated by Congress. In addition,
Interior had not yet promulgated the regulations required by the Act. A
lawsuit was instituted to enjoin Interior from awarding any further
leases until it promulgated the required regulations.
The district court ruled that Interior's 9-month delay in
promulgating the regulations necessary to implement the statutorily
mandated reforms "although lengthy, is not arbitrary and capricious in
light of the complexity and sensitivity involved in preparation of such
regulations." Energy Action Educational Foundation v. Andrus, 479 F.
Supp. 62, 63 (D.D.C. 1979). Therefore, the court denied the request for
a preliminary injunction. The lower court's decision was affirmed by
the D.C. Circuit Court of Appeals. Energy Action Educational Foundation
v. Andrus, 631 F.2d 751 (D.C. Cir. 1979). A concurring opinion stated:
* * * (The Government's) immediate responsibility is to
promulgate the necessary regulations as rapidly as possible in
order to implement Congress' reform goals.
* * * At this point, on this record, the delay is not clearly
unreasonable, but the more sales of leases which are held without
promulgation of the new regulations which are necessary before the
congressionally-mandated program of reform can get under way, the
more unreasonable the delay appears. * * * 631 F.2d at 762 (Wald,
J., concurring) (footnote omitted).
A year later, this matter again came before the appeals court, but
this time with a slightly different result. Energy Action Educational
Foundation v. Andrus, 654 F.2d 735 (D.C. Cir. 1980), rev'd on other
grounds, sub nom. Watt v. Energy Action Educational Foundation, 454 U.S.
151, 160 n.11 (1981). The issue before the court was summarized as
follows:
Having found in the language and history of the Act a
Congressional imperative to promulgate regulations, as a necessary
prelude to (implementation of the reforms mandated by the Act),
the critical question is when does such an obligation become due.
654 F.2d at 754.
The court agreed with Interior that "Congress did not intend to hold
up all OCS leasing and development until all the regulations are
promulgated. To do so would be to undervalue the stated statutory
objectives of expediting development of the OCS and mitigating this
nation's energy problems." 654 F.2d at 755 n.96. Nevertheless, the
court found that:
* * * given the absence of significant progress * * * the day
has arrived when the (Government's) continued delay (of over 2
years) is unreasonable and frustrates the essential purposes of
(the act). 654 F.2d at 737.
We think these cases support the proposition that agencies are
entitled to a reasonable period of time in which to promulgate
regulations required by statute. The statute is violated when the delay
results in frustration of the statute's "essential purposes." We are in
no way suggesting that agencies may continue to use offset without
regard to section 10 for an indefinite period. What we are saying is
that, if an agency provides the protections required by section 10, and
if it is making reasonable progress toward the issuance of its
regulations, then we think the "essential purposes" of section 10 are
being satisfied and that the agency may continue to exercise
administrative offset during the interim period prior to the
finalization of those regulations.
Procedural rights of debtors, including notice and an opportunity for
administrative review, are specified in 31 U.S.C. Section 3716(a). As
noted earlier, regulations are required by 31 U.S.C. 3716(b), and are to
be based on the best interests of the United States, the likelihood of
collecting claims by administrative offset, and the cost effectiveness
of leaving claims unresolved for more than 6 years. The regulations
appear designed to assure consideration of these three factors, rather
than advancing the rights specified in subsection (a). Presumably, the
regulations will also address the subsection (a) procedural rights, and
thus might be said to help in protecting those rights by assuring
uniformity and certainty of procedure. Nevertheless, those rights
derive from the statute itself. Lack of regulations would not excuse
failure to provide them. Therefore, agencies should provide those
rights or their substantial equivalent without awaiting the finalization
of regulations.
CONCLUSION
Based on the foregoing analysis, we conclude that the Government is
entitled to a reasonable period of time in which to promulgate
regulations to implement section 10 and that, so long as debtors are
accorded the substantial equivalent of the procedural rights specified
in 31 U.S.C. Section 3716(a), agencies are not precluded from taking
administrative offset under section 10 prior to finalization of their
regulations. Accordingly, USDE is authorized to pursue its its offset
remedy in accordance with 31 U.S.C. Section 3716 and 4 C.F.R. Section
102.3.
FOOTNOTES
(1) The amount of the debt and the identity of the debtor were not
specified, and are not relevant for purposes of our decision.
(2) USDE seeks to use section 10 because the statutes and regulations
which govern the Federal Insured Student Loan Program do not address the
use of offset against payments made by other agencies of the Government
to collect debts arising under this program. See 20 U.S.C. Sections
1071 et seq.; 34 C.F.R. pt. 682 (1984). Cf. 34 C.F.R. Section
682.711(c) (authorizing USDE to take offset against any benefits or
claims due the lender (from USDE).") In addition, we have been
informally advised by USDE that the relevant contractual agreements
neither permit nor prohibit offset actions. Cf. B-214679, Apr. 29,
1985, 64 Comp. Gen. 492.
B-218624; B-218880, 64 Comp. Gen. 813
Matter of: Monterey City Disposal Service, Inc., September 3, 1985
Environmental Protection and Improvement - Waste - Disposal
Since Solid Waste Disposal Act requires federal agencies to comply
with local requirements respecting the control and abatement of solid
waste generated by federal facilities in the same manner and extent as
any person subject to such requirements, those federal facilities
located within the city of Monterey must comply with a city requirement
that all inhabitants of the city have their solid waste collected by the
city's franchisee. Therefore, federal solicitations seeking bids for
these services should be canceled and the services of the city or its
franchisee should be used instead.
Monterey City Disposal Service, Inc. (MCDS), protests the issuance by
the Departments of the Navy and the Army of invitations for bids (IFB)
No. N62474-84-C-5427 (Navy) and ADKF03-85-B-0022 (Army) for the
collection and disposal of solid waste at the Naval Postgraduate School,
the Presidio of Monterey and Fort Ord.
MCDS has an exclusive franchise from the city of Monterey for the
collection and disposal of solid waste. The city of Monterey code
requires that inhabitants of the city utilize the solid waste disposal
service provided by the city or its franchisee. The Solid Waste Disposal
Act, 42 U.S.C. Section 6961 (1982) (SWDA), provides:
Each department * * * of the executive branch * * * of the
Federal Government * * * engaged in any activity resulting or
which may result, in the disposal or management of solid waste * *
* shall be subject to, and comply with, all Federal, State,
interstate, and local requirements, both substantive and
procedural (including any requirement for permits * * * ),
respecting control and abatement of solid waste * * * in the same
manner, and to the same extent, as any person is subject to such
requirements, including the payment of reasonable service charges.
MCDS contends that section 6961 requires the Navy and the Army, to
the extent that their responsive IFB's concern services to be performed
within the city limits, to utilize its services because of its exclusive
franchise with the city.
After protesting to our Office, MCDS filed suit in the United States
District Court, Northern District of California, San Jose (District
Court) (Gary Parola and Monterey City Disposal Service, Inc. v. Casper
Weinberger, et al., No. C-85-20202WAI). The city of Monterey, a party to
the suit, supports the plaintiff's action. The District Court issued an
interim order on June 24, 1985, granting a preliminary injunction
pending our decision on whether the Navy and the Army are required to
utilize MCDS's services.
We find that the Navy and Army are required to use the services of
the city or its franchisee and the protests are sustained.
The legislative history of section 6961 reveals that its purpose is
to require federal agencies to provide leadership in dealing with solid
waste and hazardous waste disposal problems by having them comply not
only with federal controls on the disposal of waste, but also with state
and local controls as if they were private citizens. S. Rep. No.
94-985, 94th Cong., 2d Sess. 23-24.
Both the Army and the Navy point to two recent court cases,
California v. Walters, 751 F.2d 977 (9th Cir. 1984), and Florida v.
Silvex Corp., No. 83-926-CIV-J-14, slip. op. (M.D. Fla. Jan 28, 1985),
as indicating that the type of requirement they must comply with does
not include local provisions such as the solid waste collection
provision of the Monterey code.
In California v. Walters, the city of Los Angeles initiated a
criminal prosecution against the Veterans Administration because of its
alleged disposal of hazardous medical waste, citing section 6961 as a
waiver of sovereign immunity by the United States. The court disagreed,
holding that while state waste disposal standards, permits and reporting
duties were "requirements" applicable to federal agencies under section
6961, state criminal sanctions were not. The court stated that sanctions
are rather the means by which standards and reporting duties are
enforced and, as such, are not clearly within the scope of the waiver of
sovereign immunity under section 6961.
Florida v. Silvex Corp. involved a state statute that holds a party
strictly liable for removal costs and damages for releasing a hazardous
waste. A Navy contractor responsible for removing hazardous waste
spilled the waste, and the state sought to hold the Navy liable for
damages, citing section 6961. As in the California case, the court
reasoned that liability requirements under state statutes were not
within the coverage of section 6961.
Sanctions are not being sought in this case. Rather the protester is
seeking to require the Army and the Navy to use its solid waste
collection services just as any other person in the city of Monterey
would be required to do. California Reduction Co. v. Sanitary Reduction
Works, 199 U.S. 306 (1905 The city code provision in question clearly is
designed to permit the city to control the disposal of solid waste
within city limits in a safe and efficient manner. /1/ The protester and
the city point out that, by requiring that all solid waste be collected
by the city's exclusive franchisee, the city is better able to assure
that its rules and regulations regarding solid waste disposal are
followed. See also, Strub v. Deerfield, 167 N.E.2d 178, 180 (Ill.
1960), 83 ALR2d 795. The city further points out that until now the Navy
has used its services (the Army has always competed for these services)
and that if the Navy now withdraws, the city's ability to provide
adequate service to the entire community at a reasonable price may be
impaired.
The Navy argues, however, that federal procurement statutes require
that its services and purchases be obtained on a competitive basis, and
that the recently enacted Competition In Contracting Act of 1984 (CICA)
10 U.S.C.A. Section 2301 (West Supp. 1985), reinforces the requirement
for competition in contracting. The Navy argues that in the absence of
an express congressional intent to permit sole source contracting under
section 6961, we should not read the section as requiring sole source
instead of competitive contracting.
We note that, while CICA requires that federal agencies use
competitive procedures, the act recognizes as an exception when:
A statute expressly authorizes or requires that the procurement
be made * * * from a specified source. 10 U.S.C.A. Section
2304(c)(5) (West Supp. 1985).
Under Section 6961, federal agencies are required to comply with
local requirements respecting the control and abatement of solid waste,
"in the same manner, and to the same extent, as any person is subject to
such requirements, including the payment of reasonable service charges."
This language expressly requires federal agencies to obtain waste
disposal services from local government where the local government
requires that its waste disposal services be used. In short, we think
the exception provision of CICA is applicable here.
Finally, the Navy expresses concern that it could find itself at the
mercy of expensive or unscrupulous contractors if it has to use the
local franchises. In this case, for example, Navy notes that it received
three bids under its solicitation, a low bid of $107,400, a second low
bid of $129,000, and a third bid from the protester of $250,432.
Further, Navy notes that its current contract with the protester
provides a price of $175,000.
We would share the Navy's concern, but for the fact that the record
indicates that solicitation's statement of work exceeds the statement of
work of the current contract. Moreover, MCDS has filed an affidavit
showing that it bid using "the standard rates which the Company's
franchise agreement with Monterey requires us to charge all customers
within the City." Affidavit of Gary Parola, May 14, 1985, p.4. In view
of MCDS's status as a public utility under California law, United States
v. Scavengers Protective Ass'n, 105 F. Supp. 656 (N.D. Cal. 1952), we
find that MCDS's rates are reasonable under the circumstances since they
are subject to local government regulation and judicial review. See Ex
parte Zhizhuzza, 81 P. 955, 957 (Cal. 1905); see also City of Glendale
v. Trondsen, 308 P.2d 1, 6 (Cal. 1957).
Therefore, we find that, in accordance with section 6961, the Navy
should use the services of the city's franchisee to collect its solid
waste. We recommend that the Navy solicitation be canceled and the
Navy's collection requirements be met by using the services of the city
or its franchisee.
In the case of the Army, we reach a similar conclusion with regard to
Presidio. The Army's solicitation covers both Fort Ord, which is located
outside the city, and Presidio, which is located within the city. As
indicated by the Army solicitation, most of the solid waste will be
generated outside the city (estimated 127.5 tons per week at Fort Ord
compared to an estimated 30 tons per week at the Presidio). The Army
has not presented any reasons why it can not obtain services for
Presidio apart from the solid waste collection services it obtains for
Fort Ord. Since the Fort Ord facility is outside the city limits of
Monterey, the Army of course need not comply with the city code
provision for its Fort Ord collection requirement. We therefore
recommend that the Army delete the Presidio requirement from the Fort
Ord solicitation. We further recommend that the Presidio requirement be
met by using the services of the city or its franchisee.
The protests are sustained.
FOOTNOTES
(1) The California Plan (Oct. 1981) as approved by the Environmental
Protection Agency (EPA), 47 Fed. Reg. 6834 (1982), delegated to local
government the responsibility for establishing collection standards of
local concern. Consistent with the Plan the California Code provides
that local government shall determine:
Whether such services are to be provided by means of
nonexclusive franchise, contract license, permit, or otherwise,
either with or without competitive bidding, or if in the opinion
of its governing body, the public health, safety and well-being so
require, by partially exclusive or wholly exclusive franchise,
contract license, permit, or otherwise, either with or without
competitive bidding. Such authority to provide solid waste
handling services may be granted under such terms and conditions
as are prescribed by the governing body of the local governmental
agency by resolution or ordinance.
Cal. Gov't Section 66757(b) (Deering Supp. 1985) (enacted in 1980).
B-219930, 64 Comp. Gen. 810
Matter of: Ford Construction Company, Inc., August 30, 1985
Bids - Invitation for Bids - Cancellation - After Bid Opening - Low Bid
in Excess of Government Estimate
Agency's rejection of only bid received on the basis of unreasonable
price, resulting in cancellation of solicitation, is proper when the bid
price is approximately 27 percent higher than the government estimate.
Bids - Invitation for Bids - Cancellations - Resolicitation -
Negotiated Procurement
Issuance of a request for proposals after cancellation of invitation
for bids on the basis of price unreasonableness, instead of negotiation
with sole bidder responding to the invitation, is proper, since
regulations permit but do not require such negotiation and since
cancellation determination does not authorize negotiation on this basis.
Ford Construction Company, Inc. protests the cancellation after bid
opening of invitation for bids (IFB) No. FO4699-85-B-0072. The IFB was
issued on June 25, 1985 as a small business set-aside by the Sacramento
Air Logistics Center, McClellan Air Force Base, California. The Air
Force cancelled the invitation for hazardous waste cleanup after the
contracting officer determined that Ford's bid, the only one received,
was unreasonable as to price.
The protester contends that the difference between its bid and the
government estimate was not a compelling reason to reject its bid and
cancel the invitation and argues that the Air Force should have
negotiated with it instead.
We dismiss the protest.
The Federal Acquisition Regulation (FAR) provides that after bids
have been opened, award must be made to the lowest responsible bidder
unless there is a compelling reason to reject all bids and resolicit.
FAR, Section 14.404-1(a)(1) (FAC No. 84-5, Apr. 1, 1985). The
regulation, as supplemented by the Department of Defense (DOD),
specifically provides that a solicitation may be cancelled after bid
opening if the prices of all otherwise acceptable bids are unreasonable.
FAR Section 14.404-1(c)(6); DOD FAR Supp. Section 14-404-1 (DAC No.
84-10, Jan. 10, 1985). Such a determination of unreasonableness
involves broad discretion on the part of the contracting officer, and we
generally will not disturb it absent a showing of fraud or bad faith.
Mid South Industries, Inc., B-216281, Feb. 11, 1985, 85-1 CPF 175. In
this regard, we have recognized that a determination of price
reasonableness properly may be based upon comparisons with such things
as a government estimate, past procurement history, current market
conditions, or any other relevant factors. Omega Container, Inc.,
B-206858.2, Nov. 26, 1982, 82-2 CPD Paragraph 475.
In this procurement, Ford states that the contracting officer
informed it that the determination to cancel was based on a comparison
of its bid with the government estimate. Ford's bid price of $3,566,000
was $760,000 higher than the government estimate of $2,806,000. We have
found cancellation to be justified where the low responsive bid was 24
percent greater than the government estimate. See IFR, Inc., B-209929,
May 17, 1983, 83-1 CPD Paragraph 524; Building Maintenance Specialists,
Inc., B-186441, Sept. 10, 1976, 76-2 CPD Paragraph 233. We believe the
contracting officer here also was justified in determining that the Ford
bid price -- approximately 27 percent higher than the government
estimate -- was unreasonable. Further, the protester has not alleged
fraud or bad faith. Therefore, we have no basis to object to the
agency's rejection of protester's bid and the resulting cancellation of
the invitation.
Alternatively, the protester requests that the agency be directed to
negotiate with it so that it can present evidence as to the
reasonableness of its price. Contrary to the protester's apparent
belief, once an IFB is cancelled because of price unreasonableness, the
FAR does not require that the completion of the acquisition by
negotiation be limited to negotiations with those who submitted bids.
The FAR provides agencies with this option, but it is only an option,
and it may be utilized only if such action is authorized in the
cancellation determination. FAR Sections 14.404-1(e)(1) and 15.103.
Otherwise the contracting officer must proceed with a new acquisition.
FAR Sec. 14.404-1(e)(2).
Here, Ford has neither alleged nor shown that negotiation was
authorized with it, the sole bidder, in the determination to cancel the
IFB, and the Air Force advises us that on August 13, it issued a new
solicitation pursuant to FAR Section 14.404-1(e)(2). We have no legal
basis to object to this action.
The protest is dismissed.
B-219677, 64 Comp. Gen. 809
Matter of: Modern Microfilm Methods, Inc., August 29, 1985
Bids - Mistakes - Correction - Intended Bid Price - Establishment
Required
In deciding cases involving bid correction which displace the low
bidder, the critical element is that the intended bid price be
ascertainable from the bid itself.
Modern Microfilm Methods, Inc. (MMM), protests the award of a
contract by the Government Printing Office (GPO) to any other bidder
under solicitation No. 243-S. MMM asserts that GPO improperly declined
to permit it to correct an obvious mistake in its bid.
We dismiss the protest pursuant to section 21.3(f) of our Bid Protest
Regulations, 4 C.F.R. Section 21.3(f) (1985), because it is clear on the
face of the protest that it is without merit.
MMM originally submitted a bid which included a price of $3,008.71
per 100 microfiche for item 1(c). Immediately after bid opening, it
realized that this was an error and that it had intended to bid $4.10
per 100 microfiche. MMM requested GPO to allow it to correct the
mistake in bid. In support of the mistake, MMM submitted its original
worksheet and an affidavit explaining its error. GPO disallowed
correction on the basis that it would displace the low bidder and that
existence of the mistake and the bid actually intended were not
substantially ascertainable from the invitation and MMM's bid.
MMM then filed this protest with our Office. MMM contends that once
it establishes the intended bid of $4.10 from its worksheet, that by
experimentation with the information in the bid, the agency could arrive
at that amount. However, in deciding cases involving bid corrections
which would displace the low bidder, the critical element is that the
intended bid price be ascertainable from the bid itself. See Marine
Ways Corp., B-211788, Aug. 29, 1983, 83-2 C.P.D. Paragraph 271. In this
case, the bid only shows an amount of $3,008.71 and it cannot be
ascertained from that information that the bid should have been $4.10.
B-216917, 64 Comp. Gen. 806
Matter of: Panama Canal Commission Firefighters, August 29, 1985
Compensation - Panama Canal Commission Employees - Pay Increases -
Firefighters
Panama Canal firefighters' pay adjustments in 1983 and 1984 were
governed by administrative policies adopted under statute that their pay
be revised based on the adjustment in District of Columbia firefighters'
pay limited by the annual percentage adjustment in General Schedule pay
rates. They recieved a 3.5-percent pay increase on October 2, 1983,
based on a 7-percent increase for D.C. firefighters modified in
anticipation that the General Schedule rates would be increased 3.5
percent. General Schedule rates were increased by 3.5 percent effective
January 1, 1984, but this rate was retroactively increased to 4 percent
by legislation. Firefighters may be allowed the increase of 4 percent
in lieu of 3.5 percent between January 1984 and April 1984 because the
employing agency has adopted a policy of basing adjustments in the pay
rates of those employees on revisions in rates of pay for General
Schedule employees.
The question presented in this matter is whether firefighters
employed by the Panama Canal Commission may receive a retroactive pay
increase on the basis of a retroactive increase authorized for rates of
pay under the General Schedule by legislation enacted in April 1984.
/1/ In the particular circumstances presented, we conclude that the
Panama Canal firefighters are eligible for a pay increase for the period
from January 1 to April 29, 1984.
Background
Pay rates for Panama Canal employees are governed by section 1215 of
the Panama Canal Act of 1979, /2/ codified as 22 U.S.C. Section 3655,
which generally provides that the employees' rates of basic pay may be
established and revised administratively in relation to the
corresponding rates of basic pay for the same or similar work performed
in the United States. 22 U.S.C. Section 3655(b). This provision
further authorizes adjustments in the rates of pay of Panama Canal
employees based on adjustments in the corresponding rates. These
adjustments may not exceed the amount of the adjustment in the
corresponding rate and may not be made earlier than the increases in
such corresponding rates of pay. 22 U.S.C. Section 3655(c).
The Administrator of the Panama Canal Commission reports that under
this provision of law a policy has been established that the rates of
pay for Commission firefighters will be adjusted on the first day of the
fiscal year in relation to the rates of pay fixed for firefighters of
the District of Columbia, rather than the pay rates of Federal employees
holding General Schedule positions. Nevertheless, beginning in fiscal
year 1982 a related policy was adopted of placing an overriding
limitation on the percentage of their pay increase to correspond with
the pay increase received by employees under the General Schedule.
The Administrator further reports that under these established
policies the Commission firefighters received a 3.5-percent pay increase
on October 2, 1983, even though firefighters of the District of Columbia
received a pay increase of approximately 7 percent at that time. /3/
The Administrator indicates that the 3.5-percent increase received by
the Commission firefighters in October 1983 was predicated on an
administrative forecast derived from information then available that the
annual adjustment of General Schedule pay rates would be limited to 3.5
percent. We note that the 3.5-percent limit to be effective January 1,
1984, was contained in the alternate plan submitted to Congress by the
President under the authority of 5 U.S.C. Section 5305(c).
Under the procedures prescribed by 5 U.S.C. Section 5305, basic pay
rates for employees holding General Schedule positions were increased by
3.5 percent on January 1, 1984. However, in April 1984 the Congress
enacted legislation increasing rates of pay under the General Schedule
by 4 percent instead of 3.5 percent, effective January 1, 1984, thus
authorizing a retroactive increase in rates for the period between
January and April 1984. /4/
The Commission firefighters received an enhanced pay increase for
fiscal year 1984 from 3.5 to 4 percent on the basis of that legislation,
but this was applied prospectively only from and after April 29, 1984,
because of doubts concerning their eligibility for a retroactive
increase. The question presented here is whether they are eligible for
a retroactive pay increase predicated on the April 1984 legislation.
Analysis and Conclusion
It is well established that when administrative directives are issued
rights under those directives become fixed, and although the directives
may be amended prospectively by administrative action to increase or
decrease rights, in the absence of specific statutory authority they may
not be amended retroactively. /5/ Thus, the long-established rule is
that administrative changes in salary rates may not be made
retroactively without specific authority of law. /6/
However, legislative enactments may increase retroactively the pay
entitlements of Federal personnel. Moreover, we have expressed the
general view that in the case of Federal employees whose pay is fixed
administratively, the employing agency may adopt an administrative
policy of basing adjustments in the pay rates of those employees on
revisions in rates of pay which are fixed by legislation. /7/ Those
employees may then become eligible for retroactive pay increases based
on legislation affecting the corresponding rates of pay to which their
own rates have previously been attached administratively, since in that
situation no retroactive administrative action is actually involved.
/8/
In the present case, as indicated, the Panama Canal firefighters' pay
adjustments in fiscal year 1984 were governed by administrative policies
previously adopted under the authority of 22 U.S.C. Section 3655 that
their pay be revised on the first day of the fiscal year in relation to
changes in the District of Columbia firefighters' pay rates, not to
exceed the percentage increase in General Schedule pay rates. It
appears that these policies were mandatory and remained in effect
throughout the periods at issue here.
Our view is that under these policies it was proper for the
firefighters to be allowed a 3.5-percent pay increase on October 2,
1983, since a 7-percent increase was received by D.C. firefighters in
October 1983 and since there was authority to modify that increase based
on the alternate plan submitted by the President regarding General
Schedule increases. Under the two-step procedure adopted this rate of
pay for firefighters is first considered in relation to District of
Columbia firefighter salaries, and second in relation to any general
limitation on General Schedule salaries. In view of the different
effective dates applicable to pay rates under the two systems due to the
delay factor incorporated in the President's alternative plan, the
action taken to grant a pay rate on the effective date of the D.C.
firefighters' increase was appropriate, and the limitation on that
increase in accordance with the President's alternative plan was also
appropriate under the Commission policies.
However, it is our view that the mandatory policies adopted with
respect to the Panama Canal firefighters required that conforming
revisions be made in their rates of pay effective simultaneously on the
date of any adjustment actually made under law in the General Schedule
rates of pay. Since January 1, 1984, was made the effective date of the
4-percent upward adjustment in General Schedule pay rates under the
April 1984 legislation, the firefighters' pay rates were subject to that
adjustment on the same effective date. /9/ Hence, we conclude that the
firefighters may be given an upward retroactive pay adjustment
predicated on a rate increase from 3.5 to 4 percent effective January 1,
1984.
The question presented is answered accordingly.
FOOTNOTES
(1) This action is in response to a request for a decision received
from the Administrator of the Panama Canal Commission.
(2) Public Law 96-70, Section 1215, approved September 27, 1979, 93
Stat. 452, 465.
(3) District of Columbia City Council Resolution 5-338, September 20,
1983, 30 D.C. Reg. 5005, 5018 (1983).
(4) See subsection 202(a) of the Omnibus Budget Reconciliation Act of
1983, Public Law 98-270, April 18, 1984, 98 Stat. 157, 158.
(5) See, generally, James Barber, 63 Comp. Gen. 316, 321 (1984);
Station Housing Allowances, 56 Comp. Gen. 1015, 1017 (1977); and
decisions there cited. Compare also Friedlander v. United States, 120
Ct. Cl. 4, 12-13 (1951).
(6) See, generally, Canal Zone Government, 56 Comp. Gen. 900, 903
(1977); and 31 Comp. Gen. 163, 164 (1951).
(7) See 44 Comp. Gen. 89 (1984). Compare also 58 Comp. Gen. 430
(1979).
(8) See 44 Comp. Gen. 89, supra, at page 90. Of course, the specific
wording of provisions of statute authorizing rates of pay to be set
administratively for a particular group of employees may preclude their
receipt of a retroactive pay increase in such situations, even though a
retrospective pay increase is made legislatively in the corresponding
rates of pay. For example, under a prior law which has now been
superseded by 22 U.S.C. Section 3655, the pay of Panama Canal
firefighters could be increased retroactively only if their pay rates
were equated to rates set by an "Act of Congress," and we held that they
were therefore ineligible for a retroactive pay increase corresponding
to one authorized legislatively not by Congress but by the District of
Columbia Council for District firefighters. See 56 Comp. Gen. 900,
supra, at pages 903-905.
(9) Compare 44 Comp. Gen. 89, supra, at page 90.
B-219591.2; B-219594.2, 64 Comp. Gen. 805
Matter of: F&F Pizano - Request for Reconsideration, August 27, 1985
Bonds - Bid - Surety - Unacceptable - Bidder and Principle as Surety
Protests that a bidder and principal on a bid bond may serve as its
own surety is without merit as such a situation would defeat the purpose
of the bond.
Frank Pizano, Jr., d/b/a F&F Pizano, requests reconsideration of our
July 25, 1985, dismissal of its protests, B-219591, B-219594, concerning
the Department of Agriculture's invitation for bids Nos. SCS-13-PA-85
and SCS-27-PA-85. The protester's bids were rejected as non-responsive
because the penal sum was omitted from the accompanying bid bond. The
protester alleged that these omissions were minor informalities and that
they should have been waived or that he should have been given an
opportunity to cure the defects. We dismissed the protest because a bid
accompanied by a bid bond containing no penal sum is nonresponsive,
since no obligation in a sum certain is undertaken by the surety. We
affirm our dismissal.
The protester, noting that our prior decision cited Allen County
Builders Supply, B-216647, May 7, 1985, 64 Comp. Gen. 505, 85-1 CPD
Paragraph 507, asserts that a different result is warranted here because
in Allen County corporate surities were involved while here we have "the
unique situation where the surety and bidder are one and the same." /1/
We think this situation, rather than permitting acceptance of the bids,
provides a further basis for rejecting them.
Suretyship is a tripartite relationship created by agreement between
the party insured (the government), the principal obligor (the bidder),
and the surety or guarantor (a third party). Federal Acquisition
Regulation, 48 C.F.R. Section 28.001 (1984). A surety necessarily must
be distinct from the principal, as the surety undertakes to pay the debt
or to perform an act for which the principal has bound himself, should
the principal default. 74 Am. Jur. 2d Suretyship Section 3 (1974).
Thus, a bidder, who is the principal on the bid bond cannot be his own
surety. See also Standard Form 28, Instruction 2 (covering the
unacceptability of partners as a surety where the partnership or an
individual partner is the principal obligor on the bond).
The determinative question as to the acceptability of such a bond is
whether the bidding documents establish that the bond could be enforced
if the bidder does not execute the contract. Minority Enterprises,
Inc., B-216667, Jan. 18, 1985, 85-1 CPD Paragraph 57. As the creditor,
the government's right to maintain an action against the principal
exists independently of its rights against the surety. 72 C.J.F.
Principal and Surety Section 245 (1951). Therefore, the fundamental
purpose of the bid bond is frustrated where the bidder/principal is the
same person as the surety.
Thus, aside from the original defect -- the failure to include a
penal sum in the bond -- the bond is defective because the surety in
this instance cannot be considered to be acceptable.
The prior decision is affirmed.
FOOTNOTES
(1) The bidder is an unincorporated firm or sole proprietorship.
B-219265, 64 Comp. Gen. 802
Matter of: Army - Food served at luncheon honoring handicapped
employees, August 26, 1985
Entertainment - Appropriation Availability - Specific Statutory
Authorization Requirement
Army may not use appropriated funds to pay for meals of handicapped
employees attending a luncheon in honor of National Employ the
Handicapped Week.
The Assistant Comptroller for Finance and Accounting, Department of
the Army, has requested a decision on whether the Army may expend
appropriated funds to provide meals to handicapped employees attending a
luncheon held in honor of National Employ the Handicapped Week. The
luncheon is scheduled for the first week of October 1985. All attendees
at the luncheon are to pay the cost of their lunch with the exception of
some 80-90 handicapped employees in grades equivalent to GS-01 through
GS-04 who are to attend as guests. The cost of the lunch is anticipated
to be approximately $8.00 per person, making the projected cost of the
program to be about $640 to $720.00. For the reasons set out below, we
find that the expenditure for the cost of the 80-90 meals is not
permissible.
The Assistant Comptroller argues that the presence of the handicapped
employees at the luncheon is crucial to the EEO training objective of
allowing handicapped and non-handicapped employees to become more
comfortable in each other's presence. Furthermore, he asserts that the
luncheon provides a forum for dispelling preconceived notions because
handicapped and nonhandicapped employees will be able to interact in a
non-work environment. He directs our attention to some prior decisions
of the Comptroller General which he believes demonstrates that the
expenditure is allowable.
First, the Assistant Comptroller refers to our decision in 60 Comp.
Gen. 303 (1981), in which we held that the cost of a performance by an
African dance troupe designed to promote EEO training objectives of
making the audience aware of the cultural or ethnic history being
celebrated could be taken from appropriate funds if it was part of a
formal program determined by the agency to be intended to advance EEO
objectives. He argues that, like the presentation involved in 60 Comp.
Gen. 303, the luncheon here is a legitimate part of employee training
under the Army's EEO program.
The Assistant Comptroller next refers to our decision of March 23,
1982, B-199387. In that case, we held that the Army could use
appropriated funds to pay for samples of different ethnic foods prepared
and served as part of a formal ethnic awareness program. /1/
The general rule is that appropriated funds are not available for
entertainment, including the provision of meals, unless specifically
authorized by statute. See, e.g., 61 Comp. Gen. 260 (1982); 60 Comp.
Gen. 303 (1981); B-208527, Sept. 20, 1983; B-188078, May 5, 1977.
Concerning the use of appropriated funds to pay for meals, the Federal
Travel Regulations (para. 1-7.6(a) (Supp. 1, September 28, 1981),
oncorp. by ref. 41 C.F.R. Section 101-7.003 (1984)), do not permit
Government employees to receive a per diem allowance or any other
payment for subsistence when they are at their permanent duty stations.
See B-215702, March 22, 1985, 64 Comp. Gen. 406.
The two decisions mentioned above constitute rather narrow exceptions
to the general rule against using appropriated funds to pay for
entertainment. 60 Comp. Gen. 303 authorized payment for an African
dance troupe on the basis of an Office of Personnel Management guideline
which was held to authorize artistic presentations in connection with
ethnic and cultural special emphasis programs.
Similarly, the food samples in B-199387 were themselves a part of an
educational program designed to acquaint employees with the unique
characteristics of different cultures and countries and were not
intended as meals or refreshments. Accordingly, the use of appropriated
funds to pay for food samples was held to be within the authority of the
OPM ethnic awareness guidelines.
While we would not dispute the educational value of a social setting
in which handicapped and non-handicapped employees can interact, we note
that the guidance from the Comptroller General decisions relied on to
authorize payment in the cases discussed above does not appear to cover
the situation under consideration here. In both these cases the
"entertainment" provided was itself representative of a cultural or
ethnic heritage with which it was felt all employees should become
familiar. In the present case, as the Assistant Comptroller himself
recognized, "Unlike ethnic and cultural minorities, handicapped persons
do not possess a common cultural heritage around which equal opportunity
programs can be developed." Moreover, the submission indicates that the
handicapped employees for whom meals would be provided work at the
Army's Tank Automotive Command in Warren, Michigan, which is also
apparently where the luncheon would be held. Accordingly, the
prohibition against paying employee subsistence while at a permanent
duty station would appear to be directly applicable. We are therefore
of the opinion that the lunches for the handicapped employees should not
be paid for out of appropriated funds.
The above holdings should not be interpreted to bar any expenses
properly attributable to the EEO program itself and which do not
constitute unrelated costs for meals or entertainment. (It is
understood that the provision of a free meal to guest speakers at a
luncheon meeting is permissible, since it amounts to a kind of
honorarium or inducement for obtaining their services.) Moreover, we
note from the submission that certain selected handicapped employees are
to receive special recognition for their achievements during the year.
We would have no objection if these special honorees were provided with
a free lunch, in addition to a plaque or whatever other award was
contemplated, pursuant to OPM and agency regulations governing awards.
FOOTNOTES
(1) Two other decisions, B-208729, May 24, 1983 and B-208527,
September 20, 1983, mentioned by the Assistant Comptroller are not
apposite.
B-216920, 64 Comp. Gen. 801
Matter of: George W. Lacey III - Relocation Allowances - Employee's
Travel to New Duty Station, August 23, 1985
Travel Expenses - Transfers - Employee Return to Old Duty Station - To
Complete Moving Arrangements
Transferred employee who reported for duty at his new official
station in January 1984 may not be paid for his travel expenses for a
subsequent trip in July 1984 to fly his privately owned aircraft from
his old to his new duty station. Employee's travel expense entitlement
became fixed at the time he reported to his new post of duty in January
1984. Hence, he is entitled to payment for his own travel expenses from
his old to his new duty station when he reported for duty, but not for
his subsequent trip.
This decision is in response to a request by Mr. Walter G. Lobisser,
Assistant Financial Manager, United States Customs Service, Department
of the Treasury, Boston, Massachusetts, for an advance decision
regarding the propriety of paying a reclaim travel voucher submitted by
Mr. George W. Lacey III, an employee of the Customs Service. The
voucher is for per diem allowances and transportation costs for Mr.
Lacey's own travel incident to his change of permanent duty station from
Springfield, Illinois, to Baltimore, Maryland. We hold that the voucher
may not be paid.
The record shows that Mr. Lacey transferred from the Fish and
Wildlife Service, Department of the Interior, to the Customs Service in
January 1984. He reported for duty at the Baltimore Office of
Investigations of the Customs Service on January 22, 1984. In May 1984,
he submitted a travel voucher covering the travel of his family to his
new official station. Their travel took place from March 14 through
March 17, 1984. Mr. Lacey did not make a claim for his own travel
expenses to Baltimore at that time.
In September 1984, Mr. Lacey submitted a travel voucher for a trip he
took from Springfield to Baltimore in his privately owned aircraft on
July 2, 1984. Mr. Lacey contends that he can select this trip for
reimbursement since, under the Federal Travel Regulations, an employee
may submit a claim for reimbursement of relocation expenses for a period
up to 2 years after his transfer. Since he made numerous trips to
Springfield and return to Baltimore, Mr. Lacey feels that he may claim
any one of the trips as his relocation trip for purposes of payment of
per diem and transportation costs.
The Customs Service contends that Mr. Lacey should claim the trip he
took in January 1984, when he reported for duty at his new official
station, as his relocation trip.
Section 5724, Title 5, United States Code, 1982, provides that the
head of an agency, or his designee, may pay from government funds, the
travel expenses of an employee transferred from one official station to
another for permanent duty. The implementing regulations are found in
Chapter 2, Part 2, of the Federal Travel Regulations, (September 1981)
(FTR), incorp. by ref., 41 C.F.R. Section 101-7.003 (1984). Paragraph
2-2.1 states that per diem instead of subsistence expenses,
transportation costs, and other travel expenses of the employee shall be
allowed. In interpreting these statutory and regulatory provisions, we
have held that when a transferred employee reports to and enters on duty
at his new duty station, the change of station authorized in the travel
order is accomplished and his travel expense reimbursement becomes
fixed. 54 Comp. Gen. 301, 303 (1974); John W. Corwine, B-203492,
December 7, 1982.
Here, Mr. Lacey reported for duty at the Baltimore Office of
Investigations on January 22, 1984. His entitlement to travel expenses
became fixed at that time. Any additional trips by Mr. Lacey between
Springfield and Baltimore, including the claimed trip of July 2, 1984,
are considered to have been made for personal reasons. Hence no per
diem or transportation costs may be paid for the additional trips. Argy
L. Hager, B-206354, June 8, 1982.
Mr. Lacey relies upon the 2-year period for travel allowed under the
Federal Travel Regulations, but that provision does not support his
claim. Paragraph 2-1.5a(2) of the FTR provides:
That limits for beginning travel and transportation. All
travel, including that for the immediate family, and
transportation, including that for household goods allowed under
these regulations, shall be accomplished as soon as possible. The
maximum time for beginning allowable travel and transportation
shall not exceed 2 years from the effective date of the employee's
transfer or appointment, * * * .
Although this provision allows up to 2 years for travel by an
employee's immediate family and for transportation of household goods,
it does not allow an employee to be reimbursed for his own travel to the
new duty station after he has reported for duty at the new location.
See the cases cited above.
Accordingly, Mr. Lacey is entitled to per diem and transportation
costs for his travel from Springfield, Illinois, to Baltimore, Maryland,
in January 1984 when he reported for duty at his new official station,
if otherwise appropriate. However, his reclaim travel voucher for per
diem and transportation costs for his trip of July 2, 1984, may not be
certified for payment.
B-217869, 64 Comp. Gen. 796
Matter of: Purchase of decorative items for individual offices at
the United States Tax Court, August 22, 1985
Appropriations - Availability - Art Objects
GAO has no objection to purchase by U.S. Tax Court of paintings and
other art objects for individual judges' offices and chambers, provided
that each purchase "is consistent with work-related objectives and the
agency mission, and is not primarily for the personal convenience or
personal satisfaction of a Government officer or employee." 63 Comp.
Gen. 110, 113 (1983).
Courts - Tax Court of United States - Regulations - Procurement
U.S. Tax Court advised to develop internal regulations governing
purchase of decorative items for individual judges' offices and chambers
which provide adequate administrative controls to assure that purchases
are not made solely to please the individual judges involved. Present
Tax Court policy of allocating fixed sum of money to each judge and
allowing him or her to select the objects to be procured does not
provide such controls.
Courts - Tax Court of United States - Court of Record Status of
Procurement
U.S. Tax Court, a legislative court of record, is not bound by GSA
regulation on personal convenience items (41 C.F.R. 101-26.103-2) which
applies only to executive branch agencies, nor by an Administrative
Office of the United States Court regulation (Title VIII of the "Guide
to Judiciary Policies and Procedures") since the Tax Court is not part
of the judicial branch. Nevertheless, both regulations, as well as GAO
decisions, can provide useful guidance for Tax Court in developing its
own regulation on the expenditure of its appropriations for art objects.
This is in response to a request from the Administrator of the United
States Tax Court, joined by the Chief Judge of the Court, for a decision
on the propriety of the use of appropriated funds for the purchase of
artwork and other decorative items for the individual offices and
chambers of "regular" judges and special trial judges of the Tax Court.
The Administrator seeks guidance on "the appropriateness of the Court's
present policies" and asks for rulings on five specific questions. The
answers to these questions are presented below, roughly in the order
submitted.
Present Policies
From the information submitted by the Administrator, it appears that
the Tax Court has never developed internal regulations governing the
purchase of artwork and related objects for individual offices and
chambers. Instead, it has relied primarily on the applicable Federal
Property Management Regulation (issued by the General Services
Administration (GSA) and codified at 41 C.F.R. Section 101-26.103-2),
and until October of 1984, on a similar policy set out in Title VIII of
the "Guide to Judiciary Policies and Procedures," published by the
Administrative Office of the United States Courts (A.O.).
The Administrator points out that the A.O. considerably relaxed its
restrictions on these sorts of purchases in October of 1984, which he
attributes to the influence of three GAO legal decisions. Because it
was not clear that the new A.O. policy was consistent with the GAO
decisions, the Tax Court has not followed the A.O. policies to date.
Nevertheless, the Administrator states that it is at least arguable that
Tax Court judges should be allowed the same leeway since their status is
so similar in many ways to Federal district court judges.
At any rate, based on its interpretation of the GSA regulation, a
Judges' Committee on Building and Court Facilities decided to allocate
$2,000 to each judge to spend on artwork for his or her office and
chambers in connection with the move into a new Government-owned Tax
Court building in 1974. All subsequently appointed new judges were also
allocated a maximum of $2,000 each for this purpose. In August of 1984,
the Judges' Committee voted to allocate each judge an additional $2,000
each to purchase new artwork. Finally, special trial judges, who are
appointed by the Chief Judge of the Tax Court, were allocated $800 each
to decorate their offices in a separate building leased by the GSA.
DISCUSSION
As a preliminary matter, GAO has no objection to the purchase of
paintings and other objects of art for individual judges' offices and
chambers, provided that each purchase "is consistent with work-related
objectives and the agency mission, and is not primarily for the personal
convenience or personal satisfaction of a Government officer or
employee." 63 Comp. Gen. 110, 113 (1983). See also 60 Comp. Gen. 580,
582 (1981).
We asked the A.O. whether the purchase of decorative items for the
offices and chambers of the judges under its jurisdiction was consistent
with the above-mentioned decisions. The Acting Director replied:
It is the position of the Administrative Office of the United
States Courts that this policy is fully consistent with the cited
decisions * * * . (T)he purchase of decorative items would
constitute a permanent feature of judicial office decor, resulting
in improved efficiency and morale and adding to the dignity of the
Federal courts.
We have no difficulty in accepting this rationale and note that the
justification offered may apply to the Tax Court as well. There is one
major difference. It is not related to a difference in the necessity
for the art objects, but rather to the presence or absence of
administrative controls to be sure that no purely personal convenience
items are purchased under this authority.
The A.O. has a set of carefully crafted regulations governing the
purchase of these and other items from the furniture and furnishings
appropriation. The number of decorative items for each office is
limited to four, at a cost of not to exceed $200 for each item,
including framing. Moreover, no funds may be expended to purchase
"expensive or valuable pieces of art, nor for items of a personal nature
such as family portraits." A special form is prescribed to procure these
items, which must be accompanied by a written justification, and
submitted to the Procurement and Property Management Branch,
Administrative Services Division, where the approval authority resides.
In contrast (although the Tax Court submission did not make its
procedures too clear), it appears that a committee of judges is
responsible for making an allocation of funds for the purchase of art
items for Tax Court judges' offices and chambers, notwithstanding the
fact that the judges on the committee have an obvious interest in the
outcome. Of equal concern is the fact that once the allocation is made,
the individual judge is presumably free to purchase any item he feels is
suitable, as long as he does not exceed the funding ceiling. (This may
account for the situation described by the Administrator, in which a
$2,000 painting selected by a former judge is languishing in a basement
storeroom because no one else wanted to hang it on his wall.)
In summary, it is not our function to tell the Tax Court how to write
its regulations but only to urge that it develop and adopt some
administrative controls to assure compliance with Government policies
and GAO decisions on the purchase of decorative items.
Questions (1), (2), and (3)
In the light of the above discussion, we would discourage the
practice of turning over specific funds to individual judges, allowing
each judge to decorate his or her own space without subjecting these
actions to any administrative review as to suitability and necessity.
In this connection, we see no significant distinction between the
judges' office space and the judges' chambers. Although a larger number
of employees have desks in the latter space, in both cases the rooms are
under the control of and serve the needs of the individual judge. It is
also immaterial whether the judges are "newly appointed" or have served
for many years, for purposes of avoiding the appearance of purchases
made solely to satisfy the personal wishes of an individual official.
(See question 5 for a discussion of an overall "plan for decoration of
Federal buildings.") In other words, the request for a "lighted globe"
is neither more nor less objectionable because it came from a relatively
new judge rather than from an "old timer." Again, the question must be
whether the purchase serves the agency's mission or is made solely to
satisfy the wishes of the individual judge.
Questions (4) and (5)
We are not aware of any existing regulations in the legislative
branch which would "govern" the Tax Court in establishing its policies
on property management.
The Tax Court submission offers, as justification for the $2,000
allocation for each regular judge and the $800 allocation for each
special trial judge at the time of their respective moves into new
buildings, the authority provided in the first sentence of 41 C.F.R.
Section 101-26.103-2, the GSA Federal Property Management Regulation.
That sentence states:
Government funds may be expended for pictures, objects of art,
plants, or flowers (both artificial and real), or any similar type
items when such items are included in a plan for the decoration of
Federal buildings approved by the agency responsible for the
design and construction. (Italic supplied.)
The Tax Court evidently assumed that it, rather than GSA, was "the
agency responsible for design and construction" of the buildings, and
that the approval of its Judges' Committee satisfied the above
requirement. We think the court is mistaken. This function has clearly
been delegated to the GSA. See 40 U.S.C. Chapter 10. Although we
conclude (see discussion, infra), that this particular regulation is not
binding on the Tax Court insofar as no public corridors or lobbies are
concerned, we offer two observations about the impact of this regulation
on agencies to which it applies.
In 60 Comp. Gen. 580 (1981), we construed the "plan" requirement of
the regulation as applying only to new Federal construction or to major
renovations of existing Federal buildings. In contrast, we said, the
second sentence of the regulation which applies to "space assigned to
any agency" refers to existing space, including leased space.
Determinations as to the need to purchase decorative items in such space
are left to the discretion of the occupying agency.
After receiving the Tax Court submission, we consulted informally
with knowledgeable officials at the GSA about the above distinction. We
were told that as "landlords," GSA has no particular concern about the
manner in which its tenants decorate their individually assigned space,
whether the building concerned is new or has been in existence for some
time. (The GSA would, of course, be concerned if any agency's
decorating scheme intruded inappropriately in the public areas of the
buildings.) Moreover, we were told, the GSA has not developed its own
decorating plan for individually occupied space nor does it generally
require that such plans be submitted by its tenants for GSA review and
approval. Nevertheless, the regulation is still on the books and until
modified by the GSA, executive department agencies should continue to
consult with the GSA before embarking on an ambitious decorating effort
in new buildings.
As mentioned above, we do not think that the GSA regulation in
question applies to the Tax Court, which is a legislative court of
record specifically removed from the executive branch of the Government
by section 951 of the Tax Reform Act of 1969, 26 U.S.C. Section 7441.
The authority cited for the subpart in which the above regulation
appears is 40 U.S.C. Section 486(c), which specifically limits the
applicability of its policies and directives to heads of executive
agencies. This does not mean that none of the Federal Property
Management Regulations have any applicability outside the executive
branch of the Government. The Federal Property and Administrative
Services Act defines the term "Federal agency" to apply broadly to all
three branches of the Government (with certain exceptions not relevant
here). 40 U.S.C. Section 472(b). Applicability of a particular
regulation to the Tax Court depends, therefore, on whether, by its
terms, it purports to bind all "Federal agencies" or only "executive
agencies."
As the Administrator correctly surmised in his submission,
regulations promulgated by the A.O. are similarly nonbinding since the
Tax Court is not a part of the judicial branch. Nevertheless, it is
quite appropriate to follow the A.O. regulations as guidance to the
extent the Tax Court regards them as useful. In answer to the
Administrator's specific question, while we take no position on the
details of the A.O. regulations -- for example, on the amount authorized
for expenditure in each office -- we regard the regulations as setting
forth "a proper, lawful policy regarding the expenditure of agency
appropriations for artwork."
B-217807, 64 Comp. Gen. 792
Matter of: John Buick Construction Company - Applicability of
Davis-Bacon Act of Owner/Operators, August 22, 1985
Contracts - Labor Stipulations - Davis-Bacon Act - Applicability
Owner/Operators
An owner/operator of earth moving equipment who files a claim under
the Davis-Bacon Act is entitled to payment since the Act's minimum wage
provisions apply to owner/operators of equipment who are employed as
laborers or mechanics on federal construction sites. Where there is no
evidence of a subcontract our Office will not defer consideration of the
Davis-Bacon Act claim of an owner/operator who meets the statutory and
regulatory criteria for payment.
Contracts - Labor Stipulations - Davis-Bacon Act - Wage Underpayments -
Employee Remedies
Owner/operator of earth moving equipment is not entitled to the full
amount of his claim since the payment from the General Accounting Office
that is due an employee underpaid in violation of the Davis-Bacon Act is
limited to the amounts properly withheld and payable under the Act. The
General Accounting Office may disburse to such underpaid employees no
more than the difference between the prevailing wage rate applicable and
the amount of payment already received.
The Director, Division of Contract Standards Operations, United
States Department of Labor, by a letter dated February 13, 1985, has
requested our decision on the proper amount of payment to be disbursed
to an underpaid employee within the scope of the Davis-Bacon Act, 40
U.S.C. Sections 276a to 276a-5 (1982). The first issue raised by the
Director's inquiry is whether the Davis-Bacon Act minimum wage
provisions are applicable to owner/operators of equipment. If such an
employee is within the scope of Davis-Bacon Act protection the second
issue is raised. That issue is whether the proper payment to the
underpaid owner/operator is the full amount billable by him to the
contractor or, instead, is the applicable wage rate as stipulated in the
contract between the prime contractor and the contracting agency.
We conclude that an employee who is an owner/operator of equipment is
a laborer or mechanic subject to the protection of the minimum wage
provisions of the Davis-Bacon Act. Such an employee, when underpaid, is
entitled under the Davis-Bacon Act to be paid the wage rate stipulated
in the contract between the prime contractor and the contracting agency.
FACTS
John Buick Construction Company (John Buick) performed work for the
United States Forest Service (Forest Service) in the Mendocino National
Forest in California. The work was agreed to by the parties in Contract
Number 50-9129-1-0034, dated September 26, 1981, and was subject to
Davis-Bacon Act labor stipulations for construction or repair work on
government property. In the course of performing its contract with the
Forest Service, John Buick employed Mr. Lee Howard, an owner/operator of
earth moving equipment. Mr. Howard performed 17 hours of excavation
work on the construction site but received no payment. Mr. Howard was
not paid because John Buick failed to consider an owner/operator to be
an employee for the purpose of Davis-Bacon Act minimum payment
requirements. Instead, Mr. Howard was considered to be a "supplier" of
excavation services, was treated as an otherwise unprivileged creditor
of John Buick and, in accordance with the poor financial condition of
the company, was not paid.
Mr. Howard has submitted a claim for unpaid wages under the
Davis-Bacon Act, 40 U.S.C. Section 276a, supra. The amount claimed is
$1,700, which is the $100 per hour rate stipulated by his agreement with
John Buick multiplied by the 17 hours he worked. The prevailing wage
rate applicable to a laborer or mechanic of Mr. Howard's class, as set
out in the contract between John Buick and the Forest Service and in
Wage Decision Number CA-81-5132, is power equipment operator (group 10),
$25.42 per hour. In accordance with 40 U.S.C. Section 276a, the
contracting officer withheld $2,251.25 from payment due to John Buick in
order to cover the wages owed to underpaid employees. /1/ That sum is
now on deposit with the Claims Group, General Government Division,
United States General Accounting Office.
DISCUSSION
Applicability of Davis-Bacon Act
The Davis-Bacon Act states that all mechanics and laborers employed
directly on the construction site must be paid at least the prevailing
wage rate "regardless of any contractual relationship which may be
alleged to exist between the contractor or subcontractor and such
laborers and mechanics * * * ." 40 U.S.C. Section 276a(a), supra. The
irrelevance of the employee's contractual relationship with the
contractor in determining the employee's status as a laborer or mechanic
has been recognized by the courts, the Attorney General, and by this
Office, See, United States v. Landis & Young, 16 F. Supp. 832 (W.D. La.
1935); 40 Op. Att'y Gen. 488 (1960); T. W. P. Company, 59 Comp. Gen.
422 (1980); T. W. P. Company -- Reconsideration, 61 Comp. Gen. 231
(1982). Applicable regulations define a laborer or mechanic as "at
least those workers whose duties are manual or physical in nature
(including those workers who use tools or are performing the work of a
trade), * * * ." 29 C.F.R. Section 5.2(m) (1984).
Despite the confusion surrounding his classification under the
Davis-Bacon Act, it is clear that the Act applies to Mr. Howard insofar
as he has been an employee of John Buick and has worked on the
construction site under Contract Number 50-9129-1-0034. Because of his
status as an owner/operator Mr. Howard's standing under the Davis-Bacon
Act is ambiguous when compared to the traditional notion of an employee
serving as a laborer or mechanic. However, his contractual relationship
with John Buick as an owner/operator, or in any other contractual
capacity, does not affect his ability to recover under the Davis-Bacon
Act if he can, in fact, be classified as a laborer or mechanic. United
States v. Landis & Young, 16 F. Supp. at 833-834; 40 Op. Att'y Gen. at
501-502; T. W. P. Company, 59 Comp. Gen. at 424; T. W. P. Company --
Reconsideration, 61 Comp. Gen. at 232. As the operator of his own earth
moving equipment on the construction site, Mr. Howard falls clearly
within the definition of laborer or mechanic set out in 29 C.F.R.
Section 5.2(m), supra. He performed manual labor in the course of
employment by John Buick on a federal construction site.
Mr. Howard's status as an owner/operator is distinguishable from that
of owners of subcontracting firms who perform work on construction
projects subject to Davis-Bacon Act wage provisions. We have deferred
applying Davis-Bacon Act wage rates to owners of subcontracting firms
who personally perform work at the worksite until such time as the
Department of Labor develops manageable standards for the application of
the Act to these individuals.
In the case of Mr. Howard, however, the record contains no evidence
of notice to the Forest Service of subcontractual relationships entered
into by John Buick and no evidence of any written subcontract between
John Buick and Lee Howard. Additionally, Lee Howard has not indicated
that he considered himself to be a subcontractor. Finally, Mr. Howard
was carried on John Buick's payroll as an employee. On a similar record
this Office has distinguished a subcontractor from an employee in H. C.
Wear & Associates, Inc., B-196064, November 18, 1980. On the basis of
the criteria set out in that case the relationship between Lee Howard
and John Buick is that of an employee to an employer. As an employee
engaged in physical labor on the site of a federal construction contract
Mr. Howard's minimum wage is protected by the Davis-Bacon Act.
Payment Under the Davis-Bacon Act
According to the Davis-Bacon Act the amount to be withheld from the
contractor in order to compensate underpaid employees is "the difference
between the rates of wages required by the contract to be paid laborers
and mechanics on the work, and the rates of wages received by such
laborers and mechanics and not refunded to the contractor,
subcontractors, or their agents." 40 U.S.C. Section 276a(a), supra. The
General Accounting Office is responsible for the disbursement to the
underpaid employees of the money withheld from contractors for
violations of the Davis-Bacon Act. 40 U.S.C. Section 276a(a) must be
made directly against the contractor or its surety. Cf. 46 Comp. Gen.
178, 179 (1966) (Miller Act bond claim). The reason for this is that
the only claim against the government is for that portion of wages that
are held and properly payable under the Davis-Bacon Act, which is the
difference between the wage rate stipulated in the contract and the
payment actually received by the employee. Where the settlement of the
statutory claim is insufficient to cover the entire amount owed by the
employer to the employee, then the underpaid employee is left to other
legal remedies against the employer. See 40 U.S.C. Section 276a-2(b)
(1982).
Mr. Howard's Davis-Bacon Act claim is for the full $1,700 allegedly
due from John Buick. Unfortunately, he is entitled under that Act only
to the amount properly withheld and payble. This amount is the
difference between the prevailing wage rate applicable to a power
equipment operator under Contract Number 50-9129-1-0034 and the
compensation actually received by Mr. Howard. As he has been paid
nothing, this amount is the prevailing wage rate of $25.42 multiplied by
the 17 hours that Mr. Howard worked for John Buick, or $432.14.
Mr. Howard's claim to the remaining $1,267.86 is certainly legitimate
insofar as he is owed compensation for the use of his earthmover by John
Buick. However, the authority of our Office to determine and pay
Davis-Bacon Act claims does not extend to collateral claims of the
employee against the employer. The Davis-Bacon remedy merely provides a
minimum wage. Other than the payment of the minimum wages mandated by
the Davis-Bacon Act, the settlement of obligations between contractors
and those furnishing labor to them is a matter outside the jurisdiction
of our Office, there being no privity of contract between laborers or
mechanics and the United States. Cf. Vern Willard, B-210544, March 14,
1983, 83-1 CPD 27 (Jurisdiction of General Accounting Office under
Miller Act limited to that imposed by statute). Mr. Howard must
consider other available action to recover the remainder of the amount
claimed from John Buick.
CONCLUSION
We find that the minimum wage provisions of the Davis-Bacon Act apply
to owner/operators insofar as such employees are in fact laborers or
mechanics performing work on the construction site under a federal
contract. The payments to owner/operators, and to other laborers or
mechanics, resulting from violations of the Davis-Bacon Act are limited
to those amounts properly withheld and payable as defined by that Act at
40 U.S.C. Section 276a(a). Application of this decision will be
effected by directing our Claims Group to disburse $432.14 to Mr. Lee
Howard in payment of his Davis-Bacon Act claim arising under Contract
Number 50-9129-1-0034, dated September 26, 1981, between John Buick
Construction Company and the Forest Service. The balance withheld from
the contractor will be disbursed to John Buick Construction Company or
its successors.
FOOTNOTES
(1) Mr. Gregg Simpson, a truck driver employed by John Buick, had
claimed $551.25 in unpaid wages. Since first reporting this
underpayment, Mr. Simpson has been paid in full and has withdrawn his
Davis-Bacon Act Claim.
B-216856, 64 Comp. Gen. 789
Matter of: Department of the Interior - Smoking and Smokers in
Federal Buildings, August 22, 1985
Appropriations - Availability - Air Purifiers (Ecologizers)
Smokeeaters that would be placed on the desk of Federal employees who
smoke can be purchased with appropriated funds where they are intended
to and will provide a general benefit to all employees working in the
area.
Appropriations - Availability - Medical Fees - Authorization
Requirement
No authority exists for the use of appropriated funds to pay for a
smoker rehabilitation program for Federal employees who wish to stop
smoking. Such medical care and treatment are personal to the individual
employee and payment therefore may not be made from appropriated funds
unless provided for in a contract of employment or by statute or valid
regulation.
General Accounting Office - Authority - Generally
Our Office has no basis on which to determine whether smoking can
legally be prohibited in all work areas of a Federal office. The
General Services Administration (GSA) has promulgated regulations set
forth at 41 C.F.R. 101.20.109 which govern smoking in GSA-controlled
buildings.
This decision is in response to a request from a contracting officer
for the United States Department of the Interior requesting answers to
three questions relating to smokers and smoking in Federal buildings.
The three questions concern (1) payment for air purifying devices used
in Government work space; (2) payment for treatment and rehabilitation
programs for Government workers; and (3) authority to ban smoking in
Government buildings.
With respect to the question of whether air purifiers that would be
placed on the desks of smoking employees can be purchased with
appropriated funds, we would not object where the air purifiers are
intended to and will provide a generalized benefit to all employees
working in the area. Second, there is no authority for the Department
to use appropriated funds to pay for a smoker rehabilitation program for
Federal employees. Finally, General Services Administration regulations
anticipate that smoking will be regulated, but not completely banned, in
Government offices. However, under some circumstances a total ban could
be instituted.
Question 1 -- Purchase of "Smokeeaters"
The first question is whether appropriated funds can be used to
purchase desktop air purifiers, commonly known as "smokeeaters," to be
placed on each smoker's desks in the Arizona State Office of the
Department's Bureau of Land Management. The contracting officer states
that smokeeaters placed on the desks of smokers would benefit "all
persons utilizing the building space" and therefore are not "personal
convenience items since the purpose of the purchase is to clean the air
for all employees." Accordingly, the contracting officer suggests that
the purchase should be approved on the basis of our decision in 62 Comp.
Gen. 653 (1983) where we allowed the Department to purchase air
purifiers for use in a public reading room.
The general rule concerning the propriety of using appropriated funds
to make purchases of this type is that "in the absence of specific
statutory authority, the cost of special equipment and furnishings to
enable an employee to perform his or her official duties constitutes a
personal expense of the employee and is not payable from appropriated
funds." 61 Comp. Gen. 634, 635 (1982). /1/ Thus, in that case we
disapproved the proposed purchase of a smokeeater that would be
installed in the individual office of an employee who was adversely
affected by tobacco smoke. We said that since the smokeeater was needed
"primarily for the benefit of a single employee" it constitutes "a
personal benefit which may not be conferred with public funds."
However, in 62 Comp. Gen. 653 (1983), the case cited by the
contracting officer, we held that appropriated funds could be used to
purchase two smokeeaters to be installed in the Arizona Public Land
Records Room. We said that unlike the situation we considered in 61
Comp. Gen. 634 where the purchase was for the personal use of an
individual employee, this purchase was permissible since the air
purifiers would benefit the public users of the reading room and the
employees who worked in that area.
Our ruling in 62 Comp. Gen. 653 was relied upon in B-215108, July 23,
1984 (copy enclosed) which involved circumstances that are much closer
to the present situation. In that case we held that the OPM could
purchase 10 air purifiers for use in a large "open space" office area
occupied by smoking and non-smoking employees. We said that the "air
purification of a large office area where the benefit accrues to a group
of employees as well as other people having business in the area is
analogous to air purification of a reading room where the benefit is for
groups of employees as well as outsiders having occasion to visit the
room."
Applying these precedents to the case at hand, we would not object to
the proposed purchase of smokeeaters which the contracting officer says
are needed in order to provide cleaner air for all employees.
Question 2 -- Payment for Smokers' Rehabilitation Program
The second question we were asked to consider is whether appropriated
funds can properly be used "to pay for a smokers' rehabilitation program
for all smoking employees who desire to 'kick the habit.'" The
contracting officer states that programs involving counseling and
referral for treatment of employees suffering from alcoholism and drug
abuse have been sponsored by the Federal Government in accordance with
regulations issued by OPM. He further states that since "smoking is now
considered an addiction of a similar nature and is treated as such, * *
* a program of this type (for smokers) would be appropriate and
beneficial to both the employee and the taxpayer through improved
productivity, work attendance and morale."
The existence of programs sponsored by the Federal Government, in
accordance with regulations promulgated by OPM, to assist Government
employees suffering from alcoholism or drug abuse do not provide a basis
for our approval of the proposed expenditures in this case. We have
consistently held that medical care and treatment are personal expenses
of an employee and their payment may not come from appropriated funds
unless specifically authorized under a contract of employment or by
statute or regulation. 63 Comp. Gen. 96, 97 (1983). See, also 57 Comp.
Gen. 62 (1977), 53 Comp. Gen. 230, 231 (1973), and cases cited therein.
The regulations governing the program for alcohol and drug addicted
employees were adopted pursuant to specific statutory authority.
Section 521 and 525 of the Public Health Services Act, as amended, 42
U.S.C. Sections 290dd-1 and 290ee-1 (1983 Supp.). These statutory
provisions require OPM to develop and maintain "appropriate prevention,
treatment, and rehabilitation programs and services" for alcohol and
drug abuse "among Federal civilian employees." Comparable legislation
has never been enacted that would authorize establishment of health
programs to treat smoking or tobacco use by Federal employees.
Furthermore, our Office has held that while those programs that have
been established for employees suffering from alcohol and drug abuse do
allow appropriated funds to be used to pay for diagnostic and preventive
psychological counseling services, treatment and rehabilitation expenses
must be borne by the employee. See B-198804, December 31, 1980, and 57
Comp. Gen. 62, 66 (1977). Similarly, new regulations that were recently
adopted by OPM provide that the appropriate prevention, treatment, and
rehabilitation programs and services required by the legislation for
employees with alcohol and/or drug problems shall consist of short term
counseling and referrals. 50 Fed. Reg. 16692 (1985), to be codified at
5 C.F.R. Pt. 792.
Accordingly, there is no legal basis for using appropriated funds to
pay the personal medical expenses of Federal employees that would be
incurred as a result of their participation in a smokers' rehabilitation
program. It is important to note, however, that this conclusion does
not impair the authority of agencies to conduct programs designed to
promote and maintain employee mental and physical health short of
"treatment and rehabilitation." See 5 U.S.C. Section 7901; OPM
instructions set forth in FPM, Chapter 292 (Instruction 261, December
21, 1980); 57 Comp. Gen. 62, 66 (1977).
Question 3 -- Prohibition of Smoking in a Federal Workplace
The third question is whether smoking can legally be prohibited "in
all work areas of a federal office by employees and visitors alike."
Since GAO is not responsible for establishing or enforcing smoking
regulations except in its own office space, we are not able to give you
a definitive answer to this question. General Services Administration
guidelines for smoking in GSA-controlled buildings and facilities do not
anticipate a total prohibition against smoking in these buildings. See
41 C.F.R. Section 101-20.109-10 (1984). It would appear, however, that
under certain circumstances an agency has the authority to ban smoking
within the space allotted it. For example, GSA regulations state that
local laws should be complied with wherever applicable and employees may
unanimously declare an office a no-smoking area. Id.
FOOTNOTES
(1) As explained in 63 Comp. Gen. 115 (1983), this decision was not
intended to apply to equipment purchased under the authority of the
Rehabilitation Act of 1973, 29 U.S.C. Section 701 et seq.
B-218640.2, 64 Comp. Gen. 786
Matter of: Prince George's Contractors, Inc., Aug. 20, 1985
Contracts - Protests - Court Action - Protest Dismissed
Footnote in a court order, indicating that the court will not object
to a GAO opinion, does not constitute a request for such an opinion
where the court has neither granted the protester's motion for an
extension of the hearing date nor taken any other action that would
enable GAO to issue a timely decision.
Contracts - Protests - Court Action - Protest Dismissed
Protester's decision to bring suit in court after filing a bid
protest constitutes an election of remedies that binds the protester,
even though the protester believed it was compelled to take such action
in an attempt to stop award or performance. Consequently, the
protester's offer to withdraw its suit from the court and reopen the
protest at GAO, made after the court has refused to grant the
protester's motion seeking an extended briefing schedule until GAO
issues an advisory opinion, will not be considered.
Prince George's Contractors, Inc. renews its protest against award to
Chemung Contracting Corporation under invitation for bids No.
DTFA-15-85-B-10010, issued by the Federal Aviation Administration (FAA)
for the rehabilitation of ramp taxiways at Washington, D.C. National
Airport. For reasons similar to those in our earlier decision on the
firm's protest, Prince George's Contractors, B-218640, June 28, 1985, 64
Comp. Gen. 647, 85-2 CPD Paragraph . . ., we dismiss the protest.
Subsequent to filing the prior protest, Prince George's brought suit
in the U.S. District Court for the District of Columbia, Prince George's
Contractors, Inc. v. Donald D. Engen, Administrator, et al. (Civil
Action No. 85-1783), seeking injunctive relief. In this connection,
Prince George's asked the court to mandate abbreviated filing deadlines
and processing of the bid protest, so that an advisory opinion would be
available for the court's consideration when deciding Prince George's
motion for a preliminary injunction. Although the court indicated that
it would consider an opinion of this Office should one fortuitously be
issued, it did not mandate the abbreviated bid protest schedule. This
would have permitted full development of the record, with an agency
report and comments by the protester and interested parties, so that our
Office could have issued a decision within the court's time objectives.
Since the parties were unwilling to accelerate their submissions on a
voluntary basis, we dismissed the earlier protest.
Subsequently, the court by order of July 12 denied Prince George's
motion for a preliminary injunction; set a date of September 20 for a
permanent injunction hearing; and set a schedule for filing briefs by
the parties. In a footnote, the court also stated:
"Inasmuch as this matter will proceed to a final injunction hearing
in late September, the parties may wish to petition the GAO to resume
consideration of plaintiff's administrative protest. Should the GAO
agree to do so, the Court would have no objection."
On July 31, Prince George's filed the instant protest, again
requesting an advisory opinion of this Office for the court; stating
its expectation that the court would extend the hearing date to
accommodate a bid protest decision; and furnishing a copy of Prince
George's motion to enlarge the time for briefing and for an extension of
time for the hearing. The court did not grant this motion and, we are
advised, does not intend to do so.
Prince George's further argues that the Attorney General's initial
refusal to recognize those portions of the Competition in Contracting
Act of 1984 (CICA) relating to the suspension of award or performance
pending resolution of bid protests, 31 U.S.C.A. Sections 3553(c) and (d)
(West Supp. 1985), virtually compelled Prince George's to bring suit in
the U.S. District Court. However, should this Office agree to hear its
protest, Prince George's states, it would now consider seeking dismissal
of its action in the District Court, since the Attorney General has
reversed his advice that federal agencies not follow the stay provisions
of CICA.
We still decline to consider this protest. Our Bid Protest
Regulations require the dismissal of any protest where the matter
involved is the subject of litigation before a court of competent
jurisdiction (unless the court requests a decision by the General
Accounting Office) or where the matter has been decided by the court. 4
C.F.R. Section 21.9 (1985). It has long been our policy not to decide
protests that come within these guidelines. See Pitney Bowes, Inc.,
B-218241, June 18, 1985, 64 Comp. Gen. 696, 85-1 CPD Paragraph 696,
citing Raycomm Industries, Inc., B-182170, Feb. 3, 1975, 75-1 CPD
Paragraph 72.
The issues presented in the Prince George's court proceeding
encompass the issues presented in this protest. Therefore, the court's
determination of the lawsuit will control the resolution of the bid
protest issues under the doctrine of res judicata. In this regard, we
do not interpret the court's footnote in the order denying the
preliminary injunction -- stating that the court would take no objection
to this Office's continued consideration of the bid protest -- to be the
equivalent of a request by a court for a decision of this Office. To
the contrary, the court's refusal to grant Prince George's motion for an
extension of time to accommodate the bid protest process indicates that
a decision of this Office is not a matter of concern to the court.
Moreover, in the absence of court-established deadlines for the bid
protest process, it does not appear likely that this Office could issue
a decision within the time dictated by the court's schedule.
Consideration of the protest therefore would serve no purpose. See
Prince George's Contractors, Inc., supra.
Finally, we recognize the difficulty of the situation created by the
Attorney General's earlier advice to agencies concerning CICA. However,
the fact remains that Prince George's actively sought relief from the
court with knowledge of the possibility that the court might, in its
discretion, refrain from specifically requesting this Office's opinion
on the matter. In these circumstances, the protester's filing of a suit
constituted an election of remedies which bound the protester, even
though the consequences of that election may not have been foreseen.
Protest dismissed.
B-210555.10, 64 Comp. Gen. 782
To: Honorable William Proxmire United States Senate, August 19, 1985
133 Vehicles - Government - Home to Work Transportation -
Government Employees
GAO has identified for Senator Proxmire, the Director of OMB and his
Deputy as individuals at OMB who have received home-to-work
transportation. Since White House did not respond to our inquiries, we
cannot verify whether incumbents of the same four positions reported to
Senator Proxmire 3 years ago are still using home-to-work
transportation.
Vehicles - Government - Home to Work Transportation - Government
Employees - Prohibitions
No person at the Office of Management and Budget (OMB) or on the
White House staff may properly receive Government home-to-work
transportation. Such transportation is prohibited by 31 U.S.C. 1344,
which exempts only a small group of high officials, not including any
person at OMB or on the White House staff. Specific home-to-work
prohibition included in HUD appropriation act does not indicate
congressional intent to exempt OMB officials. Assertion of "security
grounds" by OMB, without further explanation of the specific nature of
the threat and the added protection afforded by Government
transportation, does not establish circumstances warranting home-to-work
transportation. If security grounds are asserted by White House Staff,
similar justification must be provided. OMB Director is not entitled to
home-to-work transportation as the head of an agency listed in 5 U.S.C.
101. Penalty for violation of 31 U.S.C. 1344 is provided in 31 U.S.C.
1349(b).
This is in response to your letter dated May 28, 1985, requesting
that this Office "review the current practice, and legality, of
chauffeur service for top staff of the Office of Management & Budget and
the White House." We have answered the specific questions posed in your
May 28 letter in the discussion of the pertinent circumstances and
applicable law set forth below. In general, we have concluded that no
person at the Office of Management and Budget (OMB) or on the White
House staff may regularly receive Government transportation for travel
between his home and his workplace under the law as it is presently
worded.
The information available to us at this time indicates that at OMB,
the former Director was receiving daily Government home-to-work
transportation until his recent departure from Government service. The
Deputy Director of OMB received such transportation during the first 3
months of this year (until April 5, 1985), but now drives himself to and
from his office. The White House has not responded to our inquiries to
date and we were unable to verify the information provided in your May
28 letter that the Counselor to the President, the Chief of Staff, the
Deputy Chief of Staff, and the Assistant to the President for National
Security Affairs receive Government home-to-work transportation. We
have therefore answered your questions with respect to the White House
staff in general terms, making a working assumption that the information
provided to you 3 years ago is still true for the present incumbents of
the positions you identified.
The provision of home-to-work transportation to Government employees
is governed by 31 U.S.C. Section 1344 (1982) which provides that a
vehicle may be operated with appropriated funds "only for an official
purpose." The term, "official purpose," with few exceptions, "does not
include transporting officers or employees of the Government between
their domiciles and places of employment * * * ." 31 U.S.C. Section
1344(a). In our decision in 62 Comp. Gen. 438 (1983), we concluded that
some of our previous decisions interpreting 31 U.S.C. Section 1344
included "overly broad language which implied exceptions to the
statutory prohibition which we did not intend." We then set out to
restate the law as unequivocally as possible.
We held that unless certain narrow exceptions apply, "agencies may
not properly exercise administrative discretion to provide home-to-work
transportation to their officers and employees, unless otherwise
provided by statute." 62 Comp. Gen. at 447.
Section 1344(a) of title 31 provides exemptions from the home-to-work
prohibition for medical officers performing outpatient services and
certain employees performing field work. In our opinion, these
exemptions do not apply to OMB and White House staff. Further, section
1344(b) exempts a small group of officials from the home-to-work
prohibition. That group includes the President, the heads of cabinet
departments specifically listed in section 101 of title 5, and
"principal diplomatic and consular officials." 31 U.S.C. Section 1344(b)
(1982). Because no person at OMB or on the White House staff falls
within this group of officials, and we are aware of no other pertinent
authority, we conclude that, in the absence of any information which
would support an exception, no person at OMB or on the White House staff
may properly receive Government home-to-work transportation.
As your May 28 letter indicates, OMB cites section 406 of Public Law
98-371, the Department of Housing and Urban Development-Independent
Agencies Appropriation Act, 1985, in support of its position that
home-to-work transportation for the Director and Deputy Director of OMB
is authorized. That section reads:
SEC. 406. None of the funds provided in this Act to any
department or agency may be expended for the transportation of any
officer or employee of such department or agency between his
domicile and his place of employment, with the exception of the
Secretary of the Department of Housing and Urban Development, who,
under title 5, United States Code, section 101, is exempted from
such limitation. 98 Stat. 1237.
OMB, in its April 2, 1985, letter to you, points out that section
406, "by expressly preventing the use of appropriated funds to provide
such transportation to all officials other than the Secretary of HUD and
the agencies covered by the bill, demonstrates that Congress knows how
to prohibit such transportation when it wishes to do so."
OMB's argument seems to be that because Congress in section 406
specifically prohibited home-to-work transportation for Department of
Housing and Urban Development employees (with the exception of the
Secretary), and has enacted no similar prohibition for OMB, Congress
intends that there be no home-to-work prohibition applicable to OMB. We
cannot agree with OMB's contention. We are aware of no precedent or
statutory authority which would support such a legal theory. OMB's
position ignores the permanent prohibition of 31 U.S.C. Section 1344.
Were we to accept OMB's argument and apply it to all agencies other than
HUD, it would effectively repeal the home-to-work transportation
prohibition of 31 U.S.C. Section 1344. We are not aware of anything
that shows that Congress intended such a result.
You point out that OMB also asserts "security grounds" as
justification for the provision of home-to-work transportation to the
former Director and the Deputy Director. In 54 Comp. Gen. 855 (1975)
this Office recognized that a legitimate fear of violent criminal or
terrorist activities could warrant an exception to the home-to-work
prohibition for Government employees exposed to such danger. In order
to justify the use of a Government vehicle for home-to-work
transportation on the basis of such a threat, there must be a "clear and
present danger" of violent criminal or terrorist activities directed at
the employee in question and it must be clear that the furnishing of
Government transportation would provide protection not otherwise
available. 54 Comp. Gen. at 858. A determination that a threat to the
safety of an employee justifies home-to-work transportation should be
made with great circumspection. This Office would consider it an abuse
of discretion if speculative or remote fears of terrorism were used to
justify home-to-work transportation of employees. B-210555.3, February
7,1984.
Here, OMB has merely asserted "security grounds," with no further
explanation, as justification for the home-to-work transportation of the
former Director and the Deputy Director. In our view, this assertion,
standing alone without further explanation of the specific nature of the
threat and the added protection afforded by Government transportation,
does not establish the existence of circumstances warranting Government
home-to-work transportation.
On the other hand, to the extent that security measures are
justified, home-to-work transportation at Government expense may be
authorized.
Your May 28 letter indicates that OMB spokesmen, in statements to the
media, have asserted that the Director's position has "Cabinet-level
rank" and, accordingly, the Director is entitled to Government
home-to-work transportation. OMB apparently contends that the Director
should be numbered among the "heads of executive departments listed in
section 101 of title 5," who are exempt from the home-to-work
prohibition under 31 U.S.C. Section 1344(b). However that may be, under
the law as it presently stands OMB is not a cabinet agency and its
Director is not entitled to rely on the exception. In this connection
you are doubtless aware that the Administration has submitted proposed
legislation on this subject.
Finally, you have specifically asked whether top White House and OMB
staff are subject to the penalties prescribed in law for knowing
violation of the home-to-work prohibition and, if so, how these
penalties would be invoked. The penalty for violation of 31 U.S.C.
Section 1344 is set forth in 31 U.S.C. Section 1349(b) (1982) as
follows:
(b) An officer or employee who willfully uses or authorizes the
use of a passenger motor vehicle or aircraft owned or leased by
the United States Government (except for an official purpose
authorized by section 1344 of this title) or otherwise violates
section 1344 shall be suspended without pay by the head of the
agency. The officer or employee shall be suspended for at least
one month, and when circumstances warrant, for a longer period or
summarily removed from office.
We are aware of no reason why White House or OMB staff would not be
subject to this provision. The appropriate penalty is mandatory and
would be invoked if a determination by the agency head is made that a
willful violation of section 1344 had taken place. In the case of both
Mr. Stockman and Mr. Wright, as a non-cabinet agency head and his
second-in-command, our 1983 decision established a moratorium on
enforcement of the prohibition against non-cabinet agency heads and the
second-in-command of cabinet and non-cabinet level agencies, until the
end of the 98th Congress in order to afford the executive branch an
opportunity to submit an amendment to the existing prohibition that
might expand the exemptions. That moratorium has now expired. /1/ Mr.
Stockman had continued to use Government transportation until his
departure from Government service and Mr. Wright continued to do so
until April 5, 1985. They did so on advice of counsel that they
qualified for an exemption on several other grounds. The advice was
mistaken in our view, but there may not be grounds for a finding that
Mr. Stockman or Mr. Wright "willfully" disregarded the prohibition.
Similarly, we assume that if White House staff members utilized such
transportation, they did so with advice of counsel. While such
transportation is not permitted by the statute, and we have received no
information regarding any applicable exception to the prohibition, its
use probably would not amount to "willful" disregard of the law by the
staff members involved.
Nevertheless, irrespective of concerns of willfulness, the fact
remains that on the present record unauthorized use of Government
vehicles for home-to-work transportation did occur. It is our view on
that record, that the officers and employees on the White House staff
who might be involved should immediately cease such use of Government
vehicles unless adequate justification is provided.
We hope that we have been of assistance. Unless we hear otherwise
from your office, this letter will be available for release to the
public 30 days from today.
FOOTNOTES
(1) In a letter to OMB dated February 1, 1985, we offered to delay
our enforcement of the home-to-work restrictions until June 1, 1985, "if
the Administration's proposed legislation is promptly introduced in the
Ninety-Ninth Congress." Since the legislation was not introduced, there
was no extension of our enforcement moratorium beyond the end of the
98th Congress.
B-219019, 64 Comp. Gen. 780
Matter of: Mike Vanebo, August 16, 1985
Bids - Invitation for Bids - Amendments - Failure to Acknowledge - Wage
Determination Changes
Bid which failed to acknowledge amendment requiring upward wage rate
revision was properly rejected as nonresponsive. Failure to acknowledge
amendment could not be waived as a minor informality because the effect
of the amendment on bid price cannot be said to be clearly de minimis.
Mike Vanebo protests the rejection of his bid as nonresponsive under
invitation for bids (IFB) No. R6-3-85-46s, issued by the Gifford Pinchot
National Forest for precommercial thinning and slash disposal services
in the Wind River Ranger District. The contracting officer rejected
Vanebo's bid because Vanebo failed to acknowledge an amendment that
revised a wage rate under the Service Contract Act. Vanebo argues that
he did all that was required to acknowledge the amendment. The
protester argues in the alternative, even if he had not, the amendment
had a negligible effect on his price so his failure to acknowledge
should be waived.
We deny the protest.
The IFB was amended twice. The first amendment replaced the original
wage rate determination with a new determination including higher rates
for laborers and the second amendment changed the work schedule and
extended the bid opening date. The first amendment contained the
following standard instruction:
Offers must acknowledge receipt of this amendment prior to the
hour and date specified in the solicitation or as amended, by one
of the following methods: (a) By completing Items 8 and 15, and
returning copies of the amendment; (b) By acknowledging receipt
of this amendment on each copy of the offer submitted; or (c) By
separate letter or telegram which includes a reference to the
solicitation and amendment numbers.
The agency inserted "0" in the blank which normally would be used to
indicate that 1 or 2 copies of the amendment should be returned.
Vanebo's bid, which was low on one of the three items on the bid
schedule, included a signed copy of the second amendment but did not
include a copy of the first amendment. The bid did not otherwise
indicate that Vanebo had received a copy of that amendment. Due to a
clerical error, however, the bid abstract indicated that Vanebo had
acknowledged both amendments. Later the contracting officer determined
that Vanebo's bid was nonresponsive because the first amendment had not
been acknowledged. A copy of the erroneous bid abstract indicating that
Vanebo had acknowledged both amendments was inadvertently sent to Vanebo
with notice that his bid had been rejected.
Vanebo does not argue that his bid included a copy of the amendment
or that he ever indicated to the agency, in his bid, or otherwise, that
he received a copy of the amendment. Rather, Vanebo maintains that he
literally complied with the amendment's instructions by signing the
amendment and filling in his address without returning the original or a
copy of the amendment or otherwise indicating to the agency that he had
received the amendment. As proof that he properly acknowledged the
amendment, Vanebo has submitted a copy of the bid abstract.
The agency says that the "0" was entered in the blank to indicate
that bidders were not required to acknowledge the amendment by returning
a signed copy of the amendment itself, but could use one of the other
two listed methods.
While the agency's insertion of "0" in the instruction blank was
confusing, we do not believe that Vanebo's reading of the instruction
was reasonable. It was clear from the amendment that acknowledgement
was required. The protester's interpretation of the instruction as
permitting a method of acknowledgement which is not communicated in any
way to the agency simply makes no sense. If the protester was confused
by the ambiguity caused by the "0" in the instruction, it should have
brought the matter to the agency's attention prior to bid opening.
Further, the fact that the contracting officer erroneously indicated on
the bid abstract that the amendment was actually acknowledged has no
bearing on whether the amendment was actually acknowledged by the
bidder. We thus conclude that the protester did acknowledge the
amendment.
Vanebo further argues that even if we conclude that the amendment was
not properly acknowledged, his failure to acknowledge the amendment
should be waived because it had only a negligible effect on the bid
price. The protester maintains that paying the wage rate increase of
$.55 per hour on this contract would only add $492.80 to his total bid
on this item of $26,961.
Generally, a bid which fails to acknowledge an amendment revising the
wage rate for a labor category to be employed under the contract must be
rejected. Morris Plains Contracting, Inc., B-209352, Oct. 21, 1982,
82-2 CPD Paragraph 360. Without acknowledgement of such an amendment,
the government legally cannot require the bidder to pay the wages
incorporated by the amendment, and the bid therefore is nonresponsive.
We have recognized, however, that the failure to acknowledge a wage rate
amendment can be waived as a minor informality and cured after bid
opening, but prior to award, if the effect on the bid price is clearly
de minimis and the bidder affirmatively evidences its intent to be
obligated to pay the revised rates by acknowledging the amendment as
soon as possible after bid opening, but before award. United States
Department of the Interior -- Request for Advance Decision, et al., 64
Comp. Gen. 189 (1985), 85-1 CPD Paragraph 34; Reliable Service
Technology, B-217152, Feb. 25, 1985, 85-1 CPD Paragraph 234.
This case does not fall within the limited circumstances for waiving
minor informalities in wage rate situations. The amendment cannot be
said to have clearly de minimis effect. See United States Department of
the Interior -- Request for Advance Decision, et al., supra. Vanebo's
estimate of a total price impact of only $492.80 appears to be based on
hiring only one employee. On the other hand, Vanebo also seems to argue
that it will have no impact since he will do all the work himself and
thus will pay no wages at all. The agency suggests that more than one
employee would be necessary under the contract and argues that the
effect of the revised wage rate on Vanebo's bid price is significant.
Generally, whether the value of an unacknowledged amendment is
trivial or negligible depends on the amendment's estimated impact on bid
price and the relationship of that impact to the difference between the
two low bids; both tests must be satisfied in order to permit waiver.
Marino Construction Co., Inc., 61 Comp. Gen. 269 (1982), 82-1 CPD
Paragraph 167. Even if we accept Vanebo's estimate, it is not clear
that the effect of the amendment is trivial. While the impact on
Vanebo's price, amounting to approximately 1 percent of the $26,961 bid
is minimal, the more than 9 percent impact on the $5,400 difference
between the low bids is more significant. In any event, the matter is
clouded by the agency's argument that the impact would be greater and
Vanebo's statement that he will do all the work himself so the amendment
will have no impact at all. Whatever Vanebo's current plans are
regarding the performance of the contract, it is clear that Vanebo could
legally hire employees or subcontract with another firm otherwise
subject to the wage rates. Since Vanebo did not acknowledge the
amendment containing the latest wage rate, it would not be obligated to
pay at that rate. RTC Construction, B-217362, Jan. 24, 1985, 85-1
Paragraph 95. In view of this and considering the uncertainty of the
impact on the bid price we are unable to conclude that the value of the
amendment was clearly de minimis. In this regard, we note that in the
only prior case where we concluded that the impact of an acknowledged
wage rate amendment was de minimis the agency and protester agreed on
the value of the impact. See United States Department of the Interior
-- Request for Advance Decision, et al., supra. Thus, Vanebo's failure
to acknowledge the amendment is not a minor informality and may not be
waived.
The protest is denied.
B-218489, et al., 64 Comp. Gen. 772
Matter of: Mounts Engineering; Department of the Interior - Request
for Advance Decision, August 16, 1985
Contracts - Architect, Engineering, etc. Services - Costs, etc. Data
Although Standard Form (SF) 254, "Architect-Engineer and Related
Services Questionnaire," by which architect-engineer (A-E) firms can
document their general professional qualifications, need only be updated
on annual basis, SF 255, "Architect-Engineer and Related Services
Questionnaire for Specific Project," by which A-E firms can supplement
their SF 254 with specific information on the firm's qualifications for
a particular A-E project, should contain information which is "current
and factual."
Contracts - Architect, Engineering, etc. Services - Procurement
Practices - Evaluation of Competitors - Application of Stated Criteria
Contracting agency which found the two top-ranked architect-engineer
(A-E) firms to be "equally preferred," acted improperly when it
thereupon requested the firms to submit cost proposals prior to
selecting for negotiations the most highly qualified firm. Under the
Brooks Act, 40 U.S.C. 541-544 (1982), which governs the procurement of
A-E services, contracting officials may not consider the proposed fees
in ranking the professional qualifications of A-E firms.
Contracts - Architect, Engineering, etc. Services - Procurement
Practices - Brooks Bill Applicability - Equality of Consideration
Where contracting agency (1) failed to hold discussions with three
architect-engineer (A-E) firms as to anticipated concepts and the
relative utility of alternative methods of approach, as required under
the Brooks Act, 40 U.S.C. 541-544 (1982), (2) may have ranked the firms
in order of preference based upon out-of-date or misleading information,
and (3) improperly requested firms to submit cost proposals prior to
selecting for negotiations the most highly qualified firm, agency's
post-award decision to conduct discussions with the three A-E firms
initially evaluated as most highly qualified and to reevaluate their
qualifications based upon updated information is not objectionable.
Contracts - Protests - Moot, Academic, etc. Questions - Corrective
Action Proposed, Taken, etc. by Agency
The details of the contracting agency's proposed corrective action
are matters for the sound discretion and judgment of the agency. The
inability to achieve total competitive equality in a recompetition or
speculation as to the agency's likely bad faith in evaluating the
recompetition does not preclude otherwise appropriate corrective action.
General Accounting Office - Recommendations - Contracts - Procurement
Deficiencies - Correction
Where the contracting agency, although receiving notice of a protest
within 10 days of contract award, nevertheless allows contract
performance to continue on the basis that directing the contractor to
cease performance would not be in the best interests of the United
States, then GAO, in the event that it determines that the award did not
comply with statute or regulations, must recommend corrective action
without regard to any cost or disruption from terminating, recompeting
or reawarding the contract.
Mounts Engineering (Mounts) protests the Department of the Interior
(Interior), Bureau of Mines' award of architect-engineer (A-E) contract
No. S0156015 to Potomac Engineering and Surveying (Potomac). Mounts
challenges the agency's determination that Potomac was the firm most
highly qualified to perform the required services, the collection of
mine subsidence data, and alleges that the agency failed to comply with
the requirements set forth in the Brooks Act, 40 U.S.C. Sections 541-544
(1982), which governs the procurement of A-E services.
Although Interior contests most of Mount's allegations, it concedes
that contracting officials failed to conduct discussions with at least
three A-E firms as required under 40 U.S.C. Section 543. Accordingly,
the agency proposes to reevaluate the qualifications of three of the A-E
firms which originally offered to satisfy the agency's requirement, this
time conducting the required discussions with the firms. Interior
requests an advance decision from our Office, under 31 U.S.C. Section
3529 (1982), as to the propriety of its proposed corrective action.
We sustain Mounts' protests and make no objection to Interior's
proposed corrective action.
Generally, under the selection procedures set forth in the Brooks Act
and in the implementing regulations in the Federal Acquisition
Regulation (FAR), subpart 36.6, 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,
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, i.e., 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 their SF 254 with specific
information on the firm's qualifications for a particular project.
Potomac, Mounts and nine other firms responded to the announcement.
As indicated above, Interior then evaluated qualifications without
holding the required discussions with three A-E firms.
In the agency's initial evaluation of qualifications, 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. When Mounts
objected that it was improper to consider cost before the selection of
the most highly qualified firm, the contracting officer warned that
Mounts might be considered "non-responsive if . . . (it) doesn't submit
costs." Mounts thereupon submitted a cost proposal in which it offered
to provide the required service 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. We note that the contracting officer claims that "(a)t
no time did the evaluation board have knowledge of or access to the cost
proposals submitted by Mounts or Potomac."
Interior subsequently informed Mounts that it was negotiating with
Potomac as the most preferred firm. Mounts thereupon protested to the
agency. When the contracting officer denied that protest and instead
made award to Potomac, Mounts protested to our Office. Mounts later
supplemented its initial protest to our Office with another protest
against award to Potomac.
Mounts' Allegations
Mounts questions both the procedures used in evaluating
qualifications and the ultimate determination that Potomac was the most
highly qualified firm. Mounts argues that the procedures used to select
Potomac were improper, alleging that (1) the evaluation board was
appointed in bad faith and lacked the expertise required in order to
properly evaluate the qualifications for this type of work, (2) that the
board failed to conduct discussions with at least three of the most
highly qualified firms regarding anticipated concepts and the relative
utility of alternative methods of approach, and (3) that the agency
should not have requested cost proposals before selecting the most
preferred firm. Mounts also questions the determination that Potomac
was the most highly qualified firm, alleging (1) that there was no
indicating 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) that 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) that Potomac lacked experience in
subsidence monitoring, (4) that Potomac's "capacity" to perform was less
than that of Mounts, (5) that the board gave Potomac credit in the
category of past performance on government contracts for current
subsidence monitoring work at another site performed at Potomac's own
risk and in anticipation of the award of a contract for that site, (6)
that 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, (8) and that the reevaluation of qualifications
was inevitably influenced by Interior's knowledge of Potomac's lower
prices. Finally, Mounts contends that Interior acted improperly in
permitting Potomac to amend its SF 255 after award in order to include
the resume of a registered surveyor with the resumes of other key
personnel.
Interior's Response and Proposed Corrective Action
While Interior contests most of Mounts' allegations, it admits that
the board failed to conduct the required discussions with at least three
of the most highly qualified firms. The agency also agrees that the
SF's 254 and 255 submitted by Potomac were "not up-to-date," although it
maintains that it is not unusual for the SF's 254 and 255 submitted by
A-E firms to be "out-of-date" and that the Brooks Act and FAR only
requires that firms be encouraged to submit them on an annual basis.
In view of the failure to conduct the required discussions, Interior
proposed to undertake certain corrective measures. In particular, the
agency proposes (1) to obtain updated SF's 254 and 255 from the three
firms previously rated most highly qualified, (2) to 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) to 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.
Interior, however, requests that we render an advance decision as to
the propriety of its proposed actions.
Deficiencies in the Evaluation Process
The bill which became the Brooks Act was amended specifically to
require contracting officials to conduct discussions, regarding
anticipated concepts and alternative methods of approach, prior to
recommending the firm with which the agency should commence negotiations
so as to assure "as extensive an evaluation of alternative approaches
and design concepts as is possible without requiring actual design work
to be performed." H.R. Rep. No. 92-1188, 92d Cong., 2d Sess. 8 (1972).
The importance with which this "mandatory" requirement was viewed was
apparent from the expectation that the selection authority:
Through discussions with an appropriate number of the firms
interested in the project, will obtain sufficient knowledge as to
the varying architectual and engineering techniques that, together
with the information on file with the agency, will make it
possible for him to make a meaningful ranking.
H.R. Rep. No. 92-1188, pp. 8, 10; Sen. Rep. No. 1165, 92d Cong., 2d
Sess. 8 (1972).
As indicated above, Potomac and Mounts were found to be "equally
preferred" in the initial evaluation, while the reevaluation resulted in
a mere 15 point or 1.6 percent difference between their scores, 930 and
915 points, respectively. Given the closeness of the evaluations, we
think that the failure to conduct discussions could have prevented a
meaningful ranking and could have deprived Mounts of the opportunity for
award.
Furthermore, the evaluations may be open to question on other grounds
as well.
Interior concedes that Potomac's SF's 254 and 255 were "not
up-to-date." Thus, for example, although Potomac indicated in the SF 255
that it submitted in response to the September 11 CBD announcement of
the project that its proposed project manager was currently associated
with Potomac, Interior has determined that the individual "has not
worked for Potomac since he was hired by the Bureau (of Mines) in July,
1984."
Interior maintains that it "is not unusual for the SF 254 and 255
submitted by A&E firms to be out-of-date" and that A-E firms need only
be "encouraged to submit them on an annual basis."
It appears to us, however, that at least SF 255 must be current as of
the time of the particular project, since, under the regulations, SF 255
is a means by which a SF 254 already on file can be supplemented with
specific information, information which is both "CURRENT AND FACTUAL,"
as to a firm's qualifications for a particular project. FAR, Sections
36.702(b)(2) and 53.301-255. The policy in favor of encouraging annual
statements of qualifications, 40 U.S.C. Section 543, is implemented
through submission and annual updating of SF 254, not SF 255. FAR,
Sections 36.603(d) and 53.301-254.
Moreover, in setting forth the cirteria which evaluation boards could
use in ranking A-E firms, neither the Act nor the implementing
regulations include cost as a consideration. 40 U.S.C. Section 543;
FAR, Sections 36.602-1 and 36.602-3. On the contrary, the Act provides
for the consideration of cost during negotiations, i.e., after the final
ranking of firms, 40 U.S.C. Section 544, while the regulations prohibit
the consideration of fees during discussions, FAR, Section 36.602-3(c).
Therefore, we question the propriety of requesting cost proposals from
A-E firms prior to selecting the most highly qualified A-E firm.
This reflects the congressional intent to continue the traditional
method of procuring A-E services by first ranking the firms in order of
their qualifications and only then negotiating fees. Congress was
convinced that any consideration of the proposed fees as a factor in
ranking A-E firms would result in undue pressure on the firms to lower
their proposed fees, which in turn would adversely affect the quality of
the design by favoring the selection of "the less skilled, and those
willing to provide a lower level of effort." H.R. Rep. No. 92-1188, pp.
2-4; S. Rep. No. 1165, pp. 2-4. Accordingly, it believed that:
(I)n no circumstances should the criteria developed by any
agency head relating to the ranking of architects and engineers on
the basis of their professional qualifications include or relate
to the fee to be paid the firm, either directly or indirectly.
H.R. Rep. No. 92-1188, p. 10; Sen. Rep. No. 1165, p. 8.
We recognize that we have previously held that where a source
selection official, after taking into account all the evaluation
factors, including both price and technical factors, is unable to choose
between offerors, then he may properly consider "other factors which are
rationally related to a selection decision for the particular
procurement," even though as a general rule awards must be based upon
evaluation criteria set forth in the solicitation. Group Hospital
Service, Inc., (Blue Cross of Texas), 58 Comp. Gen. 263 (1979), 79-1
C.P.D. Paragraph 245. Nevertheless, given the legislative mandate to
rank A-E firms without reference to compensation, we believe that the
fee proposed by a firm is not a factor rationally related to deciding
which A-E firm is most highly qualified to provide the required
services.
Accordingly, we see no reason to question Interior's basic decision
to conduct discussions with the three firms ranked highest in the
initial evaluations and to reevaluate their qualifications. The protest
is sustained.
Mounts' Objections to Interior's Proposed Corrective Action
Mounts also objects to some portions of Interior's proposal for
corrective action. Mounts questions Interior's intention to consider
updated SF's 254 and 255, believing that this would give Potomac a
competitive advantage as a result of the experience gained and the
employees hired in performing the current contract. Mounts also
questions whether contracting officials can be trusted to undertake an
unbiased evaluation. In any case, it argues that the proposed
corrective action does not address all of the allegations that it made.
We have previously held that the details of implementing one of our
recommendations for corrective action are within the sound discretion
and judgment of the contracting agency. General Electric Information
Services Company, B-190632, Sept. 21, 1979, 79-2 C.P.D. Paragraph 209.
We believe that the agency possesses a similar discretion where, as
here, it decides on its own to implement corrective action.
Mounts has not demonstrated that Interior abused this discretion by
proposing to consider updated SF's 254 and 255 in the reevaluation of
qualifications. Mounts has itself called into question the extent to
which Potomac's original SF's 254 and 255 accurately reflected Potomac's
qualifications at that time. Moreover, we do not find it to be
unreasonable for Interior to seek to assure itself that the firm
determined to be most highly qualified upon reevaluation is in fact
currently best able to perform under a new contract, since it is a
firm's current, as opposed to past, capability which is most relevant to
the quality of the work the government can expect to receive. Cf.
Beacon Winch Company -- Request for Reconsideration, B-204787.2, Aug.
15, 1983, 83-2 C.P.D. Paragraph 205 (responsibility, i.e., whether a
bidder has the apparent ability and capacity to perform the contract
requirements, should be based on the most current information available
to the contracting officer); but cf. Richard Sanchez Associates,
B-218404.2, B-218474, June 10, 1985, 64 Comp. Gen. 603 85-1 C.P.D.
Paragraph 661 (evaluation of A-E firm's qualifications relative to other
offerors differs from a negative responsibility determination).
We recognize that Potomac's competitive position may benefit from the
experience gained and from the additional staff employed in performing
the current contract. Nevertheless, we do not think it is feasible to
preclude Interior in a reevaluation from considering protester's
performance under the current contract. Honeywell Information Systems,
Inc., 56 Comp. Gen. 505 (1977), 77-1 C.P.D. Paragraph 256.
We also point out that Mounts' contention that the reevaluation will
not be conducted in good faith is wholly speculative at this point. Cf.
General Electric Information Services Company, B-190632, supra, 79-2
C.P.D. Paragraph 209 at 3 (speculation as to proposed corrective
action). Interior has proposed selection of a new evaluation board
comprised of qualified personnel from outside the Bureau of Mines, and
Mounts has failed to demonstrate that the new board will not fairly
evaluate the firm's qualifications. Cf. A.R.E. Manufacturing Co., Inc.
B-217515, B-217516, Feb. 7, 1985, 85-1 C.P.D. Paragraph 162 (to
establish bad faith a protestor must present virtually irrefutable proof
that government officials had a specific and malicious intent to injure
the protester".
Given Interior's decision to reevaluate qualifications based upon
updated SF's 254 and 255, we need not consider Mount's remaining
contentions as to other possible improprieties in the original
evaluations, since these are now academic. See Sunbelt Industries,
Inc., B-214414, July 20, 1984, 84-2 C.P.D. Paragraph 66.
Recommendation
Mounts' initial protest to our Office was filed 8 calendar days after
the award to Potomac. Although we notified the agency of the protest on
the same day it was filed, Interior permitted Potomac to continue
contract performance, finding that it would be "not in the best interest
of the Government" to direct Potomac to cease performance.
The bid protest provisions of the Competition in Contracting Act of
1984 Section 2741(a), 31 U.S.C.A. Sections 3551-3556 (West Supp. 1985),
require a federal agency to direct a contractor to cease performance
where the contracting agency receives notice of a protest within 10 days
of the date of contract award unless the head of the responsible
procuring activity makes a written finding either that contract
performance is in the best interests of the United States or that there
are urgent and compelling circumstances significantly affecting the
interests of the United States which do not permit waiting for a
decision. 31 U.S.C. Section 3553(d). Where the agency allows
performance to continue without a finding of urgent and compelling
circumstances, we must recommend any required corrective action without
regard to any cost or disruption from terminating, recompeting or
reawarding the contract. 31 U.S.C. Section 3554(b)(2).
By separate letter to Interior, we are therefore recommending that if
Interior determines upon reevaluation that a firm other than Potomac is
the best qualified firm, the agency should terminate the contract with
Potomac and award to that other firm if a mutually satisfactorily
contract can be negotiated with it pursuant to FAR, Section 36.606.
Since qualifications are to be reevaluated with Mounts having a full
opportunity to compete, we have not declared Mounts to be entitled to
the costs of pursuing its protests, cf. Federal Properties of R.I.,
Inc., B-218192.2, May 7, 1985, 85-1 C.P.D. Section 508 (recovery of the
costs of pursuing a protest inappropriate where protestor given an
opportunity to compete for award under a corrected solicitation), and of
responding to the CBD announcement, 4 C.F.R. Section 21.6(e).
B-219862, 64 Comp. Gen. 770
Matter of: Dustin R. Lohof, August 15, 1985
Bids - Guarantees - Checks - Status of Personal Check
A bank or credit union check submitted with a bid as a bid guarantee
is not an acceptable substitute for a cashier's check, since such checks
may be subject to a stop payment order and therefore are not in the form
of the firm commitment required of a bid guarantee at the time of bid
opening.
Dustin R. Lohof protests the rejection of his bid as nonresponsive
for a construction project under solicitation No. R1-16-85-171, issued
by the Forest Service, United States Department of Agriculture. Mr.
Lohof's bid was rejected because his bid guarantee, in the form of a
credit union check, /1/ was found to be an inadequate bid guarantee. We
dismiss the protest.
The solicitation contained the clause specified in the Federal
Acquisition Regulation (FAR), 48 C.F.R. Section 52.228-1 (1984). That
clause requires bidders to submit bid guarantees in the form of a firm
commitment, such as a bid bond, postal money order, certified check,
cashier's check, irrevocable letter or credit or certain bonds or notes
of the United States. The underlying principle in all of the examples
of acceptable forms of a bid guarantee under the FAR clause is that the
obligation must be beyond anyone's control to revoke.
In this case, the bid was rejected as nonresponsive because of the
contracting officer's uncertainty over the degree of control the bidder
retained over the credit union check, that is, whether or not the bidder
could stop payment on the check before it was negotiated by the
government and accepted by the bank upon which it was drawn.
There is a distinction between a cashier's check and a bank check. A
cashier's check is an instrument issued by a bank on which the bank
check is both the drawer and the drawee. For that reason, it is
generally agreed that a cashier's check is accepted when issued, that
is, it is not subject to dishonor. On the other hand, a bank check is
not considered by many authorities to have been accepted when issued,
and thus is subject to a stop payment order. While some jurisdictions
have held otherwise, there is certainly no unanimity of opinion on the
subject. See generally Annot., 97 A.L.R. 3d 714 (1980).
The credit union check was made payable to the "USDA Forest Service"
and was drawn on the First National Bank of Great Falls, Great Falls,
Montana. Mr. Lohof is not a member of the credit union and consequently
he obtained the check through a member. According to the credit union,
Mr. Lohof would have no stop payment rights because he is not a member.
The clear implication is, however, that the member who obtained the
check could stop payment. In any event, a contracting officer is not
called upon to determine the legal effect of various instruments offered
as a bid guarantee, or to check with the instrument's issuer to
determine if the check is subject to dishonor. A bid guarantee
requirement is generally a matter of responsiveness, and as such the
adequacy of the guarantee must be determined at the time of bid opening.
Building Systems Contractors, Inc., B-219416, July 9, 1985, 85-2 C.P.D.
Paragraph 36. Mr. Lohof's bid was therefore properly rejected because
the adequacy of the credit union check as a bid guarantee could not be
determined at the time of bid opening.
The protest is dismissed. 4 C.F.R. Section 21.3(f) (1985).
FOOTNOTES
(1) For the purpose of this decision we will assume that the credit
union check falls within the same category of instruments as a bank
check or teller's check.
B-219500, 64 Comp. Gen. 768
Matter of: Industrial Structures, Inc., August 13, 1985
Contracts - Subcontractors - Listing - Invitation Requirement
Fact that bid package did not include a form for listing
subcontractors, nor highlight requirement for subcontractor listing,
does not render improper an agency's rejection of bid for failure to
include subcontractor listing required by IFB to prevent bid shopping.
Bids - Mistakes - Nonresponsive Bids - Correction Improper
A late modification of a bid may not be accepted if the bid as
originally submitted is nonresponsive.
Bids - Competitive System - Preservation of System's Integrity -
Pecuniary Disadvantage to Government
A nonresponsive bid may not be accepted even though it would result
in monetary savings to the government since acceptance would be contrary
to the maintenance of the integrity of the competitive bidding system.
Industrial Structures, Inc. (Industrial), protests the rejection of
its low bid as nonresponsive under invitation for bids (IFB) No.
STP-5-85, issued by the Immigration & Naturalization Service (INS) for
renovation of a Service Staging Area, Broadview, Illinois. INS rejected
Industrial's bid because it did not contain a list of the subcontractors
Industrial intended to use to perform the work. Industrial protests
that INS should have highlighted the subcontractor listing requirement
in the IFB's Part I, Solicitation Provisions, and that the bid package
should have provided a specific form for the subcontractor listing. We
deny the protest.
The IFB contained a clause entitled, "Listing of Subcontractors," in
Part II, Special Provisions. The clause stated, among other things,
that "For each category on the list of subcontractors, which is included
as part of the Bid, the Bidder shall enter either (1) the name and
address of the individual or firm with whom the Bidder proposes to
subcontract for performance of the category, or (2) the Bidder's own
name to indicate that the category will not be performed by
subcontract." The clause further directed that "Failure to submit the
list by the time set for bid opening shall cause the bid to be
considered nonresponsive * * * " and that " * * * the successful Bidder
(Contractor) shall not have the on-site work of any listed category or
portion of category performed by any individual or firm other than those
named in the Bid for performance thereof." Industrial did not submit a
subcontractor list with its bid nor did it indicate that it intended to
perform each required category of work itself.
Industrial contends that the subcontractor listing clause was buried
in the 1 1/2-inch thick contract documents, and should have been
highlighted in a notice to all bidders. Industrial points out that
paragraph 19 in Part I, Solicitation Provisions, stated that bids must
be submitted on forms furnished by the government, and notes that no
specific form was provided for the listing of subcontractors.
While INS acknowledges that no specific form was provided for the
subcontractor listing, it contends the requirement was neither minor nor
hidden since the subcontractor listing clause was three pages long.
We have frequently upheld the rejection of bids for construction
projects because of the failure to list subcontractors as required by
the IFB to prevent bid shopping. (Bid shopping refers to the seeking
after award by the prime contractor of lower price subcontractors than
those originally considered in the prime contractor's bid). See 43
Comp. Gen. 206 (1963); James and Stritzke Construction Company, 54
Comp. Gen. 159 (1974), 74-2 C.P.D. Paragraph 128; Piland Construction
Company, Inc., B-183077, Apr. 25, 1975, 75-1 C.P.D. Paragraph 262;
Coronis Construction Company, et al., B-186733, Aug. 19, 1976, 76-2
C.P.D. Paragraph 177. In a case with solicitation language similar to
that here, where the IFB did not contain space for a subcontractor list,
we held that the IFB's directions were very clear that a list had to be
included, and that the contracting agency properly rejected as
nonresponsive a bid which did not include the list. Lazos Construction
Co., Inc., B-211966, Aug. 11, 1983, 83-2 C.P.D. Paragraph 201.
Industrial cites the length of the IFB and argues that the
requirement for the subcontractor listing could be easily overlooked.
However, government solicitations and the resulting contracts are highly
complex instruments which are required by law to contain numerous
provisions and clauses. Quillin & Associates, Inc., B-208021, July 30,
1982, 82-2 C.P.D. Paragraph 98. The bidder bears the responsibility for
preparing and submitting a proper, responsive bid. The Library Store,
Ltd., B-213258, Feb. 9, 1984, 84-1 C.P.D. Paragraph 162. Implicit in
that responsibility is the duty of a potential bidder to examine
carefully the solicitation documents which describe the requirement to
be procured. Pluribus Products, Inc., B-201553, May 21, 1981, 81-1
C.P.D. Paragraph 400. It is clear that if Industrial had carefully
examined the IFB, it would have noted the requirement for a
subcontractor list.
Industrial believes that its submission of the subcontractor list, in
response to a request from INS after bid opening, should be accepted as
a late modification of an otherwise successful bid which makes its terms
more favorable to the government, in accordance with 48 C.F.R. Section
14.304-1(d) (1984). However, a late modification of a bid may only be
accepted if the bid as originally submitted is responsive.
Siemens-Allis, Inc., B-218054, Feb. 8, 1985, 85-1 C.P.D. Paragraph 169.
Industrial states that its bid represents a savings to the government
of at least $100,000. Although rejection of Industrial's bid may result
in additional cost to the government on this procurement, we have
consistently held that a nonresponsive bid may not be accepted, even
though it would result in savings to the government, since such
acceptance would compromise the integrity of the competitive bidding
system. Eclipse Systems, Inc., B-216002, Mar. 4, 1985, 85-1 C.P.D.
Paragraph 267.
We note that Industrial requested of INS a list of bid submittals
from those bidders considered to be responsive, and that INS withheld
unit prices of other bidders from Industrial's copy of the agency
report. The reason given by INS was so that Industrial would not gain a
competitive advantage over other bidders if the project were
resolicited. However, the bids were publicly opened and the unit prices
are matters of public record and should have been released since bids
may be inspected after opening. Federal Acquisition Regulation, 48
C.F.R. Section 14.402-1(c) (1985); also see Competition in Contracting
Act of 1984, Pub. L. 98-369, Section 2741(a), 98 Stat. 1175, 1199-1203.
Nonetheless, since the basis of Industrial's protest does not concern
the unit prices of other bidders, it does not appear that Industrial has
been prejudiced by INS's nondisclosure.
The protest is denied.
B-217167, 64 Comp. Gen. 763
Matter of: Priority or Payment From Remaining Contract Proceeds,
August 13, 1985
Contracts - Payments - Conflicting Claims - Assignee v. Surety v. IRS
Order of priority for the payment of remaining contract proceeds held
by a contracting Federal agency are to the surety on its performance
bond, including the taxes required to be paid under the bond, the IRS
for the tax debts owed by the contractor, the surety on its payment
bond, and the assignee.
Contracts - Payments - Bankrupt Contractor - Government v. Assignee,
Trustee, etc.
As the remaining contract proceeds held by a Federal contracting
agency are not, and will not, become the property of the defaulting
contractor, the trustee in bankruptcy would have no right to them.
Contracts - Labor Stipulations - Davis-Bacon Act - Applicability
Since the owner-operator laborers performing work on a Federal
contract have been paid, and the question of priority of payment of
remaining contract proceeds held by Federal contracting agency does not
depend on determining whether the laborers are covered by the
Davis-Bacon Act, 40 U.S.C. 276a, the question of whether they are
covered by that Act is moot and need not be answered.
A contracting officer with the Department of Agriculture's Forest
Service has asked us to determine the order of priority of payment among
several claimants of the remaining $36,500 proceeds of a contract
between the United States Forest Service and Scott Construction Co.
(Contract No. 50-9JHA-2-216). The claimants are the Internal Revenue
Service, Reliance Insurance Co., as surety on performance and payment
bonds, the Bank of America as the contractor's assignee, and a trustee
in bankruptcy. He also asks whether certain owner-operator laborers who
performed work for Scott Construction are covered by the Davis-Bacon
Act, 40 U.S.C. Section 276a.
For the reasons given below, we find the order of priority to be
first, Reliance on its performance bond, second, the Internal Revenue
Service (IRS) for the tax debt, third, Reliance on its payment bond, and
last, the Bank of America. As the laborers have all been paid by the
payment bond surety, we think the Davis-Bacon Act issue is moot.
BACKGROUND
The contract in question was awarded to the Scott Construction Co.,
on August 28, 1982, for $271,780.40. On September 28, 1982, performance
and payment bonds were executed between Scott Construction and the
surety, the Reliance Insurance Co., consistent with the contract
provision making the Miller Act, as amended, 40 U.S.C. Sections
270a-270d, applicable to the contract. The Miller Act requires
performance and payment bonds on various kinds of Government contracts
exceeding $25,000. On May 27, 1983, Scott Construction assigned all
monies due or to become due on the contract to the Bank. Proper notice
of the assignment was received by the Forest Service contracting officer
on June 13, 1983, in compliance with the Assignment of Claims Act, 31
U.S.C. Section 3727. We understand that at the time of the assignment,
the assignee knew that Scott Construction Co. had secured performance
and payment bonds with Reliance. The assignment does not have a "no
setoff" clause.
The IRS has informed us that Scott Construction failed to pay
required taxes arising from the contract for the second, third and
fourth quarters of 1983. The first notice of tax lien was filed with
the Forest Service on October 25, 1983. Not all of the delinquent
taxes, however, which exceed $250,000, pertain to the Forest Service
contract. On October 26, 1983, David Scott, representing the Scott
Construction Co., filed a chapter 11 petition for bankruptcy in the
United States Bankruptcy Court for the Eastern District of California.
In re Scott, No. 283-04392-W-11.
The Forest Service terminated the contract with Scott Construction
Co. for default on November 7, 1984. Soon thereafter, pursuant to its
performance bond, the surety, Reliance, elected to complete the
remaining contract work. The takeover agreement states that the
estimated total cost for the work is $10,000. Reliance has also paid
$15,449.50 to the IRS in partial payment of Scott Construction's tax
liability arising from the contract under its performance bond.
Pursuant to its payment bond obligations, Reliance has paid all contract
obligations incurred by its principal, including the claims for wages of
four owner-operators who performed work on the contract.
Reliance contends that it has first priority for reimbursement on the
retained contract funds pursuant to its performance bond, both for
amounts incurred in completing work on the project and for the
$15,449.50 paid to the IRS for the contractor's delinquent taxes.
Furthermore, in reliance on Henningsen v. United States Fidelity and
Guaranty Co., 208 U.S. 404 (1908), Reliance claims that it also has
priority rights to reimbursement from the retained funds for satisfying
its payment bond obligations. These rights, it contends, are equal to
its performance bond rights, and thus superior to the interest of both
the IRS and the assignee Bank of America.
The IRS states that all of its claims, whether for taxes pertaining
to the contract or other taxes, have priority over all competing claims
to the remaining contract proceeds, with the possible exception of the
performance bond surety for its expenses in completing the contract.
The Service argues that its claims arose prior to those of the Bank of
America because the taxes were assessed prior to full performance of the
work which gave rise to the assigned account receivable.
LEGAL DISCUSSION
1. Performance Bond Surety vs. All Others
It is well established that a surety who completes performance of a
contract or pays funds needed for completion of a contract, becomes
entitled to remaining contract proceeds in the hands of the Government
as the Government's subrogee. Pearlman v. Reliance Ins. Co., 371 U.S.
132, 139 (1962); Trinity Universal Ins. Co. v. United States, 382 F.2d
317, 320 (5th Cir. 1967), cert. denied 390 U.S. 906 (1968). It also is
established that a surety completing a defaulted contract under a
performance bond has a right to reimbursement from the unexpended
contract balance for the expenses it incurs, free from setoff by the
Government of the contractor's debts to the Government. 62 Comp. Gen.
498, 500-01 (1983). Thus, the performance bond surety's priority over
the Government's right to set off tax debts "avoids the anomalous result
whereby the performance bond surety, if set-off were permitted, would
frequently be worse off for having undertaken to complete performance."
Security Ins. Co. of Hartford v. United States, 428 F.2d 838, 844 (Ct.
Cl. 1970). It follows that a performance bond surety who stands in the
contracting agency's shoes has priority over an assignee of contract
proceeds, who is entitled to such proceeds only to the extent that the
assignor would have been entitled had the assignment not been made.
Prairie State Bank v. United States, 164 U.S. 227, 239-40 (1896);
Trinity Universal Ins. Co. v. United States, 382 F.2d at 320.
Consistent with these principles, we think Reliance has first
priority to receive the unexpended contract proceeds for its performance
bond obligations. This priority includes not only the expenses for
carrying out the work on the contract but also for payment of any
employment taxes covered by the performance bond. In this regard, we
have held that a surety who pays the withholding taxes required to be
paid under a performance bond is entitled to be reimbursed for the
amount of those taxes free from set-off for any other debts of the
contractor. B-189679, September 7, 1977; see United States v. United
States Fidelity and Guaranty Co., 328 F. Supp. 69 (E.D. Wash. 1971),
aff'd, 477 F.2d 567 (9th Cir. 1973). This is consistent with section 1
of the Miller Act, as amended, 40 U.S.C. Section 270a(d), which requires
every performance bond to "specifically provide coverage for taxes
imposed by the United States which are collected, deducted, or withheld
from wages paid by the contractor in carrying out the contract with
respect to which such bond is furnished." The contract between Scott
Construction and the Forest Service makes the Miller Act applicable to
the contract.
2. Payment Bond Surety, IRS, and Assignee
With respect to the other claimants, the priorities are more
complicated. The doctrine of subrogation allows a payment bond surety
who pays the debts of his principal to assert all the rights of the
creditors who were paid, in order to enforce the surety's right to be
reimbursed. Pearlman v. Reliance Ins. Co., 371 U.S. at 136-37. For
example, when a surety meets its obligations on a payment bond by paying
claims of laborers and materialmen, as happened in this case, it is
subrogated to whatever rights the contractor and laborers and
materialmen had in undisbursed contract funds. Id. at 141. The
surety's right has been held to relate back to the date of the surety
bond, entitling it to priority over all subsequent lienholders and
general creditors. Western Casualty and Surety Co. v. Brooks, 362 F.2d
486, 489-90 (4th Cir. 1966).
As an assignee can acquire no greater right to contract proceeds than
its contractor-assignor had, and an assignor's rights to payment under a
Government contract is subject to the surety's right to be reimbursed
for amounts paid on the contractor's behalf, a payment bond surety would
have priority over an assignee. 63 Comp. Gen. 533, 535 (1984).
In this instance, pursuant to its payment bond obligations, Reliance
paid the four operator-owners mentioned above, who did the actual work
under the contract. Moreover, the payment bond was executed some 9
months before the assignment was made, and, in any event, the assignee
had notice of the surety's bond obligations. Thus, Reliance has
priority over the Bank on its payment bond.
It is well-settled that the Government has the same right belonging
to every creditor to apply undisbursed moneys owed to a debtor to fully
or partially extinguish debts which he owes to the Government. /1/
United States v. Munsey Trust Co., 332 U.S. 234, 239 (1947); Gratiot v.
United States, 40 U.S. (15 Pet.) 336, 370 (1841); (1984); B-214905.2,
July 10, 1984. Thus, absent a "no set-off" clause in a contract, the
Government may satisfy by set-off any tax claim it has against a
contractor, notwithstanding that all or part of the tax claim does not
pertain to the contract under which the parties are contesting payment.
The Government's right of set-off has been held to be superior to that
of a payment bond surety who has paid the claims of laborers and
materialmen, United States v. Munsey Trust Co., 332 U.S. at 239-44, and
to that of an assignee so long as the tax debt arose before the
assignment was made. 60 Comp. Gen. 510, 513-15 (1981). /2/
Accordingly, the IRS would have priority over Reliance on its payment
bond and the Bank of America as assignee on the tax debts that arose
before the assignment was made.
We reach the same result in the present case for the tax debt that
arose after the notice of assignment was filed with the Forest Service,
but on different grounds. It is true that as mentioned above, in the
absence of a no set-off provision in a contract, an assignee has
priority over the IRS for tax debts accruing after an assignment is
made. 60 Comp. Gen. at 513-14. This is based on the common law
principle that the debts of an assignor that mature after an assignment
is made may not be set off against payments otherwise due the assignee.
Id. Nevertheless, if we hold in this case that the Bank of America has
priority over the IRS for the tax debts of the contractor that arose
after the notice of assignment was received by the Forest Service, we
would create a tautology that admits of no solution. The IRS would have
priority over the payment bond surety, the surety over the assignee, and
the assignee over the IRS.
A similar problem was considered and resolved in 63 Comp. Gen. 533,
536 (1984), in which the assignment did have a no set-off clause. There
we held that the assignee bank was entitled to priority over the IRS
only if it could establish that it otherwise was entitled to the funds.
Since the payment bond surety had priority over the assignee, the
assignee was not "otherwise" entitled to the funds, and therefore it
could not have priority over the IRS. Thus, we found the order of
priority to be the IRS, the payment surety, and last, the assignee bank.
We think the same principle should apply here. In other words, since
Reliance on its payment bond obligations has priority over the Bank, the
Bank would be precluded from maintaining its priority over the IRS.
3. Trustee in Bankruptcy vs. All Other Claimants
With regard to the trustee in bankruptcy, the Supreme Court has held
that property interests in a fund not owned by a bankrupt at the time of
adjudication are not a part of the bankrupt's property and do not vest
in the Trustee. Pearlman v. Reliance Ins. Co., 371 U.S. at 135-36. In
Pearlman, the Court said that the Bankruptcy Act "simply does not
authorize a trustee to distribute other people's property among a
bankrupt's creditors." Id. at 135-36. As the remaining contract
proceeds are not, and will not be, owned by Scott Construction Co., or
by Mr. Scott, the Trustee has no right to them.
As a final matter, since the four owner-operator laborers, described
earlier, were paid by Reliance pursuant to its payment bond obligations,
and the answer to the priority question does not depend on determining
whether they were covered by the Davis-Bacon Act, 40 U.S.C. Section
276a, the question about their coverage is moot and need not be
answered. /3/
FOOTNOTES
(1) Of course, the Government also has a right to enforce its tax
lien. 26 U.S.C. Sections 6321, 6322.
(2) When a validly assigned contract does contain a no setoff clause,
the IRS may not set off a tax claim against the assignor regardless of
when it arose or became mature. 62 Comp. Gen. 683, 690-693 (1983).
(3) Consistent with the Department of Labor's informal comments to
us, however, we do point out that the salient factor for determining
Davis-Bacon coverage is not the contractual relationship between the
contractor and the individual, but whether the individual is performing
the duties of a laborer or mechanic. 29 C.F.R. Section 5.2(o).
B-218441, 64 Comp. Gen. 756
Matter of: Monarch Water Systems, Inc., August 8, 1985:
Statutory Construction - Legislative Intent - General Accounting Office
Duties
Under the Competition in Contracting Act of 1984 (CICA), GAO's bid
protest authority extends to any "federal agency" as that term is used
in the Federal Property and Administrative Services Act of 1949 (FPASA),
including wholly owned government corporations. Notwithstanding
provision of CICA which defines "protest" with reference to "executive
agency," 31 U.S.C. 3551(1), proper interpretation effectively
substitutes the term "federal agency." Rules of statutory construction
permit such a substitution where supported by legislative intent as
evidenced in language of CICA protest provisions as a whole and in
legislative history of CICA.
Contracts - Protests - Authority to Consider - Tennessee Valley
Authority Procurements
Tennessee Valley Authority (TVA), Act, 16 U.S.C. 831 et seq. (1982),
sets sufficient parameters for the collection and use of TVA power
program funds so as to constitute a continuing appropriation; TVA's
power program is not a nonappropriated fund activity beyond the protest
jurisdiction of the General Accounting Office.
Bids - Invitation for Bids - Specifications - Brand Name -
Reasonableness
Protest is denied where protester fails to demonstrate that brand
other than that specified in contracting agency's solicitation would
satisfy agency's needs or that agency's brand name requirement is
unreasonable.
Monarch Water Systems, Inc. (Monarch) protests invitation for bids
(IFB) No. C3-958959 for the procurement of water conditioning compounds,
issued by the Tennessee Valley Authority (TVA). Monarch contends that
the IFB requirements are unduly restrictive of competition. The TVA
challenges our jurisdiction to decide the protest under the Competition
in Contracting Act of 1984 (CICA) and our Bid Protest Regulations.
Based on our review of the act and its legislative history, we conclude
that CICA extends our bid protest authority to wholly owned government
corporations, including TVA. We also find that TVA is using
appropriated funds for this procurement. We find the protest, however,
to be without merit.
Background
Prior to the implementation of the procurement protest system
authorized by CICA (31 U.S.C. Sections 3551-3556, as added by Section
2741(a) of Pub. L. No. 98-369), we decided bid protests based on our
authority to adjust and settle government accounts and to certify
balances in the accounts of accountable officers under 31 U.S.C. Section
3526 (1982) (formerly 31 U.S.C. Sections 71 and 74 (1976)). See
Wheelabrator Corp. v. Chafee, 455 F.2d 1306, 1313 (D.C. Cir. 1971); 46
Comp. Gen. 441, 453 (1966); C.T. Bone, Inc., B-185084, Nov. 28, 1975,
75-2 CPD Paragraph 364. In exercising that authority, we consistently
declined to consider protests involving TVA. Our position was based on
the following provision of the TVA Act of 1933 as amended, 16 U.S.C.
Section 831h(b) (1982):
* * * Provided, that subject only to the provisions of this
chapter, the Corporation is authorized to make such expenditures
and to enter into such contracts, agreements and arrangements,
upon such terms and conditions and in such manner as it may deem
necessary including the final settlement of all claims which the
Board shall determine to have been necessary to carry out the
provisions of said chapter.
Since this provision gave TVA broad authority to enter into contracts
as well as final claim settlement authority, we concluded that we could
not take exception to a TVA contract award. We therefore declined to
consider bid protests involving TVA. See General Crane and Hoist, Inc.,
B-208477, Aug. 8, 1982, 82-2 CPD Paragraph 156.
Similarly, prior to the implementation of CICA, we generally declined
to consider protests involving procurements by other government
corporations and agencies endowed by statute with broad authority to
determine the character and manner of their expenditures. See, e.g.,
CompuServe, Inc., B-213015, Oct. 3, 1983, 83-2 CPD Paragraph 411,
regarding the Pension Benefit Guaranty Corporation; Ingersoll Rand Co.,
B-190275, Oct. 12, 1977, 77-2 CPD Paragraph 289, regarding the St.
Lawrence Seaway Development Corporation; Leon P. Brooks Real Estate
Co., B-181550, Jan. 6, 1975, 75-1 CPD Paragraph 7, regarding the
authority of the Commissioner of the Federal Housing Administration as
transferred to the Secretary of Housing and Urban Development.
GAO's Procurement Protest System under CICA
The enactment of CICA both strengthened and, for the first time,
expressly defined our bid protest authority. Under the new protest
system, we are to decide protests concerning alleged violations of
procurement statutes or regulations. 31 U.S.C. Section 3552. This bid
protest authority is not related to account or claim settlement
authority over the contracting agency involved.
TVA's Position
TVA argues that its procurements are not subject to our protest
jurisdiction for two reasons: (1) it is not an "executive agency" under
the protest system authorized by CICA, and (2) 98 percent of its
purchases are made with nonappropriated funds.
TVA first points out that a protest to be decided by our Office under
CICA is defined as:
* * * a written objection by an interested party to a
solicitation by an executive agency for bids or proposals for a
proposed contract for the procurement of property or services or a
written objection by an interested party to a proposed award or
the award of such a contract. * * * (Italic supplied.) 31 U.S.C.
Section 3551(1).
TVA submits that because the protest provisions were enacted as a new
subchapter V to chapter 35 of title 31 of the United States Code, they
are subject to the definition of "executive agency" contained therein
which provides:
In this chapter, "executive agency" does not include * * * a
corporation, agency, or instrumentality subject to chapter 91 of
this title. 31 U.S.C. Section 3501 (1982).
Chapter 91 of title 31 contains the codified provisions of the
Government Corporation Control Act, which lists TVA as a wholly owned
government corporation. 31 U.S.C. Section 9101(3)(M) (1982). Thus, TVA
concludes that we are authorized to decide only protests involving
procurements by executive agencies, as defined in 31 U.S.C. Section 3501
and that as a government corporation, TVA is not included in that
definition.
TVA also refers to the following colloquy which took place between
Senators Howard Baker, then majority leader of the Senate and from the
state in which TVA is headquartered, William Cohen, principal sponsor of
the measure, and William Roth, chairman of the conference committee
dealing with CICA, during the Senate consideration of technical
corrections to CICA.
MR. BAKER. I do, however, want to clarify one point. Under
subtitle D, section 2741 of this title, which provides a statutory
base for the General Accounting Office's bid protest system, the
term "Federal agency" is defined as having the same meaning as
that term has under the Federal Property and Administrative
Services Act of 1949.
It is my understanding that, in choosing the particular
definition, the conferees do not intend to increase the GAO's bid
protest authority over the Tennessee Valley Authority beyond the
extent that GAO currently has such authority. Am I correct in my
understanding of the conferees' intent?
Mr. COHEN. Yes you are correct. The conferees, do not intend
to expand the current scope of GAO's bid protest authority with
regard to the TVA.
Mr. ROTH. As chairman of the subconference which considered
this title, I agree with the Senator from Maine that your
understanding of the GAO's bid protest authority, as it applies to
the TVA, is consistent with the conferees' intent.
Mr. BAKER. I thank the Senators for that clarification. 130
Cong. Rec. S8886 (daily ed. June 29, 1984).
TVA's second contention is that 98 percent of its purchases,
including the instant procurement, are made with nonappropriated funds,
and that under our Bid Protest Regulations such procurements are beyond
our bid protest authority.
Jurisdiction
As explained below, based on our review of CICA and its legislative
history, we conclude that our bid protest authority extends to "federal
agency" that is used throughout the protest provisions of CICA, and
further given that it is the term "federal agencies," as that term is
used in the Federal Property and Administrative Services Act of 1949
(FPASA), including wholly owned government corporations such as TVA.
Furthermore, we do not agree that TVA is a nonappropriated fund activity
beyond our bid protest authority.
Although the term "executive agency" is used in the definition of
"protest" at 31 U.S.C. Section 3551(1), supra, we do not think this term
alone is dispositive of our jurisdiction. The other protest provisions
of CICA must also be considered, and they indicate that we are to decide
protests of procurements involving any "federal agency," including
wholly owned government corporations such as TVA.
First, virtually every other reference in the statute dealing with
the new bid protest system uses the term "federal agency." For example,
31 U.S.C. Section 3553(b)(1) provides:
Within one working day of the receipt of a protest, the
Comptroller General shall notify the Federal agency involved of
the protest. (Italic supplied.)
See also 31 U.S.C. Sections 3554(b), (c), (d), (e). Second, the CICA
protest provisions do not define the term "executive agency"; they do,
however, expressly define the term "federal agency." According to CICA,
"federal agency" has the same meaning as that given by section 3 of the
FPASA (40 U.S.C. Section 472 (1982)). 31 U.S.C. Section 3551(3). That
definition includes wholly owned government corporations. /1/ Although
the term "wholly owned government corporation" is not itself defined in
the FPASA, we read it to include the corporations so designated in the
Government Corporation Control Act. TVA is so designated. 31 U.S.C.
Section 9101, supra.
Applying the well established principle of statutory construction
that individual parts of a statute should be construed so as to produce
a harmonious whole, 2A Sutherland Statutory Construction, Section 46.05
(4th Ed., 1973), we believe CICA must be read as providing our Office
with protest authority over federal agencies, not only over executive
agencies. If, as TVA argues, Congress intended to limit our protest
authority to an "executive agency" as that term is used in 31 U.S.C.
Section 3501, then the use of the term "federal agency" contained
throughout CICA's protest provisions would conflict with that intent, as
"federal agency" under the FPASA encompasses a larger domain than
"executive agency" under 31 U.S.C. Section 3501. Given that except for
31 U.S.C. Section 3551(1), it is the term "federal agency" that is used
throughout the protest provisions of CICA, and further given that it is
the term "federal agency" and not "executive agency" that CICA defines
for purposes of the subchapter dealing with the new protest system, we
think the clear intent of Congress was to establish a protest system
that applied to federal agencies. Consequently, the intent of Congress
can be given effect if the term "federal agency" is substituted for the
term "executive agency" in 31 U.S.C. Section 3551(1).
Such a substitution of words or phrases is generally permissible as a
method of statutory construction so long as it is consistent with
legislative intent. As the Supreme Court has observed, "the canon in
favor of strict construction is not an inexorable command to override
common sense and evident statutory purpose. It does not require
magnified emphasis upon a single ambiguous word in order to give it a
meaning contradictory to the fair import of the whole remaining
language." United States v. Brown, 333 U.S. 18, 25-26 (1947). See also
Symons v. Chrysler Corp. Loan Guarantee Bd., 670 F.2d 238, 242 (D.C.
Cir. 1981); 2A Sutherland, supra, Sections 46.06 and 47.36.
Our conclusion regarding the congressional intent is borne out by
CICA's legislative history. The conference committee report on CICA
states:
Any actual or prospective bidder or offeror whose direct
economic interest would be affected by the award or failure to
award a procurement contract by an executive agency may challenge
the agency's solicitation, award or proposed award by filing a
protest with the Comptroller General. Final agency determinations
under section 307 of the Federal Property and Administrative
Services Act and section 2310 of title 10, United States Code, may
be the subjects of protest to GAO, the courts, and where
appropriate, the GSA board. (Italic supplied.) H.R. Rep. No.
98-861, 98th Cong., 2nd Sess. 1435.
Final agency determinations under section 307 of the FPASA refers to
procurement decisions by "agency heads." FPASA Section 307, 63 Stat.
377, 396 (not codified). The FPASA defines "agency head" to include the
head of an "executive agency," 41 U.S.C. Section 259 (1982), which in
turn is defined in FPASA Section 3, discussed earlier, and which
includes wholly owned government corporations. Thus, this report
language strongly suggests that the conferees intended that procurements
involving an executive agency, as defined by the FPASA, and therefore
including wholly owned corporations, were to be subject to the new
protest system.
In light of the above, we find the aforementioned Senate colloquy to
be unpersuasive. While the remarks in question evidence the Senators'
belief that CICA does not grant us bid protest jurisdiction over TVA,
all other evidence indicates the contrary.
Next, we consider whether the instant procurement is beyond our bid
protest jurisdication because TVA is allegedly using nonappropriated
funds. Our regulations state that nonappropriated fund activities are
beyond the scope of our bid protest jurisdiction. 4 C.F.R. 21.3(f)(8)
(1985). According to TVA, the instant procurement does not involve
appropriated funds because it is funded by power system revenues and
bonds.
While the power program funds appear to be self-generated rather than
the result of an annual appropriation by Congress, we do not consider
them to be nonappropriated. Where Congress has authorized the
collection or receipt of certain funds by an agency and has specified or
limited the purposes of those funds, the authorization constitutes a
"continuing appropriation" regardless of the fund's private origin.
Fortec Constructors-Reconsideration, 57 Comp. Gen. 311, 313-314 (1978),
78-1 CPD Paragraph 153. This rule applies to government corporations.
See, e.g., 60 Comp. Gen. 323 (1981) (involving Federal Prison
Industries, Inc.); 43 Comp. Gen. 759 (1964) (Federal Savings and Loan
Insurance Corporation); B-193573, Dec. 19, 1979 (St. Lawrence Seaway
Development Corporation).
Here, the provisions of the TVA Act both authorize the collection and
specify the application of the power program funds. For example, 16
U.S.C. Section 831h-1 provides for the generation and sale of electric
energy by the TVA Board; Sections 831i and 831j provide for the sale of
power and that it be equitably distributed among states and
municipalities; Section 831k requires that the price of the power sold
be fair and reasonable, and Section 831n et seq., provide for terms and
conditions for the sale of bonds and use of bond funds by the Board.
Thus, we think the TVA Act sets sufficient parameters for the collection
and use of TVA power program funds so as to constitute a continuing
appropriation. We therefore find that TVA's power program is supported
by approporiated funds and is not beyond the scope of our bid protest
jurisdiction.
Monarch's Protest
Monarch protests TVA's solicitation for the procurement of
ion-exchange compounds (resins) as unduly restricted to vendors
supplying resins manufactured by only one firm, Rohm and Haas. Monarch
contends that this is an unnecessary brand name requirement, which
improperly excludes dealers of other manufacturers' resins. While
acknowledging TVA received 24 bids under the solicitation, Monarch
asserts that the government is being denied one of the essential
benefits of competition -- low price -- as the bids of dealers offering
Rohm and Haas resins are all higher than those of dealers of other
manufacturers' products.
The issue, however, is not whether a product can be obtained at a
lower price, but whether TVA's brand name requirement reasonably
reflects its actual minimum needs. The Federal Acquisition Regulation
(FAR) requires contracting agencies to avoid using unnecessarily
restrictive specifications or requirements which might unduly limit the
number of bidders unless the requirements are essential to meet an
agency's minimum needs. 48 C.F.R. Section 10.002(b)(3) (1984).
Although TVA has broad statutory authority regarding its contracts
and expenditures, absent a determination to the contrary by the TVA
Board, it is subject to the procurement procedures set forth in the
FPASA and the FAR. See 39 Comp. Gen. 426 (1959). TVA has not informed
us that the Board has determined not to follow the FAR; therefore we
apply its provisions to the instant procurement.
Regarding the use of brand name requirements, we have traditionally
upheld an agency's decision to procure products on a brand name only
basis where the agency offers a rational basis for its decision and the
protester does not prove the decision to be clearly unreasonable. Wang
Laboratories, Inc., B-215589, Sept. 17, 1984, 84-2 CPD Section 300. In
this case, TVA points out that the resins to be purchased are to be
mixed with those already in use. TVA states that the industry practice
for the specific application -- "condensate polishing" -- does not
permit mixing of different brands which may have different
characteristics and capabilities. TVA states, and Monarch does not
refute, that this application is so critical that even one or two parts
per billion of contaminants could result in equipment failure and plant
shutdowns. TVA also notes that by using the same brand of resin as is
currently in use, it will be able to identify and correct problems more
readily. Finally, TVA maintains that less restrictive specifications
are in fact used for less demanding applications, and that the agency's
purchases as a whole are not confined to Rohm and Haas products.
Monarch has provided a comparison of the properties of a Rohm and
Haas product and of another manufacturer's product which shows
comparable characteristics; however, even by Monarch's comparison, the
two are clearly not identical. In this regard, TVA reports that resins
from different manufacturers which are "comparable" do not have
identical physical properties; it further states that it cannot mix
different brands that are not identical because of the "substantial
probability" that technical operational problems will result. The
protester has not refuted TVA's position.
Accordingly, given the protester's failure to demonstrate that resins
of a brand other than that specified in TVA's solicitation would meet
TVA's needs, and given TVA's reasonable explanation for its insistence
on requiring a particular brand name resin, we find no basis to conclude
that TVA has unreasonably excluded the protester from competing for the
contract. Therefore, Monarch's protest is denied.
FOOTNOTES
(1) The FPASA contains the following definitions: Section 472.
Definitions
As used in titles I through VI of this Act --
(a) The term "executive agency" means any department or independent
establishment in the executive branch of the Government, including any
wholly owned Government corporation.
(b) The term "Federal agency" means any executive agency or any
establishment in the legislative or judicial branch of the Government
(except the Senate, the House of Representatives, and the Architect of
the Capitol and any activities under his direction). 40 U.S.C. Section
472.
B-219762, 64 Comp. Gen. 755
Matter of: A. Moe & Co., Inc., August 7, 1985:
General Accounting Office - Jurisdiction - Contracts - Scope of Review
Protest against denial of application for a Master Agreement for
Repair and Alteration of Vessels is not for consideration under GAO's
bid protest function since protester's objections do not pertain to a
particular solicitation or to the proposed award or award of a
particular contract and thus are not within the scope of the bid protest
provisions of the Competition in Contracting Act of 1984, Pub. L. No.
98-369, 98 Stat. 1175, 1199-1203 (to be codified at 31 U.S.C. 3551-3556)
A. Moe & Co., Inc. (Moe), protests the denial by the Department of
the Navy, Naval Sea Systems Command (NAVSEA), of its application for a
Master Agreement for Repair and Alteration of Vessels (Master
Agreement). Moe disputes NAVSE's conclusion that the firm does not
possess the organization and facilities necessary to meet the
eligibility requirements for either a Master Ship Repair Agreement or an
Agreement for Boat Repair, two types of Master Agreements. We dismiss
the protest.
A Master Agreement, entered into with a prospective contractor
possessing the organization and facilities necessary to perform ship
repair work satisfactorily, establishes in advance the terms upon which
a contractor will make repairs, alterations and additions to vessels
under job orders. When a requirement arises for the type of work
covered by the Master Agreement, offers are to be solicited from
prospective contractors which have previously executed a Master
Agreement or which possess the necessary qualifications and agree to
execute a Master Agreement before award of a job order. Department of
Defense Supplement to the Federal Acquisition Regulation, subpart 17.71,
50 Fed. Reg. 12,276 (1985) (to be condified at 48 C.F.R. Sections
217.7100 to 217.7104).
The bid protest provisions of the Competition in Contracting Act of
1984 (CICA), Pub. L. No. 98-369, 98 Stat. 1175, 1199-1203 (to be
codified at 31 U.S.C. Sections 3551-3556), provide that the Comptroller
General shall decide a protest concerning an alleged violation of a
procurement statute or regulation of the protest is filed in accordance
with the bid protest provisions of CICA. 31 U.S.C. Section 3552. These
provisions define a "protest" as:
A written objection * * * to a solicitation by an executive
agency for bids or proposals for a proposed contract for the
procurement of property or services or a written objection by an
interested party to a proposed award or the award of such a
contract.
Since Moe's objections to the denial of its application for a Master
Agreement do not pretain to a particular solicitation or to the proposed
award or award of a particular contract, they do not constitute a
protest within the meaning of CICA and we will not consider them under
our bid protest function. Cf. Carolina Drydocks, Incorporated,
B-218186.2, June 3, 1985, 85-1 C.P.D. Paragraph 629 (allegation that
award of contract for vessel repairs was improper because agency
improperly denied protester's application for a Master Agreement, a
prerequisite for award under the solicitation)
Accordingly, the protest is dismissed.
B-218616, 64 Comp. Gen. 752
Matter of: McGean-Rohco, Inc., August 7, 1985:
Contracts - Negotiation - Requests for Proposals - Specifications -
Qualified Products - Time for Determination
Protester's contention that an RFP to which was attached a
specification stating that award would be made only for products
qualified for listing on the appropriate qualified products list at time
of bid opening should be interpreted as requiring qualification at the
time set for receipt of initial proposals is denied since, in a
negotiated procurement, award can be made to an offeror whose product is
qualified at the time of award.
Contracts - Negotiation - Qualification of New Sources - Evidence -
Sufficiency at Time of Initial Proposal Submission
Protester's contention that at the time of award of negotiated
contract, the awardee's product was not qualified for listing on a
required qualified products list is denied since the product had
successfully completed all tests in accordance with the specification
and the contracting officer had been so notified.
Contracts - Protests - General Accounting Office Procedures -
Timeliness of Protest - Solicitation Improprieties - Apparent Prior to
Bid Opening/Closing Date for Proposals
Protest that solicitation was defective based upon alleged
impropriety apparent on face of solicitation is dismissed as untimely
where filed after bid opening.
McGean-Rohco, Inc., protests the Department of the Navy's award of a
contract for paint remover to Turco Purex Industrial, Inc., under
request for proposals (RFP) No. N68836-85-R-0049. McGean contends that
Turco's offer was nonresponsive because, on the date for proposal
receipt, it was allegedly not eligible for listing on the appropriate
qualified products list (QPL); and that the RFP was defective because
it did not incorporate a mandatory QPL clause from the Federal
Acquisition Regulation (FAR). McGean requests that the award to Turco
be terminated for the convenience of the government and award made to
McGean as the lowest priced offeror whose product met the QPL
requirement, or that the requirement be resolicited with the FAR clause
included.
We dismiss the protest in part and deny it in part.
The RFP was issued on March 15, 1985, by the Naval Supply Center,
Jacksonville, Florida. The specifications required that the paint
remover comply with Military (MIL) Specifications No. MIL-R-81294C,
which, among other things, limited awards to products that were, "at the
time set for opening of bids, qualified for inclusion in QPL-81-294,
whether or not such products have actually been listed by that date."
The RFP did not incorporate the clause in FAR, 48 C.F.R. Section
52.209-1 (1984), which provides notice in the solicitation that award is
limited to products on a specified QPL. The clause also states that the
product must be qualified at the time set for opening of bids, or at the
time of award in negotiated procurements, whether or not the product is
actually included in the QPL.
On April 15, nine proposals were received. McGean's price of
$329,175 was the fourth lowest; Turco's price of $115,500 was the
lowest. At that time, McGean was the only offeror who had been informed
that its product met the requirements for listing on the QPL. Turco's
product had completed preliminary testing at the Naval Air Development
Center (NADC), Warminster, Pennsylvania, and had been forwarded on April
8 to the Naval Air Rework Facility (NARF), Jacksonville, for final field
service testing. Two days after the proposals had been received, NARF
orally informed the contracting agency that the field testing of Turco's
product had been completed. A message by NARF to NADC was sent on April
25 stating that the product had been tested and performed satisfactorily
in accordance with the MIL specification. On April 30, the Navy made
award to Turco.
McGean concedes that there was no "bid opening" in this case, but
insists that it would be absurd to interpret the MIL specification as
applying only to IFBs and not the RFPs. McGean contends that Turco's
product was not QPL qualified until May 22 when Turco was formally
informed by letter that its product would be listed.
The use of a QPL is a method of procurement that is inherently
restrictive of competition. For that reason, we will interpret the
regulations relating to the use of QPL procurements in a manner that
will not result in unnecessary restrictions on competition. See 51
Comp. Gen. 47 (1971). Further, the purpose of a QPL is to allow the
efficient procurement of those types of products which require testing
in order to insure their compliance with specifications requirements.
T.G.L. Rubber Company, Ltd., B-206923, Sept. 20, 1982, 82-2 CPD
Paragraph 239. It follows, then, that the use of a QPL is for the
benefit of the government and not for the benefit of any particular
offeror. Since this is a negotiated procurement and not one using the
sealed bid method, we also think it appropriate that the rules
applicable to negotiated procurements be applied to the facts of this
case, even though the MIL specification in question refers to formally
advertised procurements only. The use of negotiated procedures results
in a less restrictive application of the QPL rules because it permits
the award of a contract to an offeror whose product is qualified at the
time of award, rather than at the time of bid opening in sealed bid
procurements, or, as the protester argues here, at the time of the
receipt of initial offers. /1/
While there seems to be some confusion as to the actual date field
testing was completed, we are satisfied from an examination of the
record that the tests were satisfactorily completed before the April 30,
1985, award date, that this fact was communicated to the contracting
officer by the testing activity, and that the formal letter of approval
was not issued until after award (May 22). The issue, then, is whether
the awardee's product was qualified for listing on the QPL prior to the
date of the letter notifying it of that fact. We think that it was. In
51 Comp. Gen. 47, supra, we held that the issuance of a letter of
approval was a ministerial act and that the government should not be
deprived of the benefit of the lower bid "merely because it had not
completed the paperwork." We recognized in that case that in other
circumstances, we had held that the effective date of the qualification
was the date of the letter of approval, but we noted also that in those
cases (1) the tests were only partially successful so that the approval
letter itself involved an element of discretion that was necessarily
exercised in the issuance of the approval letter, and (2) that the
products were listed in the letter without reference to the testing
date. McGean notes that the letter in this case refers to "this letter"
as the qualification reference rather than the testing date and
concludes that the letter itself is therefore the essential element for
approval. From this, McGean reasons, approval was not granted until
after award.
We reject this reasoning. First, there does not appear to be any
discretion necessary in the issuance of the letter of approval in
question, that is, the product either passed the test or it did not. As
in 51 Comp. Gen. supra, the letter itself appears to us to be nothing
more than the completion of the paperwork necessary to have the product
listed on the appropriate QPL. We attach no special significance to the
qualification reference being "this letter" rather than the testing date
because it does not alter the substantive finding that was made when the
tests were successfully completed. In our view, the purpose of the QPL
requirement has been satisfied by the completion of the requisite tests.
We therefore conclude that the award in this case was proper.
In the alternative, McGean argues that the solicitation was defective
for failure to include the mandatory QPL clause in FAR Section
52.209-1(a). This ground of protest is dismissed as untimely under our
Bid Protest Regulations, 4 CFR Section 21.2(a) (1985), which require
that protests providing alleged improprieties in a solicitation must be
filed prior to bid opening.
The protest is dismissed in part and denied in part.
FOOTNOTES
(1) Section 303 D(c)(4) of the Small Business and Federal Procurement
Competition Enhancement Act of 1984, 98 Pub. L. 98-577, Oct. 30, 1984,
98 Stat. 3066, while not effective at the time the solicitation was
issued, permits an offeror to demonstrate that its product meets or can
meet the standards established for qualification before the date of
award.
B-218287.2, 64 Comp. Gen. 748
Matter of: Stellar Industries, Inc. - Request for Reconsideration,
August 5, 1985:
Contracts - Small Business Concerns - Awards Self-Certification -
Acceptance
Prior decision, which held that a small business bidder's
representation of itself as a manufacturer of the offered supplies for
purposes of the Walsh-Healey Public Contracts Act created a binding
obligation to furnish supplies manufactured or produced by a small
business concern, is reversed, and other decisions to the same effect
are expressly modified. The Department of Labor interprets the
Walsh-Healey Act as not prohibiting a qualified manufacturer from
subcontracting the manufacture of the offered supplies. Therefore, a
representation by a small business bidder that it is a manufacturer of
the supplies being procured is not equivalent to a certification that
all supplies to be furnished will be manufactured or produced by a small
business concern.
This decision overrules B-218287, May 30, 1985.
The Defense Logistics Agency (DLA) requests reconsideration of our
decision in Stellar Industies, Inc., B-218287, May 30, 1985, 85-1 CPD
Paragraph 616. In that decision, we sustained Stellar Industries'
protest against the agency's rejection of its low bid as nonresponsive
under invitation for bids (IFB) No. DLA13H-85-B-8145, a total small
business set-aside. The agency had rejected the bid because Stellar
Industries has not certified that all supplies to be furnished would be
manufactured or produced by a small business concern. We held that the
rejection was improper because it was clear from representations made by
Stellar Industries in the IFB's place of performance and Walsh-Healey
Public Contracts Act clauses that the firm had legally bound itself to
manufacture the offered supplies. Therefore, we recommended that the
awarded contracts be terminated and Stellar Industries awarded the
balance of the requirement.
DLA asserts that our May 30 decision is inconsistent with prior
holdings of this Office. DLA further contends that our decision is in
error because it disregards a significant interpretation of the
Walsh-Healey Public Contracts Act by the Department of Labor.
Upon reconsideration, we reverse our prior decision.
It is well-settled that if a bid on a small business set-aside fails
to establish the legal obligation of the bidder to furnish supplies
manufactured or produced by a small business, the bid is nonresponsive
and must be rejected. Automatics Limited, B-214997, Nov. 15, 1984, 84-2
CPD Paragraph 535; Mechanical Mirror Works, Inc., B-210750.2, Oct. 20,
1983, 83-2 Paragraph 467. Otherwise, a small business contractor would
be free to provide the supplies from either small or large business
manufacturers as its private business interests might dictate, thus
defeating the intent of the set-aside program. DuHadaway Tool and Die
Shop, Inc., B-216082, Aug. 29, 1984, 84-2 CPD Paragraph 239.
Accordingly, where a small business bidder fails to complete the
small business certification clause, the bid must be rejected as
nonresponsive unless it is clear from the bid, when read as a whole,
that the bidder otherwise has legally bound itself to furnish supplies
manufactured or produced by a small business concern. We have applied
this rule in two recent decisions that DLA cites in support of its
request for reconsideration: Automatics Limited, B-214997, supra and
ASC Industries, B-216293, Dec. 21, 1984, 84-2 CPD Paragraph 684.
In Automatics Limited, we held that a bid which failed to indicate
that the small business bidder was a manufacturer of the offered
supplies, and did not certify that the supplies would be manufactured or
produced by a small business concern, was nonresponsive. The bidder's
failure to assume the obligation to furnish supplies of small business
manufacture or production was not obviated by the firm's completion of
the IFB's place of performance and shippping point clause, indicating
its own address as the performance and shipping point, because that
clause only expressed a present intent to provide the principal
production facility. We noted that the purpose of the clause was
informational in nature and thus related to bidder responsibility rather
than to bid responsiveness. Therefore, the firm was not necessarily
precluded from altering its designated place of performance after bid
opening.
In contrast, in ASC Industries, we held that a bid, which failed to
contain the requisite certification that all supplies to be furnished
would be manufactured or produced by a small business concern, was
improperly rejected as nonresponsive where the bidder had bound itself
to use a specific supplier under the place of performance clause, and
the agency had information on file indicating the listed supplier's
status as a small business. We reached a different result from that
reached in Automatics Limited because the subject IFB specifically
advised bidders that failure to list the place of performance could be
cause to reject the bid, and further provided that the performance of
work at other than the indicated location was prohibited unless approved
in writing in advance by the contracting officer. Therefore, we
concluded that since the bidder was bound to use the supplier listed in
the place of performance clause, and the agency had information
available to it from its own records to indicate that the listed
supplier was small, the bidder had legally obligated itself to furnish
supplies of small business manufacture or production, and the bid was
accordingly responsive.
DLA contends that our reliance on the place of performance clause in
our May 30 decision is in error because the IFB did not specify that
failure to complete the clause might be cause for rejecting the bid, nor
did it state that prior approval from the contracting officer was needed
before the listed location could be changed. Thus, the agency contends
that Stellar Industries' completion of the clause, indicating its own
plants as the place of performance, was not sufficient to bind the firm
to use its own facilities. DLA urges that our decision, therefore, is
inconsistent with our holdings in ASC Industries and Automatics Limited.
DLA also asserts that our conclusion that Stellar Industries'
representation of itself as a manufacturer under the Walsh-Healey Public
Contracts Act clause was sufficient to establish the firm's intent to
furnish supplies of its own manufacture ignores a 1969 Department of
Labor interpretation of the Walsh-Healey Act which concluded that the
Act did not prohibit qualified manufacturers from subcontracting.
Therefore, DLA urges that even if a small business bidder represented
itself as a manufacturer of the offered supplies, this would not be
sufficient to bind it to furnish only supplies of small business
manufacture or production, since it could always subcontract the work to
a large business firm.
We do not agree with DLA that our prior decision in this matter is
inconsistent with our holdings in ASC Industries and Automatics Limited.
It is true that the IFB in this case did not indicate that completion
of the place of performance clause was a matter of bid responsiveness,
and did not state that the listed location could not be changed absent
prior approval by the contracting officer (so that completion of the
clause in fact was insufficient to bind Stellar Industries to use only
its own facilities in performance of the contract); however, our
decision did not turn on the firm's completion of that clause. While we
did note that Stellar Industries listed its own plants as the place of
performance, we did so only in conjunction with our conclusion that
Stellar Industries' representation of itself as a manufacturer of the
goods being procured was sufficient to show the firm's intent to furnish
supplies manufactured by a small business concern. That conclusion was
the primary basis for our decision, and we believe it is consistent with
our prior decisions in this area. See Automatics Limited, B-214997,
supra; Jack Young Associates, Inc., B-195531, Sept. 20, 1979, 79-2 CPD
Paragraph 207 (where we indicated that a small business bidder's
representation of itself as a manufacturer for Walsh-Healey purposes
would be sufficient to establish its obligation to furnish supplies
manufactured by a small business).
Upon reconsideration, however, we now agree that a small business
bidder's representation in the IFB that it is a manufacturer of the
supplies offered does not in fact legally obligate the firm to furnish
supplies manufactured or produced by a small business concern. As
previously indicated, the subject clause implements the Walsh-Healey
Public Contracts Act, 41 U.S.C. Sections 35-45 (1982), which, with
certain limited exceptions, permits the award of contracts for
materials, supplies, articles, or equipment to be made only to the
manufacturer of, or a regular dealer in, the items to be furnished under
the contract. The Act also requires bidders to represent or stipulate
that they are either the manufacturer or a regular dealer. 41 U.S.C.
Section 35(a). /1/
The clear intent of this requirement was to eliminate bid brokering,
the practice whereby a person who was not a legitimate dealer or
manufacturer submitted a bid so low that established firms could not
successfully compete for the contract. The broker would then
subcontract to substandard factories and "sweatshops," thus overriding
the federal government's desire to promote fair and safe labor
conditions. /2/
As authorized by the Act, the Secretary of Labor has made certain
interpretations of the Act, which appear at 41 C.F.R. pt. 50-206 (1984).
Applicable here is 41 C.F.R. Section 50-206.51(a)(1), which defines a
manufacturer as a:
person who owns, operates, or maintains a factory or
establishment that produces on the premises the materials,
supplies, articles, or equipment required under the contract and
of the general character described by the specifications.
This definition is also set forth in the Federal Acquisition
Regulation (FAR), 48 C.F.R. Section 22.601 (1984).
We have reasoned from this definition and the language and history of
the Act that when a small business bidder represents itself in its bid
as a manufacturer of the offered supplies, it necessarily commits itself
to manufacture those supplies. See Jack Young Associates, Inc.,
B-195531, supra, and Automatics Limited, B-214997, supra. In the
present matter, since Stellar Industries, undeniably a small business,
in fact had represented itself as a manufacturer of the required
supplies for Walsh-Healey purposes, we concluded that the firm had
obligated itself to manufacture those supplies.
However, DLA has submitted a 1969 interpretation /3/ of the
Walsh-Healey Public Contracts Act by the Department of Labor, which
follows in pertinent part:
You are correct in your assumption that the Act does not
prohibit qualified manufacturers from subcontracting. Thus, for
example, an eligible manufacturer * * * may purchase all the
components which are made part of (the product) he assembles.
Likewise, he may subcontract the manufacture of the entire
(product) should he wish. However, this presupposes that the firm
does own, operate or maintain an establishment that produces (the
product). So long as the firm is eligible for the receipt of the
contract, the amount subcontracting is immaterial * * * . (Italic
supplied.)
Although this particular interpretation is nowhere indicated in the
various interpretations of the Act provided at 41 C.F.R. pt. 50-206,
supra, the Department of Labor has advised this Office during our
reconsideration of this case that such an interpretation is correct.
According to the Department, it is only necessary that a firm qualify,
i.e., be eligible in its own right as a manufacturer of the supplies
offered, and nothing in the Act precludes the firm from later
subcontracting the work. (We note that this view is consistent with an
earlier case in which we stated that there is nothing in the Act which
prohibits an award to a company which contemplates subcontracting. 34
Comp. Gen. 595 (1955)).
Upon first impression, the Department of Labor's interpretation seems
inconsistent with the Act's overall purpose, since a firm obtaining the
contract as a manufacturer apparently would be able to shift part or all
of the manufacturing to firms operating under unfair or unsafe labor
conditions. The Department of Labor has administratively ruled,
however, that if a contractor is awarded a contract subject to the Act
as a manufacturer, it assumes an obligation to manufacture the supplies
under the labor standards of the Act, and may not relieve itself of this
obligation merely by shifting the manufacturing to another firm. The
contractor is jointly liable with the "substitute manufacturer" for any
acts or omissions on the latter's part which would have constituted
violations of the Act if the prime contractor had performed the contract
in its own facilities. This administrative ruling has been expressly
upheld by the Fourth Circuit. United States v. Davison Fuel and Dock
Co., 371 F.2d 705 (4th Cir. 1967); cf. United States v. New England
Coal and Coke Co., 318 F.2d 138 (1st Cir. 1963) (contractor who entered
into a contract to furnish supplies to the government as a regular
dealer and operated as such in performing the contract was not liable
under the Department of Labor's "substitute manufacturer" ruling for the
labor standards of its suppliers).
Thus, a small business bidder which represents itself as a
manufacturer for Walsh-Healey purposes is not prohibited from
subcontracting and therefore has not in fact legally obligated itself to
manufacture the offered supplies. Rather, the firm could subcontract
the entire work to a large business manufacturer if its business
interest so dictated. In light of this, we now agree with DLA that
Stellar Industries' representation that it was a manufacturer of the
supplies offered for Walsh-Healey purposes was not legally equivalent to
a binding obligation to furnish supplies manufactured or produced by a
small business.
Accordingly, we reverse our May 30 decision. To the extent that
other decisions have indicated that bidder's representation of itself as
a manufacturer of the supplies offered would have rendered the bid
responsive despite the bidder's failure to complete the small business
certification clause, those decisions are hereby modified.
FOOTNOTES
(1) We note that while the Act refers to "the" manufacturer, the
contract clause uses the terminology "a" manufacturer.
(2) See H.R. Rep. No. 2946, 74th Cong., 2nd Sess. 4 (1936).
(3) Letter of June 16, 1969, from the Administrator, Wage and Hour
and Public Contracts Divisions, Department of Labor, to the President of
Tyco, Inc.
B-218800, 64 Comp. Gen. 728
To: Honorable John D. Dingell, House of Representatives, August 2,
1985
Leaves of Absence - Involuntary Leave - Curtailment of Agency
Operations
In response to congressional request on legality and propriety of ICC
decision to furlough its employees for 1 day per week from April 15
through June 15 to meet unexpected cut by continuing resolution of $6.55
million from amount reported by House Appropriations Committee in 1985
year appropriation, GAO concludes that while the furlough appears to
have had a deleterious effect on the work of the ICC, it was legal and
fully within the administrative discretion of the Commission. While
more timely action could possibly have lessened the severity of the
furlough, the use of that method to meet budgetary restrictions appears
preferable to other alternatives available.
Sunshine Act - Applicability - Public Notice Provisions
We also feel that while the new Commission rules comply with
Government in the Sunshine Act and represent considerable improvement
over prior practice, more could probably been done to comply fully with
the Act. While the Government in the Sunshine Act does not bar use of
notation voting and meetings should not be required for routine or
trivial agency actions, we are concerned that only a small number of
meetings have been held to consider cases that the ICC identifies as
"significant."
Leaves of Absence - Involuntary Leave - Curtailment of Agency
Operations
Agencies have broad authority to furlough any or all of their
employees if there are legitimate management reasons for doing so. The
statute controlling such actions, 5 U.S.C. 7513 (1982) states that
furloughs can be required "only for such cause as will promote the
efficiency of the agency." The ICC furlough appears to have met the
legal requirements in every regard. A situation in which a deficiency
in an appropriation is expected is recognized by the statutory
definition of a furlough to be of sufficient cause.
Appropriations - Deficiencies - Anti-Deficiency Act - Violations -
Possibility - Underestimating Obligations
Although not expressly stated in the statutory language, we have held
that the Antideficiency Act requires heads of Federal agencies to expend
fiscal year appropriations so as to prevent the necessity for a
supplemental or deficiency appropriation and to avoid exhausting the
funds before the end of the period for which they are appropriated. ICC
met this requirement by adopting an operating plan for fiscal year 1985
that while including a request for a supplemental appropriation also
included an emergency plan which would enable the ICC to operate for the
entire fiscal year even without a supplemental.
Appropriations - Deficiencies - Anti-Deficiency Act - Violations -
Possibility - Underestimating Obligations
The apportionment provisions of the Antideficiency Act are violated
if only a drastic curtailment of activity will allow an agency to get
through the year without exhausting its appropriations. Therefore,
should there be no supplemental, the ICC will be forced to take more
drastic action than its original furlough plan to avoid violating the
Antideficiency Act. If the Commission does not act soon, it may be
unable to avoid violating the Act. Cf. 36 Comp. Gen. 699 (1957).
Appropriations - Deficiencies - Anti-Deficiency Act - Violations - Not
Established
ICC actions did not violate the Antideficiency Act, 31 U.S.C. 1341
(1982) because it never expended funds or incurred obligations in excess
or advance of available appropriations as apportioned by OMB. Actions
taken by the ICC demonstrate that from the point at which the Congress
and the President approved legislation that would cause their spending
level to exceed budgetary limits, every decision related to
expenditures, furloughs and RIFS were made to avoid violation of the
objectives of both maintaining essential services and staying within
budgetary limits.
In your letter of April 22, 1985, you asked us to examine the
legality and propriety of the decision by the Interstate Commerce
Commission (ICC) to furlough its employees for 1 day per week to deal
with a lower than expected appropriation. Specifically you asked us:
(1) to ascertain when the ICC knew that its appropriation would be
insufficient to support existing staff levels; (2) to determine whether
the ICC acted properly and lawfully in spending at known high levels in
anticipation that Congress would appropriate additional funds; (3) to
identify alternatives available to the ICC other than furloughs; and
(4) to discuss the fairness and impact of the agency's furlough. On an
unrelated matter, you also asked that we determine the legality of ICC's
amended rules on open meetings.
As you know, the budgetary problems that led to ICC's decision to
furlough its employees for 1 day per week from April 15, through June
15, arose on October 12, 1984, when the Congress appropriated $48
million for the ICC in fiscal year 1985, a cut of nearly $6 million from
the amount requested in the budget and of $6.55 million from the amount
reported by the House Appropriations Committee. The amount requested in
the budget was considered necessary to support 987 staff years, a
reduction of at least 13 from the number of staff years maintained in
fiscal year 1984. See Department of Transportation and Related Agencies
Appropriation Act, 1985, enacted as part of the fiscal year 1985
continuing resolution, Pub. L. No. 98-473, 98 Stat. 1837, 1959. The
number of employees expected to be funded by the appropriation was also
reduced significantly. The following chart shows the differences in
funding and the resulting staff years expected to be funded for the
appropriations bills reported, but not enacted by both Houses of
Congress, and for the continuing resolution:
COMPARISON OF ICC FUNDING AND STAFFING LEVELS IN FISCAL YEAR 1985
APPROPRIATION BILLS
TABLE OMITTED
In order to respond to your inquiry, we have interviewed an assistant
to the Chairman and other officials of the ICC, and have examined
relevant internal memoranda and the Chairman's response to questions
formally submitted in April by your office and by this Office in May.
On the basis of our interviews, and examination of relevant laws,
regulations, cases and legislative history, we conclude that, while the
furlough appears to have had a deleterious effect on the work of the
ICC, it was legal and within the administrative discretion of the
Commission. While more timely action could possibly have lessened the
severity of the furlough, the use of that method to meet budgetary
restrictions appears preferable to other alternatives available to the
ICC at the time the continuing resolution was enacted. We also conclude
that the new Commission rules comply with the Government in the Sunshine
Act.
In this letter we will discuss the legal issues as they relate to the
ICC's furlough actions and whether ICC's rules on open meetings comply
with the Government in the Sunshine Act. For detailed information on
the propriety or timeliness of ICC's actions regarding the budget cut,
see Appendix I. Appendix II summarizes actions taken by ICC after the
passage of the continuing resolution. In Appendix III, we provide
information on ICC's alternatives to the furlough and in Appendix IV, we
present information on the impact and fairness of the ICC furlough.
BACKGROUND
Immediately after the enactment of the continuing resolution, the
Chairman of the ICC instructed the Managing Director to prepare an
analysis of funding alternatives for the ICC to consider. The
Director's memorandum, dated October 19, 1984, discussed more fully in
Appendix II, concluded that substantial personnel and nonpersonnel cuts
would have to be taken immediately for the ICC to stay within the $48
million appropriation. If it were to freeze its operations at the then
current levels, given usual attrition rates, it would use a minimum of
1,000 staff years or $53.2 million on personnel-related costs alone. An
immediate plan to save $1.1 million in nonpersonnel expenses was
proposed, which the ICC later estimated would save $2.7 million through
the end of the fiscal year.
While the memorandum provided as one of five proposed alternatives
the means by which the ICC could continue to operate for the entire
fiscal year without requesting supplemental funding from the Congress,
at an open meeting held on October 25, the Commission voted to seek a
supplemental appropriation to provide funding for 984 total staff years,
the amount thought necessary to meet its work load requirements. At the
same time the Commission requested its Managing Director to prepare an
emergency plan to enable it to get through the year with only the $48
million appropriation, instituted a reduction-in-force (RIF) to reduce
personnel to the level requested in the supplemental and voted to freeze
expenditures for various nonpersonnel costs.
On January 18, 1985, the Managing Director of the ICC issued a
memorandum recommending the furloughing of every employee for 2 days
each pay period between April and September as the best means of
operating within the $48 million appropriation. He noted that while
total employment of 1,070 at the start of the fiscal year had declined
to 1,007 and that RIF's then occurring would reduce this level to 980,
this would still be 300 employees above the level that could be
supported for the remainder of the year by the $48 million
appropriation, when RIF costs and amounts already committed to
nonpersonnel costs were taken into account. An expected attrition rate
of 1 percent per month was seen as reducing staff to 900 by the end of
this fiscal year, 23 positions under staff-year ceilings proposed in the
1986 budget request. Without a furlough, a supplemental appropriation,
or additional RIFs of 300 employees (which would cost more than $2
million in separation costs, or the equivalent of another 100 staff
years), the memorandum warned that the Commission would be totally
without funds for the last 6 weeks of the fiscal year. The following
was the basis given for the furlough recommendation:
The furlough plan offers two significant advantages over those
alternatives requiring major RIFs. First, and perhaps most
important, is the continuity of current functions. While the
program and organizational change alternatives discontinue some
functions and organizations, those changes are not necessarily
desirable. They are actions designed largely to reduce costs.
However, in my view, these organizations and functions are
necessary and should be continued. The furlough alternative
permits these essential functions to be continued into FY 1986.
If, on the other hand, the Commission discontinues certain
functions or offices for FY 1985, it seems certain that the
Congress will cut funding for them from our FY 1986 budget
request, and any functional or organizational changes made due to
this funding crisis will most likely become permanent. * * *
In addition, the furlough plan is the only option that offers
some flexibility. It can be implemented during March or April and
continued in the absence of a clear indication that the
supplemental will be passed. If supplemental funding subsequently
becomes available, furloughs can be immediately terminated.
Memorandum to the Commission, from Martin E. Foley, Emergency
Plan, pp. 10-11.
The Commission approved the decision to adopt and implement furloughs
on January 24, 1985, and on March 1 all employees were formally notified
that the furlough was to begin on April 1 for the remainder of the
fiscal year. A subsequent notice informed employees that the furlough
would be delayed until the week of April 15 and that until further
notice, all employees would be furloughed for 2 days each pay period.
The furloughs were suspended on June 17, when the Commission concluded
that Congress would approve a supplemental appropriation.
Because the furlough had been in effect for only about a month at the
time of our review, we were unable to make an independent assessment of
the impact of the furlough on ICC programs and personnel. Based on
information supplied to us by the ICC, which is fully discussed in
Appendix IV, and given the alternatives available to the ICC, the
furlough, while causing financial hardship to all employees and creating
serious backlogs, missed deadlines and reduced efficiency, did enable
the ICC to retain the present organizational structure to continue
essential services even if at a reduced level.
DISCUSSION
I. Legality of Furlough Plan
A furlough, as defined in 5 U.S.C. Section 7511(a)(5), is:
* * * the placing of an employee in a temporary status without
duties and pay because of lack of work or funds or other
nondisciplinary reasons.
ICC elected to use RIF procedures for the furlough set forth in 5
C.F.R. pt. 351 rather than the "adverse action" procedures because the
furlough was expected to extend beyond 30 calendar days. See Federal
Personnel Manual (FPM) ch. 752-9.
Agencies have broad authority to furlough any or all of their
employees if there are legitimate management reasons for doing so.
Although 5 U.S.C. Section 7513 (1982) is specifically directed to
furloughs of less than 30 days in length, as the only statute defining
such actions, it sets the standards for all furloughs in stating they
can be required "only for such cause as will promote the efficiency of
the services."
The ICC furlough appears to have met the legal requirements. A
situation in which a deficiency in an appropriation is expected is
recognized by the statutory definition of a furlough to be a sufficient
cause to support a furlough.
OPM has supported the use of furloughs in situations in which the
agency does not expect to later separate the employees through a RIF
when it finds itself lacking funds, because OPM has found that this
course is likely to "have less adverse impact on employees than
reductions in force." See FPM Bulletin No. 351-32 (1981).
ICC employees were served with a general RIF notice on November 7,
1984, and were given a formal written furlough notice from the Director
of Personnel on March 1, 1985, 6 weeks before the furlough took place.
The notice provided a detailed explanation of the budgetary reasons that
such action would be necessary and of the duration and coverage of the
action. They were told of the right to appeal in writing to the Merit
Systems Protection Board no later than 20 days after the first day of
the furlough and of the address to which such appeal should be sent and
the minimum contents of such appeal. They were also notified of the
location of applicable regulations. We have been informed by the ICC
that only three employees have appealed this action and that the
affected unions were notified of the furlough decision 2 months before
the action was taken but took no appeal from it.
II. ICC Compliance With Antideficiency Act
You have asked whether it was proper for ICC to spend money at "known
high levels" in anticipation of receiving supplemental funding from the
Congress. To control agency obligations for the purpose of avoiding
deficiency spending the Congress enacted the so-called Antideficiency
Act, currently codified in Chapter 13, Subchapter III and Chapter 15,
Subchapter II of title 31 of the United States Code. Section 1341 of
title 31 prohibits an officer or employee of the United States from
making or authorizing "an expenditure or obligation exceeding an amount
available in an appropriation or fund for the expenditure or
obligation," or from incurring an "obligation for the payment of money
before an appropriation is made unless authorized by law." Based upon
our investigation, we are aware of no instance in which the ICC
obligated or expended funds in excess of its $48 million appropriation,
or obligated moneys in an anticipated supplemental appropriation before
they were appropriated.
The Antideficiency Act also prohibits a Federal officer or employee
from making or authorizing an appropriation in excess of an
apportionment, or the administrative division of an apportionment. 31
U.S.C. Section 1517(a). Section 1512 requires that appropriations
available for a definite period of time "be apportioned to prevent
obligation or expenditure at a rate that would indicate the necessity
for a deficiency or supplemental appropriation for the period." /1/ For
agencies in the Executive Branch, including the ICC, the apportionment
is done by the President through the Office of Management and Budget
(OMB). See 31 U.S.C. Section 1513(b)(1). Further, each agency is
required to establish a system of administration to assure that
obligations or expenditures do not exceed apportionments, and, if they
do, that responsibility is fixed. 31 U.S.C. Section 1514(a).
Within 2 weeks of the President's approval of the continuing
resolution, the ICC voted to request a Category B apportionment, under
which the $48 million would be apportioned for the full fiscal year,
rather than a Category A apportionment which would have divided it by
calendar quarter. See generally OMB Circular No. A-34, Section 42.3
(1976). The full appropriation was sought because the ICC anticipated
heavier expenses at the beginning of the year to reduce its staffing to
a level that would be supportable by its appropriation. Chairman Taylor
explained his request in the following language:
We are requesting a Category B apportionment, because of the
drastic reduction in our budget as provided in the Continuing
Resolution (P.L. 98-473). Since the budget authority was reduced
by approximately 15% relative to the current rate of obligations,
the Commission needs the flexibility to make quick changes in
allocating its resources. For example, a Category B apportionment
would allow the Commission the flexibility to conduct
reductions-in-force, incurring the attendant expenses earlier in
the year than a Category A apportionment would allow. Also,
termination of certain contracts can be considered if the
Commission has the funds available early in the year to pay
anticipated termination costs. Letter to David A. Stockman,
Director, Office of Management and Budget, from Reese H. Taylor,
Jr., Chairman, ICC, November 2, 1984.
OMB approved the request without change on November 9.
While apportionment of the ICC appropriation for the full fiscal year
eliminated an important control to prevent violations of the
Antideficiency Act, such apportionment is permitted under 31 U.S.C.
Section 1512(b)(1), which permits apportionment by time periods other
than calendar quarters, and appears justified in this case. The ICC had
implemented an action plan that would bring staffing down to the
supplemental request level of 984 staff years by January 31, the level
it believed necessary to fulfill the agency's statutory
responsibilities, and to reduce nonpersonnel costs. To accomplish this
result, the ICC needed a disproportionate amount of its appropriation at
the beginning of the year to pay for the added costs of RIFs and
contract terminations.
Although not expressly stated in the statutory language, we have held
that the Antideficiency Act requires heads of Federal agencies to expend
fiscal year appropriations so as to prevent the necessity for a
supplemental or deficiency appropriation and to avoid exhausting the
funds before the end of the period for which they are appropriated. See
B-167656, June 18, 1971; 38 Comp. Gen. 501 (1959); B-131361, May 9,
1957. As we have indicated, at the recommendation of its Managing
Director the ICC adopted an operating plan for fiscal year 1985 which
included a request for a supplemental appropriation. However, part of
that operating plan was an emergency plan which would enable the ICC to
operate for the entire fiscal year even without a supplemental. Under
the plan, if the Congress did not enact a supplemental appropriation by
the end of March, the Commission was to furlough all its employees for 1
day per week for the remainder of the year. This would allow the
Commission to operate through the end of the fiscal year within the $48
million already appropriated. In fact a supplemental was not passed by
the end of March and the furlough was implemented.
We have described in some detail, here and in Appendices I and II,
the actions taken by the ICC, because we think that these actions
demonstrate that from the time at which the Congress and the President
approved legislation reducing ICC's funding below the requested level,
every decision related to expenditures was made to avoid violation of
the Antideficiency Act. Decisions relating to furloughs, RIFs and cuts
in nonpersonnel expenditures were all made with the objectives of
maintaining essential services and staying within budgetary limits.
While the impact of the RIFs and furloughs on employees might have
been lessened if the ICC had acted earlier, we cannot say that the ICC
acted unreasonably in expecting that a compromise would be reached
between the Senate and House appropriation figures. As soon as the
Congress acted, which was after the beginning of the fiscal year, the
ICC acted decisively to bring spending within the budgeted levels.
We are concerned, however, with the ICC's decision to suspend the
furloughs on June 17, even though its supplemental appropriation had not
yet been enacted. The very purpose of the furloughs was to enable the
Commission to operate for the remainder of the fiscal year without
additional funding. To date, the Congress has not enacted a
supplemental appropriation for the ICC, and there is no certainty that
it will. Should there be no supplemental, the ICC will be forced to
take more drastic action than its original furlough plan to avoid
violating the Antideficiency Act. If the Commission does not act soon,
it may be unable to avoid violating the Act. Cf. 36 Comp. Gen. 699
(1957). (The apportionment provisions of the Antideficiency Act are
violated if only a drastic curtailment of activity will allow an agency
to get through the year without exhausting its appropriations.)
III. ICC Compliance With Government in the Sunshine
Requirements
The Senate Appropriations Committee, in its report on the Department
of Transportation and Related Agencies Appropriations Bill, 1985,
indicates that during hearings the Committee had expressed concern that
the ICC had held no public meetings since October 1982. The report
indicates that almost 3,000 votes had been taken during the period,
including votes on such controversial matters as boxcar deregulation and
coal price guidelines. At the hearings, the Committee had instructed
the ICC to change its procedures and open its meetings. In the report
the Committee reiterated its direction that the ICC comply with the
spirit and intent of the Government in the Sunshine Act. Sen. Rept. No.
561, 98th Cong., 2d Sess. 78-79 (1984).
The Government in the Sunshine Act, as codified at 5 U.S.C. Section
552b (1982), states that members of presidentially-appointed and
congressionally-confirmed collegial bodies, and subdivisions authorized
to act on their behalf, "shall not jointly conduct or dispose of agency
business" except as provided by the Act and that "every portion of every
meeting of an agency shall be open to public observation." 5 U.S.C.
Section 552b(b) (1982). A meeting can be closed to the public only if
the subject of the meeting falls within 1 of 10 categories provided by 5
U.S.C. Section 552b(c) (such as meetings related only to "internal
personnel rules and practices" or involving information that if
disclosed would have "significantly frustrated implementation of a
proposed agency action"), and the closing of the meeting is approved by
a recorded majority of agency members. 5 U.S.C. Section 552b(d). For
each meeting closed to the public, public certification by the agency
General Counsel is required as to his agreement that the meeting may be
closed and citing the relevant exemption provision. 5 U.S.C. Section
552b(f)(1). Public announcement of the time, place and subject matter
of each meeting is generally required at least 1 week before the meeting
is to be held. 5 U.S.C. Section 552b(e)(1). There are requirements
that transcripts, electronic recordings or complete minutes of each
meeting be taken and, except where disclosure is barred, such
transcripts, recordings or minutes shall be "promptly available to the
public, in a place easily accessible to the public." 5 U.S.C. Section
552b(f)(2) (1982).
The criticisms of ICC procedures were based on its extensive use of
notation voting, a procedure in which members voted serially and in
writing on agency business without holding meetings. It should be noted
that notation voting was found not to be prohibited by the Government in
the Sunshine Act in what appears to be the only case to consider the
issue, Communication Systems v. Federal Communications Commission, 595
F.2d 797 (D.C. Cir. 1978). While the court noted that the phrase of the
Sunshine Act stating "(m)embers shall not jointly conduct or dispose of
business" except in accordance with the Act (emphasis added by court)
was ambiguous, its study of the legislative history led it to conclude
that the Act only applied to face-to-face meetings and not to:
* * * conduct that resulted from more remote communications,
such as by circulating written memoranda or voting sheets. 595
F.2d at 799.
In supporting notation voting, the court concluded:
* * * Notation voting enables Government agencies to expedite
consideration of less controversial cases without formal meetings
and following the other strictures of the Act. If all agency
actions required meetings, then the entire administrative process
would be slowed -- perhaps to a standstill. Certainly requiring
an agency to meet and discuss every trivial item on its agenda
would delay consideration of the more serious issues that require
joint face-to-face deliberation. Clearly Congress did not intend
such a result. * * * 595 F.2d at 800-01.
There are two references in the legislative history of the Government
in the Sunshine Act that support the court's conclusion. The conference
committee, in discussing its substitute, which became section 552b(b),
supra, stated:
The conference substitute provides that members shall not
jointly conduct or dispose of agency business in a meeting other
than in accordance with new section 552b. This prohibition does
not prevent agency members from considering individually business
that is circulated to them sequentially in writing. H. Rept. No.
1441, 94th Cong., 2d Sess. 11 (1976).
Also, during floor debate, Representative Flowers explained the
phrase "joint conduct or disposition" in defining a "meeting," as
follows:
* * * The amended subsection would not preclude agencies from
disposing of noncontroversial matters by written circulations.
122 Cong. Rec. 24184, July 28, 1976.
In response to the Senate Appropriations Committee's concerns voiced
at the appropriations hearings, the ICC initially adopted on May 10,
1984, and finally approved on January 14, 1985, new voting procedures
providing for voting on significant ICC proceedings, involving major
transportation issues, at agency conferences that would be open to the
public, rather than through notation voting. See 49 Fed. Reg. 20954,
May 17, 1984, and 50 Fed. Reg. 2985, Jan 23, 1985, announcing procedures
codified at 49 C.F.R. pt. 1011 (1985). Under 49 C.F.R. Section
1011.4(c), in addition to regular meetings, the ICC Chairman is required
to call a Commission Conference, that would generally be open to the
public, at the request of any member of the Commission:
* * * for the purpose of discussing and voting upon significant
Commission proceedings involving major transportation issues, and
such conference shall be held within a reasonable time following
the close of the record in the proceeding involved.
Special meetings for consideration of other than major transportation
issues must be called by the Chairman at the request of any member,
unless a majority of the Commission votes against the request or to
delay conference consideration of that matter, or unless the Chairman
finds that "special circumstances warrant a delay." The ICC majority and
Chairman may not override a request for a conference on major
transportation issues.
The ICC Chairman, in his letter to GAO, stated his belief that the
ICC is in compliance with the Government in the Sunshine Act and stated
that the agency is "continuing to seek ways to become even more
responsive to the spirit of that Act." Letter from Reese H. Taylor, Jr.,
Chairman, ICC to GAO, June 13, 1985, p. 10 (ICC-GAO Letter). The
Chairman justified the ICC's heavy use of notation voting and the
relatively small number of meetings held by the Commission as made
necessary by the heavy deliberative work load of the ICC which,
according to the Chairman, involves a low percentage of matters
requiring actions by the entire Commission. For example, he states that
of 34,774 actions considered by the ICC in 1984, 24,613 were involved
with the issuance of licenses, 9,384 actions were taken below full
Commission level and only 777 required entire Commission action. Many
of these latter actions were procedural, ministerial or limited in scope
(such as discovery motions or requests for extensions of statutory
deadlines). He cited an informal staff survey as indicating that only
42 percent of the matters circulated for entire Commission consideration
warranted such attention and not all of those were concerned with the
ultimate merits of the case.
While we agree that the Government in the Sunshine Act is not
intended to interfere with the efficient and orderly operations of the
agency, and that meetings should not be required for routine agency
actions, we are concerned that only a small number of meetings have been
held to consider cases that the ICC identifies as "significant." From
June 1, 1984, to June 1, 1985, 21 cases on the ICC's "Significant Case
List" were decided on the merits. Open conferences were held to discuss
and vote on only nine of these cases and oral arguments were held in
six. The Chairman explained that these cases were the only ones
identified by the Commission as involving major transportation issues.
ICC-GAO Letter at 11.
The ICC has complied with the Government in the Sunshine Act by
opening its 10 meetings in 1984 and 2 meetings in 1985 to the public and
by providing adequate advance notice of these meetings. Its rules
appear to comply with the Act by assuring that all major transportation
issues are decided by conference and affording members the opportunity
to request meetings on any matter. However, the Communications Systems
case suggests that Congress probably expected agencies to hold meetings
on more than just major policy issues and did not expect excessive
reliance on notation voting. The court noted in a footnote that:
Some commentators while acknowledging that "(t)he Conference
Report makes clear that the prohibition does not prevent agency
members from disposing of business by circulation of papers
instead of meetings, i.e., by notation procedure," have suggested
that "(t)o comply with the spirit of the Sunshine Act * * *
agencies should refrain from excessive reliance on notation
procedure." R. Berg & S. Klitzman, An Interpretative Guide to the
Government in the Sunshine Act 13 (1978). * * * " 595 F.2d at
801.
In his letter, the Chairman indicates that the ICC is moving in the
direction of conducting more of its significant business in open
meetings:
The Commission has made a genuine effort to respond to
Congressional concerns regarding compliance with the Sunshine Act.
However, our efforts to date represent just a beginning, as we
are committed to increasing the number of open conferences. * * *
In addition (to open conferences held this year), there are many
more proceedings, that should be ready for a decision this year,
which will be scheduled later on for disposition at an open
conference.
Also, the agency is currently considering a major
reorganizational plan which, if adopted, would substantially
reduce the number of Entire Commission actions. Under the plan,
the disposition of routine, procedural, and less important matters
would be delegated to employee boards, thereby allowing the
Commission to dispose of more significant cases at open
conferences. In fact, one of the objectives of the plan is to
revise our institutionalized decision-making process in order to
allow for the disposition of more matters at open conferences.
In summary, the Commission is complying with the Sunshine Act
and is committed to intensifying its efforts to become even more
responsive to the spirit of the Act. ICC-GAO Letter at 11-12.
In accordance with your request, we have not provided copies of this
letter to the ICC for agency comments. Our staff will be in contact
with your office concerning the remaining portions of your request
letter which you indicated were of less urgency. Unless we hear
otherwise from your office, this letter will be available to the public
30 days from today.
Appendix I. Timeliness of ICC's Response to Funding Crisis
Although the ICC had some indication that its budget was in trouble
at least as early as July 17, 1984, the date of the Senate
Appropriations Committee's report on S. 2852, it took no action to
reduce staff size or start notice procedures necessary before any
Reduction in Force (RIF) action could be taken. In fact, prior to
passage of the continuing resolution, ICC took no action to plan for or
implement RIFs or furloughs of the magnitude that would eventually be
needed to compensate for the $6 million appropriation cut the agency
incurred for fiscal year 1985.
According to Office of Personnel Management (OPM) officials, ICC
could have taken action earlier on a plan for a RIF or furlough if the
agency had a reasonable expectation that such action would be necessary.
ICC officials have stated, however, that at the time they did not have
reason to expect that the eventual appropriation would force the agency
to institute major RIFs or furloughs. Because no documentation exists
on what discussions were held with various congressional sources or of
what ICC was told by these sources prior to the passage of the
continuing resolution, we were unable to fully assess the
appropriateness of ICC's inaction.
The Senate-reported transportation appropriation bill, S. 2852,
authorized $48 million for the ICC for fiscal year 1985. The Committee
Report provided staffing levels of 904. Sen. Rept. No. 561, 98th Cong.,
2d Sess. 77 (1984). Pub. L. No. 98-473, the continuing resolution,
approved on October 12, 1984, contained the $48 million Senate figure,
but the conference report provided staffing levels of 914. See H.R.
Rept. No. 1159, 98th Cong., 2d Sess. 400-01 (1984).
ICC officials told us that the agency was immediately aware that $48
million would not fund the 904 staff-year level contemplated by S. 2852,
in that the funding was cut by a greater percentage than the staff-year
authorization. They also told us that appropriations committee staff
were informed of these problems. Even if cuts in staffing and funding
percentages were equal, ICC officials stated that ICC would still have
funding problems because nonpersonnel costs are fixed and cannot be
reduced as quickly as costs associated with personnel. Also, as an ICC
official pointed out, when an agency is required to RIF personnel, one
type of personnel cost -- severance pay -- will go up in the short run.
To further complicate the ICC appropriation situation, the agency
found that its estimates of average salary costs used in the development
of its fiscal year 1985 budget were too low and resulted in a shortage
of $1.5 million in its projected personnel costs. Although an ICC
official stated that the agency was aware of this error prior to the
passage of the continuing resolution, it is not clear whether such
information was provided to the Congress.
According to ICC officials, the reason the agency took no early
action to plan for a RIF to meet the $48 million level proposed in S.
2852 was that ICC expected to eventually receive a higher level of
funding because of past experience and congressional assurances.
In his letter responding to a GAO inquiry, Chairman Taylor wrote:
Needless to say, the Commission was well aware last summer of
the substantial difference between the $48 million recommended by
the Senate Appropriations Committee and the $54,550,000 approved
by the House Appropriations Committee. However, based upon our
liaison with Congressional staffers during the summer and early
fall of 1984, we had every reason to believe that the difference
between the two amounts would be resolved through a compromise
during the House/Senate conference, as has been our experience in
recent years. Unfortunately, however, no compromise was
forthcoming. This left the Commission in the untenable
predicament of having to discharge its responsibilities for the
balance of FY 1985 with only $48 million to fund the effort.
Letter from Reese H. Taylor, Jr., Chairman, ICC to GAO, June 13,
1985, p.3.
Further, ICC officials told us that they were immediately aware that
the $48 million Senate Committee bill would not fund the 904 staff years
allotted. ICC's Budget and Fiscal Officer provided us with undated
documents which she indicated were developed during July or August
showing that ICC needed an additional $3.075 million to fund the 904
staff years. ICC officials stated that both Senate and House Committee
staff members were informed about the potential funding problem and
expected the funding level to be increased to the 904 staff-year level.
ICC officials were unable to provide any documentation on these staff
contracts, and the person who is said to have made the contracts for the
ICC is no longer with the agency.
In addition, the $48 million funding level of S. 2852 was based on
the assumption that legislation would be approved reducing the size of
the ICC by two Commissioners. The ICC Budget Officer indicated that
this would have had the effect of reducing the agency's costs in fiscal
year 1985 by $541,000 for the two Commissioners and their staffs. Since
this legislation was not considered by the Congress, the ICC expected
that the additional funds to provide for the actual number of
Commissioners and their staffs would have been added back to the ICC's
appropriation.
Had the ICC anticipated that a compromise between the differing
amounts of House and Senate appropriations would not be forthcoming,
they could have planned for the RIF in advance, according to two OPM
officials that our staff interviewed. The OPM officials stated that if
there is a reasonable expectation that a RIF is needed, an agency can
plan for it. But there is no law or regulation that mandates the agency
to plan for a RIF in the situation that the ICC found itself and there
is no definition of reasonable expectation. Because officials at ICC
did not think there was a reasonable expectation that their
appropriation would actually be cut to the $48 million, they did not
plan for such a cut.
Action was taken immediately after the continuing resolution was
passed. However, because of the 75- to 90-day minimum lead time needed
to develop and implement a RIF, the earliest ICC could begin to RIF was
January 1985. In order to bring spending down to the $48 million level
for the year, at the beginning of the fiscal year, ICC officials told us
they would have had to RIF 390 people. One hundred of these 390 people
would have been RIFed just to compensate for the cost of separation
compensation and benefits. ICC officials believed that cutting the
agency to this level would not allow the agency to carry out its
responsibilities or provide an acceptable level of service.
Appendix II. ICC's Actions in Response to Budget Cut
Upon learning that the continuing resolution had been approved,
Chairman Taylor instructed the Managing Director to prepare an analysis
of ICC's funding situation and funding alternatives for the Commission
to consider. The Managing Director's memorandum of October 19, 1984,
reported that the $48 million appropriated would fund only 860 staff
years and not the 914 full time permanent (FTP) total staff years
authorized by the conference committee report.
The memorandum stated that since the ICC had begun the year with a
staff of 1,070, if it were only to freeze its operations at the
then-current levels, given the usual attrition rate, a minimum of 1,000
staff years of $53.2 million, would be used on personnel-related costs
alone, not including the comparability pay raise due in January 1985.
The memorandum also stated that nonpersonnel costs (such as supplies,
rent and travel) could be cut from $13.1 million to $12 million.
The memorandum examined five alternative funding levels and how they
could be achieved. All but one of the alternatives required a
supplemental appropriation. Three of the alternatives were viewed by
the Managing Director as unacceptable and two alternatives were seen as
viable. A summary of the five alternatives follows:
Alternative 1 would have required a total appropriation of $53.97
million to support 1,022 total staff years. This was the President's
original request. The memorandum rejected this alternative because it
had already been rejected by House and Senate conferees.
Alternative 2 would have required to total appropriation of $52.2
million to support 975 total staff years (940 FTP), 26 above the 914
staff years authorized but not fully funded in the conference report.
The ICC Managing Director thought that this was a viable option.
Alternative 3 would have required $51.4 million to support the 949
total staff years (914 FTP) allowed by the conference report. This was
also considered a viable option.
Alternative 4 would have implemented the Commission's fiscal year
1986 budget levels of $50.88 million and 923 total staff years
immediately. The option was rejected because it was seen as providing
insufficient resources to meet statutory responsibilities, would require
hasty implementation, and would cause undue disruption involving
reductions-in-force.
Alternative 5 would have implemented the fiscal year 1985 conference
committee report funding level of $48 million and reduced staffing to
860 staff years. This alternative was rejected because staffing levels
were below those the Appropriations Committee said it intended and
because it would not have permitted the ICC to accomplish service and
work-load levels intended by Congress, would require extensive RIFs and
high severance pay, unemployment compensation and terminal leave costs.
Of the two alternatives which were seen as viable, alternative 3 was
not recommended because it was seen as not providing sufficient
resources to accomplish the Commission's work load. The Managing
Director also commented:
* * * While we might be able to live with the staff and funding
levels reflected in alternative 3, endorsing that option means
conceding that the Congress knows better than we do what workload
we should project and what resource needs are. * * * Memorandum,
Office of Managing Director, Oct. 19, 1984, at 7.
The preferred option, alternative 2, was seen as providing minimally
adequate staffing to meet ICC work-load requirements with a lower RIF
rate required than with all alternatives, except alternative 1.
A follow-up memorandum, dated October 23, 1985, proposed an action
plan that outlined RIFs necessary under each of the alternatives and
proposed a series of nonpersonnel cuts to be implemented immediately for
the entire fiscal year, including restrictions on travel (for an
estimated saving of $300,000 annually), freezes on outside training
($130,000 saving) and hiring and incentive awards ($70,000 saving),
reduction of long-distance and other telephone charges ($150,000
saving), limiting use of overtime to emergency situations ($70,000
saving), deferral of discretionary contract services ($280,000 saving),
elimination of all but essential discretionary expenses ($30,000 saving)
and reduction of space needs. The ICC Chairman informed us in his
letter that if these nonpersonnel cuts were continued for the entire
fiscal year, they would reduce costs by $2.7 million.
Although initially recommending against immediate furloughs since
they could be used "most effectively in situations where there is an
emergency lapse in funds or a shortfall of very limited duration," the
Managing Director later concluded that to stay within the $48 million
budget, furloughs would be necessary for approximately 30 days between
May and September.
At its open meeting on October 25, the ICC Commissioners unanimously
approved alternative 2 as its plan of action as recommended by the
Managing Director but adjusted its figures to cover an additional nine
employees. The Commissioners agreed to request a supplemental
appropriation of $4.46 million to provide for 984 total staff years (949
FTP), for a total appropriation of $52.46 million.
Throughout the proceedings, concern was expressed for the effect that
RIFs and furloughs would have on employees and of the need to comply
with the Antideficiency Act. Managing Director Foley stated that:
* * * it is crucial that we stay within the appropriation so
that no violation of the Antideficiency Act is experienced any
place in the system. Transcript of ICC Meeting, October 25, 1984,
p. 11 (Transcript).
Commissioner Gradison emphasized the dangers involved in relying on
the receipt of a supplemental appropriation:
In seeking a supplemental appropriation, we are playing double
or nothing with Congress. It is unlikely that we are going to
know how Congress is going to treat our request until the fiscal
year is half over and, if we don't receive all or even part of our
request, then the RIF actions that will be required next spring
will be double those that would have been required * * * today.
Transcript at 23.
The Chairman submitted a formal supplemental request to Congress on
November 2, 1984, to provide for staff authorized in the Conference
Committee Report with an additional amount of approximately $1 million
to perform "critical functions," for a total supplemental appropriation
of $4.46 million in accordance with the option approved by the
Commission. He reported that as many as 75 employees would have to be
involuntarily separated by March 1985 to bring staffing down from 1,009
to the 940 full time staff years contemplated in the supplemental
request.
An apportionment request was submitted by the Chairman on the same
date to the Director of OMB, in accordance with OMB Bulletin 85-2,
requesting a Category B apportionment providing for the full
apportionment in the first quarter so that extra expenses involved in
preparing for the cut in the ICC appropriation could be met. The
Category B apportionment was requested by Chairman Taylor because:
* * * the Commission needs the flexibility to make quick
changes in allocating its resources. For example, a Category B
apportionment would allow the Commission the flexibility to
conduct reductions-in-force incurring the attendant expenses
earlier in the year than a Category A apportionment would allow.
Also, termination of certain contracts can be considered if the
Commission has the funds available early in the year to pay
anticipated termination costs. Letter to David A. Stockman,
Director, Office of Management and Budget, from Reese H. Taylor,
Jr., Chairman, ICC, November 2, 1984.
The Category B apportionment was approved without change by OMB on
November 9.
Actions were concurrently taken to reduce staffing and nonpersonnel
expenses in an action plan memorandum prepared by the Managing Director
in November 1984, which followed the plan adopted by the Commission in
its October 25, 1984, conference. ICC began sending out RIF notices in
order to achieve the staff-year ceiling levels associated with the
supplemental request. The first general RIF notice was sent to all
employees on November 7 and specific RIF notices were sent to affected
employees on November 26 and 29, December 12 and 20 and January 15,
1985. During January and February 1985, 38 employees were separated
from the ICC through RIF procedures and 75 employees resigned.
Appendix III. ICC Alternatives to Furloughs
In order for the ICC Commissioners to be able to consider
alternatives, the Managing Director issued memorandum on January 18,
1985, detailing four options. One option was an across-the-board RIF of
more than 300 employees. Two other alternatives, program and
organizational changes, would have entailed RIFs, and neither
alternative would have saved the ICC enough money to operate within its
budget. The fourth alternative was furloughing all employees for 2 days
each pay period.
The program change alternative suggested that ICC could stop all
public assistance and outreach programs. Under this option, both the
Small Business Assistance Office as well as the Office of the Special
Counsel would have been abolished. Activities that would have been
eliminated include: handling complaints, inquiries, or interpretations,
making speeches, and assisting carriers with filing applications or
dealing with other problems. The memorandum stated that if this option
were adopted, it would save approximately $2.5 million and 65 staff
years. The memorandum warned, however, that the Congress might react
negatively to these changes because the Office of Special Counsel was
clearly supported in the continuing resolution. In addition, the
Managing Director did not think that the public assistance program was
expendable.
Organizational changes that were considered included closing all
field offices except the six current regional offices and three
subregional offices; abolishing the Office of Transportation Analysis
and transferring its statutory functions to the Office of Proceedings;
merging the Office of the Secretary with the Office of the Managing
Director; abolishing the Bureau of Accounts; and not collecting
financial data from carriers. In terms of savings, the organizational
changes would have saved the agency about $2.9 million and 66 staff
years. A reason given for not adopting this alternative is that the
organizational changes would not be the result of study, analysis, and
planning with a view toward creating rational, responsive, and efficient
work units. Instead, the change would come about as a result of a
crisis environment and as a result, timeliness, quality and productivity
would suffer.
According to the memorandum, the furlough plan had two significant
advantages over those alternatives requiring major RIFs. It offered
continuity of current functions. It also was the only option offering
flexibility, i.e., if funding became available, the furlough could be
discontinued. The memorandum explained that employees could not be
furloughed for an extended period of workdays because it would be
disruptive to work and the agency could not afford to pay unemployment
benefits for furloughed employees. Therefore, the memorandum suggested
that furloughing all employees 1 day each week and closing the office on
that day would be the preferable alternative.
In his response to our questions regarding the furlough, Chairman
Taylor stated:
With regard to the Commission's available alternatives, we were
really confronted with a Hobson's choice of RIFFing nearly 400
full-time permanent employees in January of 1985, which would have
permanently crippled the Agency, or requesting supplemental
funding, subject to the necessity of implementing a furlough plan
if sufficient relief was either denied or not timely approved by
Congress. Obviously, the Commission opted for the second
alternative, since it represented the only rational way to avoid
sure and immediate disaster for the Agency. ICC-GAO Letter 7.
The only alternative type of furlough discussed in the January 24
memorandum was closing the agency for an extended period of workdays.
This approach was deemed unacceptable for two reasons: first, extended,
simultaneous absences of a significant number of employees would be
disruptive to the work of individual offices. Second, the agency could
not afford to pay unemployment benefits for the employees. In our
discussions with agency officials, they indicated that other types of
furloughing were considered, but these deliberations were not
documented.
Other alternatives to furloughing include early retirement, voluntary
part-time, voluntary leave without pay, and separation of temporary
employees, including consultants. In a discussion with the Managing
Director, he told us that he did not look into a voluntary furlough
because he did not believe the agency would be able to save enough money
and there was not enough time to look into the idea. In addition, the
agency did not look into converting personnel to part-time because not
enough money would have been saved. According to the Chairman in his
response to us, one ICC employee retired by virtue of OPM early
retirement authorization. An OPM official told us that OPM encourages
agencies to look at available alternatives before instituting a RIF or
furlough. In addition, the OPM official stated that furloughs are more
humane than RIFs.
Appendix IV. The Impact and Fairness of the ICC Furlough
Because the furlough had been in effect only about a month at the
time of our review, and because of our attempt to meet your deadline, we
were unable to make an independent assessment of the impact of the
furlough on ICC programs and personnel. ICC initially issued a
memorandum in February 1985 on the expected impact on each office and
bureau of the Commission. Based on our request to ICC on May 14, 1985,
for additional information on the impact, bureau and office directors
were asked for an update on the effect of the furlough on their
respective operations.
In his letter to GAO, Chairman Taylor described the actual impact of
the furlough on ICC programs through early May. Productivity suffered
from the absence of all employees for 1 day per week and the loss by
resignation of many experienced employees. The Chairman reported that
between April 15, the start of the furlough, and June 13, 33 full time
permanent employees resigned. Each office director reported employee
morale was at an "all-time low" and every bureau and office head
reported increasing backlogs and inability to meet deadlines.
Cited as examples of the problems created by the furlough was the
failure of the office of General Counsel to interpose a timely objection
to a preliminary injunction on May 6 and the missing of a statutory
deadline in a major rail case on May 13. The Chairman stated that "our
General Counsel's Office is no longer able to provide prompt legal
advice to the Commission." ICC-GAO Letter at 10. Also, the Office of
Proceedings was reported to have missed the statutory deadline in at
least 12 rail abandonment cases. See also Memorandum of Martin E.
Foley, Managing Director to Vice Chairman Gradison, "Impact of Furlough
on Work Programs," February 11, 1985, for an office-by-office summary of
the backlogs and other problems anticipated from a 20 percent cut in
employee working hours.
It is difficult to evaluate the "fairness" of the furlough on all
employees. Concerns were expressed during the October 25 Conference of
the Commissioners on the fiscal year 1985 budget and the impact that it
would have on minorities. Commissioner Simmons reported that 300 of
1,055 employees then in the ICC were black with a very small number of
Indians, Asians and Hispanics and that 90 percent of the Blacks were at
or below GS-12 level with 70 percent of Caucasians at or above the GS-12
level. See Conference Transcript at 45. Since many of the lower grade
employees lack the necessary seniority to withstand an extensive RIF,
they would be among the first to be separated from the Commission.
Because persons at lower grade levels may not be able to maintain the
savings and investment levels of higher grade employees, they could also
be more severely affected by furloughs. Commissioner Strenio observed
that there would be an "unfairly heavy impact on minorities of whatever
actions we take." Transcript at 46-47. It is arguable that the
furloughs of all employees were the fairest alternative because they
reduced the number of RIFs and enabled all employees to share the burden
and most to retain their jobs. Chairman Taylor observed:
As to the matter of fairness, I think it is extremely unfair
that our employees have been obliged to take a twenty percent pay
cut simply because Congress has been unable to timely act upon our
Supplemental Request -- a circumstance over which neither our
employees nor the Commission has had any control. However, I
continue to believe that it is fairer for all of our employees to
have shared equally in this burden than for nearly 40 percent of
them to have been Rif'd right after the Christmas season because
of a woefully inadequate Congressional appropriation. ICC-GAO
Letter at 9.
In conclusion, given the alternatives that appear to have been
available to the ICC, the furlough, while causing financial hardship to
all employees and creating serious backlogs, missed deadlines and
reduced efficiency, did preserve more jobs than might have been
otherwise possible and did enable the ICC to retain the present
organizational structure so that services could be continued even if at
a reduced level.
FOOTNOTES
(1) The Act permits an agency to request, and the apportioning
official to grant, an apportionment, indicating the need for a
supplemental appropriation only when legislation is enacted after the
submission of a request for appropriations which requires an expenditure
beyond the agencies' control, or in certain emergencies. 31 U.S.C.
Section 1515(b). Neither of these exceptions applies to the ICC's
situation in the current fiscal year.
B-218957, 64 Comp. Gen. 727
Matter of: Government liability for unauthorized emergency telephone
services, August 1, 1985
Payments - Quantum Meruit/Valebant Basis - Absence, etc. of Contract -
Government Acceptance of Goods/Services - Benefit to Government
Requirement
Company that provided unauthorized services to Government on
emergency basis to restore telephone service due to power outage at
missile testing range may be paid on quantum meruit basis because
services constituted a permissible procurement, Government received and
accepted their benefit, company acted in good faith, and amount claimed
represents reasonable value of benefit received.
Lieutenant Colonel (LTC) Warren L. Harris, Commander at the United
States Air Force Utah Test and Training Range, requests permission to
pay the Mountain States Telephone Company $1,760.28 for services
provided to the United States Air Force at the Utah Test and Training
Range, Great Salt Lake, Utah. Based on our review of the facts in this
situation, it is our conclusion that the telephone company is entitled
to recover the amount claimed on a quantum meruit basis.
FACTS
The United States Air Force leases a rather extensive telephone
system at the Utah Test and Training Range on the west side of the Great
Salt Lake, Utah. The range serves as a testing ground for the
development of various missile systems. The 1881st Communications
Squadron at Hill Air Force Base is responsible for the management and
payment of the telephone services under a lease from the Mountain States
Telephone Company.
On Sunday, December 9, 1984, the main electrical transformer serving
all buildings on the training range was disrupted. The telephone
company in Salt Lake City was alerted by automatic signal. Backup power
sources could not be brought on line. The prognosis by the weekend
technician was that the problem could not be corrected until the
following Tuesday. Emergency batteries were incapable of providing
power until repairs could be made. Therefore, the telephone company
took the initiative of installing an auxiliary generator to restore
power in the interim.
The record does not disclose that any officer or employee of the
Government requested, or was even aware that the telephone company had
undertaken the actions in question. In other words, the telephone
company was acting as a volunteer.
Where a valid written contract for a procurement was never executed
and the agency is unable to establish even an implied agreement to pay
for the goods or services provided, the agency may not ratify the
procurement retroactively. However, under this Office's claims
settlement authority (31 U.S.C. Section 3702), the Comptroller General
may authorize reimbursement to the contractor on a quantum meruit or
quantum valebant basis when certain conditions are met.
We must first make a threshold determination that the goods or
services would have been a permissible procurement had the formal
procedures been followed. There is no reason to believe that the
emergency generator services could not have been procured formally had
time permitted.
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.
B-210808, May 24, 1984; see 33 Comp. Gen. 533, 537 (1954); 40 Comp.
Gen. 447, 451 (1961). In situations in which a third-party acted
entirely on his own, without the knowledge or consent of a Government
representative, whether conveyed formally or informally, it is difficult
to establish acceptance by the Government and good faith on the part of
the contractor unless the voluntary services were performed on an
emergency basis involving the protection of human life or property. See
31 U.S.C. Section 1342 (the "Antideficiency Act") which ordinarily
prohibits the acceptance of voluntary services except on that basis.
The Air Force has concluded that the amount of the claim is
reasonable and urges us to pay it. We have no reason to disagree with
the view that the continued operation of telephone service at a missile
test range was in the interest of public safety and thus constituted a
"public necessity," as established by our decisions. 62 Comp. Gen. 419,
423-25 (1983). Therefore, we authorize payment of $1,760.28 to the
Mountain States Telephone Company for its emergency generator services
on a quantum meruit basis.
B-217851, 64 Comp. Gen. 720
Matter of: Bureau of Land Management; Payment of Fees to National
Archives and Records Administration for Reproduction of Documents, July
31, 1985
National Archives - Document Reproduction Fees
Where neither National Archives and Records Administration (NARA) nor
its predecessor National Archives and Records Service (NARS) of the
General Services Administration has requested or received appropriations
for the purpose of reproducing documents for other agencies, NARA (and
NARS) may charge all agencies for the cost of reproducing documents on
their behalf under authority of 44 U.S.C. 2116 since this is the most
equitable way of allocating costs in performing this activity.
This decision is in response to an inquiry from Edward P. Greenberg,
Chief of the Division of Finance, Bureau of Land Management (BLM),
Department of the Interior, asking whether BLM may certify and pay fees
assessed by the National Archives and Records Administration (NARA)
(formerly the National Archives and Records Service (NARS) of the
General Services Administration /1/ to cover the cost of reproducing BLM
land entry papers and related documents, including land records of the
former General Land Office, which are in the custody of NARA. For the
reasons given below, we hold that certification and payment are
authorized.
Until April 1, 1985, the NARS was authorized to assess fees for the
reproduction of documents under 44 U.S.C. Section 2112(c) (1982) which
provided:
(c) The Administrator may charge a fee not in excess of 10
percent above the costs or expenses for making or authenticating
copies or reproductions of materials, transferred to his custody.
* * * He may not charge for making or authenticating copies or
reproductions of materials for official use by the United States
Government. Reimbursement may be accepted to cover the cost of
furnishing copies or reproductions that could not otherwise be
furnished.
Standing alone, the penultimate sentence of subsection 2112(c) would
have served to preclude NARS from assessing and collecting a fee from
other Government agencies for the reproduction of documents needed for
their official use. However, this prohibition was modified by the last
sentence which authorizes reimbursement when the copies would not
otherwise be furnished.
Title 44, United States Code, was enacted into positive law by Pub.
L. No. 90-620, Oct. 22, 1968, 82 Stat. 1238. Subsection 2112(c)
codified without substantive change section 509(c) of the Federal
Property and Administrative Services Act of 1949, as added by the Act of
September 5, 1950, ch. 849, sec. 6(d), 64 Stat. 583, 589.
Prior to the enactment of section 509(c), the Archivist was precluded
from charging other Government agencies the cost of reproducing
documents in his custody by language similar to that set forth in the
penultimate sentence of 44 U.S.C. Section 2112(c). 44 U.S.C. Section
300h (1946). However, this led to problems which the 1950 amendment was
intended to correct as explained in the Report by the Senate Committee
on Expenditures in the Executive Departments:
Section 509(c) continues the provisions of existing law with
respect to fees for reproductions of records. The proviso at the
end of the subsection is new, and its purpose is to permit the
furnishing of reproductions that might be vital to the interest of
the Government at times when funds necessary for furnishing them
were unavailable to the Administrator. S. Rep. No. 2140, 81st
Cong. 2d Sess., 18 (1950). See also H. Rep. No. 2747, 81st Cong.
2d Sess., 17 (1950).
Thus, until April 1, 1985, the National Archives and Records Service
of GSA could recover the cost of furnishing copies of documents in its
custody only when funds were unavailable to it for that purpose. See
GAO, Improvements Are Needed In the Management of the National Archives
Preservation and Trust Fund Activities at 14-15 (LCD-80-13, B-146743,
Oct. 26, 1979).
Effective April 1, 1985, section 2112 was redesignated section 2116
and subsection (c) amended to read:
(c) The Archivist may charge a fee set to recover the costs for
making or authenticating copies or reproductions of materials
transferred to his custody. Such fee shall be fixed by the
Archivist at a level which will recover, so far as practicable,
all elements of such costs, and may, in the Archivists'
discretion, include increments for the estimated replacement cost
of equipment. * * * The Archivist may not charge for making or
authenticating copies or reproductions of materials for official
use by the United States Government unless appropriations
available to the Archivist for this purpose are insufficient to
cover the cost of performing the work. See Pub. L. No. 98-497,
Oct. 19, 1948, 98 Stat. 2280, 2292 (Section 201).
Thus, 44 U.S.C. Section 2116(c) authorizes the Archivist of NARA,
beginning April 1, 1985, to assess and collect a fee from agencies for
reproductions of documents in NARA's custody when appropriations
available to the Archivist are insufficient to cover the performance of
the work.
We note that NARA's activities are funded from lump-sum
appropriations covering all of the agency's activities. (This was also
the case with NARS.) While in the absence of anything to the contrary,
these funds would be available for reproducing documents for other
agencies, it is also clear that they are not intended to be used solely
for that purpose. However, neither 44 U.S.C. Section 2116 nor its
predecessor, 44 U.S.C. Section 2112, provide any guidance as to how
funds should be allocated for this purpose. Absent OMB apportionment of
a specific amount for this purpose (and we have been informally advised
by officials at NARA that OMB does not apportion the appropriation in
this manner) the Archivist normally would have discretion in determining
the amount of funds available for reproduction of documents.
We previously called attention to the fact that NARS was charging
agencies for documents when it still had unobligated balances in its
operating expenses appropriation but we did not find it legally
impermissible to do so. See GAO report, cited above. Thereafter, NARS
opted not to request appropriations for this purpose but to fund the
entire program on a reimbursable basis. /2/ This avoided the problem
caused by NARS funding of reproductions for agencies without charge
until allocated funding was exhausted and then charging for copies of
documents. Inequities inevitably resulted since there was no way to
know in advance the quantity of reproduction services that NARS would
have to provide to other agencies or when agencies would request the
services. Thus, any system of allocation which resulted in a shortfall
ultimately favored early users, regardless of the volume of service
provided, over later users.
In view of the foregoing, as long as NARA neither requests nor
receives appropriations for the purpose of reproducing documents for
other agencies, we have no objection to its charging all agencies for
the cost of reproducing documents on their behalf under authority of 44
U.S.C. Section 2116 since this is the most equitable way of allocating
cost in performing this activity. This rationale would apply as well to
NARA's predecessor, NARS. Thus, BLM is authorized to certify for
payment the fees assessed by NARS or NARA to cover the cost of
reproducing BLM land entry record.
FOOTNOTES
(1) Effective April 1, 1985, the former National Archives and Records
Service was transferred to the newly established and independent
National Archives and Records Administration. See 44 U.S.C. Section
2101 as added by Pub. L. No. 98-497, Section 101, October 19, 1984, 98
Stat. 2280. See also Sections 103 and 301 of Pub. L. No. 98-497, 98
Stat. 2283, 2295.
(2) See for example, Hearings on Treasury, Postal Service, and
General Government Appropriations For Fiscal Year 1985, Part 5, before a
Subcommittee of the House Appropriations Committee, 98th Cong., 2d
Sess., 120 (1984). See also S. Rep. No. 98-562 accompanying the
Treasury Postal Service and General Government Appropriation bill, 1985,
61 (1984) where it states:
"No funds are included in the operating expenses, National Archives
and Records Service appropriation for providing reproduction of records
to Federal agencies. Agencies will be charged cost in accordance with
44 United States Code 2112(c)."
B-215543, 64 Comp. Gen. 718
Matter of: Veterans Administration - Washington State Sales and Use
Tax, July 31, 1985
Contracts - Modification - Mutual Mistake - State Sales Tax Application
Reformation may be permitted on a case-by-case basis of fixed-price
contracts between Veterans Administration (VA) and Washington State
construction contractors which purported to include in contract price
all applicable state taxes but did not include state sales and use taxes
where both parties thought, due to erroneous assumptions of law, that
these taxes which are not applicable at the time the contract was signed
could not be imposed retroactively at a later time.
Contracts - Releases - Subsequent Claims
Even though some contractors may have executed a general release of
all claims against the VA, based on the same mutual mistake of law, the
release too may be reformed on a case-by-case basis to permit VA to
reimburse contractors for state sales and use taxes retroactively
assessed against them where it is clear that both parties expected VA to
assume the cost of all applicable taxes.
This decision is in response to the letter dated October 31, 1984,
from the Acting General Counsel, of the Veterans Administration (VA)
requesting our advise on whether it may reimburse its contractors for
certain sales and use taxes for which the State of Washington is
retroactively assessing them. These taxes were not thought to apply to
contractors at the time contracts were awarded and therefore presumably
were not included in their fixed-price bids. In 1983, the Supreme Court
rules that the taxes could constitutionally be imposed on contractors.
Washington v. United States, 460 U.S. 536.
VA, in an earlier request on June 5, 1984, asked whether it could
make a blanket reimbursement of all affected contractors under a theory
of mutual mistake. We had declined to answer this question because the
issues involved were then before the courts. See B-215543, September
11, 1984. The VA has now informed us that the District Court for the
Western District of Washington dismissed the case on September 27, 1984,
without resolving the reimbursement issue. Therefore, VA, resubmitted
the matter to our Office on October 31, 1984, in accordance with its
original request.
While a mutual mistake of law may well have occurred, our Office
cannot approve of an across-the-board blanket reimbursement plan.
However, we do not object, for the reasons given below, to reimbursement
on a case-by-case basis if the VA is able to make the factual
determination that a mutual mistake occurred and that each contractor
claiming reimbursement did not include Washington State sales and use
taxes in its bids.
BACKGROUND
On November 3, 1977, the United States District Court for the Western
District of Washington State held that a state sales and use tax
statute, as amended in 1975 to impose a sales tax on contractors who
acquired materials for incorporation into Federal construction projects,
discriminated against contractors who dealt with the United States since
the statute did not impose a similar tax on non-Federal project
contractors. The court found that this discriminatory tax violated the
Supremacy Clause of the United States Constitution. Accordingly, the
Court enjoined the State of Washington from continuing to assess and
collect the tax and ordered the state to refund to the United States all
sales taxes impermissibly collected from Federal contractors. In 1981,
the Court of Appeals for the 9th Circuit affirmed the District Court's
ruling. United States v. State of Washington, 65 F.2d 570 (9th Cir.
1981). The State of Washington appealed.
In Washington v. United States, 460 U.S. 536 (1983), the Supreme
Court reversed the decision of both lower courts, and held that
imposition of the Washington State sales and use tax on Federal
contractors was not discriminatory and did not violate the Constitution
since the statute imposed a similar tax directly on the property owners
for all non-Federal construction projects. Pursuant to the Supreme
Court's decision, the District Court, considering the case on remand,
dissolved its injunction that had prohibited the State of Washington
from collecting the tax from Federal contractors.
The State of Washington is now in the process of retroactively
assessing the tax against Federal contractors for the period during
which the injunction was in force. The specific question we have been
asked to resolve is whether the VA "may reimburse Washington State
contractors, which in reliance on a Federal Court decision declaring the
state tax unconstitutional, failed to include the tax in their bids."
While the injunction prohibiting collection of the tax was in effect,
construction contracts used by VA contained the standard tax clause
ordinarily used in construction contracts, which provided as follows:
(a) -- Except as may be otherwise provided in this contract,
the contract price includes all applicable Federal, State, and
local taxes and duties.
Based on that provision, the Justice Department's Office of Legal
Counsel concluded that VA and other Federal agencies that employed the
standard clause in their construction contracts, "are under no legal
obligation to reimburse their contractors for the imposition of this tax
on them." However, in a footnote, the Office of Legal Counsel noted that
it had not considered whether a Federal contractor might, "because of a
unique factual situation, later succeed against the Government in a
particular contract action seeking rescission of the contract or
reimbursement under some common law reformation of contract theory, such
as mutual mistake."
VA's letter of June 5, 1984, suggests that reimbursement to all
affected contractors, which presumably would be all those that entered
into construction contracts with VA during the period the injunction was
in effect, would be proper under a mutual mistake theory. In this
respect, VA's letter reads as follows:
The position of the Washington State contractors is that the
sales tax was not applicable during the pendancy of the injunction
(from November 1977 until the decision) and therefore was not bid.
It is clear that once the injunction was issued, the VA did not
expect contractors to include the tax in their bids and did not
allow the inclusion of the tax in any negotiated change orders.
Our survey of contracting officials, however, does not indicate
any specific instances where a contractor, competitively bidding
on a project, was advised not to include the tax. The vast
majority of VA contracting officials however were under the
impression that the tax was not being included.
VA informed us that construction contracts with Department of Defense
(DOD) agencies operating in Washington State during this period
contained a special clause directing contractors not to include the
Washington State sales and use tax in their bid. Those contractors
further provided that the contractors would be reimbursed for any state
tax that was subsequently assessed against them. VA advised us that in
April or May 1976 it has placed a similar clause on its "station"
contracts that directed contractors not to include the tax in their bids
and which agreed to "pay the contractors for any taxes which were
ultimately assessed." After the District Court's ruling that the tax was
unconstitutional, the clause was removed since "the VA considered the
tax invalid as a result of the Court decision." VA never used a similar
clause in its Office of Construction contracts.
DISCUSSION
A mutual mistake occurs when the contract, as written, does not
reflect the actual agreement and true intention of the parties. See
B-198515, June 23, 1981 and B-199049, August 7, 1980. The presence of
the standard tax clause in the VA construction contracts which provided
that the contract price included all "applicable federal, state, and
local taxes" indicates that both parties to the contract intended the
contract price to include any state taxes for which the contractor was
liable. However, VA believed that the contractors were not liable for
the sales and use taxes in question. VA says firmly that "once the
injunction was issued, the VA did not expect contractors to include the
taxes in their bids and did not allow the inclusion of the tax in any
negotiated change orders." VA apparently never considered the effect of
a reversal of both lower court decisions.
Similarly, in a letter we received from the Associated General
Contractors of America, the contractors argue that while the District
Court's injunction was in effect, the sales tax was "not applicable for
bidding purposes because the state was not allowed to collect the tax *
* * ."
Both the VA and the contractors were correct in concluding that as of
the time the bids were submitted to and accepted by VA, the sales and
use taxes having been held unconstitutional and invalid by the two lower
courts were not collectible. Ultimately, of course, the Supreme Court
determined that the tax was valid. Since the decision by the Supreme
Court has the effect of allowing the State of Washington to impose sales
taxes "retroactively" on contractors who were awarded contracts during
the period the injunction has been in effect, both the contractors who
had not included the tax in their bids and the VA officials who did not
believe the tax had been or should have been included in the contract
price proved to be mistaken. In other words, both parties to the
contract made a mutual mistake of law. They apparently assumed,
erroneously, either that the District Court's ruling, as affirmed, was
final or else that even if the decision was overturned on appeal, as was
the case, such a reversal would not have any impact on the applicability
of the tax during the period the court injunction had been in force.
Certainly, it would have been preferable for the VA to have adopted a
provision in its construction contracts similar to the one apparently
used in the contracts of DOD agencies (and for a brief time in VA's
"station" contracts) which directed contractors not to include the tax
in their bids but which agreed to reimburse them for any state sales
taxes that were subsequently assessed against them. However, VA's
failure to use such a clause, as well as the contractors' failure to
insist on its use, is completely consistent with the mistaken assumption
both parties apparently made that even if the District Court's decision
was reversed, the State of Washington could not retroactively impose
sales taxes on the contractors.
In the past, our Office has allowed reformation of contracts when we
were able to determine that the contract price failed to include state
sales tax payable by the contractor due to a mutual mistake of law.
See, B-186949, October 20, 1976; B-159064, May 11, 1966; and B-153472,
December 2, 1965. For example, in B-180071, February 25, 1974, we
allowed reformation after concluding that the parties to the contract
had entered into the agreement "under the mistaken expectation" that the
state sales and use tax was not applicable to contract performance.
The cases cited above in which reformation was allowed are different
from the present case in one respect. They all involve situations in
which a representative of the Government agency involved made a
misrepresentation, albeit an innocent one, that the tax involved was not
applicable. We granted reformation after we determined that the
contractor had reasonably relied on that misrepresentation in failing to
include the tax in its bid. While we recognize that that distinction
may have some significance in a court of equity, we do not think that
the difference should affect the result reached in this case. For one
thing, none of those cases involved a situation in which the court had
determined that the sales tax was unconstitutional and had issued an
injunction prohibiting its collection.
As stated above, the essence of the mutual mistake theory is that the
contract as written does not reflect the true intention and the actual
agreement of the parties. See 30 Comp. Gen. 220 (1950). Since the
contract clause which stated that the contract price included all
"applicable" taxes demonstrates that both parties to the contract
intended that the Government compensate the contractor for the cost of
paying state and other taxes for which the contractor was responsible,
we believe that any contract which, as a result of the confusion and
misunderstanding generated by the issuance of the District Court's
injunction, did not include in the price an amount representing state
sales tax did not reflect the true intention of the parties and may be
reformed.
However, we agree with the view expressed by the Justice Department's
Office of Legal Counsel that the determination of whether a mutual
mistake occurred in any of the individual contracts involved is a
factual question that can only be resolved on a case-by-case basis. In
the cases cited earlier, reformation was only allowed after a review of
each record to determine that a mutual mistake had occurred and that the
contractor claiming reimbursement in fact had not included the tax in
its bid. See, for example, B-153472, December 2, 1965. Moreover, when
mutual mistake is alleged, the standard proof is a substantial one. For
example, in B-197170, March 16, 1981, we said that the burden of proof
rests on the party seeking reformation who must demonstrate through
"clear and convincing" evidence that a mutual mistake occurred. See
also 26 Comp. Gen. 899 (1947).
Therefore, we do not believe reformation would be proper here on an
across-the-board or blanket basis without reviewing each contract to
determine if a mutual mistake actually occurred. For example, it is
certainly possible that when a particular contractor submitted its bid,
it was either unaware of the existence of the District Court injunction
or, even if aware, decided that the tax should be included anyway
because the decision might be overturned and the tax retroactively
imposed. Allowing reformation in these circumstances to add the tax
again to contracts where it had already been included in the contract
price would result in an improper and unauthorized windfall to the
contractor involved.
Accordingly, if the VA is able to make the factual determination
based on its review of the available records pertaining to a particular
contract that the contractor failed to include sales tax in its bid due
to a mutual mistake, we would not object to reformation of the contract
to provide for reimbursement by the VA to the contractor of any
Washington State sales and use taxes that are ultimately assessed
against the contractor.
Finally, since the contracts involved were entered into between 1977
and 1983, it is reasonable to assume that VA has already made final
payment to many, if not most, of the contractors involved. Ordinarily,
Government contracts provide that before final payment can be received,
the contractor must execute a general release, but may specifically
except from the effect of such release any continuing claims the
contractor has against the Government under the contract. See Clark
Mechanical Contractors, Inc. v. United States, 5 Cl. Ct. 84, 87 (1984).
Assuming that a contractor who contracted with VA during the period in
question executed such a release in connection with its receipt of final
payment from VA, and did not note any specific exceptions for Washington
State sales tax, the question arises as to whether the release would now
bar a mutual mistake claim.
In G.M. Shupe, Inc. v. United States, 5 Cl.Ct. 662, 674 (1984), the
Claims Court recognized that "where it is shown that by reason of a
mutual mistake, neither party intended that the release cover a certain
claim, the court will reform the release." As an example of such a
situation in which reformation of the release would be allowed the Court
described a situation in which the parties to a contract agreed that the
contractor should
* * * be paid for state taxes on contract materials as part of
the contract price and that after completion of the contract and
execution of a release the state changed its laws and imposed
taxes on the contractor.
Accordingly, we do not believe that a contractor would be barred from
making a claim for reformation of the contract on the grounds of mutual
mistake of law even if it had received final payment and had executed a
general release. If VA is able to determine to its satisfaction that a
mutual mistake of law occurred when the contract was entered into (which
it must do if reformation is to be allowed), it is reasonable to assume
that as a result of that same mistake, neither party intended that the
release would cover state sales and use taxes which they did not know
would become applicable to the contractors. Therefore, the release may
also be considered to be amended.
B-218875.2, 64 Comp. Gen. 714
Matter of: Southwest Marine, Inc., July 29, 1985
Bonds - Requirement - Bid, Performance, etc. - Administrative
Determination
Protest that Miller Act performance and payment bond requirements are
inapplicable to a Department of Transportation contract for the
conversion of a government-owned vessel is denied where the statute, by
specifically providing that the Secretary of Transportation may waive
such bonding requirements with respect to contracts for the
construction, alteration, or repair of vessels of any kind or nature,
clearly indicates that vessels owned by the government are "public
works" and therefore embraced by the Miller Act.
Bonds - Bid - Requirement - Reasonableness
The fact that seven out of eight bids received included the requisite
bid guarantee, which is to be submitted when performance and payment
bonds are required, clearly refutes an assertion that a bonding
requirement unduly restricted competition.
Bonds - Requirement - Bid, Performance, etc. - Administrative
Determination
An agency was fully justified in requiring a performance bond to
protect the government's interest where the contract involved the
extensive utilization by the contractor of a government-furnished vessel
in performing conversion work, and where the contractor was to assume an
existing contract for the construction of ship cranes to be incorporated
into the vessel, the amount of which represented nearly half of the
total contract price.
Bonds - Requirement - Bid, Performance, etc. - Administrative
Determination
An assertion that a requirement for Miller Act bonds constituted an
improper predetermination of responsibility is without merit where the
agency determined that evidenced potential underbidding might jeopardize
performance of the contract and payment to laborers, materialmen, and
suppliers, the very occurrences which the provisions of the Miller Act
were intended to mitigate.
Southwest Marine, Inc. protests the requirement for performance and
payment bonds under invitation for bids (IFB) No. DTMA-91-85-B-50503,
issued by the Department of Transportation, Maritime Administration
(MARAD). The procurement is for the conversion of a government-owned
vessel into an auxiliary crane ship for use by the Department of the
Navy. Southwest essentially contends that the bonding requirement is
contrary to regulation and serves no useful purpose in protecting the
government's interest. We deny the protest.
At the outset, we question whether Southwest remains an "interested
party" to pursue the protest because of the results of the competition.
Since Southwest's bid, which included neither the bid guarantee nor the
premium to obtain it, was only fifth lowest firm can reasonably expect
to receive the award even if we were to conclude that the bonding
requirement was improper and should now be waived. In this regard, the
four lower bids would be even lower absent the bid guarantee premiums.
See Marine Industrial Insulators, B-217443, June 14, 1985, 85-1 CPD
Paragraph . . . . However, because Southwest was an "interested party"
within the meaning of GAO Bid Protest Regulations when it filed the
protest prior to bid opening, see 4 C.F.R. Section 21.0(a) (1985), we
will consider the protest on the merits.
Background
The solicitation contemplated the award of a firm-fixed-price
contract for the vessel conversion effort. Under the terms of the
solicitation, the contractor was to assume an existing contract for
construction of the ship cranes in the amount of $10,170,000 by which
the crane builder would become a subcontractor of the shipyard, and all
bids were to include that amount as part of the total conversion price.
The solicitation further provided that the contractor was to furnish a
performance bond in the amount of the full contract price and a payment
bond in the amount of $2.5 million within 10 days of receipt of the
notice of award. Because performance and payment bonds were required,
all bidders were also required to submit with their bids a bid guarantee
equal to 20 percent of the bid price (but not to exceed $3.0 million).
Eight bids were received in response to the IFB. Southwest's bid was
fifth lowest at $22,900,000, and the firm was the only bidder not to
submit a bid guarantee with its bid.
Southwest contends that the requirement for performance and payment
bonds is in violation of the Federal Acquisition Regulation (FAR), 48
C.F.R. Section 28.103-1(a) (1984) which provides that, in general,
contracting agencies shall not require such bonds for other than
construction contracts. In this regard, the firm asserts that the
vessel conversion work is not in the nature of a construction contract.
To support its assertion, Southwest refers to the FAR, 48 C.F.R. Section
36.102, which provides, in part:
Construction does not include the manufacture, production,
furnishing, construction, alteration, repair, processing, or
assembling of vessels, aircraft, or other kinds of personal
property.
Southwest believes that MARAD, in requiring the bonds, has
erroneously relied upon the provisions of the Miller Act, as amended, 40
U.S.C. Sections 270a-270f (1982), which, according to the firm, only
relates to the furnishing of performance and payment bonds on contracts
for the construction, alteration, or repair of public buildings or
public works of the United States, and, therefore, is inapplicable to a
vessel conversion contract.
Southwest contends that the bonding requirement unduly restricts
competition, especially by small business concerns such as itself,
because of the difficulty in finding an acceptable surety willing to
provide the bonds, and because of the high direct costs association with
them.
Southwest urges that the bonding requirement serves no useful purpose
in protecting the government's interest. The firm asserts that the only
government-furnished property involved in the work is the vessel itself,
which, for the most part, is to be self-insured by the government during
the actual conversion effort. Southwest also notes that the existing
crane construction contract to be assumed by the contractor has already
been separately bonded, and the firm accordingly believes that MARAD
acted unreasonably in requiring a performance bond in the amount of the
full contract price.
Finally, Southwest also contends that MARAD's stated reason for
requiring the bonds -- its concern that shipyards have usually underbid
such work in the past -- constitutes an improper predetermination of
responsibility. In this regard, Southwest notes that MARAD waived the
bonding requirement for two identical prior vessel conversion contracts,
but refused to do so here after the firm had requested such a waiver.
Analysis
We do not agree that the provisions of the Miller Act are
inapplicable to this procurement. Specifically, we refer to 40 U.S.C.
Section 270f, which provides that:
The Secretary of Transportation may waive sections 270a to 270b
of this title, with respect to contracts for the construction,
alteration, or repair, of vessels of any kind or nature * * * .
From this, it is clear that the Miller Act, expressly requiring that
performance and payment bonds be furnished for contracts "for the
construction, alteration, or repair of any public building or public
work of the United States" which exceed $25,000 in amount, 40 U.S.C.
Section 270a, is also applicable to a government-owned vessel conversion
contract, since the vessel is indicated to be a "public work" of the
United States.
In the legislative history of 40 U.S.C. Section 270f, as added by
section 39 of the Merchant Marine Act of 1970, Pub. L. No. 91-469, 84
Stat. 1018, 1036, and as amended by section 12(12) of the Maritime Act
of 1981, Pub. L. No. 97-31, 95 Stat. 151, 154 (which substituted
"Secretary of Transportation" for "Secretary of Commerce") the Senate
Committee on Commerce stated:
A vessel constructed for the United States, or repairs to a
vessel owned by the United States, constitute a public work within
the meaning of this statute.
S. Rep. No. 1080, 91st Cong., 2d Sess. 62, reprinted in 1970 U.S.
Code Cong. & Ad. News 4188, 4236.
We also note that the Supreme Court, in a case involving the former
section 270 of title 40 (as originally enacted by the Act of August 13,
1984), long ago held that a vessel being built for the United States was
a "public work" within the meaning of the Statute. Title Guaranty &
Trust Co. v. Crane Co., 219 U.S. 24 (1910). We therefore believe that
Southwest's position as to the inapplicability of the Miller Act to this
procurement is in error.
We do not agree with Southwest's assertion that Part 36 of the FAR
effects a waiver by the Secretary of Transportation of the bonding
requirements for vessel contracts by excluding vessels from the
definition of construction. Part 36, by its own terms, prescribes the
"policies and procedures peculiar to contracting for construction and
architect-engineer services" for "buildings, structures and other real
property." It is not intended to be all-inclusive or to apply to other
"public works," such as vessels, that can be categorized as personal
property.
Furthermore, as already indicated, the Miller Act, 40 U.S.C. Section
270f, supra, statutorily vests the authority to waive bonding
requirements for vessel contracts with the Secretary of Transportation,
thus affording the Secretary broad discretion to decide whether a
bonding requirement in a particular instance is in the government's best
interest. See B-199445, Apr. 6, 1982. Although such waiver authority
is delegated to the Maritine Administrator, and may be redelegated to
the head of the contracting activity, 48 C.F.R. Sections 1201.601,
1202.101, it clearly could not legally be delegated to the FAR
Secretariat. Thus, Part 36 of the FAR is inapplicable with respect to
any waiver of bonding requirements for vessel contracts.
Moreover, we have consistently held that contracting agencies have
the discretion to determine whether the need exists for performance and
payment bonds in a particular procurement. Triple "P" Services, Inc.,
B-204303, Dec. 1, 1981, 81-2 CPD Paragraph 436. Although a bonding
requirement in some instances may result in a restriction of
competition, it is nevertheless a necessary and proper means of securing
to the government fulfillment of a contractor's obligations under the
contract. Renaissance Exchange, Inc., B-216049, Nov. 14, 1984, 84-2 CPD
Paragraph 534. Thus, where the decision to require bonds is found to be
reasonable and made in good faith, we will not disturb the agency's
determination. Cantu Services, Inc., B-208148.2, Dec. 6, 1982, 82-2 CPD
Paragraph 507.
The fact that seven of the eight bids received in response to the IFB
included the necessary bid guarantee, which is to be submitted when
performance and payment bonds are required, FAR, 48 C.F.R. Section
28.101-1(a), clearly refutes Southwest's assertion that the bonding
requirement unduly restricted competition. See Galaxy Custodial
Services, Inc., et al., B-215738, et al., June 10, 1985, 64 Comp. Gen.
593, 85-1 CPD Paragraph 658. Despite whatever burdens the bonding
requirement may have imposed on the firm, bonds are an important aspect
of federal procurement, and firms seeking to obtain a government
contract should expect to furnish such bonds when the requirement is
mandated by statute or otherwise determined to be necessary to protect
the government's interest.
In this regard, we also do not concur with Southwest's view that the
bonding requirement here serves no useful purpose. Clearly, the vessel
itself constitutes government property to be utilized by the contractor
in performing the contract, and we have repeatedly held that the use of
government property by a contractor serves as a proper justification for
a bonding requirement. See Renaissance Exchange, Inc., B-216049, supra.
Even if the Miller Act were not applicable to this procurement, we note
that the use of government property is one of the examples for
performance bond requirements enumerated in the FAR, 48 C.F.R. Section
28.103-2(a). We find no merit in Southwest's position that the fact
that the government will self-insure the vessel while it is in the
possession of the shipyard means that the bonding requirement is, in
effect, a redundancy.
MARAD states that it required the performance bond to be in the
amount of the full contract price because the contractor, upon assuming
the existing crane contract, will become responsible for incorporation
of the cranes into the vessel. The separate performance bond for the
crane contract expires when the cranes are delivered to the shipyard,
and all risks associated with the cranes, such as any damage that might
be suffered while awaiting incorporation, will therefore lie with the
shipyard contractor. In our view, MARAD acted reasonably in requiring
the performance bond to include the amount of the assumed crane
construction contract in order to protect the government's interest to
the fullest extent.
MARAD also informs us that its experience with recent contracts of
this nature indicates that the economic difficulties of many shipyards
have led them to underestimate actual costs, and that the resulting
underbidding may therefore jeopardize performance of the work and
payment to laborers, materialmen, and suppliers, the very occurrences
which the provisions of the Miller Act were intended to mitigate. See
United States v. Kimrey, 489 F.2d 339 (8th Cir. 1974). In MARAD's view,
a waiver of the bonding requirement under 40 U.S.C. Section 270f, supra,
would not be in the government's best interest. We believe that MARAD's
position is reasonable and in full accord with the intent of the Miller
Act. Hence, we do not agree with Southwest's assertion that the bonding
requirement constitutes an improper predetermination of responsibility.
See Renaissance Exchange, Inc., B-216049, supra; Wright's Auto Repair &
Parts, Inc., B-210680.2, June 28, 1983, 83-2 CPD Paragraph 34.
The protest is denied.
B-217925, 64 Comp. Gen. 711
Matter of: Department of Agriculture - Use of Appropriation for
Payments in Foreign Currencies for SBIR Program, July 29, 1985
Appropriations - Availability - Contracts - Research and Development -
Small Business Innovation Development Act - Operational v. R&D
Activities
Under the Small Business Innovation Development Act the Department of
Agriculture must obligate a certain portion of its extramural research
and research and development (R&D) budget to fund small business
participation under the Small Business Innovation Research (SBIR)
Program. The fiscal year 1985 appropriation for the Department of
Agriculture includes $5 million for external research for foreign market
development to be paid for in foreign currencies. The Act, which does
not require that every eligible research or R&D program participate in
the SBIR program, provides no authority to pay for foreign market
development research in U.S. currency or, absent specific authority, to
use any appropriated funds other than in accord with the terms of the
applicable appropriation.
The Secretary of Agriculture requests an advance decision as to
whether funds appropriated for payments in foreign currencies, owed to
or owned by the United States, for foreign market development research
may be utilized in part to fund the Department's Small Business
Innovation Research (SBIR) program. This program requires that fixed
percentages of obligations for extramural research be awarded to small
business concerns. The Secretary states that to fund the SBIR program
all extramural research funds were assessed a pro rata share of 0.2
percent by the Department so as to avoid a significant impact on one or
more of the research projects and that these funds are pooled to support
the SBIR program.
We are told that the decision to assess all program funds identified
as making up the extramural budget followed from the conclusion that the
Small Business Innovation Development Act authorizes the Department in
its discretion to reallocate the necessary funds to operate the SBIR
program from any or all of the various extramural research
appropriations that make up the total extramural research budget. The
only limitation in the Department's view would be the percentage
limitation on the use of extramural basic research funds (as opposed to
research and development funds) established by the Act for the
Department as a whole. Based on this, the Secretary is of the opinion
that the Act authorizes the Department in its discretion to reallocate
funds from the Foreign Currency Program appropriation to the SBIR pool
in dollars as opposed to equivalent amounts of foreign currencies.
For the reasons indicated below, we conclude that no allocation under
the Small Business Innovation Development Act may cause funds to be used
for purposes or in a manner that differs from the underlying
appropriation. Therefore, the converting of foreign currencies to
dollars would not be permitted because it is not authorized by the
Foreign Currency Program appropriation.
The Small Business Innovation Development Act of 1982, Pub. L.
97-219, 96 Stat. 217, amended section 9 of the Small Business Act. 15
U.S.C. Section 638 (1982). The Act mandates an SBIR program modeled
after one established by the National Science Foundation. Under Section
9(f)(1) of the Act, an agency with an extramural research or research
and development (R&D) budget of over $100,000,000 if fiscal year 1982 or
thereafter, must obligate not less than a stated percentage of funds for
purpose of making awards to qualified small business concerns. The term
"extramural budget" is defined in section 9(e)(1) as:
* * * the sum of the total obligations minus amounts obligated
for such activities by employees of the agency in or through
Government-owned, Government-operated facilities. * * * .
The continuing resolution that provided the Department of Agriculture
with appropriations for fiscal year 1985 funded programs to the extent
and in the manner provided in the conference report and joint
explanatory statement of the Conference Committee for the Agriculture,
Rural Development and Related Agencies Appropriation Act, 1985 (H.R.
5743). Section 101(a), Pub. L. 98-473, 98 Stat. 1837, October 12, 1984.
The report (H.R. Rep. 1071, 98th Cong., 2nd Sess. 7 (1984)) by its
terms adopted the following provision in H.R. 5743 which appeared in the
bill as approved in both Houses of the Congress:
SCIENTIFIC ACTIVITIES OVERSEAS (FOREIGN CURRENCY PROGRAM)
For payments in foreign currencies owed to or owned by the
United States for market development research * * * $5,000,000:
Provided, That this appropriation shall be available, in addition
to other appropriations for these purposes, for payments in the
foregoing currencies: Provided further, That funds appropriated
herein shall be used for payments in such foreign currencies as
the Department determines are needed and can be used most
effectively to carry out the purposes of this paragraph * * *
ANALYSIS
The Small Business Innovation Development Act, while requiring a
stated percentage of external research and R&D to be dedicated to the
SBIR program, does not mandate that each research or R&D program would
necessarily participate in SBIR. For example, Chairman LaFalce, of the
Subcommittee on General Oversight, Committee on Small Business, in
explaining the proposed SBIR legislation to the House of
Representatives, stated that:
The committee believes that a statutory allocation is essential
if Federal SBIR programs are to succeed. The committee feels that
there is ample flexibility in each agency's R. & D. budget to
target the required percentage of their funds to implement the
SBIR programs. It is left to the agencies' discretion to decide
which funds to use for this purpose. 128 Cong. Rec. H3593 (daily
ed. June 17, 1982).
A similar point of view was expressed by Representative Smith of
Iowa, a member of the Small Business Committee, in commenting on the
lack of need for a proposed amendment to exempt research performed in
State governmental facilities from being regarded as extramural research
for SBIR purposes. (The amendment was defeated.)
They (the Department of Agriculture) are not required to take a
certain percentage out of each and every program; it is only a
certain percentage out of the whole Department of Agriculture.
There is no necessity to take it out of those individual
programs the gentleman is talking about. 128 Cong. Rec. H3774
(daily ed. June 22, 1982).
The $5 million appropriation in question is for foreign market
development research that is to be paid for in foreign currencies. The
appropriation is stated to be in addition to other appropriations for
this type of research. While the Secretary is given the specific
authority to determine which foreign currencies are to be utilized for
this purpose, the use of U.S. dollars is not included as an option.
When an appropriation is by its terms subject to authorizing statutes
we have given effect to such provisions. See 61 Comp. Gen. 532 (1982).
However, in the case at hand the appropriation Act clearly states that
the $5 million appropriated is to be spent in foreign currency, and this
limitation is not inconsistent with the Small Business Innovation
Development Act. Neither does the latter Act otherwise provide
authority to use funds for purposes other than those for which they were
appropriated. The Secretary's discretion under this Act does not extend
to using funds for purposes other than for which appropriated on the
basis that a percentage of each appropriation is to be put into a SBIR
pool. Each appropriation retains its identity and is subject to
conditions or limitations applicable to that appropriation.
Accordingly, absent specific authority the establishment of a pool to
pay for research by small business concerns that is not subject to the
limitations applicable to the appropriations assessed to fund the pool
would be impermissible, whether or not foreign market research funds are
included in the pool. See 36 Comp. Gen. 386 (1956).
It is clear that the Act does not mandate that any particular program
participate in the set-aside. The foreign market development research
program either may be omitted from participation in the SBIR program or
included with payment in foreign currency for market development
research in foreign countries as required by the appropriation. Of
course, the dollar value of this appropriation should be used for the
purpose of determining the agency's total extramural research budget.
Accordingly, we conclude that the Small Business Development Act of
1982 does not excuse the Department of Agriculture from the 1985 fiscal
year appropriation requirement that the market development research
involved be paid for in foreign currencies.
B-219074, 64 Comp. Gen. 710
Matter of: Advance payment for maintenance of equipment, July 26,
1985
Contracts - Payments - Advance - Prior to Receipt of Supplies, etc.
Notwithstanding Federal Supply Schedule contract language to the
contrary, agents of the government are prohibited by 31 U.S.C. 3324 from
compensating contractors for any service or goods which have not been
received.
The Veterans Administration (VA) requests our decision concerning the
legality of the advance payment made by the VA to the Dictaphone
Corporation (Dictaphone) for the period of January 1, 1985, through
September 30, 1985, under Federal Supply Schedule (FSS) contract No.
GS-00F-69310, special item No. 47-320, covering maintenance service of
office equipment. We understand the special item in question has now
been deleted from the contract.
The question arises because of a conflict between the terms of
special item No. 47-320 and 31 U.S.C. Section 3324 (1982) (formerly 31
U.S.C. Section 529). Special item No. 47-320, in pertinent part,
provided:
Invoices will be rendered yearly in advance at the rate
established by Dictaphone within the terms of this contract and
are payable upon receipt.
However, 31 U.S.C. Section 3324, in pertinent part, provides:
* * * a payment under a contract to provide a service or
deliver an article for the United States Government may not be
more than the value of the service already provided or the article
already delivered.
The statute does provide for advance payments where authorized by a
specific appropriation or other law or the President, but a specific
appropriation or other law or the President, but those conditions do not
exist here. Section 255 of U.S.C. title 41 provides for advance payment
by civilian agencies where the agency head determines it is in the
public interest and there are other specified circumstances present.
That is not the situation here.
Under 31 U.S.C. Section 3324, absent the exceptions noted above,
agencies of the government are prohibited from paying for goods or
services in advance of receiving them. See, e.g., B-172054, June 11,
1971. Therefore, notwithstanding the FSS contract language to the
contrary, agents of the government are strictly prohibited by statute
from compensating contractors for any service of goods which have not
been received. Thus, the advance payment for the services in question
should not have been made to Dictaphone.
However, since there is a short period remaining for which advance
payment was made and we understand that Dictaphone is performing
satisfactorily and that there is no reason to believe that it will not
continue to do so for the remaining period for which advance payment was
made, no corrective action need be taken in the immediate case, but in
the future the VA should adhere to the prohibition in 31 U.S.C. Section
3324.
B-218455.2, 64 Comp. Gen. 704
Matter of: Meridian House International -- Request for
Reconsideration, July 26, 1985
Contracts - Protests - General Accounting Office Procedures -
Reconsideration Requests - Error of Fact or Law - Not Established
Prior decision, which held that an agency's request for proposals was
inadequate to promote effective competition and resulted in a de facto
sole-source award to the incumbent, is affirmed where the request for
reconsideration fails to indicate that material errors of fact or of law
exist in the prior decision to warrant its reversal or modification.
Meridian House International requests reconsideration of our decision
in University Research Corp., B-216461, Feb. 19, 1985, 64 Comp. Gen.
273, 85-1 CPD Paragraph 210, in which we sustained a protest by
University Research Corporation (URC) alleging that the Agency for
International Development (AID) had improperly awarded a 5-year contract
to Meridian House, the incumbent, under request for proposals (RFP) No.
ROD-NEB-84-10. Meridian House asserts that the decision was based upon
an incomplete administrative record, and that we misapplied certain
legal precedents in reaching our conclusion. /1/ We affirm our prior
decision.
Under the subject solicitation, the contractor was to provide a wide
range of orientation and hospitality services for foreign visitors to
the United States, many of whom are of high political and social status
in their home countries. The services to be performed included greeting
the visitors upon their arrival in the United States, arranging hotel
reservations and transportation, conducting orientation programs and
educational tours, arranging hospitality in American homes in the
Washington, D.C., area, facilitating attendance at social and cultural
events, and developing and publishing participant-oriented materials.
The contractor was required to be extremely flexible in providing the
requisite services, due to the fact that the annual total of visitors
was estimated to be 1200 arriving in weekly groups ranging from 1 or 2
individuals to 50 to 100 or more, with as little time as same-day notice
given before arrivals.
Because of the past use by Meridian House of a large number of
volunteers in providing many of the services, /2/ all offerors under the
RFP were required to have a qualified and trained volunteer staff in
place at the time of award, and to demonstrate compliance with this
requirement in their proposals. Furthermore, because of AID's concern
that appropriate physical facilities that "reflect the dignity of this
country" be utilized in performing the contract, all offerors were
required to demonstrate in their proposals that their offered facilities
would be suitable.
The RFP represented AID's effort to procure the services on a
competitive basis for the first time, Meridian House having been our
prior decision, we did not accept URC's assertion that the RFP was
consciously structured in such a manner that only Meridian House was
afforded a realistic opportunity to receive the award. Rather, we
concluded that more effective competition could have been obtained
through better solicitation draftsmanship.
We found that the RFP did not adequately set forth AID's requirements
as to the number and content of the orientation programs the contractor
was required to conduct, and did not sufficiently detail what was meant
by "specific" programs and "special" groups. Furthermore, we found that
the RFP failed to indicate clearly the nature, quality, and quantity of
the participant-oriented publications required from the contractor.
Because of these defects, and because no other proposals had been
received, we concluded that there was an unacceptable level of
uncertainty and risk present in the solicitation.
In addition, we agreed with URC that the RFP's requirements that
offerors have physical facilities and a qualified and trained volunteer
staff in place at the time of award, and that offerors demonstrate
compliance with these requirements in their proposals, unduly restricted
competition. From the record before us, it was apparent that only
Meridian House could have met these requirements upon proposal
submission by virtue of its incumbency, and that it would have been
especially burdensome for other offerors to do so given the 30-day
response period in the RFP. We concluded that it would have been more
appropriate for the solicitation to provide a specific period of time
between the date of selection for award and the effective date of the
contract for the successful offeror to obtain the requisite facilities
and provide for a qualified and trained body of volunteers.
Request for Reconsideration and GAO Analysis
Meridian House urges that our prior decision is erroneous both as to
matters of fact and of law. On the first point, the organization
asserts that AID's administrative report on the protest failed to fully
indicate the unique nature of the services being acquired. Meridian
House contends that we erred in concluding that the RFP was inadequately
detailed. According to Meridian House, because the size of the visiting
groups, and the particular national, political, and cultural
characteristics of the arriving visitors will always differ, AID could
not have known the precise nature and content of the various programs,
seminars, and publications required from the contractor, and could not,
therefore, have described these aspects of performance in any greater
detail.
From a legal standpoint, Meridian House does not accept our
conclusion that the fact that no other proposals were received indicates
that the level of uncertainty and risk in the solicitation was
unacceptable. Meridian House contends that a more plausible explanation
for the lack of competition was that other firms realized that they did
not have the capability and flexibility to meet the agency's needs, and,
accordingly, that they could not effectively compete. In this regard,
Meridian House asserts that, because of the special nature of AID's
requirements, the contemplated contract did not hold any significant
appeal for commercial firms.
Meridian House also argues that we erred in concluding that the RFP's
requirements that facilities and volunteer staff be in place at the time
of award unduly restricted competition. Meridian House contends that
potential offerors had a lengthy period of time between the CBD notice
and the closing date for receipt of proposals to make suitable
arrangements, and that prudent business practice would have dictated
that offerors make arrangements contingent upon the award of the
contract for the provision of both facilities and volunteers. Meridian
House asserts that URC's protest as to the allegedly restrictive nature
of these requirements is really an admission that the firm was unable to
meet the agency's minimum needs, and that URC had ample opportunity to
enter into joint venture or subcontracting arrangements with other
organizations with the institutional capability to meet those needs.
We have carefully reviewed the record in this matter, and we have
entertained AID's comments on Meridian House's request for
reconsideration. /4/ We find no basis to conclude that our prior
decision contains errors of fact or of law so as to require its reversal
or modification.
(1) Specification Inadequacy
As stated in our prior decision, we recognize the unique nature of
the services being acquired and AID's need for a great degree of
flexibility from the contractor. However, we remain of the view that
more effective competition could have been achieved if the RFP had been
structured in a more appropriate format.
With regard to the issue of specification inadequacy, we think that
AID should have provided representative data from the previous 5-year
period of performance to indicate what was required from the contractor.
Without such information, a specification like the one in the RFP,
requiring the contractor to conduct "seminars or other specific programs
for special groups, several hours or days in length," can only be
construed as so indefinite as to preclude intelligent proposal
preparation. Although we accept Meridian House's statement that the
present contract would probably require services to foreign visitors of
different national origins and needs than those encountered in the past,
past contract data would not necessarily have been misleading, but
rather could have served to provide a general framework for proposal
preparation. Similarly, the RFP should have described the
participant-oriented publications that Meridian House was currently
furnishing, rather than placing the burden upon prospective offerors to
obtain copies of such publications from Meridian House.
Furthermore, we do not agree with Meridian House's contention that we
legally erred in applying our decision in Memorex Corp., B-212660, Feb.
7, 1984, 84-1 CPD Paragraph 153, to the facts of this case. In Memorex,
the protester had contended that the performance specifications
contained far too little detail to define the agency's needs. Upon
analysis, we concluded that the solicitation's mandatory requirements
clearly stated the required capability and characteristics of the
requested equipment, and, therefore, that the protester's contrary
assertion was without merit. Furthermore, the fact that five proposals
had been received in response to the RFP led us to believe that the
level of uncertainty and risk in the solicitation was acceptable.
Conversely, in this matter, we concluded upon analysis that certain
aspects of the solicitation were too general and vague to allow for
effective competition. As already indicated, we did not accept the
argument that AID could not have defined certain requirements with
greater precision. In essence, because of the long history of prior
performance, both AID and Meridian House knew what was expected from the
contractor; however, the RFP as drafter was not an adequate vehicle to
impart that knowledge to other prospective offerors. We believe this
view is supported by the fact that only Meridian House submitted a
proposal in response to the RFP, while URC and five other firms had
earlier furnished capability statements to AID and had been issued
copies of the solicitation. Clearly, the proposition stated in Memorex
is consistent with this conclusion.
To the extent that Meridian House contends that a more plausible
explanation for the lack of competition is that the contemplated
contract held little appeal for commercial firms, this argument is
refuted by the fact that URC is indeed a commercial firm, and its great
interest in the contract is shown by its diligent pursuit of the
protest. On this same issue, AID contends that we erred in discounting
its assertion that another prospective offeror found no fault with the
specifications, but rather did not compete because it had reduced its
Washington, D.C., staff. In fact, we did not discount this assertion,
but found it unpersuasive, since the agency had not provided sufficient
support for the contention. Therefore, we could not give this contrary
explanation any significant weight.
(2) Solicitation Restrictiveness
We believe that both Meridian House and AID have misconstrued the
basis for our conclusion that the requirement for facilities and
volunteer staff to be in place at the time of award was unduly
restrictive. Given the sensitive foreign relations aspects of this
procurement, we have never disputed AID's justification for requiring
that physical facilities be appropriate for performing the services, and
that the requisite volunteer staff be composed of qualified and trained
individuals. However, we continue to believe that it would have been
clearly less restrictive of competition for the solicitation to have
provided the successful offeror with a phase-in period to meet these
requirements.
As indicated in our prior design, this approach would have allowed
the uninterrupted furnishing of services until the successful offeror
became fully operational, without additional cost to the government. To
the extent that Meridian House disputes the legality of such a
transition period, we find no basis for the organizations' position. It
is not unusual for contracting agencies to request an incumbent
contractor to extend its contract beyond the specified term of
performance for various reasons. In any event, this procurement
approach presupposes that the agency would structure the solicitation so
that the effective date of the successor contract at the end of the
phase-in period would coincide with the expiration date of the existing
contract.
Although Meridian House and AID argue that URC could have entered
into contingent arrangements for facilities and volunteer staff prior to
the proposal closing date, URC's own experience indicates otherwise.
The firm states that it was not possible to get a commitment for space
without a substantial initial expenditure, and that it would have been
economically prohibitive to equip the facility and hire staff merely in
expectation of an award. We believe this is a reasonable objection to
the RFP's requirement that facilities be in place at the time of
proposal submission. With respect to the requisite volunteers, URC
stresses that it in fact attempted to work thorugh a number of local
organizations, such as international voluntary services and civic and
professional associations, to recruit volunteers but that it was
impossible to obtain firm commitments from these organizations in the
absence of a contract award.
We do not accept the argument that prospective offerors necessarily
had a long period of time to make contingent arrangements. In our view,
the procurement came into being when AID issued the RFP, not when it
published the CBD notice. We seriously doubt that sufficient contingent
arrangements could have been entered into merely on the basis of the CBD
notice, or that it would have been prudent for prospective offerors to
act directly upon that notice alone.
We remain of the view that the RFP should have provided for a
phase-in period between the date of selection for award and the
effective date of the contract. If the successful offeror's facilities
and volunteer staff were not in place and acceptable at the end of that
period, the firm could be found nonresponsible to perform the contract,
and no award could ensue. See the Federal Acquisition Regulation, 48
C.F.R. Section 9.103 (1984).
In any event, we find no evidence in the record to establish that
URC, as a commercial firm, would not have been able to obtain
appropriate facilities and a qualified volunteer staff, had the RFP
provided a less burdensome vehicle for prospective offerors to meet
these requirements. See Environmental Protection Agency Sole-source
procurements, 54 Comp. Gen. 58 (1974), 74-2 CPD Paragraph 59. Although
Meridian House contends that its volunteers would have declined to offer
their services to a commercial firm such as URC if it had been the
successful offeror, we do not believe this argument supports the use of
restrictive specifications. Further, we question whether the volunteers
in fact are motivated more by their loyalty to a particular organization
than by their dedication to the foreign visitor programs.
AID now informs us that only one other offeror besides Meridian House
was judged to be capable on the basis of the informational statements
submitted in response to the CBD notice. AID states that URC was not
considered to be capable, apparently because it was a commercial firm
and not a nonprofit organization similar to Meridian House with an
established corps of volunteers. However, we do not believe this point
to be material to our reconsideration. The fact is that URC was issued
a copy of the solicitation, and neither the CBD notice nor the RFP
indicated that a prospective offeror had to be a nonprofit organization
with a volunteer staff already on hand. Rather, the only requirement
was that offerors be able to attract and maintain a sufficient number of
qualified volunteers to perform the services. We find no support for a
conclusion that only nonprofit organizations are capable of doing so.
After careful reconsideration, we find no basis to reverse or modify
our February 19 decision. Accordingly, that decision, with its
recommendation that corrective action be taken, is affirmed.
FOOTNOTES
(1) Meridian House did not participate in the original protest
proceedings because of AID's failure to notify the organization of the
protest. Accordingly, we have entertained the reconsideration request
in order to afford Meridian House the opportunity to be heard in the
matter. See Andrew Corp., et al., B-217024 et al., Mar. 25, 1985, 85-1
CPD Paragraph 344.
(2) Meridian House is a nonprofit organization and has apparently
retained a dedicated body of volunteers over the years.
(3) In January of 1984, nearly 8 months prior to issuing the RFP, AID
published a notice of its future intent to issue an RFP in the Commerce
Business Daily, (CBD) and requested capability statements from
interested offerors. URC and five other firms submitted such statements
and were issued copies of the RFP.
(4) We note here that AID has never requested reconsideration of the
original decision. Because we have granted Meridian House a rehearing,
we have also accepted AID's comments. As a general rule, however, we
will not consider newly presented arguments by an agency where the
agency failed to present such arguments in its report on the protests,
and the information which forms the basis for the arguments was
available at that time. See Griffin-Space Services Co. --
Reconsideration, 64 Comp. Gen. 64 (1984), 84-2 CPD Paragraph 528; Swan
Industries -- Request for Reconsideration, B-218484.2 et al., May 17,
1985, 85-1 CPD Paragraph 569.
B-218387.2, 64 Comp. Gen. 702
Matter of: Harris Construction Company, Inc. - Request for
Reconsideration, July 26, 1985:
Bids - Modification - Before Bid Opening - Ambiguity
Where a garbled telegraphic modification increasing the bid price in
an uncertain amount causes the bid price to be uncertain, the bid was
properly found to be nonresponsive, even if, as the bidder now shows,
statement in prior decision indicating that the modification also
acknowledged two material amendments to the solicitation was erroneous.
Abhe and Svoboda, Inc. (A&S) requests reconsideration of our decision
in Harris Construction Co., Inc., B-218387 June 21, 1985, 64 Comp. Gen.
628, 85-1 C.P.D. Paragraph 710, in which we sustained Harris
Construction Company, Inc.'s (Harris) protest of the Navy's award of a
contract to demolish a seaplane hangar, Bldg. A-1, at the United States
Naval Air Station Annex, Bermuda, to A&S. The Navy had awarded the
contract to A&S as the low bidder and ignored an attempted telegraphic
bid modification from A&S which sought to increase A&S's bid by an
amount that could not be determined because the message was garbled. We
affirm our previous decision.
We held that A&S's bid did not offer a firm fixed-price prior to
opening because the garbled message indicated A&S's intent to increase
the bid price it originally submitted, but by an uncertain amount.
Accordingly, we sustained Harris' protest because a bid not offering a
firm fixed-price could not be the basis for an award under a formally
advertised procurement.
A&S argues that our decision is based on the incorrect assumption
that the garbled telegram which rendered the bid indefinite also
acknowledged two material amendments, from which we concluded that the
telegram could not be ignored because without it the bid could be
nonresponsive. A&S now points out that its original bid documents had
acknowledged the amendments in question. Therefore, A&S argues that our
decision is based on an erroneous factual premise.
In the absence of the original bid in the record on which we based
our previous decision, we relied on A&S's statement to our Office which
read as follows:
* * * Prior to the bid opening, Abhe & Svoboda, Inc.
acknowledged certain amendments which had been made to the
solicitation and attempted also at that time to modify its bid.
Abhe and Svoboda, Inc. attempted to accomplish this modification
via a western union telegram.
Consequently, we believed A&S only acknowledged these amendments in
the garbled telegram and not in its bid.
Although our previous decision erroneously found that the garbled
telegram was the only acknowledgment of the amendments, this does not
affect our holding that A&S's bid is nonresponsive. A&S specifically
indicated prior to bid opening that its price was not firm.
Consequently, its bid did not offer the required fixed price and could
not be the subject of award. Regardless of whether A&S already had
acknowledged the amendments in its bid, its indication that it was
revising its bid upwards by an unknown amount in the garbled telegram
could not be ignored since A&S's intention to rescind its original bid
price and to offer a price that was higher was clear from the telegram.
A&S also cites 42 Comp. Gen. 514 (1963) and asserts that this
decision stands for the proposition that a bid remains as originally
submitted unless a comprehensible modification is received prior to bid
opening or unless a mistake can be clearly established. That case,
however, dealt with a bidder's attempt to withdraw a bid after bid
opening because the bidder, a supplier of orange juice, did not wish to
provide the juice at the bid price since a catastrophic freeze destroyed
a large percentage of the citrus crop, thus raising his costs. That
case follows the general proposition that after bid opening a bid is
valid for the period of acceptance. That is not the situation here.
The decision is affirmed.
B-216842, 64 Comp. Gen. 700
Matter of: Aurora Associates, Inc., July 26, 1985
Contracts - Negotiation - Awards - Initial Proposal Basis - Propriety
Award on the basis of initial proposals is not appropriate where
contracting officer has cost concerns regarding all offerors' proposals.
Contracts - Negotiation - Disclosure of Price, etc. - Inadvertent
Where agency error may have resulted in disclosure of portion of one
offeror's proposal to second offeror, but second offeror was not
selected for award, first offeror was not prejudiced by the error in
present procurement and we know of no remedy for future procurements.
Aurora Associates, Inc., protests the award of a contract for
operation of the Brunswick, Georgia, Job Corps Center (BJCC) under
request for proposals (RFP) No. 84-RIV-JC-0010, issued by the Office of
Job Corps, United States Department of Labor, Employment and Training
Administration (DOL/ETA). Aurora contends that the competitive nature
and integrity of this procurement were compromised by the release by
DOL/ETA of confidential financial and technical information contained in
a proposal which Aurora submitted under a prior RFP for the same
services. (This initial RFP, No. 84-RIC-JC-0005, was canceled after the
contracting officer learned that the offerors' technical and cost
rankings might have been disclosed prior to submission of best and final
offers.) Aurora requests that the later RFP be canceled and the earlier
one reinstated, and that award be based on the initial proposals
submitted under the earlier RFP. Subsequent to the filing of Aurora's
protest, DOL/ETA awarded a contract for the services to the Management
and Training Corporation (MTC).
We deny the protest.
The initial RFP for continued operation of the Brunswick Job Corps
Center, noted above, was issued on March 16, 1984, with proposals due on
May 11, 1984. After best and final offers had been submitted, the
Director of the Job Corps learned that one of the offerors might have
received information regarding the other offerors' technical and cost
rankings prior to submission of best and final offers. The contracting
officer reviewed the situation and concluded that there was sufficient
basis to suspect that the confidentiality of the procurement process had
been compromised. (These same events were the subject of our decision
in Youth Development Associates, B-216801, Feb. 1, 1985, 85-1 CPD
Paragraph 126.) He canceled the RFP on August 21, 1984, and issued a
second RFP, No. 84-RIV-JC-0010, on October 1, 1984.
Upon cancellation of the original RFP, Aurora and the other two
offerors, Singer and TMR, requested return of their proposals. The
agency complied, but mistakenly mailed several copies of Aurora's
business management proposal to Singer. Singer immediately returned
Aurora's materials to the contracting officer along with a statement
indicating that no Singer staff had read or copied the Aurora proposal.
Aurora contends that the situation which led to cancellation of the
original RFP was not adequately remedied, and that the improper release
of the financial and technical information in its business management
proposal placed it at a competitive disadvantage under the second RFP
and in other similar procurements. Aurora urges that the offerors
should have been returned to the position they occupied before any
impropriety occurred, and that award should have been based on
evaluation of initial proposals under the original RFP.
In this respect, Aurora asserts that none of the original offerors
would be prejudiced by award on the basis of initial proposals, since
each was on notice under the original RFP that its initial proposal
should be realistic and competitive. In our view, this assertion
ignores the fact that the absence of prejudice to the government is also
a prerequisite to award on the basis of initial proposals. Federal
Acquisition Regulation (FAR), 48 CFR 15.610(6) (1984). In this case,
the contracting officer apparently determined that the conditions of FAR
Section 15.610(a)(6) had not been satisfied since the Job Corps had
concerns regarding all offerors' proposed costs and, in fact, conducted
negotiations with all offerors. We have previously declined to
recommend award on the basis of original proposals where there was
evidence that a fair and reasonable price would not be obtained. T.M.
System, Inc., B-185715, May 4, 1976, 55 Comp. Gen. 1066, 76-1 CPD
Paragraph 299. Given the Job Corps' concerns about all offerors'
proposed costs, we find the contracting officer's action to be
reasonable.
Moreover, we note that although the possible disclosure of a portion
of Aurora's proposal to Singer could possibly have placed Aurora at
competitive disadvantage with regard to that company, we find no
evidence that it placed Aurora at a competitive disadvantage with
respect to the awardee, MTC. Although Aurora speculates that other
offerors may have gained access to the portion of its proposal which was
erroneously mailed to Singer, there is no evidence -- and we see no
reason to assume -- that Singer disclosed this information to another
competitor. Therefore, we find no basis to conclude that Aurora was
prejudiced in this procurement by the erroneous transmittal of a portion
of its proposal to Singer. Also, to the extent that Aurora alleges that
it may have been prejudiced in other procurements by this action, we are
aware of no remedy appropriate for these procurements. Youth
Development Associates, B-216802, supra.
The protest is denied.
B-218577, 64 Comp. Gen. 698
Matter of: Russell Drilling Company, July 25, 1985
Bids - Mistakes - Correction - Low Bid Displacement
Agency improperly permitted awardee to correct unit bid, displacing
protester's lower bid, where the awardee's unit bid, extended bid and
total bid were in agreement and existence of error was not otherwise
discernible from face of bid. General Accounting Office recommends that
awardee's contract be terminated for convenience and that award be made
to protester.
Russell Drilling Company (Russell) protests award of a contract to
An-Dee Drilling Company (An-Dee) under invitation for bids (IFB) No.
3123-3-18-85, issued by the Department of Health and Human Services
(HHS) for the construction of 11 water wells to serve Indian family home
sites on the Fort Berthold Indian Reservation in North Dakota. The
protester complains An-Dee improperly was permitted to correct its bid
downward, thereby displacing Russell as the low bidder. We sustain the
protest.
Russell and An-Dee submitted the only responsive bids. Russell's bid
was low at $66,490, and An-Dee's second low bid was 86,248. The bid
schedule provided for the entering of unit prices for several items as
well as extended total prices for each item (the unit bid price
multiplied by stated estimated quantities), and a total bid, the sum of
the extended totals.
Based on an initial examination of An-Dee's bid, the contracting
officer requested verification of An-Dee's unit bid of $24.00 per linear
foot, and extended total of $24,000 for item No. 13 (no fault well
abandonment). In response, An-Dee claimed that the unit price instead
should have been $2.40 per linear foot, and the extended price $2,400,
and submitted its original pricing worksheet in support of a request
that it be permitted to correct its bid downward. On the basis of this
evidence and personal experience in the subject matter, the contracting
officer allowed correction of An-Dee's bid, resulting in a total bid
price of $64,638, and displacement of Russell as low bidder.
Russell contends that neither the existence of the error nor the bid
intended are ascertainable substantially from the IFB and the bid
itself, the standard under Federal Acquisition Regulation (FAR), 48
C.F.R. Section 14.406-3(a)a (1984), for permitting a downward mistake
correction which displaces the apparent low bidder. Russell concludes
that An-Dee therefore should not have been permitted to correct its bid.
HHS maintains that the error consisted of misplacing a decimal point
and entering a unit price of $24.00 per foot rather than $2.40 per foot,
and that because this error was apparent to the contracting officer
based on experience, it is correctable as a clerical error under FAR
Section 14.406-2. HHS argues alternatively that the error is
correctable under the general mistake-in-bid provisions of FAR Section
14.406-3(a), since this regulation does not require that the mistake and
intended bid be apparent only from the face of the bid, but merely that
they be ascertainable "substantially" from the soliciation and the bid
itself. It is HHS's position that the contracting officer thus had
leeway to rely on the bidder's original worksheet and his prior
experience in determining the existence of the mistake and the intended
bid.
We need not distinguish between clerical and other mistakes in this
case, since two prerequisites for correcting any mistake where the low
bidder thereby will be displaced are that the mistake must be apparent
on the face of the bid, and the contracting officer must be able to
ascertain the intended price from the face of the bid, without benefit
of extraneous evidence from the bidder. See Mayrant Constructors, Inc.,
B-215274, June 11, 1984, 84-1 C.P.D. Paragraph 617 (other than clerical
error), and Engle Acoustic & Tile, Inc., B-190467, Jan. 27, 1978, 78-1
C.P.D. Paragraph 72 (clerical error). We find this was not the case
here.
Even assuming that An-Dee's bid for item 13 was so excessive as to
place the contracting officer on constructive notice of mistake,
An-Dee's alleged intended bid of $2.40 per linear foot is evidenced
nowhere on the face of the An-Dee's bid. An-Dee's unit price for item
13 is $24.00 per foot, and An-Dee correctly multiplied this price by the
estimated 1,000 feet to arrive at its item 13 extended price of $24,000.
The total bid amount of $86,248 also is the correct sum of the extended
bids for the items. Therefore, the bid amounts all are in agreement and
no possible alternate intended item 13 bid is apparent on the face of
the bid.
We have held that a decimal point error is obvious when the bidder's
extended price is either one-tenth or ten times greater than the product
that should have resulted from multiplying the unit price by the stated
quantity. See Monmouth Painting Co., Inc., B-183422, July 9, 1975, 75-2
C.P.D. Paragraph 23. As An-Dee's extended price of $24,000 for item 13
is the correct product of its $24.00 unit price multiplied by the stated
1,000 foot quantity, we do not believe there can be said to be an
obvious decimal point error in An-Dee's bid for item 13.
While the contracting officer's experience might have led him to
believe An-Dee probably misplaced a decimal point, this mere suspicion
hardly satisfies the standard that the intended bid be apparent on the
face of the bid. Experience and reason play some part in considering
whether to permit mistake corrections, but such intangible factors
cannot eliminate entirely the need for some indication of the intended
price in the bid itself. See Frontier Contracting Co., B-214260.2, July
11, 1984, 84-2 C.P.D. Paragraph 40 (contracting officer's experience and
logic sufficient basis for deciding which of two clear possible bids was
intended); Engle Acoustic & Tile, Inc., B-190467, supra (where there is
unit/extended price discrepancy, experience and reason are sufficient to
determine that extended price, rather than unit price, was intended).
Again, even if $24.00 was so excessive a price for item 13 that the
contracting officer was on notice of a mistake, the intended price still
reasonably could have been any other amount under $24.00 since nothing
in the bid suggested the nature of the mistake. Thus, while the mistake
could have been one of the misplacing the decimal point, judging solely
from the face of the bid, it just as easily could have been
typographical in nature, the numbers in the bid therefore giving no clue
as to the intended price. The contracting officer's prior experience
with other bid mistakes involving misplaced decimals therefore simply is
not probative of whether such was the nature of the mistake in this
instance.
An-Dee's bid worksheets were not submitted as part of its bid, and
thus constitute extraneous evidence upon which the agency could not rely
in deciding whether to permit An-Dee to supplant Russell as the low
bidder. Mayrant Constructors, Inc., B-215274, supra.
We conclude that HHS should not have permitted An-Dee to correct its
bid so as to displace Russell as the low bidder. Accordingly, we
recommend that An-Dee's contract be terminated for convenience, and that
a contract for the requirement be awarded to Russell, if found otherwise
eligible.
The protest is sustained.
B-219318, 64 Comp. Gen. 697
Matter of: Equity Federal Savings Bank, July 24, 1985
Contracts - Protests - Authority to Consider - Activities Not Involving
Federal Procurement
Protest against the terms of agency's solicitation of offers for the
lease of government-owned space is not for consideration under GAO's bid
protest function since it does not concern a procurement by a federal
agency of property or services within the scope of the bid protest
provisions of the Competition in Contracting Act of 1984, Pub. L.
98-369, 98 Stat. 1175, 1199-1203 (to be codified at 31 U.S.C.
3551-3556), and the agency has not agreed in writing to have GAO decide
such protests under the provisions of our Bid Protest Regulations
providing for the consideration of nonstatutory protests, 4 C.F.R. 21.11
(1985).
Equity Federal Savings Bank (Equity) protests the terms of invitation
for bids No. 8PE-517, issued by the General Services Administration
(GSA) to solicit bids for the lease of government-owned space in the
Denver Federal Center in Denver Colorado. Equity alleges that the
solicitation is defective because it includes space which Equity now
occupies under a contract allegedly giving Equity the right of
possession under June 1986. Moreover, Equity contends that GSA is
ignoring its obligation to ensure that a fair proportion of contracts
are placed with small and small disadvantaged businesses, such as
Equity. We dismiss the protest.
The bid protest provisions of the Competition in Contracting Act of
1984 (CICA), Pub. L. No. 98-368, 98 Stat. 1175, 1199-1203 (to be
codified at 31 U.S.C. Sections 3551-3556) provide that the Comptroller
General shall decide a protest concerning an alleged violation of a
procurement statute or regulation if the protest is filed in accordance
with the bid protest provisions of CICA. 31 U.S.C. Section 3352. These
provisions define a "protest" as a written objection to a solicitation
by an executive agency "for the procurement of property or services" or
the proposed award or award of such a contract. 31 U.S.C. Section 3551;
see 4 C.F.R. Section 21.1(a) (1985). A solicitation of offers to lease
government-owned space is not a procurement or acquisition by a federal
agency of property or services within the meaning of CICA.
Furthermore, although our Bid Protest Regulations provide for the
consideration of certain nonstatutory protests where the agency involved
has agreed in writing to have its protests decided by GAO, 4 C.F.R.
Section 21.11, GSA has not agreed to have GAO decide protests concerning
GSA's solicitations of offers to lease government-owned property.
While Equity has requested a conference on the merits of its protest,
a conference would serve no useful purpose here since it is apparent
from the protest that the protest is not for consideration by our
Office. See Technical Micronics Inc., B-216545, Nov. 26, 1984, 84-2
C.P.D. Paragraph 557.
The protest is dismissed.
B-217053; B-218535, 64 Comp. Gen. 691
Matter of: Terex Corporation; Caterpillar Tractor Company, July 24,
1985
Contracts - Negotiation - Requests for Proposals - "Off-the-Shelf" End
Product Requirement
Protests that Army should amend solicitation to restrict eligibility
for award to offerors which have marketed product commercially in
significant numbers for at least 1 year are denied. While Competition
in Contracting Act of 1984 and relevant Army regulation state that it is
the government's policy to promote the use of commercial products
whenever practicable, nothing in the act or regulation requires that any
particular procurement be restricted to offers of commercial products.
Contracts - Negotiation - Requests for Proposals - Evaluation -
Criteria - Administrative Discretion
Protests that request for proposal product testing requirements are
inadequate is denied. Responsibility for establishment of tests
necessary to determine product acceptability is within ambit of
cognizant technical activity, and protester's disagreement with agency's
engineers over adequacy of tests is not sufficient to carry protester's
heavy burden of proof.
Terex Corporation (Terex) and Caterpillar Tractor Company
(Caterpillar) protest under request for proposals (RFP) No.
DAAE07-83-R-H291 issued by the United States Army Tank-Automotive
Company (Army). The RFP solicits offers for a 5-year contract to supply
1,068 full tracked, low speed diesel engine driven, medium drawbar pull
tractors (hereinafter referred to as T-9 tractors). The protesters
contend that this procurement represents an improper departure from the
Army's usual policy of including a "standard commercial product" clause
in all solicitations for construction equipment which is
nondevelopmental in nature. The standard commercial product clause
basically requires that offers be based upon providing off-the-shelf
commercial construction equipment which has been used by civilian
industry in significant numbers for at least 1 year. Caterpillar also
contends that the Army has included inadequate product testing
requirements in the RFP as a substitute for requiring offers to be based
upon commercially proven products only. The protesters therefore
request that our Office direct the Army to amend the RFP to include the
standard commercial product clause and to eliminate the allegedly
inadequate product testing provisions.
We deny the protests.
The basic facts and background relevant to this procurement are not
in dispute. The concept of purchasing commercial construction equipment
for use by the Army was formulated in the late 1960's. Among other
things, the commercial construction equipment program was designed to
take advantage of the commercial construction equipment industry's
research and development efforts so that the government could obtain the
most recent technology; to obtain maximum reliability, availability,
and maintainability of commercial equipment and necessary spare parts;
and to eliminate the necessity for, the expense of, and the delays
related to product testing and evaluation by the military. The Army,
apparently satisfied with its policy of procuring commercial
construction equipment, had procured various items of construction
equipment under the auspices of this policy under four different
procurements as recently as 1982.
The Army readily admits that it fully intended to buy the T-9
tractors here on the basis of commercial acceptability supported by
substantial sales and use in the marketplace. In fact, as Caterpillar
points out, the Army's Belvoir Research and Development Center, in an
October 1983 report, specifically identified the T-9 tractors as a
commercial construction equipment item to be purchased under the
program. The Army conducted a presolicitation field survey of the known
manufacturers of T-9 tractors to collect data upon which it could draft
the specifications and subsequently issued a presolicitation performance
specification for the T-9 tractor. This performance specification,
MIL-T-52270C, dated March 15, 1983, specifically described the T-9
tractor as a standard commercial vehicle which, in order to be eligible
for contract award, had to have been marketed and used in the commercial
market for at least 1 year. However, prior to issuing the present RFP,
the Army revised specification No. MIL-T-52270C and issued specification
No. MIL-T-52270D, March 7, 1984, which deleted the requirement that the
product offered must have been commercially marketed for at least 1
year. Thus, the RFP as issued on April 6, 1984, incorporated revised
specification MIL-T-52270D and no longer required that offers be based
upon commercially proven tractors in order to be eligible for contract
award.
Both protesters argue that it was improper for the Army to delete the
requirement for an off-the-shelf commercially proven vehicle in view of
the Army's longstanding policy of acquiring and using commercial
products when feasible. The protesters cite several Department of the
Army circulars and documents, prior Army procurements, and the Army's
presolicitation actions in the present case, to show that the Army
favored the use of commercial construction equipment. In particular,
Caterpillar cites Army Regulation 70-1, paragrarph 6-3 (February 1,
1984, effective March 15, 1984) which stated, "Acquisition of commercial
products to satisfy Army requirements is authorized and encouraged."
Terex also invokes as support section 2301(b)(6) of title 10, United
States Code, as amended by the Competition in Contracting Act of 1984,
Pub. L. 98-369, Section 2721, 98 Stat. 1185, 1186, which states that it
is the policy of Congress that agencies in the Department of Defense
"promote the use of commercial products whenever practicable."
The Army reports that, although it originally planned to procure
these T-9 tractors under the auspices of the commercial construction
equipment program, it changed its plans and deleted the standard
commercial product eligibility requirement from the RFP because of
certain language contained in the appropriations acts governing the
funds to be used for the contract. Section 779 of the Department of
Defense Appropriation Act, 1984, Pub. L. 98-212 (Dec. 8, 1983), 97 Stat.
1421, 1452, provides in pertinent part:
None of the funds appropriated by this Act may be obligated or
expended to formulate or to carry out any requirement that, in
order to be eligible to submit a bid or an offer on a Department
of Defense contract to be let for the supply of commercial or
commercial-type products, a small business concern (as defined
pursuant to section 3 of the Small Business Act) must (1)
demonstrate that its product is accepted in the commercial market
or (2) satisfy any other prequalification to submitting a bid or
an offer for the supply of any such product.
Similarly, section 8071 of Pub. L. 98-473 (Oct. 12, 1984), 98 Stat.
1837, 1938, an act providing continuing appropriations for fiscal year
1985, provides in pertinent part:
None of the funds appropriated by this Act may be obligated or
expanded on a Department of Defense contract for commercial or
commercial-type products if the solicitation excludes any small
business concern * * * that cannot demonstrate that its product is
accepted in the commercial market * * * .
Accordingly, the Army determined that, since both 1984 and 1985 funds
would be used for this multiyear contract, it had to change the
specifications to permit offers from small businesses regardless of
whether such small businesses had previously produced a T-9 tractor
which had been commercially marketed for at least 1 year.
The Army also reports that, even though its presolicitation market
survey showed that only large businesses manufactured the T-9 tractor,
it had no basis to conclude that an offer would not be received from a
small business in response to the present RFP. Additionally, the Army
states that it considered issuing a solicitation which would require
large businesses to offer only commercially proven T-9 tractors but
which would exempt small businesses from that eligibility requirement.
However, small business offerors whose products did not meet or exceed
the commercially proven standard would be required to have their
products tested extensively by the Army. The Army rejected this duel
standard approach because the Army did not believe the two eligibility
criteria -- commercially marketed and product testing -- could measure
fairly and equally the performance of the T-9 tractors offered.
Accordingly, the Army decided to require all offerors, both large and
small businesses, to have their products undergo extensive testing and
added a series of product tests to the specification by amendment No. 5
issued October 23, 1984.
The protesters' argument that it has been the Army's policy to
purchase commercially proven construction equipment and their reliance
upon prior procurement actions and the Army's circulars provides no
basis for objection to the Army's decision to use less restrictive
specifications in the present procurement. The Army directives do not
have the force and effect of law and do not provide a basis for
determining the legality of a proposed award. See Timeplex, Inc.,
B-197346, et al., Apr. 13, 1981, 81-1 C.P.D. Paragraph 280 at 12,
wherein our Office specifically stated that a Department of Defense
directive which encouraged the use of off-the-shelf products did not
provide an adequate basis to sustain a protest. In any event, we regard
the Army's commercial construction equipment program to be a matter of
executive branch policy which is ordinarily not for review under our bid
protest function. See GeneralData Comm Industries, Inc., B-182556, Apr.
9, 1975, 75-1 C.P.D. Paragraph 218.
With regard to the protester's invocation of the Competition in
Contracting Act of 1984 and Army Regulation 70-1, we note that, while
these authorities state the government's policy of "promot(ing) the use
of commercial products" and "authoriz(ing) and encourag(ing)"
acquisition of commercial products, there is nothing in either the
Competition in Contracting Act of 1984 or Army Regulation 70-1 which
mandates acquisition of commercial products in any specific procurement.
See, for example, Interior Steel Equipment Co., B-212253, Nov. 14,
1983, 83-2 C.P.D. Paragraph 556, for the analogous government policy
favoring use of a small business set-asides in a fair proportion of
purchases; we pointed out in Interior Steel Equipment Co. that there is
nothing in the Small Business Act or procurement regulations which
mandates a small business set-aside on any particular procurement.
Moreover, we note that the Competition in Contracting Act of 1984 is
applicable only to solicitations issued after March 31, 1985, and
therefore was not in effect at the time the present RFP was issued
(April 6, 1984).
Accordingly, we deny both protests that the Army must require
commercially proven vehicles in this procurement.
Caterpillar also contends that the Army's product testing
requirements, which were incorporated into the RFP by amendment No. 5,
are inadequate as a replacement for the commercially proven product
standard which the Army had originally intended to use in this
procurement. Basically, Caterpillar argues:
As explained at length in our protest, a test program lasting 4
to 5 years would be necessary to insure the Army's receipt of
reliable and durable machines. Obviously, a test program of that
duration is not feasible due to the excessive cost and delay
involved. This is the very reason for the Army's strong
preference for commercial construction machinery. Thus, the only
viable method to assure the procurement of a proven, reliable,
durable, and supportable T-9 tractor is to amend the solicitation
to reinstate the commerciality requirement for large businesses.
Regarding the propriety of the product testing requirements, our
Office has consistently taken the position that procurement agencies
have the primary responsibility for drafting specifications which
reflect their actual needs. See D. Moody & Co.; Astronautics Corp. of
America, 55 Comp. Gen. 1, 17 (1975), 75-2 C.P.D. Paragraph 1 at 23. In
this regard, we have consistently held that the responsibility for the
establishment of tests and procedures necessary to determine product
acceptability is within the ambit of the expertise of the cognizant
technical activity. Id.; see also Aeronautical Instrument and Radio
Co., B-190920, Oct. 13, 1978, 78-2 C.P.D. Paragraph 276 at 4. Here,
Caterpillar is essentially arguing that the test specifications should
be made more stringent. To the extent that Caterpillar's allegation of
inadequate test requirements can be construed as an argument that the
testing specification should be made more restrictive, we will not
consider the issue because, we do not review protests which contend that
more restrictive specifications should be incorporated into a
solicitation. S.A.F.E. Export Corp., B-212489, Feb. 6, 1984, 84-1
C.P.D. Paragraph 146. To the extent Caterpillar alleges that the test
procedures are deficient, we are not convinced by Caterpillar's
arguments.
The Army reports that its engineers at the Belvoir Research and
Development Center developed the RFP's test procedures as a substitute
for the commercial acceptability standard. The Army engineers designed
a series of tests which require a total of approximately 3,200 hours of
testing. The specifications call for extensive testing to be performed
on two preproduction vehicles. A second round of tests will be
performed on two production vehicles. Additionally, the contracting
officer points out that the specification calls for post-test
disassembly and examination of the test tractor in order to allow
discovery of "impending failures and points of excessive wear which can
be used to uncover design deficiencies and project potential future
failures." The Army admits that the RFP prescribed tests do not match
the tests which Caterpillar reports that it performs on newly introduced
commercial tractors, but the Army considers its testing requirements to
be adequate for the government's needs. Furthermore, the Army reports
that its engineers designed the test series based upon a proven
specification (MIL-T-52270B) which had been used successfully for
several procurements, including three separate T-9 tractor procurements,
between 1963 and 1971. In these circumstances, we cannot find
unreasonable the Army's reliance on the test requirements successfully
used before implementation of the commercial construction equipment
program. See Bell Helicopter Textron, 59 Comp. Gen. 158, 171 (1979),
79-2 C.P.D. Paragraph 431 at 19. In any event, this protest issue
essentially presents a disagreement between Caterpillar and the Army's
engineers over whether the required testing will be adequate to fulfill
the government's needs for a quality product. Since it is the protester
which must bear the heavy burden of showing that the contracting
agency's technical opinion was unreasonable, we defer to the Army's
engineers on this technical matter and conclude that Caterpillar has not
carried its burden of proof. See DANTEC Electronics, Inc., B-213247,
Aug. 27, 1984, 82-2 C.P.D. Paragraph 224 at 6; London Fog Co.,
B-205610, May 4, 1982, 82-1 C.P.D. Paragraph 418 at 3.
Accordingly, we deny Caterpillar's protest that the RFP's testing
procedures were inadequate.
The protests are denied.
B-218533, 64 Comp. Gen. 688
Matter of: ECI Telecom, Inc., July 23, 1985
Contracts - Negotiation - Offers or Proposals - Qualifications of
Offerors
Where solicitation required contractor to have host country approval
for installation of its telecommunications equipment and offeror's
proposal indicated that such approval would be obtained, agency acted
properly in accepting the proposal since the solicitation did not
require submission of evidence of having that approval prior to award.
Contracts - Negotiation - Offers or Proposals - Evaluation -
Technically Equal Proposals - Price Determinative Factor
Where solicitation indicated that each technical evaluation element
would be considered on a "responsive/non-responsive" basis to determine
technical acceptability without relative ranking of offers on each such
element, and protester and awardee were both judged technically
acceptable for all requirements and therefore essentially equal, agency
properly did not consider whether protester in fact was technically
superior in any evaluation element, instead of making award on the basis
of price.
Contracts - Negotiation - Offers or Proposals - Evaluation Technically
Equal Proposals - Price Determinative Factor
Although solicitation indicated that technical specifications and
delivery were more important than price, where competing proposals for a
fixed-price contract were rated essentially equal in accordance with
evaluation method stipulated in the solicitation, price properly became
the determinative factor for award.
ECI Telecom, Inc. (ECI), protests the Defense Communications Agency,
Defense Commercial Communications Office's (DCA) award of a contract to
Republic Telcom Systems Corporation (Republic) /1/ pursuant to request
for proposals (RFP) No. DCA200-85-R-0004, covering the lease of
communications service equipment in Europe. ECI protests that the award
to Republic was improper because it was inconsistent with the
solicitation's evaluation criteria. We deny the protest in part and
dismiss it in part.
DCA sought proposals to establish a commercial Time Assignment Speech
Interpolation (TASI) system /2/ with specific initial and expansion
capabilities; as well as service requirements to engineer, furnish,
install, test, interface, interconnect and maintain a full period, full
duplex telecommunications system in support of the Department of
Defense's AUTOVON telephone system between 13 European sites.
In response to the RFP, three proposals were received by the January
15, 1985 closing date; one proposal was determined to be nonresponsive
because it was incomplete. A technical evaluation was initiated on
January 21 during which the two remaining offerors, Republic and ECI,
provided sufficient clarification to warrant findings that both offerors
were technically responsive on each of the evaluation criteria. /3/ The
price analysis which was completed by January 31 resulted in a lower
evaluated price for Republic on either a straight lease or lease to
ownership plan. The user activity in Europe indicated that a straight
60-month lease plan would be the most economical for its needs.
Accordingly, in mid-May 1985 the agency awarded Republic a contract for
the first year on a 60-month straight lease plan totaling $884,132.84
with a 30-day delivery schedule.
ECI contends that Republic's offer was nonresponsive to the
solicitation's requirement that "Host nation approval and/or connection
approval is required for all locations in Spain." ECI claims it has such
approval whereas Republic does not. Republic disputes this claim by
assuring this Office and the contracting agency that, through its
numerous contacts with officials of the Spanish Telephone Company, CTNE,
all necessary approvals will be granted in connection with delivery of
service.
The agency considers host nation approval and/or connection approval
to mean that the appropriate authority in the country (Spain) where the
equipment is to be located approves of the installation of equipment
which is to be connected to that country's circuit transmission
facilities. ECI points out that the "Evaulation Factors for Award" set
out in section "M" of this solicitation indicate that the "technical
evaluation will insure that the proposal is responsive, i.e.,it meets
the Government requirements as stated in Section C of this
solicitation." ECI argues that this wording makes host nation approval a
performance requirement, with which Republic's offer does not comply.
The contracting officer reports that he was not aware of any specific
host country approval procedure or any specific certification
documenting such approval and therefore did not intend for such approval
to be reflected in proposals or to be a prerequisite to award. Rather,
the contracting agency makes clear, it views the approval requirement as
simply one with which the contractor will have to copy during
performance. Republic's proposal, we note, did not take exception to
the requirement; rather, Republic's proposal indicated that it would
have all necessary approvals to perform the contract. In these
circumstances, we find no merit to the protester's argument that
Republic had to have host country approval before award or that the
agency improperly accepted Republic's proposal.
ECI advances a number of arguments regarding the efficiency,
capacity, and maintenance of its equipment to bolster its contention
that its proposal was technically superior to Republic's offer. ECI
contends that agency evaluators failed to take the steps necessary to
establish -- or otherwise ignored -- ECI's technical superiority and,
therefore, misapplied the solicitation's evaluation factors which
provided that "The evaluation consists of three parts listed in the
following descending order of importance: technical specifications,
delivery and price." ECI similarly contends that the agency failed to
establish or ignored altogether its more advantageous 14-day (compared
to Republic's 30-day) delivery schedule. Thus, ECI contends that the
contracting agency improperly evaluated the pricing factor as more
important than technical specifications and delivery schedule.
DCA states that the technical evaluation was performed on a "go/no
go" basis, and that agency evaluators found both ECI's and Republic's
offer to be acceptable as to all technical criteria evaluated and the
delivery schedule. The agency therefore determined Republic to be the
winning offeror on the basis of its lower price. We find nothing
improper with this evaluation.
The solicitation advised offerors that "The technical review criteria
will be evaluated on a 'responsive/non-responsive' basis for each
paragraph," and the agency simply determined whether the offeror's
proposal of each technical review criterior was "responsive"
(technically acceptable) or "nonresponsive" (not technically
acceptable). Based upon this method of evaluation, both ECI and
Republic were determined to be technically acceptable on each of the
evaluated criteria. The proposals, therefore, were rated essentiall
technically equal.
The agency took a similar approval with delivery. The solicitation
advised offerors that "proposals with delivery of less than 90 days will
be given the most consideration." Since both ECI and Republic proposed
delivery schedules of less than 90 days, they were both judged equally
acceptable in that regard.
Based on our reading of the solicitation, we conclude that the
agency's evaluation had a reasonable basis and was conducted in
conformance with those factors. The solicitation clearly indicated that
each technical evaluation element would be considered as acceptable or
otherwise; there was not to be a relative ranking of offers on each
such element. Thus, the fact that one proposal may have indicated some
superiority in certain areas did not entitle that proposal to more
evaluation credit than was given to other proposals that were acceptable
in those same areas. Under the evaluation scheme here, the fact that
technical concerns were weighted more heavily than price simply meant
that a proposal that was technically acceptable in more areas than
another proposal would be entitled to greater evaluation weight in the
technical area.
Similarly, we think the solicitation clearly indicated that an
offeror proposing a delivery period of substantially less than 90 days,
while entitled to more credit than one proposing 90 days or more, would
not be entitled to more weight than one also proposing substantially
less than 90 days.
Our decisions recognize that where competing proposals are
essentially equal technically, price may become the determinative
factor, notwithstanding the fact that, in the overall evaluation scheme,
price was less important than other factors. EG&G Ortec, B-213347, Feb.
13, 1984, 84-1 C.P.D. Paragraph 182 at 5; see also Alturdyne,
B-214103.2, Oct. 2, 1984, 84-2 C.P.D. 379. In accord with the
evaluation scheme set forth in the RFP here, the agency properly
determined the two proposals to be equal technically. Therefore, we
cannot conclude that DCA did not follow the evaluation criteria by
ultimately emphasizing the price criterion.
Finally, to the extent that ECI's protest can be construed as a
charge that the RFP should have required a comparison of the relative
merits of technically acceptable proposals to determine which offeror
was technically superior and which offeror had the best delivery
schedule, the protest is untimely under our Bid Protest Regulations, 4
C.F.R. Section 21.2(a)(1) (1985), which require that a protest based
upon an alleged impropriety in a solicitation which is apparent prior to
the closing date for the receipt of proposals must be filed before the
closing date for receipt of proposals.
We deny the protest.
FOOTNOTES
(1) In the course of this procurement on January 23, 1985, the
original offeror Comtech Communications Corporation was acquired by
Republic Telcom Systems Corporation which acted immediately to verify
the existing corporate offer under this solicitation.
(2) Such systems take advantage of the pauses, or listening periods
occurring in the typical two-way telephone conversation by inserting
speech from another conversation into the unused circuit to give the
effect of doubling the number of conversations that may be carried on a
given number of telephone circuits.
(3) We point out that the concept of responsiveness is not applicable
to negotiated procurements. National Council for Urban Economic
Development, Inc., B-213434, Aug. 1, 1984, 84-2 CPD Paragraph 140.
Here, even though the procurement was negotiated, the contracting agency
inappropriately dealt with the matter of technical acceptability in
terms of "responsiveness" or "nonresponsiveness." In essence, the offers
were evaluated to determine whether they were technically acceptable.
B-218249.2, 64 Comp. Gen. 681
Matter of: Washington State Commission for Vocational Education -
Reconsideration, July 19, 1985
Contracts - Protests - General Accounting Office Procedures - Filing
Protest With Agency
Protesters must comply with requirement to furnish a copy of a
protest filed with General Accounting Office (GAO) to the contracting
agency whether or not a "de novo" review is requested of a previous
agency protest decision.
General Accounting Office - Jurisdiction - Contracts - Disputes -
Between Private Parties
Allegation of possible conflict of interest by an offeror's former
employee who aided in preparation of a competitor's proposal involves a
dispute between private parties and is not a basis for GAO to object to
an otherwise valid award.
Contracts - Protests - Allegations - Bias - Unsubstantiated
Where bias is alleged, protester has burden of affirmatively proving
its case and unfair or prejudicial motives will not be attributed to
procurement officials on the basis of inference or supposition.
Contracts - Protests - Conflict in Statements of Protester and
Contracting Agency
A protester's disagreement with an agency's evaluation of its
proposal does not of itself render the evaluation objectionable in the
absence of a showing that the evaluation was unreasonable, arbitrary or
unlawful.
Contractors - Responsibility - Determination - Review by GAO -
Affirmative Finding Accepted
GAO does not review affirmative determinations of responsibility
absent a showing of possible fraud or bad faith on the part of procuring
officials or the misapplication of a definitive responsibility criteria.
A restatement of general standards of responsibility in a solicitation
does not constitute definitive responsibility criteria.
The Washington State Commission for Vocational Education (CVE)
requests reconsideration of our dismissal of its protest concerning the
award of a contract to Northwest Futures, Inc. (NWF) under request for
proposals (RFP) No. 85-003, issued by the Department of Education. The
RFP sought proposals to establish a vocational education curriculum
coordination center to assist states in improving their vocational
programs. We dismissed the protest because CVE failed to furnish a copy
of its protest to the contracting agency within 1-day after the protest
was filed with our Office. For the reasons that follow, we reopen the
file and deny the protest on its merits.
Propriety of the Dismissal
On January 8, 1985, CVE sent a letter to Education indicating its
"inten(t) to appeal" the award of the negotiated contract. CVE had
already been furnished award evaluation documents by Education, and
CVE's letter stated that it was intended to "preserve (CVE's) appeal
rights" since CVE was unaware of the procedures for filing a protest.
(CVE did not provide our Office with a copy of this letter when it filed
its protest here). The protester than filed a protest with Education on
February 4. By letter dated February 22, the agency formally denied the
protest. On February 28, CVE filed its protest with our Office and
requested a "de novo" review of the protest filed with the agency. The
protest letter showed that copies of the protest had been sent to two
named individuals.
Because it was not clear whether the protest was timely, we requested
that the protester immediately submit a copy of the January 8 letter
(which was referenced in its protest); the protester did so. While
questions still remained about the timeliness of the protest, we decided
to request an agency report from Education and so informed CVE by notice
confirming receipt of its protest. Subsequently, the agency informed
our Office that it had not received a copy of the protest from CVE. The
agency also informed us that the named individuals that had been sent
copies were state, not federal, officials and were unaffiliated with
Education. We then dismissed the protest. See GAO Bid Protest
Regulations, 4 C.F.R. Section 21.1(d), (f) (1985).
CVE argues that because it requested our de novo review of the
protest it had filed with Education on February 4, it obviously had
already furnished a copy of the protest to the agency in satisfaction of
the requirement of 4 C.F.R. Section 21.1(d). According to CVE, it thus
had complied in substance, if not in form, with that requirement.
Under the competition in Contracting Act of 1984, Pub. L. No. 98-369,
Section 2741(a), 98 Stat. 1175, 1199, 31 U.S.C. Rev. Ch. 35, and our
implementing regulations, an agency must file a written report with our
Office within a strict time limit of 25 working days from the date the
agency receives telephone notice of the protest from our Office. 4
C.F.R. Section 21.3(c). The report must contain a detailed response to
allegations raised by a protester. We think that possession by the
agency of a written copy of the protest is essential to its ability to
accomplish this task, even where the protest has previously been filed
with and denied by the agency. We fail to see how an agency can know,
without a copy of the protest, whether the protester desires a de novo
review of all the issues previously raised, whether certain issues were
abandoned, whether new arguments or points of law are made, or whether
entirely new protest issues are raised. Thus, any delay in furnishing a
copy of the protest to the agency potentially delays subsequent protest
proceedings.
Nevertheless, in the interest of fairness, we will consider this
protest on its merits since our regulations are new and have not been
subject to extensive interpretation by our Office. We cannot say that
CVE's interpretation that a copy of its protest to our Office had been
furnished to Education was totally unreasonable where essentially the
same issues were raised in CVE's initial protest to the agency. In the
future, however, protesters must comply with the requirement to furnish
a copy of the protest to the agency whether or not a de novo review is
requested of a previous agency protest decision.
Timeliness
The agency maintains that the protest is untimely because CVE knew
the basis for its protest on December 21, 1984, when the agency orally
notified CVE of the award to NWF, but did not protest within 10 working
days thereafter, as required by our Bid Protest Regulations. See 4
C.F.R. Section 21.2. CVE maintains that it did not know the basis for
its protest until Education responded to its Freedom of Information Act
request on January 28, 1985.
CVE's protest essentially challenges the propriety of the evaluation
process. Therefore, we do not agree that CVE knew its basis of protest
when it was informed of the award to NWF. The record shows that
Education furnished CVE with copies of the competing proposal (with a
few pages removed for proprietary reasons) and all evaluation documents
on January 7 and 8, and we think it was at this point that CVE knew or
should have known the basis for its protest. We also think that CVE
timely protested within 10 working days from this date. First, on or
about January 7, while reviewing the evaluation documents and requesting
instructions on bid protest procedures from the contracting officer, a
representative of CVE orally expressed his intent to appeal and thereby
preserve CVE's right to contest the award. Further, by letter dated
January 8, CVE expressly notified Education as follows:
Notice is hereby served that (CVE) intends to appeal the action
of the U.S. Department of Education in awarding contract #RFP
85-003 for the Northwestern Curriculum Coordination Center to
Northwest Futures, Inc.
This letter is written as a result of meetings in Washington,
D.C. * * * Since the (Education) representatives were unable to
provide appeal forms or procedural information, we assume this
letter of intent provides sufficient notice to preserve our appeal
rights.
This letter was a culmination of telephone conversations and meetings
in which CVE expressed dismay and continuing dissatisfaction with the
procurement results.
We have found that a letter of intent to protest, filed with an
agency, constitutes a sufficient protest where it shows awareness of a
basis for protest and seeks corrective action from the agency. See
Swintec Corp., et al., B-212395.2, et al., Apr. 24, 1984, 84-1 CPD
Paragarph 466. CVE's January 8 letter, in the context in which it was
sent, clearly expressed dissatisfaction with the evaluation results and
implicitly sought corrective action. We therefore consider CVE's
January 8 letter a timely protest to the agency. Further, CVE's
subsequent protest to our Office is also timely since it was filed
within 10 working days after its agency protest was denied. 4 C.F.R.
Section 21.2(a)(3).
The Evaluation Process and Analysis
The RFP advised offerors that award would be made to the offeror
whose proposal was the "most favorable" to the government on the basis
of technical merit and cost; however, technical merit was stated to be
of paramount importance. Five evaluators scored the two proposals
received in response to the RFP. The five technical scores for each
proposal were averaged and then the cost factor was taken into
consideration. The awardee, NWF, offered a final price of $139,851,
while the protester offered $172,313. The average evaluated technical
score for CVE was 77.6; the average score for NWF was 90.6. Thus, NWF
was rated highest technically and lowest from a cost standpoint.
Accordingly, Education awarded the contract to NWF.
CVE's first and principal contention is that a conflict of interest
contaminated the integrity of the procurement process. CVE was the
incumbent contractor for this procurement. The individual who is the
corporate secretary and proposed project director for NWF was allegedly
on CVE's payroll from September 1973 until January 1985. This same
individual allegedly incorporated NWF while still employed by CVE.
Apparently, the individual also helped prepare NWF's proposal and sent
letters critical of CVE to various individuals while still employed by
CVE. Also, NWF's proposed project assistant allegedly worked at the
time for CVE, helped prepare NWF's proposal, and did not reveal that
fact in NWF's proposal. CVE argues, among other things, that under
Washington State statutes, state employees are prohibited from
participating in transactions involving the state, in which the employee
also has a financial interest. According to CVE, the actions by the two
individuals also constituted an "organizational conflict of interest"
that detrimentally affected its competitive position.
The issues raised by CVE are outside the scope of our bid protest
function. First, the alleged violation of state conflict of interest
statutes is a matter for resolution by the courts of that jurisdiction,
not by this Office. Cf. The Dun & Bradstreet Corp., B-213790, June 13,
1984, 84-1 CPD Paragraph 626 (where we took the same position with
respect to an allegation that a contractor's approach to contract
performance constituted the unauthorized practice of law under state
statutes). Further, an organizational conflict of interest exists only
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. See the
Federal Acquisition Regulation (FAR) 48 C.F.R. Section 9.501 (1984).
The allegations here, however, pertain to the actions of two former
employees of CVE. We have specifically held that similar actions during
the competitive process by former employees of an offeror involve a
dispute between private parties concerning business practices and
relationships, and are beyond the adjudicatory function of this Office.
See DSG Corp., B-213070, Sep. 26, 1983, 83-2 CPD Paragraph 378; Ted R.
Brown & Associates, Inc., B-201724, Feb. 23, 1981, 81-1 CPD Paragraph
127.
CVE also alleges that one of the agency's evaluators, a contract
specialist, had an ex parte contact with NWF's proposed project
assistant contrary to the FAR, 48 C.F.R. Section 3.101-1, which requires
impartiality and the avoidance of conflict of interest in
government-contractor relations. Specifically, CVE alleges that the
agency contract specialist questioned the time and attendance of a CVE
employee (who worked on CVE's contract with the agency) and that she did
so because of a "false rumor" started by NWF's proposed project
assistant, then also employed by CVE. CVE has presented no evidence to
support its contention that any "ex parte" contract actually occurred
between the agency contract specialist and the proposed project
assistant, nor is there any indication of how the alleged communication
amounted to a violation of the FAR. The protester has the burden of
affirmatively proving its case and unsupported allegations do not
satisfy this burden. Lightning Location and Protection, Inc., B-215480,
Feb. 21, 1985, 85-1 CPD Paragraph 216. Accordingly, we find no merit to
this contention.
Next, CVE contests certain aspects of the evaluation and the scoring
results and suggests that there was bias and inconsistency in the
technical evaluation.
In deciding protests of an agency's evaluation of proposals, our
Office does not rescore the proposals or otherwise substitute our
judgment for that of evaluation team members. Because the evaluation of
proposals is largely subjective, it is primarily the responsibility of
the procuring agency, and not subject to objection by our Office unless
shown to be unreasonable, arbitrary or in violation of law. Credit
Bureau Reports Inc., B-209780, June 29, 1983, 83-1 CPD Paragraph 670.
The fact that a protester does not agree with an agency's evaluation of
its proposal does not itself render the evaluation unreasonable. Frank
E. Basil, Inc., et al., B-208133, Jan. 25, 1983, 83-1 CPD Paragraph 91.
Further, in cases where bias is alleged, the protester has the burden of
affirmatively proving its case and unfair or prejudicial motives will
not be attributed to procurement officials on the basis of inference or
supposition. Todd Logistics, Inc., B-203808, Aug. 19, 1982, 82-2 CPD
Paragraph 157; Cerberonics, Inc., B-205063, Apr. 14, 1982, 82-1 CPD
Paragraph 345.
CVE complains that the evaluators considered statements by NWF in its
proposal which criticized CVE's past and potential future performance,
including allegations that CVE experienced "continuous turnover of
project staff" and therefore lacked adequate staff commitment. CVE
states that as a result, its proposal was unfairly penalized in this
area. CVE also notes that although letters of assurance from proposed
staff were not required by the solicitation, Education evaluators found
that CVE had not provided "documented assurances" that proposed staff
would serve during performance of the contract. CVE argues that this is
evidence of bias on the part of agency evaluators.
We know of no law or regulation which prohibits an offeror from
adversely critizing in its proposal the performance of an incumbent
offeror. Moreover, nothing in the record supports CVE's assertion that
the evaluators considered these criticisms in evaluating CVE's proposal.
Rather, as CVE recognizes, the record shows that the evaluators found
that CVE's proposal lacked documented assurances that its proposed staff
would serve on the project. While the RFP did not require letters of
assurance from proposed staff, it did require that technical proposals
include "evidence of key staffs and proposed consultants' intentions to
participate in the project." We therefore find nothing improper in the
evaluators' consideration of CVE's staff commitments.
Concerning the alleged bias, CVE, aside from suspicions and
inferences, has presented no substantive proof establishing bias on the
part of procurement officials. Where, as here, the written records fail
to demonstrate bias, the protester's allegations are properly to be
regarded as mere speculation. Todd Logistics Inc., supra.
CVE also faults Education's evaluation because NWF is a new
organization that allegedly should not have been credited with any
institutional experience, which was one of the evaluation criteria
established by the RFP. However, as described in the RFP, this
criterion actually included much more than the past experience of the
organization. Also included as areas to be considered under this factor
were evidence of commitment to the purposes and tasks of the project,
the capability of the offeror to immediately initiate and maintain
liaison functions with regional states, and availability of facilities
and instructional material resources appropriate to the project.
Therefore, the fact that NWF was newly formed did not preclude NWF from
receiving any points for this criterion.
In this connection, we note that NWF proposed a "collaborative
effort" with a local college which included staff sharing and lease of
space at the college. While CVE disputes the extent and nature of this
collaborative relationship, there are letters in the record from
officials of the college which reasonably support NWF's claim of a
collaborative institutional effort in performing the contract work.
CVE also questions the evaluators' consideration of the prior
experience of NWF's proposed project director under the institutional
experience evaluation criterion. CVE points out that "staff
competencies and experience" was listed as a separate evaluation factor,
and explicitly included experience of the project director. We agree
that the evaluators should not have considered the proposed project
director's experience in evaluating institutional experience under these
circumstances. See Data Flow Corp., et al., 62 Comp. Gen. 506 (1983),
83-2 CPD 57; Energy and Resource Consultants, Inc., B-205636, Sept. 22,
1982, 82-2 CPD Paragraph 258. Nevertheless, we do not find this a
sufficient basis to sustain the protest given NWF's overall technical
and cost advantage over CVE. In this connection, the record shows that
only two of the five evaluators cited the proposed project director's
experience as satisfying the institutional experience requirement.
Further, as previously indicated, that criterion encompassed several
considerations in addition to experience per se, and the evaluators who
did cite the proposed project director's experience also relied on other
factors (such as commitment to the project) in arriving at their total
score for institutional experience.
In addition, CVE alleges that NWF misled Education evaluators by
using outdated letters of support, many of which were actually written
on behalf of CVE when NWF's proposed project director was CVE's project
director. The letters were submitted along with NWF's proposal as
support for NWF's proposed undertaking. We fail to see anything
improper in NWF's use of these letters. There is no evidence that NWF
misrepresented the context in which the letters were sent, to whom they
were sent, or when they were sent. Accordingly, we find no merit to
CVE's contention in this regard.
Finally, CVE alleges that NWF is not a responsible contractor under
the standards set forth in the RFP. The solicitation, however, in
setting responsibility standards, merely restated the general
considerations and the general standards contained in the procurement
regulations for determining the responsibility of a prospective
contractor. See FAR, 48 C.F.R. Section 9.104-1. Our Office does not
review protests against affirmative determinations of responsibility
unless there is a showing of possible fraud or bad faith on the part of
procuring officials or of a possible failure to apply definitive
responsibility criteria contained in a solicitation. Dragon Services,
Inc., B-213041, Mar. 19, 1984, 84-1 CPD Paragraph 322. General
principles of responsibility restated in a solicitation do not
constitute definitive responsibility criteria. Accordingly, neither
exception is present here.
The protest is denied.
B-217779, 64 Comp. Gen. 679
Matter of: Employees of the Defense Investigative Service -
Inauguration Day - Holiday Pay, June 16, 1985
Holidays - Inauguration Day
Employees stationed in the City of Fairfax, Virginia, request holiday
premium pay for the work they performed on Monday, Jan. 21, 1985, the
day selected for the public observance of the inauguration of the
President. The employees may be allowed premium pay because the
legislative history of 5 U.S.C. 6103(c) shows that the statute was
intended to authorize the inaugural holiday for employees working in the
geographical locale of the City of Fairfax.
Mr. M. Arnold Werner, Assistant Director (Personnel and Security) of
the Defense Investigative Service (DIS), requests our decision as to
whether DIS employees stationed in the City of Fairfax, Virginia, may be
paid holiday premium pay for work they performed on Monday, January 21,
1985, the day selected for the public observance of the inauguration of
the President. We hold that the employees may be allowed premium pay
because they were entitled to the inaugural holiday authorized by 5
U.S.C. Section 6103(c) (1982).
The DIS states that it did not give employees stationed in the City
of Fairfax a paid holiday for Inauguration Day, and that these employees
are requesting holiday premium pay for their work on that day. The
agency suggests that there is no legal basis for the claims, citing the
provision of 5 U.S.C. Section 6103.
The relevant provisions in 5 U.S.C. Section 6103(c) state as follows:
January 20 of each fourth year after 1965, Inauguration Day, is
a legal public holiday for the purpose of statutes relating to pay
and leave of employees as defined by section 2105 of this title
and individuals employed by the government of the District of
Columbia employed in the District of Columbia, Montgomery and
Prince Georges Counties in Maryland, Arlington and Fairfax
Counties in Virginia, and the cities of Alexandria and Falls
Church in Virginia. When January 20 * * * falls on Sunday, the
next succeeding day selected for the public observance of the
inauguration of the President is a legal public holiday for the
purpose of this subsection.
The metropolitan area described in section 6103(c) does not include
as a separate jurisdiction the City of Fairfax, Virginia, which became
incorporated as a municipality independent from Fairfax County in 1961.
Nevertheless, an examination of the legislative history of section
6103(c) shows that the statute was intended to cover employees working
in the geographical area of the City of Fairfax.
Section 6103(c) codifies Pub. L. No. 85-1, 71 Stat. 3, January 11,
1957. Before Congress enacted the permanent legislation in Pub. L. No.
85-1, it passed temporary measures every 4 years authorizing an
inaugural holiday in the metropolitan area of the District of Columbia.
/1/ In passing each of these laws, including the permanent legislation
in Pub. L. No. 85-1, Congress indicated that its list of qualifying
metropolitan areas was intended to define the geographical boundaries
within which the inaugural holiday would be granted. Specifically, the
legislators expressed an intention that the holiday would be granted to
employees stationed in the District of Columbia and its "immediate
vicinity," so that these employees could attend the nearby inaugural
ceremonies and avoid the traffic problems and work disruptions they
would encounter if they were required to report for duty. See 95 Cong.
Rec. 410-413 (1949); 99 Cong. Reg. 369, 370 (1953); and 103 Cong. Rec.
141, 303 (1957).
The necessity for repeated enactments prior to Pub. L. No. 85-1
provided Congress with a recurring opportunity to make technical
revisions in the legislation. Consequently, although it is clear that
Congress intended to authorize the inaugural holiday on a geographical
basis, a change in the political status of one surrounding metropolitan
area found its way into the language of the law. /2/
In enacting Pub. L. No. 85-1, Congress intended to permanently
authorize an inaugural holiday for employees working in the immediate
vicinity of the District of Columbia, eliminating the need for new
legislation every 4 years. 103 Cong. Rec. 303 (1957). At the time the
1957 act was passed, the area now constituting the City of Fairfax was
part of Fairfax County, Virginia. Thus, when Congress passed Pub. L.
No. 85-1 and permanently designated Fairfax County as part of the
qualifying metropolitan area, it clearly intended to provide continuing
authorization for granting the inaugural holiday to employees working in
the geographical locale of the City of Fairfax.
As noted previously, the City of Fairfax became incorporated as a
municipality independent from Fairfax County in 1961, 4 years after the
enactment of Pub. L. No. 85-1. Although it would be desirable to
specifically recognize this change of political status through a
technical amendment to 5 U.S.C. Section 6103(c), the failure to enact
such an amendment does not have any effect on the intended geographical
coverage of the statute.
Accordingly, we hold that 5 U.S.C. Section 6103(c) authorizes the
legal holiday of Inauguration Day for employees working in the City of
Fairfax, Virginia. Since DIS employees stationed in the City of Fairfax
were required to work during the inaugural holiday on January 21, 1985,
they may be allowed holiday premium pay.
FOOTNOTES
(1) Two joint resolutions preceding Pub. L. No. 85-1 were Pub. L. No.
81-1, 63 Stat. 3, Jakuary 18, 1949, and Pub. L. No. 83-1, 67 Stat. 3,
January 16, 1953. The first resolution, Pub. L. No. 81-1, authorized
the inaugural holiday for employees stationed in the District of
Columbia, Montgomery and Prince Georges Counties in Maryland, Arlington
and Fairfax Counties in Virginia, and the City of Alexandria, Virginia.
The next resolution, Pub. L. No. 83-1, added the City of Falls Church,
Virginia.
(2) As indicated in footnote 1, Pub. L. No. 83-1 expanded the list of
metropolitan areas to include the City of Falls Church, Virginia.
Although the city is physically located in Fairfax County, it became
incorporated as an independent municipality in 1948.
B-217666, 64 Comp. Gen. 674
Matter of: Anders E. Flodin, July 12, 1985
Officers and Employees - Transfers - Temporary Quarters - Permanent
Dwelling Occupancy
Employee of the Internal Revenue Service (IRS) is not entitled to
temporary quarters subsistence expenses while renting and occupying the
house he purchased as his family's residence at his new duty station.
His intent during the period for which he claims temporary quarters
subsistence expenses was to occupy the house permanently. The fact that
its purchase was subject to approval of financing and satisfaction of
outstanding liens does not change its character as the employee's
permanent quarters.
Officers and Employees - Transfers - Real Estate Expenses - Title
Insurance Policy
Employee of the IRS was denied reimbursement for owner's title
insurance in connection with purchase of residence at his new duty
station. The Federal Travel Regulations (FTR) allow reimbursement for
owner's title insurance if the insurance is a prerequisite to financing
or transferring the property. Where the insurance is recommended by
seller's attorney, and is not required to finance or transfer the
property, insurance costs are not reimbursable.
Officers and Employees - Transfers - Real Estate Expenses - Finance
Charges - Reimbursement Prohibition - Veterans Administration Funding
Fee
Employee of the IRS is not entitled to reimbursement for the Veterans
Administration funding fee charged in connection with purchase of a
residence at his new duty station. The funding fee is a finance charge
assessed in addition to a loan origination fee or a Veterans
Administration loan application fee. Since it is not similar in nature
to either of these expenses it is not allowable under para. 2-6.2d(1)(f)
of the FTR.
This action is in response to a request for an advance decision from
the Internal Revenue Service regarding the disallowance of certain
moving expenses claimed by Mr. Anders E. Flodin. /1/ Mr. Flodin, an
employee of the Internal Revenue Service, was transferred from Las
Vegas, Nevada, to Washington, D.C., and was authorized relocation
expenses. Specifically at issue is whether certain expenses claimed,
(1) temporary quarters, (2) owner's title insurance, and (3) a Veterans
Administration funding fee, may be paid in connection with the transfer.
For the reasons discussed below, we find that the expenses are not
reimbursable and were properly disallowed by the agency.
Temporary Quarters
Mr. Flodin was authorized a temporary quarters subsistence expense
allowance in connection with his transfer to Washington, D.C., in
January 1983. The statutory authority for reimbursement of temporary
quarters subsistence expenses is 5 U.S.C. Section 5724a(a)(3) (1982),
which is implemented by Part 2-5 of the Federal Travel Regulations
(Supp. 4, Aug. 23, 1982) incorp. by ref., 41 C.F.R. Section 101-7.0003
(1982). The applicable provision, paragraph 2-5.2c, defines temporary
quarters as follows:
c. What constitutes temporary quarters. Generally, the term
"temporary quarters" refers to lodging obtained from private or
commercial sources for the purpose of temporary occupancy after
vacating the residence occupied when the transfer was authorized.
However, occupancy of temporary quarters that eventually become
the employee's permanent residence shall not prevent payment of
the temporary quarters allowance if, in the agency's judgment, the
employee shows satisfactorily that the quarters occupied were
intended initially to be only temporary. In making this
determination the agency should consider factors such as: the
duration of the lease, movement of household effects into the
quarters, type of quarters, expressions of intent, attempts to
secure a permanent dwelling, and the length of time the employee
occupies the quarters.
Mr. Flodin has claimed temporary quarters subsistence expenses for
the 30-day period beginning January 3, 1983, during which he and his
dependents rented and occupied the house they purchased after their loan
was approved in March 1983.
Mr. Flodin acknowledges that he intended to purchase the house at the
time he arranged to occupy it on a rental basis, pending consummation of
the purchase transaction. However, he argues that he should receive
temporary quarters subsistence expenses because the purchase was
conditional upon the approval of the loan and removal of a number of
mechanic's liens on the property which had been foreclosed. He also
points out that his actions resulted in savings to the Government.
It has been the consistent position of this Office that when
transferring Government employees pay rent for and occupy homes they
intend to purchase, those homes are not "temporary quarters" as defined
by the Federal Travel Regulations and the employees are therefore not
entitled to reimbursement for temporary quarters subsistence expenses.
Stephen A. Webb, B-211004, May 23, 1983. The employee's intent is
determined at the time he or a member of his family moves into the
quarters which later become his permanent residence. William E.
Palzkill, B-205866, May 18, 1982. When an employee moves into a house
he has decided to purchase, even though final settlement for the house
has not yet taken place, he has ceased to occupy temporary quarters.
This is so even if the occupancy of the purchased quarters results in a
savings to the Government. William E. Palzkill, and Stephen A. Webb,
supra.
Mr. Flodin has indicated that it was his intent to acquire the
quarters as his family's permanent residence at the time they commenced
occupancy. Although failure to receive approval of the loan or to
remove the mechanic's liens may have prevented Mr. Flodin from realizing
his intent to purchase the residence, they do not affect the
determination that his intent was to purchase the quarters. (In fact,
we have held that later vacating a house because of inability to finance
the purchase does not affect the determination that the employee
intended to occupy the quarters on a permanent rather than a temporary
basis. Kenneth O. Dudley, B-205394, April 26, 1982). Consistent with
the above-cited decision Mr. Flodin may not be reimbursed temporary
quarters subsistence expenses. Since Mr. Flodin intended to purchase
the residence from the time he moved in, the residence was not
"temporary quarters" and his claim for temporary quarters subsistence
expenses must be denied.
Owner's Title Insurance
Mr. Flodin was authorized real estate sale and purchase expenses in
connection with his transfer to Washington, D.C. The provisions
governing reimbursement of residence transaction expenses are contained
in 5 U.S.C. Section 5724(a)(4) (1982) and Part 2-6 of the Federal Travel
Regulations. Paragraph 2-6.2d(12(i) authorizes reimbursement for the
cost of an owner's title insurance policy provided its purchase is a
prerequisite to financing the property or if the cost is inseparable
from other insurance costs required to finance the property.
The property Mr. Flodin purchased was encumbered by over thirty
mechanic's liens. He asserts that under these circumstances purchase of
an owner's title insurance policy was "required." In support of this
position he has provided a letter from the seller's attorney in which
the attorney recommends insurance and states that "owner's title
insurance was advisable and in my opinion mandatory because of the
problems involved."
While the purchase of title insurance may have been advisable, it
appears that the insurance was not purchased by Mr. Flodin as a
prerequisite to obtaining financing, but as a matter of prudence for his
own protection. His statement that he was advised by the lender that 80
percent or more of the borrowers in the area avail themselves of this
coverage would indicate that the purchase of an owner's title policy was
not required by the lender. Since there is no evidence that Mr. Flodin
purchased the owner's title policy as a prerequisite for financing or
transfer of the property and since the policy was purchased separately
from other insurance, he may not be reimbursed for its cost.
Veterans Administration Funding Fee
One of the items of real estate expenses for which Mr. Flodin claims
reimbursement is a Veteran Administration funding fee of $485.50
incurred in connection with the purchase of a residence at his new duty
station. In appealing from the Internal Revenue Service's disallowance
of this particular expense, Mr. Flodin points out that the regulations
specifically authorize reimbursement of a Veterans Administration loan
application fee. Noting that such a loan application fee was not
assessed in his case, he asks for clarification of the difference
between the Veterans Administration loan application fee and the funding
fee. In forwarding his appeal the Internal Revenue Service asks whether
it is necessary to disallow the funding fee on the basis suggested in
Edward W. Aitken, 63 Comp. Gen. 355, (1984), that it is charged in
addition to the loan origination fee rather than instead of the loan
origination fee.
Effective October 1, 1982, paragraph 2-6.2d of the Federal Travel
Regulations was amended by GSA Bulletin FPMR A-4, Supplement 4, to
specifically authorize reimbursement of loan origination fees, Veterans
Administration loan application fees and other fees similar in nature.
This regulation, applicable to Mr. Flodin's transfer in January 1983,
specifically provides:
d. Miscellaneous expenses.
(1) Reimbursable items. The expenses listed below are
reimbursable in connection with the sale and/or purchase of a
residence provided they are customarily paid by the seller of a
residence in the locality of the old official station or 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.
(a) FHA or VA fee for the loan application;
(b) Loan origination fee;
(c) Cost of preparing credit reports;
(d) Mortgage and transfer taxes;
(e) State revenue stamps;
(f) Other fees and charges similar in nature to those listed
above, unless specifically prohibited in (2), below;
(2) Nonreimbursable items. Except as otherwise provided in
(1), above, the following items of expenses are not reimbursable.
(e) No fee, cost charge, or expense determined to be part of
the finance charge under the Truth in Lending Act, Title I, Pub.
L. 90-321, and Regulation Z issued in accordance with Pub. L.
90-321 by the Board of Governors of the Federal Reserve System,
unless specifically authorized in (1) above * * * .
We have held that the above regulation does not authorize
reimbursement of the Veterans Administration funding fee since it is a
finance charge excluded by subsection 6.2d(2)(e). 62 Comp. Gen. 456
(1983), and E. Louis Fry, B-214243, July 26, 1984. Section 1829 of
title 38, United States Code, added by the Omnibus Budget Reconciliation
Act of 1982, Public Law 97-253, 96 Stat. 805 (1982), provides that a
"loan fee" in the amount of one-half of 1 percent of a housing loan
made, guaranteed or insured by the Veterans Administration must be
collected from the veteran purchaser and remitted to the Administrator
of the Veterans Administration as a condition precedent to the making,
guaranteeing or insuring of a loan. The fee is a user charge which is
deposited into the U.S. Treasury as miscellaneous receipts. It is
required to be charged in connection with loans made on or after October
1, 1982. 47 Fed. Reg. 46700 (1982) (to be codified at 38 C.F.R.
36.4312(e)(1)). Essentially, the Veterans Administration funding fee is
a charge for a "guarantee or insurance protecting the creditor against
the consumer's default of other credit loss" and, thus, a finance charge
within the meaning of 12 C.F.R. 226.4(b)(7) (1983).
The distinction between a Veterans Administration funding fee and a
loan assumption fee was addressed in Edward W. Aitken, 63 Comp. Gen.
355. In that case, in which we authorized reimbursement of a loan
assumption fee, we stated:
Although a loan assumption fee may be charactered as a finance
charge, we conclude that this loan assumption fee may be
reimbursed under FTR para. 2-6.2d(1)(f) as a fee or charge similar
in nature to a loan origination fee. We believe the intent of
para. 2-6.2d(1)(f) is to permit reimbursement of fees which are
similar to those listed in para. 2-6.2d(1)(a-e) and which are
charged instead of one of the enumerated fees.
By way of contrast, we considered a claim for reimbursement of
a Veterans Administration (VA) funding fee which is a loan fee of
one-half of one percent and constitutes a user charge which is
deposited into the U.S. Treasury as a miscellaneous receipt. We
held that the VA funding fee is a finance charge under Regulation
Z and is not reimbursable under the amended version of FTR para.
2-6.2d, quoted above. B-209945, June 9, 1983, 62 Comp. Gen. 456.
What is crucial for our purposes is that the VA funding fee
considered in B-209945 is charged in addition to a loan
origination fee which compensates the lender for expenses incurred
in originating the loan, preparing documents, and related work.
In the case before us, the loan assumption fee was charged instead
of a loan origination fee, and it appears to represent similar
expenses incurred by the lender.
In response to the agency's question concerning the rationale set
forth in the Aitken decision, we believe that it is a critical
distinction that the funding fee is charged in addition to and not
instead of a loan origination fee. Under FTR para. 2-6.2d(1)(f) only
fees "similar in nature" to those specifically identified as
reimbursable may be reimbursed. We have recognized that in amending the
Federal Travel Regulations to authorize reimbursement of loan
origination fees, the General Services Administration intended to allow
reimbursement for the lender's administrative expenses incurred in
processing a loan. Roger J. Salem, 63 Comp. Gen. 456 (1984). In the
case where an existing loan is assumed, the loan assumption fee is
intended to cover administrative expenses incurred in processing the
assumption. It is reimbursable since it takes the place of the loan
origination fee. James D. Hoppe, B-214724, August 15, 1984. The same
can be said ofothe Veterans Administration loan application fee which
FTR para. 2-6.2d(1)(a) specifically identifies as a reimbursable charge.
The Veterans Administration loan application fee is charged in those
cases where the loan is made by the Veterans Administration. It is not
charged in cases such as Mr. Flodin's where the loan is guaranteed or
insured by the Veterans Administration. For direct loans, one of the
loan-closing expenses charged in addition to the Veterans Administration
funding fee required by 38 U.S.C. Section 1829(a) is the following
Veterans Administration loan application fee:
(1) $50, or one percent (1%) of the loan amount, whichever is
greater, which charge shall be in lieu of the loan closer's fee,
credit report, and cost of appraisal: Provided, That if the loan
is to finance the cost of construction, repairs, alterations, or
improvements necessitating disbursements of the loan proceeds as
the construction or other work progresses, the charge to the
veteran-borrower shall be two percent (2%) of the loan amount, but
not less than $50 in any event. 38 C.F.R. Section 36.4504(b)(1)
(1982).
It is intended to cover costs that are substantially identical to
those incurred by a commercial lender and charged to the borrower as a
loan origination fee. Like a loan assumption fee, it takes the place of
loan origination fee. Note that for loans guaranteed by the Veterans
Administration, commercial lenders must charge the Veterans
Administration funding fee and may charge a loan origination fee not
exceeding 1 percent of the loan amount. 38 C.F.R. Sections
36.4312(d)(2) and (e). Since the Veterans Administration funding fee
Mr. Flodin incurred is not similar in nature to either a loan
origination fee or a Veterans Administration loan application fee, it is
not reimbursable.
Conclusion
Based on the foregoing, Mr. Flodin's claims for temporary quarters
subsistence expenses, owner's title insurance and the Veterans
Administration funding fee must be disallowed.
FOOTNOTES
(1) The request was made by Mr. John E. Totten, Internal Revenue
Service, Chief, National Office, Financial Operations Branch,
Washington, D.C.
B-218339, 64 Comp. Gen. 672
Matter of: Introl Corp., July 9, 1985
Contracts - Requests for Quotations - Specifications - Evaluation on
Basis Other Than in Invitation
Agency may not solicit quotations on one basis and then award a
contract on a different basis.
Contracts - Requests for Quotations - Preparation of Quotation - Cost -
Recovery
Recovery of quotation preparation costs may be allowed where the
contracting agency unreasonably excluded the protester from the
procurement, and other remedies are not appropriate. Recovery of costs
of filing and pursuing the protest, including attorney's fees, may also
be allowed where the agency unreasonably excluded the protester from the
procurement and General Accounting Office does not recommend that the
protester be awarded the contract.
Introl Corp. (Introl) protests the award of a contract to Unitron,
Inc. by the Naval Regional Contracting Center in Long Beach, California
under request for quotations (RFQ) No. N00123-85-Q-7005, for the
purchase of a high frequency converter generator. The generator was to
provide the power necessary to run the Sealite Beam Director at the
White Sands Missile Test Station. Introl asserts that Unitron's bid was
neither responsive to the solicitation nor low, and that its own bid, on
the other hand, was fully responsive and offered the lowest price.
We sustain the protest.
Nine bidders submitted quotations for the equipment by the closing
date for receipt of quotations. Of the nine quotations, Unitron's
offer, while not low, offered equipment which included features which
the Navy liked but which were not required by the RFQ. In their
evaluation memorandum, Navy personnel described these features and
concluded that "the unit manufactured by Unitron is clearly the unit
required." According to the Navy report, the buyer who received this
memorandum along with the evaluated quotations mistook the features
which were unique to Unitron's equipment for RFQ requirements. The
buyer than rejected Introl's low quotation for failure to include these
features, and placed a purchase order with Unitron as the low responsive
quoter. The Navy now states that the proper response to this situation
would have been to issue a revised RFQ incorporating the new
requirements.
The purchase order was placed on February 27, 1985. When the Navy
advised Introl on March 8 that the order had been placed with Unitron,
Introl protested to the Navy and to our Office.
Since Unitron had shipped the equipment prior to the agency's
discovery of the error, the Navy reports that it has taken the only
practical remedial action by explaining the applicable contract
principles to the buyer responsible for this error. In effect, the Navy
argues that it has done all that it can under the circumstances, and
urges that the protest be dismissed.
An agency may not solicit quotations on one basis and then make award
on another basis. Le Prix Electrical Distributors, Ltd., B-212078, Nov.
15, 1983, 83-2 CPD Paragraph 562. Where there is a material discrepancy
between the specifications in a solicitation and the agency's actual
needs, the agency should revise its solicitation to provide offerors
with the most accurate information available. Id. By its own
admission, the Navy should have amended the RFQ and solicited new
quotations when it determined that the RFQ did not adequately represent
its minimum needs. The agency's failure to do so effectively denied
Introl an equal opportunity to compete. See Uni-Tek Mfg. Co., B-208324,
Nov. 29, 1982, 82-2 CPD Paragraph 483.
Although it is apparent from the record that the contract was
improperly awarded to Unitron, it is impracticable for our Office to
recommend corrective action now that the equipment has been delivered.
We sustain the protest, however, and are by separate letter bringing
this matter to the attention of the Secretary of the Navy, in order to
prevent a recurrence of a similar procurement impropriety in the future.
The protester has submitted a claim for quotation preparation costs,
costs of filing and pursuing the protest, and anticipated profits.
Our Bid Protest Regulations, implementing the Competition in
Contracting Act, Pub. L. No. 98-369, Section 2741(a), 98 Stat. 1175,
1199 (1984), 31 U.S.C. Rev. Ch. 35, provide that the costs of filing and
pursuing a protest, including attorney's fees, may be recovered where
the contracting agency has unreasonably excluded the protester for the
procurement, except where we recommend that the contract be awarded to
the protester and the protester receives the award. The recovery of bid
or proposal preparation costs may be allowed where the protester has
been unreasonably excluded and where other remedies enumerated in our
regulations are not appropriate. See 4 C.F.R. Section 21.6(d)-(e)
(1985).
Although Introl's quotation was responsive and low, the Navy rejected
it in favor of a quote which did not meet the specifications but which
offered features the agency liked. By improperly departing from the
provisions of the RFQ, the Navy unreasonably excluded the protester, who
as the low quoter clearly had a substantial chance of receiving the
award, from any chance of receiving the award. We therefore find that
as no other corrective action is appropriate here, the firm may be
allowed recovery of its quotation preparation costs. See Computer Data
Systems, Inc., B-218266, May 31, 1985, 85-1 CPD Paragraph 624. We also
find that Introl should be allowed to recover its costs of filing and
pursuing the protest, since, given the circumstances of this case, we
have not recommended award to Introl. Introl should submit an
accounting of its costs to the Navy, and the protester and procuring
agency should attempt to reach agreement on the amount of the costs. If
they cannot reach agreement within a reasonable time, our Office will
determine the amount. 4 C.F.R. Section 21.6(f).
Regarding Introl's claim for loss of profits, our Office has
recognized the general rule that anticipated profits may not be
recovered even in the presence of wrongful government action. See
Effective Learning, Inc. -- Request for Review of Prior Claim Decision,
B-215505, Feb. 19, 1985, 85-1 CPD Paragraph 207. Our Office has no
authority to award such costs.
The protest is sustained; the protester is entitled to the costs of
quotation preparation and of filing and pursuing the protest.
B-216618, 64 Comp. Gen. 670
Matter of: Moorman's Travel Service, Inc., July 9, 1985
Transportation - Travel Agencies - Use Approved
Agency's competitive selection of a contractor to make travel
arrangements for federal employees is exempt from the procurement
statutes since the contractual arrangement is only a management vehicle
to obtain travel services which themselves are exempt from procurement
procedures.
Moorman's Travel Service, Inc. (MTS), protests the award of a
contract to Anthony-Bennett Travel, Inc. (ABT), under request for
proposals No. DAABO7-84-R-Q022, issued by the United States Army
Tank-Automotive Command (TACOM), for travel management services at the
TACOM facility in Warren, Michigan. This no-cost, no-fee contract
covers all reservations, tickets, car rentals and related services to
meet the official government travel requirements of TACOM personnel.
We dismiss the protest.
MTS contends that the agency improperly evaluated the MTS and ABT
proposals and improperly failed to conduct discussions. However, as an
initial matter, the agency questions our jurisdiction to consider this
protest. The Army explains that TACOM does not pay the contractor for
supplying travel management services, but instead the contractor is paid
commissions from common carriers that use the contractor as its agent to
sell tickets to the government. Thus, the Army asserts that under this
arrangement there is no expenditure of appropriated funds to obtain the
services of a contractor and, therefore, it consludes that GAO does not
have jurisdiction to consider this matter.
Prior to April 1984, our Office for many years generally prohibited
the use of commercial travel agents to procure official government
travel. 4 C.F.R. Section 52.3 (1980). Prior to that date, agencies
generally acquired travel management services through the establishment
of scheduled airline traffic offices (a carrier-sponsored ticket
office), the use of in-house offices or by dealing directly with
individual carriers. In April 1984, our Office lifted the prohibition
on the use of commercial travel agents. 49 Fed. Reg. 17,721 (1984).
Since, generally, travel services were not acquired through government
procurement procedures, the question of the application of procurement
procedures to the purchase of travel and of our jurisdiction to consider
protests against acquisition of travel management services never arose
prior to the lifting of the prohibition on travel agent use.
In two recent decisions, T.V. Travel, Inc.; World Travel Advisor,
Inc.; Discovery Tour Wholesalers, Inc., B-218198, et al., June 25, 1985,
85-1 C.P.D. Paragraoh . . . , and Omega World Travel, Inc.; Society of
Travel Agents in Government, Inc., B-218025, B-218025.2, May 23, 1985,
64 Comp. Gen. 551, 85-1 C.P.D. Paragraph 590, our Office has decided the
issue of jurisdiction in protests involving contracts for travel
management services. In these decisions, we specifically held that an
agency's competitive selection of a contractor to make travel
arrangements for federal employees is exempt from the procurement
statutes, including the Competition in Contracting Act of 1984 (CICA),
31 U.S.C.A. Section 3551, et seq. (West Supp. 1985), and that the
agency's selection of a contractor was no more than a management vehicle
to facilitate its travel purchases.
The competitive selection and contractual arrangement here are
similar to those in T.V. Travel, et al., B-218918, et al., supra. The
fact that this protest was filed prior to CICA becoming effective does
not distinguish this protest from these decisions. The purchase of
travel services provided by the air carriers and other concerns has been
exempted from the procurement laws by statute and regulations which have
been in existence for years prior to the enactment of CICA. See 40
U.S.C. Section 481 (1982); Federal Property Management Regulations
subpart 101-41.2, 41 C.F.R. subpart 101-41.2 (1984); Joint Travel
Regulations, para. C2250; Federal Acquisition Regulation Section
47.000, 48 C.F.R. Section 47.000 (1984); Omega World Travel, Inc.;
Society of Travel Agents in Government, Inc., B-218025, B-218025.2,
supra. Thus, there is no basis for consideration of this protest under
our Bid Protest Regulations, 4 C.F.R. part 21 (1985), which deal with
the filing of protests of award subject to the procurement statutes and
regulations.
The protest is dismissed.
B-219245 et al., 64 Comp. Gen. 669
Matter of: Management Development Group, July 8, 1985
General Accounting Office - Jurisdiction - Cooperative Agreements -
Awards
Protests against the procurement procedures being used to award
cooperative agreements, not significantly controlled by procurement
statutes and regulations, will not be considered where company has
neither alleged nor shown that contracts rather than cooperative
agreements should have been used or that conflict of interest was
involved.
Management Development Group (MDG) protests against the procurement
procedures used in the award by the Minority Business Development Agency
(MBDA), Department of Commerce of several cooperative agreements for the
operation of Minority Business Development Centers in various
geographical areas. MDG contends that the agency did not provide
adequate response time as required by 48 C.F.R. Section 5.203 (1984),
when it synopsized these agreements in the Commerce Business Daily. We
dismiss these protests.
We generally do not review protests concerning the award of
cooperative agreements, unless there is some showing that the agency is
using a cooperative agreement where a contract is required, that is, the
agency is using the cooperative agreement award process to avoid the
competitive requirements of procurement laws, or that a conflict of
interest exists. See Am-Tech Export Trading Co., Inc., B-216587, Oct.
22, 1984, 84-2 C.P.D. Paragraph 439. We limit our review because the
award of cooperative agreements is not significantly controlled by
statutes and regulations having the force and effect of law as in the
award of procurement contracts, and our involvement therefore would
result in interference with the administration by executive branch
agencies of their financial assistance programs. Id. MDG has not
alleged or shown that cooperative agreements were used instead of
contracts to avoid competitive requirements of procurement laws or that
a conflict of interest exists.
Accordingly, there is no basis for consideration of these protests
under our Bid Protest Regulations, 4 C.F.R. part 21 (1985), which deal
with the filing of protests of awards subject to the procurement
statutes and regulations.
The protests are dismissed.
B-216431, 64 Comp. Gen. 665
Matter of: Ronald C. Briggs, July 5, 1985
Intergovernmental Personnel Act - Assignment of Federal Employees - Per
Diem v. Station Allowances
An employee may not elect to receive per diem for the duration of an
Intergovernmental Personnel Act assignment where his agency's
determination to authorize change-of-station allowances is reflected in
his travel orders and his Intergovernmental Personnel Act Agreement.
Under 5 U.S.C. 3375, an agency may authorize change-of-station
allowances or per diem, but not both, and we have held that per diem
would ordinarily be inappropriate for Intergovernmental Personnel Act
assignments of 2 years.
Intergovernmental Personnel Act - Assignment of Federal Employees -
Relocation Expenses
The change-of-station allowances authorized by 5 U.S.C. 3375 are
payable upon relocation to, as well as return from, an Intergovernmental
Personnel Act assignment. The fact that an employee's family was
residing at the location of his assignment and that the full range of
allowances, therefore, was not authorized when the employee reported to
the university does not preclude payment of any or all of those
allowances incident to the employee's return following completion of the
assignment. There is no statutory or regulatory requirement that the
employee be authorized or incur specific expenses in reporting to the
Intergovernmental Personnel Act assignment as a condition to paying
those expenses upon its termination.
This action is in response to a request for an advance decision from
the Department of the Interior regarding the claim of Ronald C. Briggs
for per diem and relocation allowances in connection with an
Intergovernmental Personnel Act assignment. /1/ We find that per diem
may not be paid for the 2-year period of Mr. Briggs' assignment, but
that relocation expenses claimed in connection with his family's return
following completion of the assignment may be allowed.
Mr. Briggs, an employee of the Bureau of Mines, Department of the
Interior, was stationed in Twin Cities, Minnesota. In September 1979
Mr. Briggs was transferred to Washington, D.C. In connection with that
transfer he was authorized relocation expenses, including residence sale
and purchase expenses as well as travel expenses for members of his
immediate family. Although Mr. Briggs moved to Washington and reported
to his new duty station at that time, his dependents remained in
Minnesota in the family residence.
The employee had not sold his Minnesota residence nor moved his
family to Washington by July 1980 when he was offered and accepted a
2-year assignment at the University of Minnesota under the
Intergovernmental Personnel Act. Since his family remained in their
Minnesota residence, Mr. Briggs' travel order authorized only expenses
for his own travel to the university and a miscellaneous expenses
allowance. The Bureau subsequently determined that miscellaneous
expenses could not be paid since 5 U.S.C. Section 3375(a)(5) limits the
allowance to those Intergovernmental Personnel Act assignments involving
movement or storage of household goods. While at the university, Mr.
Briggs stayed in the family home.
When the assignment was terminated in August 1982, Mr. Briggs was
issued a travel order providing, among other allowances, for
transportation of his household goods and travel of his immediate family
from Minnesota to Washington, D.C. By that time, the 2-year period
within which he had been authorized to incur residence transaction
expenses incident to his 1979 transfer had expired. Because residence
transaction expenses are not payable in connection with assignment to or
return from an Intergovernmental Personnel Act location, Mr. Briggs'
orders for return to Washington did not authorize reimbursement of real
estate sale or purchase costs.
Although Mr. Briggs has indicated that he accepted the
Intergovernmental Personnel Act assignment under a misapprehension
regarding his eligibility for reimbursement of residence transaction
expenses upon return to Washington, he does not question the Bureau's
refusal to authorize these expenses. However, he has now submitted a
claim for per diem in the amount of $16,974 for the 738 days he was
assigned to the University of Minnesota. The Bureau of Mines asks
whether it may pay his claim, based on a per diem rate of $23 a day, for
the period during which Mr. Briggs stayed in his family's Minnesota
residence. The Bureau has also raised questions concerning Mr. Briggs'
claim for expenses incurred in relocating his family to Washington after
termination of the Intergovernmental Personnel Act assignment. This
claim has not been paid pending our determination as to Mr. Briggs' per
diem entitlement and because of doubt as to whether certain allowances,
including travel and temporary quarters subsistence expenses, may be
paid for dependents who participated only in the employee's return from
the Intergovernmental Personnel Act assignment.
Statutory authority for transfer or assignment of an employee under
the Intergovernmental Personnel Act is found at 5 U.S.C. Section 3371 et
seq. Under section 3372, an employee may be given an assignment not to
exceed 2 years, which may be extended for an additional 2 years by the
head of the Federal agency. Expenses, including per diem, for the
employee's travel to and from the Intergovernmental Personnel Act
assignment are payable under 5 U.S.C. Section 3375(a)(1). In addition,
that subsection makes funds available to pay a per diem allowance to an
employee while at the location of the Intergovernmental Personnel Act
assignment. Under subsections 3375(2) through (6) certain expenses
ordinarily associated,with permanent changes of station may be paid.
These include travel and transportation for members of the employee's
immediate family, transportation and storage of household goods,
temporary quarters subsistence expenses, and a miscellaneous expenses
allowance payable when movement of household goods is involved. These
particular expenses are payable in connection with assignment to the
Intergovernmental Personnel Act location as well as upon return to the
employee's regular duty assignment.
We have held that Federal employees who are assigned to state and
local governments and to institutions of higher education under the
Intergovernmental Personnel Act may not be paid per diem at the
Intergovernmental Personnel Act location and change-of-station type
allowances incident to the same assignment. 53 Comp. Gen. 81 (1973).
Consistent with that holding, employees assigned under the
Intergovernmental Personnel Act may receive either per diem or
change-of-station allowances, but not both. The agency is responsible
for determining whether to authorize change-of-station or per diem
allowances and we have authorized reimbursement based on the employee's
own election only in those cases where the travel order authorizing
payment was ambiguous on its face. Arthur G. Alexiou, B-183797, May 11,
1979.
In the present case, Mr. Briggs was authorized change-of-station
rather than per diem expenses incident to his assignment to the
University of Minnesota and he was authorized change-of-station
allowances in connection with his reassignment to Washington upon
termination of the Intergovernmental Personnel Act assignment. Although
limited allowances were authorized for relocation to the
Intergovernmental Personnel Act location because there was no need to
relocate Mr. Briggs' household, there is no ambiguity on the face of
either order and there is no doubt as to the Bureau's determination to
authorize change-of-station allowances in both instances. That
determination is also apparent from the terms of the Intergovernmental
Personnel Act Agreement executed by Mr. Briggs which specifically states
that the Bureau will pay "authorized travel expenses to and from the
assignment, plus allowable relocation expenses."
The Bureau of Mines' determination to authorize change-of-station
allowances is consistent with our holding that payment of per diem would
ordinarily be inappropriate for Intergovernmental Personnel Act
assignments of 2 years. William T. Burke, B-207447, June 30, 1983.
That holding is now reflected in the following guidance provided by the
Office of Personnel Management for Intergovernmental Personnel Act
assignments:
b. Agencies are authorized to pay for either relocation
expenses to and from the assignment location or a per diem
allowance at the assignment location during the period of
assignment. The agency may select either of those approaches to
relocation and living expenses but cannot pay both types of costs.
The cost to the government should be a major factor taken into
account when determining which approach will be used. A per diem
allowance at the assignment location is intended for short term
assignments and not for longer assignments. Per diem allowances
should not be paid for more than one year.
Paragraph 1-7b, chapter 334, Federal Personnel Manual (Installment
310, December 1, 1983). Under these circumstances, Mr. Briggs may not
elect to receive per diem rather than change-of-station allowances.
Since Mr. Briggs was properly authorized change-of-station
allowances, he is entitled to the expenses provided for by 5 U.S.C.
Sections 3375(a)(2) through (6) to the extent they have been authorized
or approved by the Bureau of Mines. These expenses are payable upon
assignment to as well as return from an Intergovernmental Personnel Act
location. However, there is no statutory or regulatory requirement that
the employee be authorized or incur specific expenses in reporting to
the assignment as a condition to paying those expenses upon its
termination. Thus, the fact that Mr. Briggs' family was already
residing at the Intergovernmental Personnel Act location at the
commencement of his assignment does not preclude reimbursement for
transportation of household goods and travel of family members upon its
termination. Since these expenses are specifically provided for in his
return travel order, they may be reimbursed insofar as otherwise proper.
Like other expenses of relocating an employee's household, temporary
quarters subsistence expenses may be paid in connection with an
employee's return from an Intergovernmental Personnel Act assignment
without regard to whether such expenses were authorized or incurred in
reporting to the assignment location. The travel order Mr. Briggs was
issued upon termination of his assignment does not specifically
authorize temporary quarters subsistence expenses. However, we have
held that temporary quarters subsistence expenses may be retroactively
approved. B-172018, April 21, 1971, and Andrew O. Davis, B-198062, June
23, 1981. Since Mr. Briggs' Intergovernmental Personnel Act Agreement
specifically provides that the Bureau of Mines will pay "allowable
relocation expenses" we would not object to its approval of Mr. Briggs'
claim for temporary quarters subsistence expenses insofar as otherwise
proper.
As indicated above, Mr. Briggs may be paid change-of-station
allowance rather than the per diem allowance requested in connection
with his Intergovernmental Personnel Act assignment to the University of
Minnesota.
FOOTNOTES
(1) The request was made by Gary K. Dragseth, Acting Chief, Division
of Finance, Bureau of Mines, Department of the Interior, Denver,
Colorado.
B-216840, 64 Comp. Gen. 658
Matter of: Vac-Hyd Corporation, July 1, 1985
Contracts - Negotiation - Offer or Proposals - Prequalification of
Offerors - Restrictive of Competition
When services being procured are of a critical nature and the agency
has only a short timeframe in which to award a new contract, General
Accounting Office (GAO) cannot object on any legal basis to an awrad to
the incumbent contractor, the only qualified source, even through the
solicitation induced nonapproved sources such as the protester to
compete.
Small Business Act - Applicability - Technically Unacceptable Offer or
Proposal
When an offer from a small business concern is not technically
acceptable because, for example, the officer is not an approved source,
the Small Business Act does not apply.
Contracts - Negotiation - Qualification of New Sources - Spare Parts,
etc. Procurement - Recommendations to Military Departments
Although denying a protest against rejection of a proposal from a
nonapproved source, GAO recommends that the agency take immediate and
vigorous steps to qualify any new source that may wish to participate in
future competitive procurements. The agency should only consider
exercising an option under the current contract if no additional sources
become qualified.
Contracts - Negotiations - Offers or Proposals - Preparation - Costs -
Denied
When a protest is denied GAO will not consider a protester's request
for proposal preparation costs.
Vac-Hyd Corporation protests the rejection of its offer under request
for proposals (RFP) No. F34601-84-r-44555, issued by Tinker Air Force
Base, Oklahoma. The solicitation covered components for repair of
fighter aircraft engines. The Air Force rejected Vac-Hyd's proposal
because the firm was not an approved source and the agency could not
delay the award while Vac-Hyd underwent the qualification process.
We deny the protest, finding the agency was compelled to make an
award to the incumbent contractor, the only qualified source, within a
timeframe that precluded qualifying other sources. Nevertheless, we
recommend that the Air Force take immediate and vigorous steps to
qualify any new nonapproved source that may wish to participate in
future competitive procurements. Only if none become qualified should
the agency consider exercising the option under the current contract.
BACKGROUND
The RFP provided for a requirement-type contract for the repair and
overhaul of TF30 compressor stators, a component of the F-111 fighter
aircraft engine. At the time the RFP was issued, only two companies --
Chromalloy American Corporation (the incumbent contractor) and the
Hamilton Standard Division of United Technologies Corporation -- had
been approved by the Air Force to do this work. Clause M-48 of the RFP
informed potential offerors of this fact and stated that the successful
offeror would have to be an approved source in accord with Air Force
procedures for the repair and overhaul of critical aircraft engine
parts. However, clause M-48 also stated that firms not currently
approved might be considered for award if the offeror submitted proof
that it (1) had received prior Department of Defense (DoD) approval as a
source for the required repair/overhaul work, or (2) had satisfactorily
performed this type of work for a DoD agency, or (3) meets or has met
the criteria established by the responsible engineering activity
concerning qualification for the required repairs. Under this last
category, the Air Force also listed "typical criteria." These included:
(a) Evidence of satisfactory experience in similar repairs of
similar parts.
(b) Evidence of satisfactory experience in welding, heat
treating or fabricating aircraft engine material for parts of
similar complexity.
(c) Evidence of satisfactory experience with special finishing
and coating techniques.
(d) Evidence of satisfactory experience in repairing aircraft
engine critical parts for other DoD services or commercial
airlines.
(e) Federal Aviation Administration (FAA) repair or
manufacturing source approval.
Since Vac-Hyd, a small business concern, has no prior DoD experience,
the firm states that it submitted with its proposal evidence that it has
had extensive experience in the repair and overhaul of commercial
aircraft stators, that it is certified by the FAA as an approved repair
station, and that its facility is fully equipped and its personnel fully
trained to perform all the overhaul and repair work required by the RFP.
In addition to this, a week before the September 17, 1984, closing date
for receipt of proposals, Vac-Hyd hand-delivered this same information
to the Office of Contracting and Manufacturing at Tinker Air Force Base.
The firm states that it anticipated that this would speed up the source
approval process, which it believed required about 3 weeks.
Nevertheless, the contracting officer notified Vac-Hyd by letter
dated September 28 that its proposal could not be considered for the
award. The contracting officer stated that the procurement was
"restricted to already approved sources" and that the Air Force's
"current requirements will not permit a delay in award incident to the
evaluation and approval of your company as a source on this
acquisition."
Upon receipt of this letter, Vac-Hyd filed a protest with the Air
Force, requesting that the agency reconsider its decision to exclude
Vac-Hyd from the competition. However, the Air Force did not respond to
this protest, and it was only when Vac-Hyd officials placed a telephone
call to the contracting officer to find out what the Air Force intended
to do that Vac-Hyd learned that on September 28, the same day the agency
had rejected Vac-Hyd's proposal, the agency had awarded Chromalloy a
1-year contract with two 1-year options. Vac-Hyd immediately protested
to our Office.
VAC-HYD'S PROTEST
Vac-Hyd's protest has two major grounds. First, Vac-Hyd argues that
the Air Force's refusal to evaluate its proposal and to initiate
procedures by which it might obtain approved source status disregarded
clause M-48 of the solicitation and violated federal procurement policy
requiring that the government deal fairly and honestly with all
offerors. Second, Vac-Hyd argues that the Air Force violated the Small
Business Act, 15 U.S.C. Section 637(b)(7)(A) (1982), when it failed to
refer the question of Vac-Hyd's ability to perform the overhaul/repair
work to the Small Business Administration (SBA) for possible issuance of
a certificate of competency (COC).
In support of its first ground for protest, Vac-Hyd asserts that the
contracting officer had no right to disregard either the approval
procedures established by the solicitation or the information Vac-Hyd
submitted with its proposal to qualify as an approved source. Vac-Hyd
further argues that the Air Force was required to provide a reasonable
time for source approval, stating that it prepared its offer under the
assumption that the agency had in fact set aside adequate time for this
procedure. This assumption was confirmed, in Vac-Hyd's opinion, when
the solicitation was amended to provide for an offer acceptance period
of 120 days rather than the normal 60 days. The protester concludes
that the Air Force effectively restricted the competition to the two
previously approved sources and in reality brought about a sole-source
award to the only approved source (Chromalloy) competing for the
contract. In Vac-Hyd's opinion, then, the Air Force conducted this
procurement in direct contradiction to the explicit terms of the RFP and
in so doing failed to consider its proposal in a fair and honest manner.
As to its second ground for protest, Vac-Hyd notes that under the
Small Business Act and applicable regulations, whenever a contracting
agency finds a small business nonresponsible, it is required to refer
the matter to the SBA; if the SBA finds the small business responsible
and issues a COC, the determination is binding on the agency. In
Vac-Hyd's opinion, the Air Force's refusal to evaluate its proposal or
to initiate qualification procedures was tantamount to a finding by the
agency that the protester lacks the special qualifications to perform
the stator overhaul/repair work. According to Vac-Hyd, this was a de
facto nonresponsibility determination that should have been referred to
the SBA, and the Air Force's failure to make the referral was,
therefore, a violation of the Small Business Act.
Vac-Hyd requests that the contract be set aside, that Vac-Hyd be
qualified as an approved source, that the requirement be resolicited,
and that Vac-Hyd be reimbursed for its original proposal preparation
costs.
THE AIR FORCE'S RESPONSE
The Air Force responds that the contracting officer, in her initial
evaluation, suspected a mistake in a portion of Vac-Hyd's proposed
prices and also discovered that Vac-Hyd had failed to return the
attachments to the RFP along with the rest of the solicitation
documents. In the Air Force's opinion, this contradicts Vac-Hyd's
assertion that it had submitted a complete proposal that only required
the Air Force to proceed with the source approval. According to the Air
Force, it would have been necessary to conduct discussions with Vac-Hyd
before the agency could have determined whether its proposal was
accepted. However, since Vac-Hyd was not an approved source, no
discussions were held and no final determination was ever made regarding
the acceptability of the proposal.
As to clause M-48 of the RFP, the Air Force maintains that while it
did specify that nonapproved sources might be considered for award, the
clause also stated that only an offeror that had been approved in accord
with the applicable procedures could ultimately receive the award and
that the approval would have to be accomplished within a timeframe that
met the government's requirements. According to the agency, it was
impossible to evaluate Vac-Hyd in time to satisfy the Air Force's needs
-- the then-current contract was about to expire and the availability of
uninterrupted stator overhaul/repair services was of critical
importance.
Regarding the amount of time needed to become an approved source, the
Air Force notes that while clause M-48 allows a nonapproved source such
as Vac-Hyd to submit evidence of prior commercial stator repair
experience to support its request for approved status, the submission of
such evidence does not by itself qualify the offeror. The Air Force
emphasizes that clause M-48 lists "typical criteria" for approved
status, not all the criteria. According to the Air Force, the
responsible engineering activity establishes the full criteria that any
firm must meet to become an approved source, and this normally includes
the offeror demonstrating its ability by performing overhaul/repair work
on Air Force-provided TF30 stators -- a process which can take from 2 to
6 months, not the 3 weeks Vac-Hyd envisioned. In addition, the Air
Force points out that the purpose behind the RFP's 120-day offer
acceptance period was to require all offerors to hold their prices while
proposals were being evaluated and had nothing to do with providing
additional time for source approval.
Finally, as to whether the question of Vac-Hyd's responsibility
should have been referred to the SBA, the Air Force argues that it never
made a determination concerning Vac-Hyd's responsibility, since Vac-Hyd
was not an approved source. Accordingly, the Air Force denies that it
was required to refer the matter to SBA for consideration under the COC
program.
Even though it concludes that the Vac-Hyd protest is without merit,
the Air Force acknowledges that it could receive the benefit of better
prices in future procurements if additional approved sources were
available to compete for the stator overhaul/repair work. Consequently,
the agency states that it is pressing forward in its effort to qualify
both Vac-Hyd and the other nonapproved source that competed under the
protested procurement. If one or both become approved sources, the Air
Force states that it will issue a new solicitation, rather than exercise
the options under the Chromalloy contract.
VAC-HYD'S REBUTTAL
Responding to the agency's protest report, Vac-Hyd argues that the
Air Force should not be allowed at this stage to maintain that it was
under time constraints that prevented it from holding up the award until
new sources were approved. Vac-Hyd notes that the Air Force should have
been aware that its old contract was for a 3-year period with a specific
expiration date; therefore, the agency should have issued the new
solicitation early enough in the last year of the contract to allow
sufficient time for new sources to be approved. In Vac-Hyd's opinion,
the Air Force should not be allowed to award what is tantamount to a
sole-source contract to the incumbent contractor because of the agency's
own administrative delays.
Vac-Hyd also alleges that the Air Force has been slow to inform
Vac-Hyd what it must do to be approved, and when it told the protester
that it would have to repair government-furnished stators for Air Force
inspection and evaluation, the agency failed to supply those stators
despite a number of requests.
GAO ANALYSIS
It is well established that the government must deal fairly and
honestly with all offerors competing for federal contracts. Keco
Industries, Inc. v. United States, 492 F.2d 1200 (Ct. Cl. 1974). It is
also well established that the prequalification of offerors, as opposed
to the prequalification of products, generally results in an unwarranted
restriction on the full and free competition contemplated by the federal
procurement statutes. D. Moody & Co., Inc., B-185647, Sept. 1, 1976,
76-2 CPD Paragraph 211. Nevertheless, our Office has recognized that,
under certain limited circumstances, the prequalification of offerors
may be allowed. See, for example, Department of Agriculture's Use of
Master Agreements, 56 Comp. Gen. 78 (1976), 76-2 CPD Paragraph 390;
Rotair Industries; D. Moody and Co., Inc., 58 Comp. Gen. 149 (1978),
78-2 CPD Paragraph 140.
Recent legislation, although not applicable to this procurement,
specifically addresses the practice of prequalifying offerors and
establishes a framework for future procurements. /1/ In addition, our
Office has consistently held that when a contracting agency restricts a
contract award to an approved source, nonapproved sources must be given
a reasonable opportunity to qualify. See Hill Industries, B-210093 July
6, 1983, 83-2 CPD Paragraph 59; 40 Comp. Gen. 348 (1960).
Here, the Air Force is not seeking to procure any particular product
or part. Rather, it seeks expert services, and because of the part
being serviced -- i.e., components for fighter aircraft engines -- the
Air Force wants to ensure that the company selected has a high level of
competence and experience. Under these circumstances, the Air Force has
decided that all potential contractors must first be approved before
they can be considered for the award and has established specific
procedures for ths process. Nevertheless, the RFP in this case
specifically invited nonapproved sources to submit proposals, provided
that they also submitted evidence of prior experience that the Air Force
was able to evaluate before award.
This prequalification process clearly serves a bona fide need of the
government -- that is, it ensures a high level of maintenance on a
critical aircraft part -- yet it also allows nonapproved sources to
submit proposals and become qualified. We therefore see nothing
improper under the facts presented with the Air Force's basic approach.
See Rotair Industries; D. Moody and Co., Inc., 58 Comp. Gen. 149,
supra. We do question, however, the way the Air Force applied this
procedure to the protester, since it does not appear that Vac-Hyd was
given a reasonable opportunity to become qualified. From the facts
presented by the Air Force, the agency was aware at the time it issued
the solicitation that its existing contract was about to expire. In
addition, it was aware that it could take from 2 to 6 months under its
procedures for a nonapproved source to be qualified. Nevertheless, the
Air Force issued an RFP that in effect encouraged nonapproved sources
like Vac-Hyd to spend time and money preparing proposals that the agency
apparently did not intend to consider.
In its protest report, the agency points out that the TF30 stator
repair program was synopsized in mid-June 1984 and provided a reference
for qualification procedures. Although in theory this means that
Vac-Hyd was on constructive notice of the qualification requirement
several months before the closing date for receipt of proposals, in
reality there is no evidence that even if Vad-Hyd acted more quickly to
initiate the qualification procedures, its proposal would have been
treated any differently by the agency. Clearly, if the full 6 months
that the Air Force states might be required for qualification actually
were required, synopsis in June would not permit a firm to qualify for
award in September.
In view of the foregoing, it is clear that the short timeframe the
Air Force was forced to work under was due largely to its own lack of
planning. As Vac-Hyd has pointed out, the agency should have begun the
procurement process early enough to allow adequate time to evaluate any
offers submitted by nonapproved sources. Nevertheless, the Air Force
did need uninterrupted service for its TF30 compressor stators, and it
was in fact under real time constraints. Moreover, on the date of
award, Chromalloy was the only approved source available to undertake
the overhaul/repair service. Under those circumstances, we cannot
object to the award on any legal basis -- even though we find that
Vac-Hyd's proposal was not treated fairly.
As to whether the Air Force should have referred the question of
Vac-Hyd's acceptability of SBA, when an agency makes a finding that an
offer from a small business concern is not technically acceptable,
because, for example, it is not an approved source, the Small Business
Act does not apply. See Pacific Sky Supply, Inc., B-215189 et al., Jan.
18, 1985, 64 Comp. Gen. 194 (1985), 85-1 CPD Paragraph 53. That is the
case here, since there has been no finding of nonresponsibility.
The protest is denied.
RECOMMENDATION FOR REMEDIAL ACTION
We believe that the Air Force has alternatives to awarding a 1-year
contract with 2 option years to the incumbent contractor. For example,
when the agency realized that it had received offers from two
nonapproved sources but did not have sufficient time to allow them to be
qualified, it could have requested Chromalloy to extend its then-current
contract long enough to allow the approval process to be completed.
The Air Force advises us that if Vad-Hyd and/or the other nonapproved
source that participated in the protested procurement are granted
approved status, it intends to resolicit the requirement rather than
exercise the option under the Chromalloy contract. We recommend that
the Air Force take immediate and vigorous steps to qualify any new
nonapproved source that may wish to participate in a competitive
procurement. Only if none become qualified should the Air Force
consider exercising the option under the current contract.
By separate letter of today, we are informing the Secretary of the
Air Force of our recommendation.
In view of our denial of the protest, we have not considered
Vac-Hyd's request for proposal preparation costs. Orvedahl
Construction, Inc., B-213408, April 10, 1984, 63 Comp. Gen. 288, 84-1
CPD Paragraph 405.
FOOTNOTES
(1) Under 41 U.S.C.A. Section 253C (West Supp. 1985), as added by
section 202 of the Small Business and Federal Procurement Competition
Enhancement Act of 1984 and 10 U.S.C.A. Section 2319 (West Supp. 1985),
as added by section 1216 of the Department of Defense Authorization Act,
1985, Congress has established standards which should aid nonapproved
sources such as Vac-Hyd in the future. Both acts contain provisions
concerning prequalification, testing, and other quality assurance
procedures. They require, among other things, that the qualification be
justified and standards specified; that potential offerors be provided
an opportunity to demonstrate their ability to meet standards; and that
agencies promptly advise offerors whether qualification was attained
and, if not, why not. Potential offerors generally may not be denied
the opportunity to submit offers and have them considered for award
solely because they are not on lists of qualified bidders or
manufacturers. Moreover, the Department of Defense Authorization Act
states that the opportunity to qualify shall be "on a reimbursable
basis," and both acts state that in certain circumstances, the
contracting agency must bear the cost of testing and evaluation for
small business concerns. However, the acts also provide that the head
of an agency need not delay a proposed procurement in order to provide a
potential offeror with an opportunity to demonstrate its ability to meet
the standards specified for qualification.
The pertinent provisions of the Small Business and Federal
Procurement Competition Enhancement Act apply to solicitations issued
more than 180 days after the date of enactment, which occurred on
October 30, 1984. Those of the Department of Defense Authorization Act
will become effective 1 year after enactment, i.e., on October 19, 1985,
and will apply to all solicitations issued after that date. Thus,
neither act applies to the protected procurement.
B-215735, 64 Comp. Gen. 655
Matter of: 9-1-1 Emergency Number Fee, July 1, 1985
Taxes - State - Constitutionality - Assessment v. Service Charge
Texas 9-1-1 Emergency Number Act authorizes establishment of
communication districts to process calls to public safety agencies from
residents of each district in large metropolitan areas for emergency
aid, accessed by dialing 911. Each district is governmental entity
performing a municipal service and is permitted by Texas law to assess
service fees to recoup operating costs. The fee assessed by the
districts amounts to a tax from which Federal entities are
constitutionally immune.
Taxes- State - Governmental Immunity - Taxes Imposed on Other Than
Government - Incidence of Tax on Vendor
While 9-1-1 service fee appears as a separately stated item on
monthly telephone bills of district customers, telephone company is only
collection agent for district and is not itself the service provider.
Legal incidence of the tax is directly on telephone service customers or
"vendees," including GSA. Direct taxes on U.S. as vendee are
unconstitutional; therefore 9-1-1 fee must be withheld from payment.
An authorized certifying officer of the General Services
Administration (GSA), requested an advance decision under 31 U.S.C.
Section 3529 on the propriety of paying a 9-1-1 emergency number service
fee, itemized on the telephone bills of Houston, Texas, customers
(including GSA) of the Southwestern Bell Telephone Company. If this
were a fee imposed by the telephone company for its own services and
duly permitted by the tariff to which all utility customers are subject,
we would find that the charges are properly due and payable by the
United States as a utility customer. However, for the reasons explained
below, we conclude that this particular charge is a tax, the legal
burden of which falls directly on the Federal Government as the service
consumer (vendee), and that the Government is constitutionally immune
from paying it. (A June 11, 1984 legal opinion provided by GSA's
Regional Counsel on this matter comes to the same conclusion.) GSA
should continue its present policy of deducting the 9-1-1 service fee
from its payments to Southwestern Bell.
I
CHARACTERISTICS OF THE HOUSTON 9-1-1 SERVICE CHARGE
In 1983, Texas enacted the 9-1-1 Emergency Number Act, Tex. Stat.
Ann., art. 1432c (Vernon 1983) (hereafter cited by section number in
art. 1432(c). Under the Act, areas with more than 2 million population
(Section 4(a)) can, by referendum (Section 10(e)), establish a special
purpose district (called a "communication district") (Section 5(a)) to
provide answering, referral and dispatch service for emergency calls to
all area public safety agencies, using the emergency service telephone
number, "9-1-1" (Section 8).
Each communication district's powers are enumerated in the law as
follows:
The district, when created and confirmed, constitutes a public
body corporate and politic, exercising public and essential
governmental functions, having all the powers necessary or
convenient to effect the purposes and provisions of this Act,
including the capacity to sue or be sued. * * * Section 11(a).
Funding for the district is also specified in the Act. The district
is permitted to accept "federal, state, county, or municipal funds as
well as private funds * * * ." (Section 11(b). The district is also
empowered to raise funds. At its option, the district may incur bonded
indebtedness to finance its start-up costs (Section 16). It may also
"levy and collect (a) 9-1-1 emergency service fee" (Section 11(a)), and
use the fee either to retire its bonds or to fund day-to-day operations,
or both.
The amount of the 9-1-1 fee is determined by the district (Section
12), but it may not exceed 2 percent of the base rate charged by the
local telephone company for each local exchange access or trunk line
(Section 10(b)). A telephone customer will be assessed the service fee
on each of its lines up to 100 lines per entity per location (Section
13(a)). Coin-operated telephones are exempt from the fee (Section
13(a)).
The 9-1-1 Emergency Number Act also provides that "(e)very billed
service user is liable for any fee imposed * * * ." (Section 13(a)).
The local telephone company has a "duty * * * to collect the fee"
(Section 13(a)) and to remit all collections quarterly to the governing
board of the communication district (Section 13(c)). In the event of
non-payment by a service user, the telephone company is required to
notify the district. (Section 13(b)). The district will then "commence
legal proceedings to collect fees" from the user (Section 13(b)).
The Act requires that the 9-1-1 fee be added to and separately stated
on the telephone company's regularly issued bills. Section 13(a) and
(b). The telephone company is required to maintain records of its fee
collections for 2 years and make them available for audit at the
district expense. Section 13(c). In return for its services, the
telephone company is allowed an administrative fee of 2 percent of the
collected 9-1-1 fees. Section 13(c).
This statutory description of the local telephone company's
responsibility with regard to the service fee, in our view, clearly
limits the utility's role to that of collection agent for services
provided by each district. This means that the legal burden of the tax
is not on the utility as vendor but on the consumer of utility services
-- the vendee.
II
DISCUSSION
The United States and its instrumentalities are constitutionally
immune from direct taxation. McCulloch v. Maryland, 17 U.S. (4 Wheat.)
316 (1819). Where the legal incidence of the tax falls directly on the
United States as the buyer of goods, Kern Limmerick, Inc. v. Scurlock,
347 U.S. 110 (1954) or as the consumer of services, 53 Comp. Gen. 410
(1973), or as the owner of property, United States v. Allegheny County,
322 U.S. 174 (1944), it may not be taxed by states and their inferior
governmental units. Such taxes may be grouped together and called
"vendee" taxes. Only the Congress can waive the Government's
constitutional immunity to a direct tax by expressly authorizing its
payment. See, e.g., 5 U.S.C. Sections 5516-20; 31 U.S.C. Sections
6901-06 (1982).
On the other hand, if the legal incidence of the tax falls directly
on a business enterprise (the "vendor") which is supplying the Federal
Government as a customer with goods or services, it is the contract or
other agreement which determines what the Government must pay for the
items supplied. For example, contract language stating that the "price
includes all applicable taxes" will authorize full payment of the
contract price, even though some of the cost of the item is attributable
to taxes paid by the vendor. 45 Comp. Gen. 192 (1965); 23 Comp. Gen.
957 (1944); B-160129, Dec. 7, 1966.
The same principle applies to taxes on public utilities. A utility's
vendor taxes which are passed along to customers can be paid (i.e.
reimbursed) by the United States if they are included in an approved
tariff. 32 Comp. Gen. 577 (1953). The State Public Utility Commission
could approve the vendor tax either as an undifferentiated element of
cost subsumed in the basic rate (B-144504, June 9, 1967) or as a
separately stated component of the approved rate. 61 Comp. Gen. 257
(1982); B-144504 June 30, 1970. The Government's obligation to pay is
contractual; if a valid vendor tax appears on a utility bill but has
not been approved by the Public Utility Commission as a part of the
tariff, there is no basis for the United States to pay. See 45 Comp.
Gen. 192 (1965); B-134602, Dec. 26, 1957.
If approved by the Public Utility Commission, the exact type of
vendor tax is unimportant. Compare 32 Comp. Gen. 577 (1953) (franchise
tax); B-123206, June 30, 1956 (sales tax); B-148667, May 15, 1962
(business privilege tax); and B-171756 Feb. 22, 1971 (tax surcharge).
In the above-cited cases, payment was allowed because the taxes were
vendor taxes and approved by the Public Utility Commission as a part of
the tariff. In the present case, as pointed out earlier, the 9-1-1 Act
imposed a fee for a governmental service not on the vendor utility, but
directly on a class of district residents (vendees) who use the
telephone services of Southwestern Bell. Although termed a "service
fee," it is clear that the service provider is not the telephone company
but rather each governmental communication district, which utilizes the
telephone company as an agent to collect the district's service fee.
It must be noted that the fact that the charge is called a "service
fee" is legally irrelevant if, as we think is the case here, the charge
was really a vendee tax imposed by a local government unit under state
law on a class of residents -- telephone users -- who receive certain
emergency services which the governmental unit is obligated by state law
to provide. See Van Brocklin v. Tennessee, 117 U.S. 151 (1886); Mullen
Benevolent Corp. v. United States, 290 U.S. 89 (1933).
VII
CONCLUSION
It is our opinion that the Houston 9-1-1 emergency service fee is a
vendee tax, the incidence of which falls directly on the United States
as the user of telephone services. Unlike vendor taxes which often
appear on public utility bills as part of the vendor utility's cost of
doing business and which must be paid if authorized by a Public Utility
Commission approved tariff, there is a constitutional immunity from a
direct (vendee) tax imposed by a governmental unit to defray the costs
of government services it is required by law to provide. Accordingly,
payment of the 9-1-1 fee would be improper, and GSA should continue its
present policy of withholding the fee portion of the basic rate charges
from its payments to Southwestern Bell for telephone service.
B-219081, 64 Comp. Gen. 653
Matter of: Prescott's Orthotics & Prosthetics, June 28, 1985
Contracts - Negotiation - Competition - Equality of Competition
In the absence of any law or regulation indicating a contrary policy,
unrestricted competition on all government contracts between commercial
concerns and nonprofit educational institutions is required by the
statutes governing federal procurement.
Contracts - Negotiation - Requests for Proposals - Specifications -
Minimum Needs - Administrative Determination
An agency is responsible for determining its minimum needs and the
best way of accommodating those needs, and we will not question that
determination absent a clear showing that it is unreasonable. Once an
agency establishes prima facie support for its position, the burden
shifts to the protester to show such determination is clearly
unreasonable. The protester has not carried its burden here.
Contractors - Conflicts of Interest - Potential or Theoretical
An allegation of a conflict of interest is denied where the record
contains no evidence that physicians, employees of both the contracting
agency and proposed awardee, would improperly refer the agency's
patients to the awardee.
Prescott's Orthotics & Prosthetics (Prescott) protests the proposed
award of a contract for prosthetic services by the Veterans
Administration (VA) to the University of Texas Health Science Center
Prosthetics Department.
We dismiss the protest.
The VA proposes to award the University of Texas, a tax-supported
institution, a requirements contract for prosthetic services. At the
time of this protest, the VA had requirements contracts with four
private firms that provide the same services as the proposed awardee.
Prescott argues that the University of Texas, as an institution
receiving a substantial amount of money from state and federal tax
revenues, has a distinct advantage over the other contractors.
In the absence of any law or regulation indicating a contrary policy,
unrestricted competition on all government contracts between commercial
concerns and nonprofit educational institutions is required by the
statutes governing federal procurement. E.I.L. Instruments, Inc., 54
Comp. Gen. 480 (1974), 74-2 C.P.D. Paragraph 339. Further, although
certain awardees may enjoy competitive advantages as a result of
federal, state, or local programs, the government is not required to
eliminate these advantages unless they are the result of unfair
government action. See Industrial Design Laboratories, Inc., B-215162,
Oct. 16, 1984, 64 Comp. Gen. 8, 84-2 C.P.D. Paragraph 413. We are
unaware of any federal procurement statute or regulation that prohibits
a tax-supported university from competing with private firms. Moreover,
there is no indication that the award to the university was caused by
unfair government action.
Prescott also argues that the four firms currently holding
requirements contracts with the VA adequately meet the needs of the
local community. This protest basis is dismissed. Merely because four
firms currently provide the local community with prosthetic services is
not a valid ground for protest. An agency has the responsibility to
determine its minimum needs and the best way of accommodating those
needs, and we will not question that determination absent a clear
showing that it is unreasonable. Logistical Support, Inc., B-215724,
June 17, 1982, 82-1 C.P.D. Paragraph 599. The initial burden is on the
procuring agency to establish prima facie support for its minimum needs.
Once established, the burden shifts to the protester to show that such
determination is clearly unreasonable. The Trane Company, B-216499,
Mar. 13, 1985, 85-1 C.P.D. Paragraph 306. Here, the VA decided that its
patients needed another provider of prosthetics. Prescott has not shown
that the VA's determination to award another requirements contract was
prima facie unreasonable, but only that it disagreed with the
determination. In light of these circumstances, there is no reason to
overrule the agency's decision.
Prescott's final contention is that a conflict of interest exists
because VA physicians are also on the university's staff. Prescott
argues that this situation will lead to agency physicians referring
patients needing prosthetic services to the university. The VA responds
that it strictly enforces its rules and regulations addressing conflicts
of interest.
It is well settled that a protester has the burden of proving its
case. National Services Corp., B-205629, July 26, 1982, 82-1 C.P.D.
Paragraph 76. Moreover, a protester has not met its burden of proof
where the allegation of conflict of interest is based solely on the
protester's speculative statements. Louis Berger & Assoc. Inc.,
B-208502, Mar. 1, 1983, 83-1 C.P.D. Paragraph 195. Here, there is no
evidence that physicians at the VA will only refer patients to the
university. Prescott has simply shown that the possibility of a
conflict of interest exists.
The protest is dismissed.
B-219061, 64 Comp. Gen. 649
Matter of: Funding for Refugee and Entrant Targeted Assistance
Pursuant to the Fiscal Year 1985 Continuing Resolution, June 28, 1985
Appropriations - Continuing Resolutions - Expiration - Unobligated
Balance Availability
Unobligated fiscal year 1984 carryover funds should not be deducted
from the sum appropriated for refugee and entrant targeted assistance by
the Fiscal Year 1985 Continuing Resolution. The general rule set forth
in 58 Comp. Gen. 530 (1979) on which the Office of Refugee Resettlement
(ORR) relied is distinguished. The result is also supported by strong
expressions of congressional intent in the legislative history.
Appropriations - Impounding - Executive Branch's Failure To Expend
Appropriated Funds
Although General Accounting Office differs from the ORR in arriving
at the amount made available in Fiscal Year 1985 by the Continuing
Resolution for refugee and entrant targeted assistance, we do not
consider ORR to have violated the Impoundment Control Act, 2 U.S.C. 681
et seq. (1982). This case involves a good faith disagreement regarding
the total amount of funds available for a particular program. There is
no evidence that any agency official determined that the funds in
question should not be spent for fiscal policy or other reasons.
This decision is in response to a direction to the Comptroller
General included in the report of the House Committee on Appropriations
on H.R. 2577, the Supplemental Appropriations Bill, 1985. The Committee
directed this Office to determine the proper interpretation of the
Fiscal Year 1985 Continuing Resolution, Pub. L. No. 98-473, 98 Stat.
1873, October 12, 1984, as it relates to funding for refugee and entrant
targeted assistance administered by the Office of Refugee Resettlement
(ORR) of the Department of Health and Human Services (HHS). H. Rep. No.
142, 99th Cong., 1st Sess. 111 (1985). This decision also responds to a
related letter dated May 29, 1985, to this Office from four Members of
the Congress -- Representatives Don Edwards, Richard H. Lehman, Howard
L. Berman, and Charles Pashayan, Jr. The May 29 letter requests that
this Office review ORR's proposed funding level for refugee and entrant
targeted assistance and determines whether that funding level
constitutes an unlawful recission under the Impoundment Control Act, 2
U.S.C. Section 681 et seq. (1982).
Because of the short time period available to prepare a response in
this case, we did not solicit the views of the Department of Health and
Human Services. However, we were provided with a copy of a letter,
dated February 27, 1985, from Phillip N. Hawkes, Director of the Office
of Refugee Resettlement, to Representative Don Edwards which we believe
adequately sets forth the views of HHS in this matter.
As set forth below, we conclude that ORR has incorrectly calculated
the total funds available for targeted assistance in Fiscal Year 1985 by
$39,026,000, a sum which represents an unobligated balance of
appropriations for FY 1984. Based on clear legislative history, the
Congress intended this sum to remain available for obligation in FY
1985, in addition to the amounts appropriated in the 1985 Continuing
Resolution. However, we also conclude that this miscalculation does not
constitute a violation of the Impoundment Control Act.
Background: ORR's Refugee and Entrant Targeted Assistance Program is
authorized by Title IV of the Immigration and Nationality Act, 8 U.S.C.
Section 1521 et seq. (1982). In Fiscal Year 1984, refugee and entrant
assistance activities, including targeted assistance, were funded by the
"Joint Resolution Making Further Continuing Appropriations for Fiscal
Year 1984." Pub. L. No. 98-151, 97 Stat. 964 (1983). That continuing
resolution provided that such activities would be continued at the
"current rate." A dispute developed regarding the meaning of the term
"current rate." See 64 Comp. Gen. 21, (1984). Congress ultimately
resolved the matter in the Second Supplemental Appropriations Act, 1984,
Pub. L. No. 98-396, 98 Stat. 1369, 1392, August 22, 1984, which provided
as follows:
For purposes of section 101(c) of Public Law 98-151, the
current rate for refugee and entrant assistance activities for
fiscal year 1984 is $541,761,000, of which not less than
$71,700,000 shall be available for social services (exclusive of
targeted assistance), and not less than $77,500,000 shall be
available for targeted assistance.
Funds available for refugee and entrant targeted assistance
activities under section 101(c) of Public Law 98-151 shall remain
available through September 30, 1985. 98 Stat. 1392.
At the end of Fiscal Year 1984, ORR had obligated $38,474,000 of the
$77,500,000 specifically available for Targeted Assistance, resulting in
an unobligated carry-over balance for Fiscal Year 1985 of $39,026,000.
See Appendix to the Budget of the United States Government, Fiscal Year
1986, Office of Management and Budget at I-K36.
For Fiscal Year 1985, Congress again resorted to a continuing
resolution to provide specific funding for the Targeted Assistance
Program. Pub. L. No. 98-473, 98 Stat. 1837, 1963, October 12, 1984.
The 1985 Continuing Resolution appropriated in section 101(k):
(k) Such amounts as may be necessary for continuing the
following activities, not otherwise provided for in this joint
resolution, which were conducted in the fiscal year 1984, under
the terms and conditions provided in applicable appropriation Acts
for the fiscal year 1984, at the current rate:
* * * Refugee and entrant assistance activities under the
provisions of title IV of the Immigration and Nationality Act,
title IV and part B of title III of the Refugee Act of 1980, and
section 501(a) and (b) of the Refugee Education Assistance Act of
1980, except that such activities shall be continued at a rate for
operations not in excess of the lower of the current rate or the
rate authorized by H.R. 3729 as passed the House of
Representatives: PROVIDED, That such funds may be expended for
individuals who would meet the definition of "Cuban and Haitian
entrant" under section 501(e) of the Refugee Education Assistance
Act of 1980, but for the application of paragraph (2)(B) thereof;
98 Stat. 1963.
The terms "current rate" and "rate authorized by" some other
reference point -- e.g., a House or Senate-passed bill, a Conference
Report, the President's budget estimate, etc. -- have become terms of
appropriations art in Continuing Resolutions. Both terms must be
translated as a fixed amount of funds, for purposes of comparison, when
the Continuing Resolution directs the agency to operate at the lower of
two (or more) such reference points. See B-152554, October 9, 1970,
printed in 116 Cong. Rec., October 12, 1970, and references therein.
"Current rate" equals the total dollars made available for obligation in
the prior fiscal year. 58 Comp. Gen. 530 (1979); B-194063, May 4,
1979; B-194362, May 1, 1979. The "rate authorized by H.R. 3729" is
similarly a fixed dollar amount.
As passed by the House of Representatives on November 14, 1983, H.R.
3729 would, if enacted, have authorized the appropriation of $50,000,000
for the Targeted Assistance Program. See Cong. Rec. H9786 (Daily ed.
November 14, 1983). Therefore, the comparison amounts are $77,500,000
(current rate) and $50,000,000 (H.R. 3729).
Both ORR and the signatories to the May 29 letter to this Office
agree that of the two "rates" set forth in section 101(k) of the 1985
continuing resolution -- the "current rate" and "the rate authorized by
H.R. 3729" -- the rate authorized by H.R. 3729, $50,000,000, is the
lower. However, the interested parties disagree as to whether that
$50,000,000 figure represents the maximum level of funding for the
program or whether the program may utilize, in addition, the unobligated
carryover balance of $39,026,000 from FY 1984. ORR contends that the
total amount made available for the Targeted Assistance Program in
Fiscal Year 1985 pursuant to the 1985 Continuing Resolution is
$50,000,000. ORR reasons that the $39,026,000 in unobligated Fiscal
Year 1984 Targeted Assistance Funds which were carried over to Fiscal
Year 1985 must be deducted from the $50,000,000 "rate for operations
specified by Congress" in order to comply with the directive that the
rate for operations should not be "in excess" of the lower of the two
references. Therefore, ORR concludes that the amount of "new funds"
appropriated for Targeted Assistance by the 1985 Continuing Resolution
is only $10,974,000. In support of this analysis, ORR cites our
decision in 58 Comp. Gen. 530 (1979) which dealt with a similar
situation under a Fiscal Year 1979 continuing resolution.
Representatives Edwards, Lehman, Berman, and Pashayan, however,
contend that the total amount available for the Targeted Assistance
Program in Fiscal Year 1985 pursuant to the 1985 Continuing Resolution
is the $50,000,000 specified in H.R. 3729 plus the $39,026,000 in
unobligated Fiscal Year 1984 carry-over funds, or a total of
$89,026,000. They contend that the $50,000,000 specified in HR 3729 was
intended to be new funds appropriated for Fiscal Year 1985 and that ORR
is acting erroneously in deducting Fiscal Year 1984 carry-over from that
sum. In support of their position, they cite the legislative history of
the 1985 Continuing Resolution, including the following excerpt from the
Conference Committee Report:
It is the intent of the conferees that $50,000,000 will be
available for the targeted assistance program in fiscal year 1985,
and that the Department will expend new monies to fulfill the 1985
appropirations levels provided by this bill. The conferees * * *
direct the Department not to reduce any State or local entity's
allotment on the basis of 1984 funds carried over or previously
committed. (H. Rep. No. 1159, 98th Cong., 2d Sess. 402 (1984)).
The signatories to the May 29 letter to this Office contend,
accordingly, that ORR's funding of Targeted Assistance in Fiscal Year
1985 at $50,000,000 constitutes an unlawful recission of $39,026,000
under the Impoundment Control Act.
ANALYSIS
We conclude that our decision in 58 Comp. Gen. 530 (1979) is clearly
distinguishable from the instant case.
The 1979 case concerned the availability of funds appropriated by the
fiscal year 1979 Continuing Resolution for a Department of Labor program
to be continued at a rate for operations "not in excess of the lower of
the current rate or the rate authorized by S. 2570 as passed by the
House of Representatives." The legislative language is, as ORR points
out, very similar to the language in the 1985 Continuing Resolution used
to fund the Targeted Assistance Program. However, in the 1979 case, the
"current rate" and not the bill authorization "rate" turned out to be
the lower dollar figure. We held that if there is a balance of
unobligated funds which is carried over into the present fiscal year,
that balance must be deducted from the "current rate" to determine the
amount of new funds actually appropriated by the continuing resolution.
This is because the "current rate" is made up of all the funds which
were available to the agency for the prior fiscal year, whether
obligated or expended or still available for obligation. Put another
way, the term "current rate" already includes an unobligated balance, if
any. To have added the unobligated balance to the "current rate"
dollars in the 1979 case, would have been duplicative and have
frustrated congressional intent that the 1979 program be carried out at
a rate of operations not in excess of the "current rate."
In contrast, the $50 million for the Targeted Assistance
appropriation does not include a prior year's balance. In fact, the
legislative history clearly indicates that the Congress was well aware
of the existence of the unobligated carryover funds and wanted them to
remain available for the program in addition to its new monies. (See
excerpt from Conference Committee Report, cited above). The Congress
took pains to instruct the Department to calculate each state's
allotment for Targeted Assistance without reference to "1984 funds
carried over or previously committed." H. Rep. No. 1159, supra. We
therefore conclude that the rule with respect to deduction of
unobligated balances in 58 Comp. Gen. 530 is not applicable where the
lower of two references rates is not the current rate.
Finally, although we do not agree with ORR's calculations of the
amount of funds made available for the targeted assistance program for
fiscal year 1985, we do not think that ORR violated the Impoundment
Control Act, 2 U.S.C. Section 681, et seq. (1982). This case involves a
good faith disagreement regarding the total amount of funds available
for a particular program. There is no evidence that any agency official
determined that the funds in question should not be spent because they
were not needed, or for fiscal policy or other reasons. See B-200769,
November 7, 1980. Accordingly, we conclude that in the instant case,
the failure of ORR to make the disputed $39,026,000 available for
obligation does not constitute an illegal rescission within the
contemplation of the Impoundment Control Act.
B-218640, 64 Comp. Gen. 647
Matter of: Prince George's Contractors, Inc., June 28, 1985
Contracts - Protests - Court Action - Dismissal
General Accounting Office (GAO) will not consider a protest where the
issues presented are before a court of competent jurisdiction, despite
the court's indication that it is willing to consider an advisory GAO
decision. The court has also indicated that it intends to rule on the
merits in advance of the date when it can be reasonably expected that
GAO will be in a position to issue a decision, given the statutory time
period for the agency to file its report on the protest and for the
parties to comment on that report.
Prince George's Contractors, Inc. protests award to Chemung
Contracting Corporation under invitation for bids No.
DTFA-15-85-B-10010, issued by the Federal Aviation Administration (FAA)
for the rehabilitation of ramp taxiways at Washington, D.C. National
Airport. Prince George's contends that award was improper because the
FAA had the intention, before award, of significantly modifying the
contract; according to the protester, this occurred on the day after
award, thereby denying other bidders the opportunity to bid on the basis
of the contract as awarded.
We will not consider the protest.
Prince George's filed its protest with our Office on May 24, 1985.
Prince George's subsequently filed suit in the U.S. District Court for
the District of Columbia, Prince George's Contractors, Inc. v. Donald D.
Engen, Administrator, et al. (Civil Action No. 85-607), seeking
injunctive relief. As a part of that proceeding, Prince George's
obtained an order on June 13 requesting an advisory opinion from our
Office prior to the date scheduled for the hearing on the preliminary
injunction, June 26, or as soon thereafter as possible.
By letter dated June 17, we informed the court that we were not in a
position to provide an advisory opinion until such time as the agency
report and the comments of the protester and interested parties had been
received, enabling us to review a complete file and issue a decision.
We suggested that if the court still desired our assistance, it should
establish deadlines for submissions by the various parties to our
proceeding consistent with the court's time requirements.
We also asked the FAA voluntarily to expedite the processing of its
report on the protest, and we asked the other parties to the protest to
agree to abbreviated times for preparing comments. /1/ Only the
protester voluntarily agreed to expedited processing of the bid protest.
The court, by letter of June 18, advised that, regretfully, it must
proceed without benefit of our advisory opinion unless it is
fortuitously issued earlier than expected. The court further advised
that it intended to rule on Prince George's motion for a preliminary
injunction by mid-July, and perhaps earlier.
The hearing was held on June 26 as scheduled with a representative of
our Office in attendance. Our Office's role in the court's proceeding
was not discussed at the hearing, and the possibility of expediting the
proceedings before our Office, by mandating abbreviated filing
schedules, was not considered by the court. Rather, the hearing, which
took more than 5 hours, dealt with the propriety of the contract award
and the other matters at issue. At the close of the hearing, the court
reiterated its intent to rule on Prince George's motion by mid-July and
perhaps earlier.
As noted above, Prince George's protest was filed here on May 24. In
accord with the Competition in Contracting Act of 1984, 31 U.S.C.A.
Section 3553 (West Supp. 1985), we have requested a report from FAA that
is due on July 2, 25 working days from the agency's receipt of notice of
the protest. After that, under our Bid Protest Regulations, the
protester and interested parties have 7 additional working days to
comment upon the FAA report, that is, until the close of business, July
12. See 4 C.F.R. Section 21.3. Consequently, it appears that the court
will, in all likelihood, rule on the merits of the dispute before the
issuance of a decision by our Office under even the most optimistic
assumptions.
Our Bid Protest Regulations require the dismissal of any protest
where the matter involved is the subject of litigation before a court of
competent jurisdiction (unless the court requests a decision by the
General Accounting Office) or where the matter involved has been decided
by the court, 4 C.F.R. Section 21.9, and it is the policy of our Office
not to decide the protests that come within these guidelines. Pitney
Bowes, Inc., B-218241, June 18, 1985, 64 Comp. Gen. 623, 85-1 CPD
Paragraph 696. Despite the court's stated willingness to consider a
decision of this Office should one fortuitously be issued earlier than
expected, there exists no reasonable expectation that a decision can be
issued in time to assist the court, given the court's stated intent to
rule on Prince George's motion by mid-July or earlier. Rather, there is
every reason to believe that our Office's decision would only be issued
after the court has decided the matter on the merits when, under the
doctrine of res judicata, the court's resolution of the issues will bind
this Office. We therefore see no purpose of further considering the
protest.
Protest dismissed.
FOOTNOTES
(1) Because Prince George's did not request expedited processing
within 3 days of filing its protest, its request is not for
consideration under the express option provisions of our Bid Protest
Regulations, 4 C.F.R. 21.8 (1985).
B-206219, 64 Comp. Gen. 643
Matter of: Jeffrey P. Cardinal - Repayment of Relocation Expenses,
June 28, 1985
Officers and Employees - Transfers - Service Agreements -
Administrative Determination
Former air traffic controller challenges indebtedness for relocation
expenses paid incident to his transfer from Alaska to California where
he failed to complete the 12-month service agreement he signed pursuant
to agency regulations. Although a service agreement is not required by
statute for a transfer from Alaska to the 48 States, our decisions have
held that an agency may require a service agreement before paying such
relocation expenses and that the employee is bound by the terms of the
agreement. Since the former employee signed a service agreement, he is
bound by its terms.
Officers and Employees - Transfers - Service Agreements - Failure To
Fulfill - Involuntary Separation
Former air traffic controller violated his relocation service
agreement when he was fired for participation in a strike. Waiver of
the service agreement depends on a determination that the separation was
beyond the employee's control and acceptable to the agency. That
determination is primarily for the agency to decide, and our Office will
not overrule absent evidence it was arbitrary or capricious.
The issues in this decision involve the indebtedness of a former
Federal employee for relocation expenses where the employee was
separated from Government service before completing his 12-month service
agreement. We hold that the agency may require such a service agreement
as a condition for paying relocation expenses. In addition, we sustain
the agency's determination that the employee's separation was not for
reasons beyond his control nor for reasons which were acceptable to the
agency.
BACKGROUND
This decision is in response to the claim of Mr. Jeffrey P. Cardinal,
a former employee of the Federal Aviation Administration (FAA), for
repayment of retirement contributions which the FAA applied against his
indebtedness to the agency for advance annual leave and relocation
expenses. Mr. Cardinal is represented by his attorney, William J.
Flynn.
Mr. Cardinal was employed by the FAA as an air traffic controller,
and in December 1980, he transferred from Anchorage, Alaska, to
Freemont, California. He signed a travel and transportation agreement
with the FAA which stated that in consideration of payment of his
relocation expenses, he agreed to remain in the Government service for
12 months from the date of relocation, unless separated for reasons
beyond his control and acceptable to the agency. The date of relocation
was January 3 1981, the date Mr. Cardinal reported to his new duty
station.
The record before us indicates that Mr. Cardinal was fired by the FAA
in August 1981, for his participation in the strike by FAA air traffic
controllers. His appeal of his removal was denied by the Merit Systems
Protection Board, and he did not pursue an appeal before the U.S. Court
of Appeals for the Federal Circuit.
Following his removal, the FAA determined that Mr. Cardinal was
indebted for advance annual leave ($1,078.70) and repayment of his
relocation expenses ($14,323.59). When Mr. Cardinal applied for refund
of his retirement contributions ($7,823.29) the FAA applied this amount
against his indebtedness, and the FAA has been pursuing collection of
the balance of the indebtedness.
On behalf of Mr. Cardinal, Mr. Flynn does not dispute indebtedness
for the advance annual leave. However, with respect to the relocation
expenses, Mr. Flynn argues that his client was discharged and that since
the agency failed to allow him to complete his "contractual
obligations," it cannot now seek damages for breach of that agreement.
Mr. Flynn also argues that 5 U.S.C. Section 5724(i) concerning service
agreements applies only to transfers within the "continental United
States," and that since Mr. Cardinal was transferred from Alaska to
California, the statute does not apply to his situation. Finally, Mr.
Flynn contends that the agency may not extend a service agreement beyond
the limits of the statute, citing Finn v. United States, 192 Ct. Cl. 814
(1970).
The report from the FAA states that Mr. Cardinal was separate for
participation in an illegal strike contrary to 5 U.S.C. Section 7311 and
for absence without leave. The report states further that Mr.
Cardinal's actions as a striker required that he be terminated from the
Federal service and that his separation was not for reasons beyond his
control. The FAA argues that Mr. Cardinal was transferred within the
continental United States and that his relocation expenses were paid
under the authority of 5 U.S.C. Section 5724(a) and (i). The FAA
concludes that Mr. Cardinal is indebted for repayment of his relocation
expenses, citing a memorandum opinion in Smith v. United States, No.
82-C-1328-M., slip. op. (N.D. Ala. March 31, 1983).
OPINION
The first issue for our decision concerns the authority for the FAA
to require a service agreement in connection with this transfer. We
note that for certain transfers under the relocation statutes, an
employee must agree to remain in the Government service for 12 months
after the transfer, unless separated for reasons beyond the employee's
control which are acceptable to the agency concerned. Thus, an employee
who is transferred to a post of duty outside the continental United
States or an employee is transferred within the continental United
States is required by statute to sign a service agreement. See 5 U.S.C.
Sections 5722(b) and 5724(i) (1982). See also para. 2-1.5 of the
Federal Travel Regulations (FTR), incorp. by ref., 41 C.F.R. Section
101-7.003 (1984).
The term "continental United States" is defined in 5 U.S.C. Section
5721(3) as the several States and the District of Columbia, but not
including Alaska or Hawaii. Thus, since Mr. Cardinal transferred from
Alaska to California, his transfer was not within the "continental
United States" as the term is used in the statute and regulations. /1/
We also note that Mr. Cardinal's transfer was not subject to the
provisions of 5 U.S.C. Section 5722(b), since he was transferred from a
duty station outside the continental United States rather than to a duty
station outside the continental United States.
However, our decisions have held that even though the statute does
not require a service agreement, agencies may refuse to pay relocation
expenses unless the employee signs a service agreement. Johnny R.
Dickey, 60 Comp. Gen. 308 (1981); 47 Comp. Gen. 122 (1967); Thelma B.
Van Horn, B-205892, July 13, 1982; and B-163726, May 8, 1968. Where
the employee signs such an agreement, as Mr. Cardinal did in this case,
he is bound by its terms. 47 Comp. Gen. 122; and B-163726, cited
above.
Mr. Cardinal signed a service agreement under the authority of
Department of Transportation (DOT) Order 1500-6, which provides in part
that a service agreement is required for an employee who is transferred
to the continental United States. Paragraph 322, Chapter 3, DOT Order
1500.6. Agency regulations such as these were recommended by our prior
decisions. See 47 Comp. Gen. 122, 125, cited above.
Mr. Flynn argues that Mr. Cardinal's transfer was not subject to the
provisions of 5 U.S.C. Section 5724(i), and that the agency may not
extend the statute to cover his transfer, citing the court's decision in
Finn, cited above. As noted above, we agree that Mr. Cardinal's
transfer was not subject to the provisions of 5 U.S.C. Section 5724(i),
since that statute applies only to transfers within the continental
United States. We disagree, however, with the application of the Finn
decision to Mr. Cardinal's situation.
In Finn, the Court of Claims considered the situation where, incident
to a relocation, an agency required 12 months of service with that
agency or the employee would violate the service agreement. The court
held in Finn that where the applicable statute and regulations required
only 12 months of Government service, the agency could not impose the
more specific requirement of agency service. 192 Ct. Cl. 814, 820.
In Mr. Cardinal's case, the FAA has not imposed a more specific
service agreement than that required by 5 U.S.C. Sections 5722(b) or
5724(i), and the agency's use of a service agreement in this situation
has been recognized by our decisions. Therefore, we conclude that the
Finn decision does not preclude the agency from requiring Mr. Cardinal
to sign a service agreement.
The next issue for our decision is whether Mr. Cardinal was separated
for reasons which were beyond his control and which were acceptable to
the FAA. Our decisions in this regard state that this determination
rests primarily with the agency concerned and that we will overturn the
agency's determination only where it has been shown to be arbitrary or
capricious. William C. Moorehead, 56 Comp. Gen. 606 (1977); Arnold M.
Biddix, B-198938, March 4, 1981; and B-114898, July 31, 1975.
Mr. Flynn argues that Mr. Cardinal did not quit but was discharged by
the FAA. He contends that Mr. Cardinal has been willing to work for the
FAA since the time of the strike but the agency chose to terminate his
employment, thus excusing a violation of the service agreement.
We note that Mr. Cardinal was separated from the Federal service for
cause, and although he may have had little control in his separation,
the actions resulting in his separation were within his control.
B-114898, cited above. Thus, in the absence of any evidence that the
FAA was arbitrary or capricious in refusing to accept Mr. Cardinal's
reasons for his separation from Government service, we sustain the FAA's
action in this case.
Accordingly, we conclude that Mr. Cardinal violated his service
agreement and is indebted for the relocation expenses paid pursuant to
that agreement.
FOOTNOTES
(1) FTR para. 2-1.5 refers to the "conterminous United States" which
is defined as the 48 contiguous States and the District of Columbia.
FTR para. 2-1.4a.
B-218556, 64 Comp. Gen. 641
Matter of: Container Products Corporation, June 26, 1985
Contracts - Protests - Information Evaluation - Sufficiency of
Submitted Information
Failure specifically to request a ruling by the Comptroller General
or to state the remedy desired, as required by General Accounting Office
Bid Protest Regulations, is a minor procedural defect which does not
require dismissal of the protest when the protest otherwise clearly
indicates the desire for a ruling and the requested remedy.
Contracts - Protests - General Accounting Office Procedures - Filing
Protest With Agency
Protest will not be dismissed for failure to furnish the contracting
officer a copy of the protest 1 day after filing as required by GAO's
Bid Protest Regulations, where the 1-day delay in doing so did not delay
protest proceedings.
Contracts - Protests - Contract Administration - Not for Resolution by
GAO
Protest that contractor will not supply acceptable items
notwithstanding the contractual obligation to do so involves a matter of
contract administration, which is the procuring agency's responsibility,
not GAO's.
Container Products Corporation (CPC) protests the Pearl Harbor Naval
Shipyard's issuance of purchase order No. N00311-85-M-7054 to Cromwell's
Welding Company (Cromwell's) for waste containers used in transporting
contaminated waste to disposal sites.
We dismiss the protest.
The Navy's request for quotations required that the containers be
constructed to specified Department of Transportation (DOT) requirements
published in title 49 of the Code of Federal Regulations and that
certification of compliance and a supporting safety analysis be
provided. Quotations were received from Cromwell and CPC, with
Cromwell's offer being low. CPC contends, however, that Cromwell's
containers will not meet the required DOT standards.
Initially, the Navy contends that the protest should be dismissed
since the protester failed to request a ruling from the Comptroller
General; failed to specify the form of relief requested; and failed to
furnish a copy of the protest to the contracting officer within 1 day
after filing the protest in our Office, as required by our Bid Protest
Regulations, 4 C.F.R. part 21 (1985).
Section 21.1 of our Regulations provides, in subsection (c), that the
protest "shall * * * (5) Specifically request a ruling by the
Comptroller General * * * and (6) State the form of relief requested."
While these requirements are stated in mandatory terms, subsection (f)
states that a protest "may" be dismissed for failure to comply with any
of the requirements of the section. Although CPC did not expressly
request a ruling by the Comptroller General or specify desired remedies,
there was no ambiguity about the protest issue or that CPC was
requesting a decision by our Office and award of a contract. Therefore,
the cited filing failures constitute minor defects which do not require
dismissal of the protest.
As to the Navy's remaining objection, section 21.1(d) of our
Regulations requires that the protester furnish to the contracting
officer, or, if appropriate, another person or location designated by
the agency, a copy of the protest no later than 1 day after the protest
is filed in our Office. CPC filed the protest in our Office on April
15, 1985, but the contracting officer did not receive a copy until April
17. (The protester is located in Wilmington, North Carolina, and the
procuring activity is located in Pearl Harbor, Hawaii.)
The basis for section 21.1(d) is found in 31 U.S.C. Section 3551, et
seq., as added by section 2741(a) of the Competition in Contracting Act
of 1984 (CICA), Pub. L. No. 98-369, which requires both that our Office
notify the contracting agency of the existence of a protest within 1 day
of the filing date and that the agency furnish a report on the protest
within 25 working days after this notice. We strictly enforce section
21.1(d) to avoid a delay that would hamper the contracting agency's
ability to meet the 25-day statutory deadline and otherwise delay
protest proceedings. Agha Construction -- Reconsideration, B-218741.3,
June 10, 1985, 85-1 C.P.D. Paragraph 662.
Nevertheless, as pointed out above, we retain the discretion, in
section 21.1(f) of our Regulations, to grant exceptions to the
requirement. Under the provisions of CICA, the agency report was due in
our Office by May 20 and was received on May 17. The 1-day delay in the
agency's receipt of a copy of the protest did not result in a delay of
the protest proceedings. Therefore, CPC's failure to furnish a copy of
the protest to the procuring activity 1 day after filing in our Office
does not require dismissal of the protest.
We dismiss the protest on the merits, however. The Navy states that
Cromwell has delivered the containers, including the required
certification and safety analysis. Also, the Navy has determined that
the containers and analysis conform to the requirements of the purchase
order, and CPC has furnished no evidence to refute the Shipyard's
finding. In any case, whether the items a contractor delivers actually
comply with the performance obligation resulting from an award is a
matter of contract administration, which is the responsibility of the
procuring activity, not our Office. Lion Brothers Company, Inc.,
B-212960, Dec. 20, 1983, 84-1 C.P.D. Paragraph 7.
The protest is dismissed.
B-218447.2, 64 Comp. Gen. 639
Matter of: Turbine Engine Services - Request for Reconsideration,
June 25, 1985
Contractors - Responsibility - Determination - Factors for
Consideration - Previous Rating, etc.
A prospective contractor's alleged unacceptable performance of a
prior federal contract is one factor an agency should consider in
determining the firm's responsibility, but does not automatically render
the firm ineligible for award. General Accounting Office will not
review an agency's affirmative determination of a firm's responsibility
where there is no allegation or showing that the agency determination
resulted from possible fraud or bad faith, or that a definitive
responsibility criterion was not met.
Bids - Responsiveness - Pricing Response Nonresponsive to IFB
Requirements - Failure to Bid Firm, Fixed Price
A bid is nonresponsive, and the bidder submitting it thus is not
eligible for award, where the intended total bid price cannot be
determined from the bid documents submitted at the time of bid opening.
Turbine Engine Services (Turbine) requests reconsideration of our
decision Energy Maintenance Corp.; Turbine Engine Service Corp.,
B-215281.3; B-215281.4, Mar. 25, 1985, 64 Comp. Gen. 425, 85-1 C.P.D.
Paragraph 341, holding that the U.S. Coast Guard improperly canceled
solicitation No. DTCG40-84-B-0173 for turbine engine overhauls. In
sustaining the protest, we recommend that the Coast Guard reinstate the
solicitation and make award to the protester, Energy Maintenance
Corporation (EMC), the low responsive bidder, if the firm was found
otherwise eligible for award. Turbine claims our decision and
recommendation are erroneous. We affirm the decision.
We sustained the EMC protest on the ground that the agency
incorrectly had determined that the solicitation did not fully describe
the required work, and thus was ambiguous. /1/ We found that the
solicitation as a whole clearly set forth the agency's needs, and thus
should not have been canceled. Turbine argues that our decision is
erroneous because: (1) it is inconsistent with our earlier decision,
Turbine Engine Services Corp., B-215281.2, Aug. 21, 1984, 84-2 C.P.D.
Paragraph 206, upholding the cancellation of solicitation No.
DTCG40-84-B-0173; (2) EMC should have been ineligible for the award
because it furnished an unacceptable engine under a prior Coast Guard
contract; and (3) we should have recommended an award to Turbine
instead of EMC since Turbine was the low responsive bidder.
We did reject Turbine's arguments that the solicitation
specifications were not defective in our Turbine decision and held that
cancellation of the solicitation was unobjectionable. That decision,
however, was based on the facts before us at that time. Turbine
previously had objected (in Turbine Engine Services Corp., B-215281, May
29, 1984, 84-1 C.P.D. Paragraph 582, which we dismissed as untimely
filed) that the specifications were defective. In view of this earlier
argument and the agency's position, we found Turbine's new argument
unpersuasive. Subsequently, we received a protest from EMC, and learned
that EMC was neither party to nor advised of Turbine's protest of the
cancellation. As a result, and because EMC raised arguments never
asserted by Turbine, we considered EMC entitled to a decision on the
merits of its protest. The agency's response to EMC's protest and the
record developed for the protest showed for the first time that the
cancellation in fact was not legally justifiable.
The EMC may have furnished an unacceptable engine under a prior Coast
Guard contract does not render erroneous our recommendation that award
be made to EMC "if otherwise found to be eligible for the award."
Contrary to Turbine's apparent understanding, unsatisfactory past
performance does not automatically render a firm ineligible for future
contract awards. Rather, performance history is but one of several
factors an agency should take into account in considering a prospective
contractor's responsibility, that is, its ability to perform
satisfactorily. Jay Fran Corp., B-217145, Jan. 2, 1985, 85-1 C.P.D.
Paragraph 8.
After receiving our recommendation, the Coast Guard apparently
determined that, notwithstanding alleged past performance problems, EMC
was a responsible contractor; we have been advised that award has been
made to EMC. As there is no allegation or showing that EMC was found
responsible as a result of agency fraud or bad faith, or that a
definitive responsibility criterion was not met, we will not consider
this matter further. See Bid Protest Regulations, 4 C.F.R. Section
21.3(f)(5) (1985); Jay Fran Corp., supra.
As to whether Turbine in fact was the low responsive bidder, Turbine
was not eligible for the award here -- and our recommendation that award
be made to EMC thus is not improper -- because its bid did not specify
prices for each replacement part as called for under the solicitation.
Instead of providing prices for each part on the 3-page parts list,
Turbine stated as the price for all the parts "Venter Net (T.P.M.S. + 8
1/2%)." In other words, Turbine offered the parts at its cost from TPMS
(Turbo Power & Marine Systems, the original equipment manufacturer
specified in the solicitation) plus an 8 1/2 percent mark-up.
In order to be deemed responsive, a bid must unequivocally offer to
provide the requested items and meet specification requirements at a
firm, fixed price. A bid that limits the firm's contractual obligation
or does not offer performance at a firm, fixed price must be rejected as
nonresponsive. Epcon Industrial Systems, Inc., B-216725, Dec. 27, 1984,
85-1 C.P.D. Paragraph 2. A bidder's intended total price must be
evident from all the bid documents submitted at the time of bid opening.
Id.
Turbine's bid did not meet the above standard. While it would become
clear during performance what price the government would be required to
pay for a given part, this price could not be determined from the face
of Turbine's bid; Turbine neither specified a particular TPMS price
list as the basis for the reference in its bid, nor (we are advised by
the agency) submitted a copy of a price list with its bid.
Consequently, Turbine's intended bid price could not be determined at
the time of bid opening. Under these circumstances, the Coast Guard
properly rejected Turbine's bid as nonresponsive, and we properly
recommended award to EMC (if otherwise qualified), as the low responsive
bidder. /2/
Turbine states that it did not bid specific prices due to a TPMS
policy of pricing its parts by part number and condition. It is not
immediately clear to us why specific prices therefore could not be
included in Turbine's bid. In any case, no matter what the business
practices of qualified parts suppliers, since the solicitation required
that prices be furnished for each part and provided for award based in
part on these prices, bidders, including Turbine, were required to
include them in their bids. If Turbine believed the solicitation was
somehow deficient due to the parts pricing requirement, it was free to
protest the matter to the Coast Guard or our Office prior to bid
opening. Turbine did not do so.
Our prior decision is affirmed.
FOOTNOTES
(1) Turbine's portion of the protest concerned the adequacy of the
specifications in the resolicitation of this requirement issued after
cancellation of the original soliciation. Turbine's protests thus
became academic once we held that the original soliciation should be
reinstated.
(2) As discussed in our decision on EMC's protest, EMC's bid also
contained uncertainties as to certain parts prices. Since EMC clarified
its bid; the range of uncertainty was clear from the face of the bid;
and the bid was low at either end of that range, EMC's bid was
sufficiently definite and, thus, responsive.
B-216861, 64 Comp. Gen. 637
Matter of: Malloy Construction Company - Davis-Bacon Act Debarment -
Stipulation Agreement, June 25, 1985
Bidders - Debarment - Labor Stipulations Violations - Davis-Bacon Act -
Basis
The Department of Labor (DOL) recommended debarment of a contractor
for violations of the Davis-Bacon Act constituting a disregard of its
obligations to employees under the Act, and both parties reached an
agreement in an administrative law proceeding stipulating to the
contractor's debarment. Accordingly, where the contractor specifically
stipulates to debarment, after being granted due process by DOL in the
form of an administrative law proceeding, we will accept DOL's findings
as evidence of a violation of the Davis-Bacon Act. Therefore, the
contractor is hereby debarred under the Act.
The Deputy Administrator, Employment Standards Administration, United
States Department of Labor (DOL), by a letter dated April 23, 1984,
recommended that the names Malloy Construction Company (Malloy);
Patrick Malloy, individually and as its President; and Donald Malloy,
individually and as its Secretary-Treasurer; be placed on the
ineligible bidders list for violations of the Davis-Bacon Act, 40 U.S.C.
Sections 276a to 276a-5 (1982), which constituted a disregard of
obligations to employees under the Act. We concur in DOL's
recommendation.
Malloy entered into eight contracts (F28609-79-C-0043,
F28609-79-C-0040, F28609-80-C-0023, F28609-80-C-0029, F28609-80-C-0036,
DACA 51-80-C-0040, DABT 35-80-C-0191, and DABT 35-81-C-0005) variously
with the Departments of the Army and Air Force for construction work.
These contracts were subject to the Davis-Bacon Act requirements that
certain minimum wages be paid. Further, pursuant to 29 C.F.R. Section
5.5(a) (1984), the contractor was to submit payroll records certified as
to correctness and completeness.
The DOL found, as a result of an investigation, that employees
performing work for Malloy under these contracts were not paid the
minimum wages required pursuant to the Davis-Bacon Act. Further, DOL
found that the number of hours and the rates reported on the certified
payrolls were inaccurate. Malloy was notified by certified letter of
the nature and extent of the Davis-Bacon Act violations with which it
was charged, and that debarment was possible. Malloy was also given an
opportunity for a hearing on the matter before an administrative law
judge in accordance with 29 C.F.R. Sections 5.6(c)(1) and 5.11(b)
(1981). Such a hearing was requested. However, on June 22, 1983, an
agreement was reached between DOL and Malloy, and approved by the
administrative law judge (Malloy Construction Company, Case No.
82-DB-28, Office of Administrative Law Judges, United States Department
of Labor (June 22, 1983) (Riffey, A.L.J.)), providing for payment to the
workers of withheld funds and debarment of Malloy under the Davis-Bacon
Act.
The Davis-Bacon Act provides that the Comptroller General is to debar
persons or firms whom he has found to have disregarded their obligations
to employees under the Act. 40 U.S.C. Section 276a-2. In this regard
we make independent legal determinations based upon our own evaluation
of the evidence in each case. B-3368, March 19, 1957. However, in the
agreement dated June 22, 1983, Malloy specifically stipulated that DOL's
allegations of violations of the Act may be deemed admitted for purposes
of payment of the workers and debarment. Accordingly, where the
contractor specifically stipulates to debarment, after being granted due
process by DOL in the form of an administrative law proceeding, we will
accept DOL's findings as evidence of a violation of the Davis-Bacon Act.
Therefore, we find that Malloy Construction Company; Patrick Malloy,
individually and as its President; and Donald Malloy, individually and
as its Secretary-Treasurer; have disregarded their obligations to
employees under the Davis-Bacon Act. The names Malloy Construction
Company; Patrick Malloy, individually and as its President; and Donald
Malloy, individually and as its Secretary-Treasurer; will be included
on a list to be distributed to all departments of the Government, and
pursuant to statutory direction (40 U.S.C. Section 276a-2), no contract
shall be awarded to them or to any firm, corporation, partnership, or
association in which they, or any of them, have an interest until 3
years have elapsed from the date of publication of such list.
B-214873, 64 Comp. Gen. 631
Matter of: Colegera L. Mariscalo - Backpay and Travel Expenses
Incident to MSPB Proceeding, June 25, 1985
Compensation - Removals, Suspensions, etc. - Backpay - Abandonment of
Position
Employee who was carried as absent without leave (AWOL) for period
prior to her discharge, and who was ordered reinstated by the MSPB, is
not entitled to backpay for the period she was AWOL in the absence of
evidence that she was ready, willing and able to work during that
period.
Travel Expenses - Overseas Employees - Transfers - Failure to Report at
New Duty Station
Employee stationed in Rome, Italy, was tranferred to the United
States and later discharged for failure to report for duty in the United
States. Notwithstanding the Merit Systems Protection Board order
requiring her reinstatement, she may not be reimbursed for travel from
Rome to the United States on the basis of her transfer since she never
reported for duty in the United States.
Travel Expenses - Overseas Employees - Return for Other Than Leave -
Transfer - Payment Basis
The record does not provide an adequate basis for determining the
location of the employee's permanent duty station at the time of her
discharge. Accordingly, payment for return travel from Rome to the
United States cannot be authorized pursuant to para. 2-1.5a(a)(b) of the
Federal Travel Regulations, FPMR 101-7 (September 1981).
Travel Expenses - Witness v. Complainant - Administrative Proceedings
Employees who are ordered reinstated may be reimbursed for travel to
attend their hearing. However, an employee's travel while in annual
leave status 5 months prior to the hearing, over 2 months prior to the
effective date of discharge, and over 3 weeks prior to issuance of a
notice of a proposed adverse action cannot be equated with travel to
attend a hearing. Such travel is governed by the rule which applies to
travel away from an employee's permanent duty station while on approved
leave. Under this rule, the Government is responsible only for the cost
of travel from the leave location to the location of the hearing. The
claim for travel to the leave location is denied.
Kevin D. Rooney, Assistant Attorney General for Administration, has
requested a decision on whether Colegera L. Mariscalo, an employee of
the Drug Enforcement Administration (DEA), is entitled to backpay for
the period June 15, 1981, through August 7, 1981, and to reimbursement
for the cost of her airfare from Rome, Italy, to New York, New York.
Based upon the present record, we find that Ms. Mariscalo is not
entitled to backpay for the period claimed, and that she is not entitled
to reimbursement for the constructive cost of travel from Rome, Italy,
to New York, New York.
Ms. Mariscalo was provided with a copy of the agency's submission in
this case and given an opportunity to comment. Her attorney, Irving
Kator, filed written comments on her behalf.
On August 7, 1981, Ms. Mariscalo was removed from her position as a
secretary with the DEA for failure to accept a reassignment to another
location. She appealed her removal to the Merit Systems Protection
Board (MSPB). On December 9, 1981, the hearing examiner issued a
decision finding that the reassignment was a subterfuge for removal and,
therefore, not taken for legitimate management reasons. The agency
filed a petition for review of the decision of the hearing examiner, and
that petition was denied by the MSPB on January 7, 1983. The agency was
ordered to cancel the removal.
Ms. Mariscalo was reinstated on March 14, 1983, and has been paid
backpay for the period August 7, 1981, the date of her discharge, to the
date of her reinstatement. She has requested reimbursement for the two
additional items based upon the following facts.
FACTS
Ms. Mariscalo had been employed at the Rome office of the DEA since
1965, and had lived in Italy since 1959. In 1978 and again in 1980 she
had been advised that she was being reassigned to another location. She
filed grievances under the agency grievance system contesting the
proposed transfers, but she was successful only as to the 1978 proposed
reassignment. Finally, after dismissal of the second grievance, in
early February 1981 while Ms. Mariscalo was on annual leave at her
family home in New York, she was directed to report for duty at the DEA
Resident Office in Key West, Florida, on March 9, 1981.
Ms. Mariscalo had previously advised DEA that she would not accept
reassignment to another location and she did not report for duty at Key
West on March 9. Instead, she voluntarily returned to Rome. Through
her attorney, Ms. Mariscalo submitted a request for 30 days sick leave,
with a note from her doctor in Rome. That request for sick leave was
approved. Accordingly, from March 9 to April 7, 1981, Ms. Mariscalo was
carried in approved sick leave status, and her reporting date at the Key
West Office was changed to April 8, 1981.
She did not report for duty on April 8, 1981, and again submitted a
request for sick leave, with a note from her doctor in Rome. That
request was approved and Ms. Mariscalo's reporting date was changed to
May 7, 1981.
When Ms. Mariscalo did not report to Key West on May 7, the agency
contacted her in Rome. Ms. Mariscalo again advised the agency that she
did not intend to report to Key West, that she wanted to exhaust her
leave and had forwarded a request for annual leave to agency
headquarters in Washington, D.C., and that she would await termination.
She also advised that she would be returning to New York in June.
The agency approved 192 hours of annual leave and established a new
reporting date at the Key West Office of June 15, 1981. On June 2,
while on annual leave, Ms. Mariscalo left Rome and returned to her
family home in New York.
Ms. Mariscalo did not report for duty in Key West on June 15. A
notice of proposed adverse action was issued on June 24, and she was
terminated effective August 7, 1981, for failure to accept reassignment.
She was carried in absent without leave (AWOL) status from June 15 to
August 7, 1981.
On August 13, 1981, Ms. Mariscalo's attorney requested that the MSPB
hold the hearing in Washington, D.C. There is no evidence in the record
to indicate that the agency made an objection to holding the hearing in
Washington, D.C., or that the agency requested that the hearing be held
at any other location. The record does not show where the agency
advised Ms. Mariscalo to file her appeal, as required by 5 C.F.R.
Section 1201.21(a) (1984). See also, 5 C.F.R. Sections 1201.22(a) and
1201.4(e).
The hearing was held on November 2, 1981, in Washington, D.C., and
Ms. Mariscalo traveled from New York to Washington, D.C., to attend.
The agency has reimbursed her for her travel from New York to
Washington, D.C., and return, on the grounds that an employee is
entitled to reimbursement for the cost of travel to testify at an MSPB
hearing. Lawrence D. Morderosian, B-156482, June 14, 1977; 33 Comp.
Gen. 582 (1954).
Ms. Mariscalo now seeks backpay for the period June 15 through August
7, 1981, prior to her termination, when she was carried in AWOL status.
She also seeks reimbursement for her travel from Rome to New York on
June 2, 1981.
OPINION
Absent Without Leave
The agency denied Ms. Mariscalo's claim for backpay for the period of
AWOL because she "voluntarily chose not to report to her new duty
station."
Ms. Mariscalo's attorney argues that since the MSPB found her removal
to be improper, and since the removal was based upon her refusal to
report to Key West, the transfer itself was illegal. Therefore, Ms.
Mariscalo was under no legal obligation to report to Key West, and is
entitled to her salary for the period she was carried as AWOL. It is
argued that the agency had no legal basis for withholding her salary
since the loss of salary was due to the illegal act of the agency, and
was through no fault of Ms. Mariscalo.
We note that there is nothing in the MSPB decision which addresses
Ms. Mariscalo's entitlement to backpay for the period of AWOL. However,
even assuming the MSPB's decision could be construed as argued by Ms.
Mariscalo's attorney, there is no entitlement to backpay for the period
claimed in the circumstances of this case.
There is no entitlement to backpay for periods during which an
employee is not ready, willing and able to work. B-160200, April 6,
1967; Ralph C. Harbin, B-201633, April 15, 1983. In this case, Ms.
Mariscalo did not report for duty at any location when her leave ended,
and did not in any other way demonstrate that she was ready, willing and
able to work during the period in question. She was carried in sick
leave status at her request from March 9 through May 6, 1981, and then
she was carried in annual leave status until June 15, 1984. There is
nothing in the record which would establish that her circumstances
changed on June 15, and she then became immediately available for work.
Accordingly, her claim for backpay is denied.
Reimbursement for Travel
The agency denied Ms. Mariscalo's request for reimbursement for her
travel on June 2, 1981, from Rome to the United States on two grounds.
First, DEA found that since she did not report for duty at Key West, she
is not entitled to the constructive cost of travel from Rome to Key
West. The agency relied on Joseph Salm, 58 Comp. Gen. 385 (1979).
Secondly, DEA found that the MSPB could have held the hearing in Rome
and, therefore, the agency was not obligated to reimburse her for the
constructive cost of travel from Rome to Washington, D.C., to testify at
the hearing on her case.
Ms. Mariscalo's attorney argues that our decision in Joseph Salm is
distinguishable and cannot properly be relied upon to deny payment in
this case. He also disputes the agency's refusal to pay on the basis
that the hearing could have been held in Rome. He points out that
although DEA states the hearing could have been held in Rome, the
hearing was in fact held in Washington, D.C. Moreover, the Washington,
D.C. location was favorable to the agency since it is the location of
its headquarters. He argues that it would have cost more to fly MSPB
and agency attorneys to Rome than it would have cost to fly Ms.
Mariscalo to Washington, D.C.
As a third basis for payment Ms. Mariscalo's attorney relies upon
paragraph 2-1.5a(1)(b) of the Federal Travel Regulations, FPMR 101-7
(September 1981) (FTR), which provides that employees separated overseas
for purposes of the Government are entitled to reimbursement for return
travel to the United States. He argues that, although the agency issued
the termination papers from the United States, Ms. Mariscalo was
constructively discharged from Rome. Since she was discharged in Rome
for purposes of the Government, she is entitled to return travel to the
United States as provided at paragraph 2-1.5a(1)(b).
The record in this case is not sufficient to authorize payment of Ms.
Mariscalo's travel to the United States under paragraph 2-1.5a(1)(b).
Had she chosen to remain in Rome and await the notice of her discharge,
and her discharge, there could be some basis for concluding that her
termination occurred there, irrespective of the location from which the
agency issued the formal notice of discharge.
Instead, for a period of 4 to 5 months, Ms. Mariscalo was carried in
a combination of sick and annual leave at her request, and voluntarily
traveled from Rome to New York twice. She was AWOL for almost 2 more
months. Thus, she had not actually been at work anywhere in the agency
for about 7 months prior to her discharge. The record does not indicate
the status of her former position in Rome or of her proposed position in
Key West during this 7-month period.
Further, neither the decision of the hearing examiner nor the
decision of MSPB addresses the issue of whether Ms. Mariscalo was
separated from a post of duty outside the conterminous United States.
Under these circumstances, and absent a determination from the MSPB that
Ms. Mariscalo was discharged from her position in Rome, the record does
not provide an adequate basis for determining her entitlements under
paragraph 2-1.5a(1)(b). But see, 5 C.F.R. Section 1201.181, Robinson v.
Department of the Army, MSPB Docket No. SF07528310135 (June 12, 1984);
Spezzaferro v. Federal Aviation Administration, MSPB Docket No.
BN075281F0717 Comp. Gen. (October 25, 1984). Accordingly, we cannot
authorize payment on that basis.
Likewise, Ms. Mariscalo's transfer to the Key West office does not
provide a basis for payment. We agree with her attorney that the facts
in Joseph Salm differ from the facts in this case. Nonetheless, since
Ms. Mariscalo did not report for duty in Key West, the transfer to Key
West does not provide a basis for payment of her travel on June 2, 1981.
There is no authority to pay an employee for travel to a new duty
station when the employee refuses to report for duty at the new
location.
The remaining argument offered in support of payment for Ms.
Mariscalo's travel on June 2 is that she was required to travel to the
United States to litigate her removal, and is, therefore, entitled to
reimbursement for her trip from Rome to the United States. The agency
disputes this, arguing that the MSPB hearing could have been held in
Rome.
We point out that there is no entitlement to reimbursement or
incidental expenses incurred in connection with litigation over an
adverse action, including travel to arrange for representation by an
attorney, and travel to confer with an attorney. We have held, however,
that an employee who has been ordered reinstated may be reimbursed for
travel expenses incurred in connection with travel to attend an MSPB
hearing. Lawrence D. Morderosian, B-156482, supra. Cf. Gracie
Mittelsted, B-212292, October, 12, 1984. The potential application of
this rule in the circumstances of this case is complicated by the fact
that there were a number of possible locations at which the hearing
could have been held. In any event, we find it unnecessary to explore
the question of where the hearing could or should have been held since
we conclude that the June 2 trip fundamentally does not qualify as
travel to attend an MSPB hearing.
As noted above the record does not provide a sufficient basis for
determining Ms. Mariscalo's permanent duty station at the time of her
discharge. However, the record is clear that when she traveled from
Rome to New York on June 2, 1981, Ms. Mariscalo was on annual leave
status. Her travel, in fact, occurred 5 months before the hearing on
November 2, 1981, over 2 months before the effective date of her
discharge on August 7, and over 3 weeks before she even received the
June 24 notice of a proposed adverse action.
Under these circumstances, her travel on June 2 cannot be viewed as
travel to attend the hearing. While the purpose of her travel on June 2
may have been to facilitate ligitation over an anticipated discharge,
there is no legal authority for payment on that basis. Travel in
anticipation of discharge cannot, in these circumstances, be equated
with travel to attend a hearing. Accordingly, wherever her permanent
duty station was at the time of her discharge in August, her travel on
June 2, must be governed by the rule that applies to travel away from
the official duty station while on approved annual leave.
The general rule is that when an employee proceeds to a point away
from his official duty station while on annual leave, he assumes the
obligation of returning at his own expense. If during that leave, or at
the expiration of that leave, the employee is required to perform
temporary duty at another location prior to returning to his permanent
duty station, the Government is chargeable only with the difference
between the cost attributable to temporary duty at the other location
and what it would have cost the employee to return to his permanent duty
station directly from the place where he was on leave. Paricia Stolfa
and Devra Bloom, B-189265, September 21, 1977; affirmed December 12,
1978.
Applying this rule to the facts in this case means that Ms. Mariscalo
is entitled to reimbursement only for travel from New York to
Washington, D.C., and return. Even assuming Rome was her permanent duty
station at all times relevant to this issue, she left Rome voluntarily
on June 2 while on annual leave. Her trip to Washington, D.C., in
November to attend the hearing is comparable to temporary duty travel to
a location other than the location of her leave.
The Government is therefore responsible only for the cost of her
travel from her leave location to the location of the hearing, i.e., New
York to Washington, D.C. and her return trip. Ms. Mariscalo has already
been reimbursed for this amount. Her claim for reimbursement for travel
from Rome to New York is denied.
B-216748, 64 Comp. Gen. 629
Matter of: Effect of Discharge Delivery, June 24, 1985
Pay - After Expiration of Enlistment - Courts-Martial Proceedings -
Awaiting Proceedings
An enlisted marine who was placed on administrative hold and
prevented from completing his processing out after he had been given his
certificate of discharge claims pay for the period after that date
during which he remained at the marine base on administrative hold
pending court-martial charges. The court held that since he had been
given his discharge before court-martial charges were brought he was not
subject to his jurisdiction. The handing over of the discharge
certificate was equally effective for administrative purposes and the
individual's status as a member and right to further pay ended at that
time.
We have been asked whether a former enlisted member of the Marine
Corps is entitled to pay after he was issued a discharge certificate but
while he was held pending court-martial. /1/ The court-martial charges
against the individual were dismissed on the basis that he had been
discharged before those charges were brought. Since the facts show that
he was discharged before the charges were brought, he was not a member
of the Marine Corps after that date while being held for court-martial
and, therefore, he is not entitled to pay for any period after that
discharge.
During the latter part of 1983, the claimant had been given
nonjudicial punishments for minor offenses which culminated in an
Administrative Discharge Board determination that he should be separated
from the service prior to the completion of his enlistment for minor
disciplinary infractions. This Board directed that he be discharged on
or before December 9, 1983. On December 8 discharge papers had been
completed and a discharge certificate was given to the member before he
was given his final pay. Apparently, the original signed discharge form
should not have been given the member prior to his reporting for final
pay. However, before the member was to report for his final pay, a hold
was placed on further action in his case because action was being taken
to bring criminal charges against him based on suspected theft of a
firearm. The member remained at the marine base and on December 22, he
was reduced in grade from private first class to private.
In due course charges were brought, but a court-martial, on January
26, 1984, determined that the member was not subject to its jurisdiction
because he had been effectively discharged before the criminal charges
had been brought against him. The military judge held specifically that
he had been given his final discharge certificate by an individual
authorized to do so and, although this person may have given the
discharge to him prematurely, it effectively terminated his status as a
marine.
Thus, although the former member was detained from December 8, 1983,
through January 26, 1984, he was, in the eyes of the court, not a member
of the service during that period.
The right of a member of the armed services to pay is a statutory one
and not one which depends upon the rules governing ordinary contractual
relationship. Bell v. United States, 366, U.S. 393, 401 (1961). It is
fundamental that an individual must be a member of an uniformed service
in order to be entitled to pay. 37 U.S.C. Section 204; B-151189, April
19, 1963. If this former member lost his status as a member of the
Marine Corps on December 8, 1983, his entitlement to pay as a marine
also ended on that day.
We have held that the determination of a court-martial as to the
status of an individual for jurisdictional purposes under the Uniform
Code of Military Justice is not necessarily binding for administrative
purposes. 57 Comp. Gen. 132 (1977). But if the court has considered
all pertinent facts, the determination of the individual's status for
administrative purposes will probably be the same as determined by the
court. 57 Comp. Gen. 136. Although the facts in the cited case
involved the question of whether individuals had been properly inducted
into the service as opposed to whether they were effectively discharged,
the rule that an individual is entitled to pay only if he or she is in
fact a member at the time is the fundamental rule upon which the
decision in that case was based. It was held that if the individual had
not been properly inducted, he or she had no right to pay as a member.
The de facto rule was applied to permit an individual to retain pay
which had been received while serving under an invalid induction, but
that rule does not permit the payment of further pay once the status of
the individual as a non-member is clear.
In this case the member received his discharge certificate and,
although he remained under military control because he was prevented
from completing his processing out, he relied upon the discharge to
escape prosecution for theft based on the argument that the discharge
had been effective when given to him on December 8, 1983. We find that
the delivery of the discharge certificate was valid also for
administrative purposes and that it terminated his status as a marine.
Thus, his entitlement to pay also terminated on December 8, 1983.
Accordingly, the former marine may not be paid for any period after
December 8, 1983.
FOOTNOTES
(1) This matter was submitted by K. J. Wright, Disbursing Officer,
Marine Corps Finance Center, Kansas City, Missouri and was assigned
control number DO-MC-1446 by the Department of Defense, Military Pay and
Allowance Committee.
B-218387, 64 Comp. Gen. 628
Matter of: Harris Construction Company Inc., June 21, 1985
Bids - Modification - Before Bid Opening - Ambiguity Allegation
A garbled telegraphic modification increasing the bid price in an
uncertain amount which was received prior to bid opening may not be
ignored, nor may it be corrected by a subsequent message which arrived
late. Since the garbled telegram made the bid price uncertain and not
fixed, that bid could not be the subject of award.
Harris Construction Company, Inc. protests the award of a contract to
Abhe and Svoboda Inc. (A&S) under solicitation No. N62470-84-B-4205 to
demolish a seaplane hanger, Bldg. A-1 at the United States Naval Air
Station Annex, Bermuda.
The protest is sustained.
In response to the Navy solicitation bids were received from Harris
and A&S in the amounts of $231,000 and $223,610, respectively. A&S
attempted to modify its bid by sending a telegram to the Navy. The
telegram, which was received prior to bid opening, acknowledged two
amendments to the solicitation and stated "We hereby increase our bid
price in the amount of EP + JJ X GALE X KKBIU".
Shortly after bid opening Western Union sent the Navy a corrected
version of the garbled message. The corrected version increased the bid
by $194,000 for a final bid price of $417,610.
A&S initially filed a protest with our Office challenging the failure
of the Navy to award it the contract at its original bid price of
$223,610. Prior to our issuing a decision on the protest, the Navy
agreed with A&S and awarded the contract to it. Harris now protests the
award of the contract to A&S.
Harris argues that either the garbled message made A&S's bid
nonresponsive or A&S should have its intent to modify its bid reflected
by adding the $194,000 increase to its initial bid of $223,610, thus
making Harris the low bidder. Harris argues that the Navy has
improperly allowed A&S to accept the award or reject it at A&S's option.
Accordingly, Harris asks that the contract be terminated and it be
allowed reasonable costs of filing and pursuing its protest including
attorney fees.
The Navy argues that the unintelligible telegraphic modification must
be ignored in considering A&S's bid since the intelligible version of
the telegram arrived after bid opening. The Navy cites Southern Rock,
Inc., B-182069, Jan. 30, 1975, 75-1 C.P.D. Paragraph 68, where an agency
ignored a late telegraphic modification which would have made the bidder
no longer low and we permitted award to that bidder after it verified
its original bid price.
Bid responsiveness requires an unequivocal offer to provide, without
exception, exactly what is required at a firm-fixed price. Medi-Car of
Alachua County, B-205634, May 7, 1982, 82-1 C.P.D. Paragraph 439. Where
a bidder indicates prior to bid opening that its price is not firm, as
was the case here, its bid cannot be said to offer a fixed price. Cf.
Burroughs Corporation, 56 Comp. Gen. 142, 150 (1976), 76-2 C.P.D.
Paragraph 472 (offeror, which states shortly prior to closing date for
receipt of proposals that its price would be adjusted upwards
approximately $126,000 as a result of a proposal mistake has not
proposed a fixed price that can be accepted by the government). A&S's
bid was indefinite since the message stated that the bid price was
raised by an indeterminate amount. Accordingly, the A&S bid did not
offer a firm-fixed price at bid opening. The Southern Rock case cited
by the Navy is distinguishable from the present situation because in
that case the telegram arrived after bid opening, so it could not be
considered. Moreover, the garbled telegram here which rendered the bid
indefinite could not be ignored since it also acknowledged two material
amendments; without this acknowledgment, A&S's bid would have been
nonresponsive.
We sustain the protest and we recommend that the Navy terminate its
contract with A&S and make an award to Harris. In view of our
recommendation that award be made to Harris, Harris' claim for costs of
filing and pursuing its protest including attorney fees is not allowable
under our Bid Protest Regulations. 4 CFR Section 21.6(e).
B-216688, 64 Comp. Gen. 625
Matter of: National Park Service - Disposition of Performance Bond
Forfeited to Government by Defaulting Contractor, June 20, 1985
Appropriations - Contracts - Amounts Recovered Under Defaulted
Contracts - Disposition - Funding Replacement Contracts
A performance bond, forfeited to the Government by a defaulting
contractor, may be used to fund a replacement contract to complete the
work of the original contract. The performance bond constitutes
liquidated damages which may be credited to the proper appropriation
account in accordance with analysis and holding in 62 Comp. Gen. 678
(1983). 46 Comp. Gen. 554 (1966) is modified to conform to this
decision. Requirements for documentation of the accounting transactions
are set forth in the General Accounting Office Policy and Procedures
Manual for Guidance of Federal Agencies.
This decision is in response to a request dated October 1, 1984
(Reference: S7217 (MWR-AB)) from Mr. Donald L. Sondag, an Authorized
Certifying Officer of the National Park Service. Mr. Sondag requests a
decision as to whether a performance bond, forfeited to the Government
by a defaulting contractor, may be used to fund a replacement contract.
If we answer yes to his first question, he asks further, what
documentation would be necessary to authorize the obligation of the
performance bond funds. As set forth below, we conclude that the
performance bond in question may be used to fund a replacement contract.
Further, requirements for documentation of the transaction are set
forth in the GAO Policy and Procedures Manual for Guidance of Federal
Agencies.
Facts: On August 17, 1983, the National Park Service awarded a
contract for the sale of Government property to Mr. Fred Boreman for the
removal of greenhouses in an area of planned development at the Cuyahoga
Valley National Recreation Area. The contract called for Mr. Boreman to
pay the Government $6,500 for the salvage value of the greenhouses and
to post a performance bond of $2,500. The $6,500 received from Mr.
Boreman by the Park Service was deposited in the General Treasury Land
and Water Conservation Fund for sale of surplus property. Mr. Boreman
duly removed the greenhouses, but thereupon abandoned the site and
failed to remove debris and restore the site to a natural state in
accordance with the terms of the contract. Mr. Boreman's default
resulted in the forfeit of his $2,500 performance bond to the
Government.
The National Park Service intends to solicit bids to complete the
demolition and restore the site, which it estimates will cost $10,000 to
$15,000. The Service asks whether the forfeited $2,500 performance bond
may be used to fund partially the replacement contract.
Analysis: The performance bond in this case constitutes liquidated
damages. Section 4 of the "Special Terms and Conditions of Sale"
attached to the invitation for bids reads, in part:
A performance bond will be required in the amount of two
thousand five hundred dollars ($2,500) per lot or lot item as
indicated, to assure completion and cleanup of the site. A
performance bond may be furnished in the form of cashiers check,
money order, certified personal check or cash. Checks are to be
made payable to the National Park Service. The Performance Bond
will be forfeited to the Government in the event the buildings or
structures have not been removed and/or the site cleaned up to the
satisfaction of the Contracting Officer and/or his designated
representative, within the time limit specified, all rights,
titles, interests, and bond amount will be forfeited to the
Government and the payments thereon made will be retained by the
Government as liquidated damages.
The traditional rule for funds received by a Government agency as
liquidated damages for a contractor's default is that they may be
retained in the appropriation originally charged with the contract. 44
Comp. Gen. 623, 626 (1965). The two rationales for retaining liquidated
damages in the appropriation account rather than depositing them in the
Treasury as miscellaneous receipts are that they effect an authorized
reduction in the price of the individual contract concerned, and that
this would make them available for return to the contractor should he
subsequently be relieved of his liability. 23 Comp. Gen. 365 (1943); 9
Comp. Gen. 398 (1930).
However, the rule that liquidated damages may be returned to an
appropriation account has been held to be inapplicable where the above
rationales do not apply; for example, when a contractor has received no
payment from the Government and it is unlikely that the contractor would
or could contest the default. 46 Comp. Gen. 554, 556 (1966). Those
circumstances are present here. In the instant case, no funds were paid
by the Government to the contractor. Further, Mr. Boreman has abandoned
the site and, despite repeated notices, has given no indication that he
will contest the forfeiture of the performance bond. Accordingly, we
conclude that the two rationales of the traditional rule regarding the
disposition of liquidated damages -- that they may be retained in an
appropriation account rather than deposited in miscellaneous receipts --
are not applicable here.
Nonetheless, we need not depend on the traditional rule regarding the
disposition of liquidated damages (and its associated cases) in
resolving this case. In 62 Comp. Gen. 678 (1983), this Office
overturned a long line of cases in establishing a new rule regarding the
retention of "excess costs of reprocurement" received by the Government
from Government contractors. In previous cases, we had held that such
funds must be deposited into the general fund of the Treasury rather
than the appropriation from which the contract payments were made. See,
e.g., 27 Comp. Gen. 117 (1947). However, in 62 Comp. Gen. 678, we
changed our position and concluded that that rule disrupted the
procurement process and was not required by statute. We held:
We do not think it is logical to insist that a breaching
contractor is legally responsible for excess reprocurement costs
and then, when the contractor fulfills that obligation, refuse to
permit his payments to be used for that purpose. We regard the
contractor's payments as being analogous to a contribution to a
Government trust account, earmarked for a specific purpose. Just
as the proceeds of a trust are considered to be appropriated for
the purpose for which the funds were deposited, so too should
excess reprocurement collections be considered to be available
only for the purpose of funding a replacement contract.
This use of the recovered excess reprocurement costs does not,
in our view, constitute an illegal augmentation of the agency's
appropriation. The agency is being made whole at no additional
expense to the taxpayer. It will merely be receiving the goods or
services for which it bargained under the original contract. 62
Comp. Gen. at 682.
We conclude that the analysis in 62 Comp. Gen. 678 regarding
recovered excess reprocurement costs is equally applicable to the
liquidated damages recovered in the instant case. In our view, the
legal distinction between damages received from a defaulting contractor
for the excess costs of reprocurement and liquidated damages specified
in the contract is not pertinent. When used for the purpose of funding
a replacement contract, both serve the purpose of making the Government
whole and ensuring that the Government receives the goods or services
for which it bargained under the original contract.
Accordingly, we conclude that the proceeds of the $2,500 performance
bond forfeited by the contractor in the case at hand may be used by the
National Park Service to fund a replacement contract to complete the
work which was to have been performed under the original contract. To
the extent our decision in 46 Comp. Gen. 554 (1966) is inconsistent with
that result, that decision is modified accordingly.
Finally, the National Park Service asks what documentation would be
necessary to authorize the retention and subsequent obligation of the
performance bond. The GAO Policy and Procedures Manual for the guidance
of Federal Agencies provides:
Collections that are credited to appropriation and fund
accounts must be proper and be authorized by law or appropriate
regulations. Agencies must be able to produce references to such
authorizations if they are called for in connection with the audit
of accounts by the General Accounting Office. Agency collection
records pertaining to refunds and reimbursements will include
descriptions of transactions sufficient for identifying the source
of, or reason for, the collection. GAO, Policy and Procedures
Manual for the Guidance of Federal Agencies, tit. 7, Section 12.4
(TS No. 7-40, July 14, 1983).
The National Park Service should document the retention of the
performance bond in accordance with that provision. The funds could
then be obligated for the replacement contract like any other available
funds.