B-199160, B-199496, November 20, 1981, 61 Comp.Gen. 85
Contracts - Annual Contributions Contract-Funded Procurements -
Complaints - General Accounting Office Review - Indian Low-Income
Housing Projects
Annual contributions contract (ACC) between Department of Housing and
Urban Development (HUD) and Indian housing authority pursuant to section
5 of the United States Housing Act of 1937, as amended, 42 U.S.C. 1437
et seq., is encompassed by GAO Public Notice entitled "Review of
Complaints Concerning Contracts Under Federal Grants," 40 Fed.Reg. 42406
(1975), since agreement results in substantial transfer of Federal funds
to housing authority and since ACC required housing authority to use
competitive bidding in awarding contracts. Contracts - Annual
Contributions Contract-Funded Procurements - Indian Low-Income Housing -
Preference to Indian Concerns
Housing authority's failure to make award to Indian-owned enterprise
whose bid was eight percent higher than low bid from non-Indian owned
firm was proper since solicitation required award to low bidder and
neither it nor HUD regulations or Indian Self-Determination and
Education Assistance Act, 25 U.S.C. 450e(b), required preference be
granted to Indian-owned firm in particular procurement. Contracts -
Annual Contributions Contract-Funded Procurements - Indian Low-Income
Housing - Federal Competitive Bidding Principles - Applicability -
Ambiguous Bid
Basic principles of Federal competitive bidding require that all
bidders be treated fairly and equally and that bidder be precluded from
deciding after bid opening whether to assert that its lump-sum price or
its inconsistent individual item prices are correct. Thus, Indian
housing authority which was required to adhere to Federal competitive
bidding principles acted improperly in accepting bid based on bidder's
post-bid opening explanation of intended bid where bid was subject to
two reasonable interpretations and was low only under interpretation
proffered by bidder.
Matter of: Curtiss Development Co. and Shipco, Inc., November 20,
1981:
Curtiss Development Co. and Shipco, Inc. have filed complaints
concerning the award of a contract by the Spokane Indian Housing
Authority. The contract is for the construction of 27 mutual help
single family dwelling units to be financed by the Department of Housing
and Urban Development (HUD) pursuant to an annual contributions contract
(ACC). Although HUD argues that we should not consider these complaints
because the contract awarded by the Housing Authority is neither a
direct Federal procurement nor funded under a grant as defined by the
Federal Grant and Cooperative Agreement Act of 1977, 41 U.S.C. 501-509
(Supp. III 1979), for the reasons given below we believe the complaints
are properly for our consideration. While we deny the complaint filed
by Curtiss, we believe there is merit in Shipco's contention that the
awardee was improperly allowed to clarify its bid
On June 14, 1976, HUD and the Housing Authority entered into an ACC
pursuant to section 5 of the United States Housing Act of 1937, as
amended, 42 U.S.C. 1437 et seq. (Supp. III 1979). Under the ACC, as
amended, the Housing Authority agreed to develop 29 mutual help single
family dwelling units to be sold to eligible home buyers in accordance
with HUD regulations. See generally 24 CFR Part 805 (1981). In
exchange, HUD agreed to provide the Housing Authority financial
assistance for the construction of the project in the form of a loan or,
at HUD's option, a loan guarantee, and to make annual contributions to
reimburse the Housing Authority for indebtedness incurred (both
principal and interest) in building the project. Specifically, HUD
agreed to loan the Housing Authority the estimated cost of the project
and to make periodic advances as needed. The ACC also provided that HUD
could, at its option, require the Housing Authority to borrow the
balance of funds not yet advanced from another lender and that HUD would
guarantee payment under the loan.
In addition to agreeing to loan the Housing Authority the necessary
money or guaranteeing any loans obtained by the Housing Authority at
HUD's direction, HUD agreed to make annual contributions for 25 years or
until the Housing Authority paid off the indebtedness incurred in
building the project, whichever came first.
The ACC further provided that the Housing Authority would "comply with
all HUD regulations and requirements" in developing the project. In
this connection, 24 CFR 805.203(c) provides that award of a contract for
the construction of the project "shall be made to the lowest responsible
bidder." The ACC further required the Housing Authority to obtain HUD's
approval prior to making an award of any contract in connection with the
development of the project.
On April 18, 1980, the Housing Authority issued an invitation for
bids (IFB) for the construction of 27 mutual help single family dwelling
units. /1/ Although the IFB required bidders to bid on a lump sum basis
and provided that award would be made on that basis, it also provided
for the separate listing of the amounts bidders included for general
construction, mechanical work and work outside the building line. In
addition, Paragraph 9 of the "Instructions to Bidders" indicated that
award would be made "to the responsible bidder submitting the lowest
proposal complying with the conditions of the Invitation for Bids * * *
." Further, the IFB also stated that "Section 7(b) of the Indian
Self-Determination and Education Assistance Act * * * provides * * *
preferences in the award of contracts and subcontracts be given to
Indian organizations and Indian-Owned Economic Enterprises."
Bids were opened on May 27. Webb Construction and LKM General
Contractors, Inc., a joint venture, submitted the lowest lump-sum bid
totaling $1,162,200; however, the individually priced items listed on
the bid did not add up to the lump sum but instead totaled $1,308,394.
Shipco submitted a lump-sum bid of $1,195,200 and Curtiss submitted a
lump sum bid of $1,264,959. The total of the individually priced items
in the Shipco and Curtiss bids equaled their respective lump-sum bid
prices.
Following bid opening, a Housing Authority official contacted a
representative of Webb-LKM to discuss the discrepancy between its
lump-sum bid and the total of the individually priced items contained in
Webb-LKM's bid. Webb-LKM confirmed that the lump-sum bid price was its
intended bid and explained that the total of the prices for the
individual items exceeded the lump-sum bid price because the work called
for under some of the items overlapped with work called for under other
items.
By letters dated June 4 and June 5, Curtiss filed protests with the
Housing Authority and our Office, respectively. Curtiss objected to an
award to any firm other than itself due to its understanding that an
award would be made to an Indian-owned enterprise provided that the bid
of such an enterprise was no more than ten percent higher than the
lowest bid received.
Curtiss argued that since it was an Indian-owned enterprise and since
its bid was only eight percent higher than Webb-LKM's bid, it was
entitled to the award.
On June 5, the Housing Authority passed a resolution accepting
Webb-LKM's lump-sum bid of $1,162,200 subject to approval by HUD.
Approval of the proposed award was made by HUD on June 19.
Subsequently, by letter of June 18, Shipco filed a protest with HUD
objecting to an award to Webb-LKM. Shipco contended that Webb-LKM's bid
was ambiguous on its face due to the discrepancy between its lump-sum
bid and the total of the individually priced items and should not be
accepted.
On July 1, the Housing Authority passed a resolution waiving the
discrepancy in Webb-LKM's bid as a minor informality. Thereafter, on
July 8, Shipco filed a protest with our Office objecting to an award to
Webb-LKM due to the apparent error in its bid. The Housing Authority
decided on July 10 to make an award to Webb-LKM notwithstanding the
protests of Curtiss and Shipco and made award to Webb-LKM on July 14.
HUD maintains that we do not have jurisdiction over Curtiss' and
Shipco's complaints. First, HUD argues that since procurements made by
Indian housing authorities under an ACC clearly are not procurements
made "by or for" a Federal agency, they are not subject to review under
our Bid Protest Procedures. 4 C.F.R.Part 21 (1981). HUD also argues
that procurements conducted by housing authorities under ACCs are not
subject to review under our Public Notice entitled "Review of Complaints
Concerning Contracts Under Federal Grants," 40 Fed.Reg. 42406 (1975),
because they are not funded by grants as defined by the Federal Grant
and Cooperative Agreement Act of 1977. HUD asserts that the Federal
Grant and Cooperative Agreement Act defines the term "grant" as not
including any agreement under which " * * * a subsidy, a loan (or) a
loan guarantee * * * is provided." HUD contends that since the
assistance under an ACC takes place in the form of a loan or a loan
guarantee and also a subsidy over a long period, we do not have
jurisdiction under our Public Notice. The agency further argues that
the Office of Management and Budget (OMB) has held that an ACC is not a
"grant" and that Attachment O to OMB Circular A-102, which is applicable
to procurement conducted by local and state governments receiving
Federal grant funds, does not apply to procurements conducted by a
housing authority under an ACC.
Consequently, HUD concludes that we do not have jurisdiction over
complaints concerning procurements conducted by housing authorities
under an ACC.
We agree with HUD that the procurement is not a direct Federal
procurement and thus not reviewable under our Bid Protest Procedures.
However, we do not agree that the complaints are not otherwise subject
to our review.
The General Accounting Office has the responsibility to "investigate
* * * all matters relating to the receipt, disbursement, and application
of public funds." 31 U.S.C. 53 (1976). Pursuant to this authority, we
announced in our Public Notice that we would review complaints
concerning procurements made by recipients of Federal grant funds. The
purpose of that review is to insure that recipients of Federal
assistance comply with all requirements imposed upon them by the terms
of the grant agreement and Federal law or regulation when contracting
for goods or services. International Business Machines Corp., B-194365,
July 7, 1980, 80-2 CPD 12.
Although the Public Notice was couched in terms of "grants," our
statutory authority obviously goes well beyond what is denominated a
grant and cannot be circumscribed by a Public Notice which delineated
one area in which we would exercise that authority and how we would do
so. Thus, even if we read the Public Notice narrowly to apply only to
what is called a "grant," we would not be precluded from considering
other forms of financial assistance. In issuing our Public Notice,
however, we did not intend to limit our review solely to those
procurements conducted under agreements designated by the parties as
"grants" or to those agreements made pursuant to statutory provisions
authorizing Federal agencies to make "grants." Rather, our Notice was
intended to cover all agreements, other than contracts resulting from a
Federal agency's direct procurement action, which (1) provide for
Federal funding and (2) impose upon the recipients certain conditions of
payment. Xcavators, Inc., 59 Comp.Gen. 758 (1980), 80-2 CPD 229. Thus,
under our Public Notice we have reviewed procurements made by recipients
of Federal assistance through a subsidy, see E. P. Reid, Inc., B-189944,
May 9, 1978, 78-1 CPD 346, as well as under a cooperative agreement.
See Xcavators, Inc., supra. We have, however, generally declined to
consider under our Public Notice complaints concerning procurements made
under loans since the Federal funds involved are repaid. See Neal &
Company, Inc., B-199022, June 19, 1980, 80-1 CPD 434.
The ACC under consideration provided for Federal funding and imposed
upon the Housing Authority conditions for the funding. Although HUD is
obligated under the ACC to lend the Housing Authority funds covering the
cost of project construction or, at its option, to guarantee loans
obtained by the Housing Authority from private sources at HUD's
direction, HUD's involvement goes well beyond that of a lender or a
guarantor. HUD is also obligated under the ACC to make annual
contributions to the Housing Authority to reimburse it for the
indebtedness incurred (both principal and interest) in building the
project. In other words, HUD not only lends the Housing Authority the
money necessary to construct the project, but also gives the Housing
Authority the money to pay back the loan. The net effect of ACC is that
of a substantial outright transfer of Federal funds to the Housing
Authority in order to build the project. Thus, unlike a typical loan
agreement, the ACC clearly satisfies the first element of what
constitutes a reviewable agreement for the purposes of our Public
Notice. See Niedermeyer-Martin Co., 59 Comp.Gen. 73, 76 (1979), 79-2
CPD 314. Moreover, under the ACC the Housing Authority is required to
comply with all HUD regulations and requirements in developing the
project. In particular, the Housing Authority is required both by HUD
regulations and the ACC provisions to award the contract for the
construction of the project to the "lowest, responsible bidder." 24 CFR
805.203(c). Thus, the ACC clearly is the type of agreement which is
covered by our Public Notice.
Moreover, the fact that Attachment O to OMB Circular A-102, which
contains the general guidelines to be followed by grantees in conducting
their procurements, does not apply to the type of agreement involved
here is irrelevant to the question of our own role in reviewing
procurements conducted by recipients of Federal funds pursuant to such
an agreement. What is controlling is that the agreement imposes upon
the recipient requirements, such as one for competitive bidding, which
must be followed in the award of contracts. See International Business
Machines Corp., supra. As we have already noted, the Housing Authority
is required by the ACC and HUD regulations to use competitive bidding.
Consequently, we think our review is appropriate regardless of whether
Attachment O applies.
Curtiss maintains that it was entitled to the award because it is an
Indian-owned firm and its bid was only eight percent higher than the
lowest responsive bid received from Webb-LKM. Curtiss states that it
was its understanding that an award would be made to an Indian-owned
enterprise so long as the bid of such enterprise was no more than ten
percent higher than the lowest responsive bid from a non-Indian-owned
firm such as Webb-LKM. In support of this understanding, Curtiss points
out that the IFB stated:
Attention is called to the fact that Section 7(b) of the Indian
Self-Determination and Education Assistance Act (25 U.S.C. 450e(b)
provides preferences and opportunities for training and employment to be
given to Indians, and that preferences in the award of contracts and
subcontracts be given to Indian organizations and Indian-Owned Economic
Enterprises.
The IFB did not specifically provide for a ten-percent preference for
Indian-owned enterprises. It merely called attention to the existence
of the Act which does not require preferences in all cases but only to
the "greatest extent possible." Thus, there is no requirement that
preferences for Indian-owned firms be incorporated in every project. In
fact, the IFB stated that award would be made "to the responsible bidder
submitting the lowest proposal" and made no mention of preferences for
Indian-owned firms other than in the quoted general notice. HUD's
regulations implementing the preferences set forth in the Indian
Self-Determination and Education Assistance Act do not provide for the
use of a ten-percent preference, although they authorize restricting
procurements to Indian-owned firms. See 24 CFR 805.204(a). Since the
IFB did not provide for a ten-percent preference and HUD's regulations
do not otherwise require such a preference, we see no basis upon which
to conclude that Curtiss was entitled to the award.
Webb-LKM's lump-sum price of $1,162,200 included $914,564 for general
building construction, $74,645 for mechanical, $75,030 for electrical
and $244,155 for off-site work. These sub-items totaled $1,308,394. On
the other hand, Shipco's lump-sum price of $1,195,200 was the total of
the $866,520 for general building construction, $179,280 for mechanical,
$77,688 for electrical and $71,712 for off-site work figures included in
Shipco's bid.
Shipco maintains that Webb-LKM's bid was ambiguous on its face due to
the discrepancy between the lump-sum bid price and the total of the
individually priced items. Shipco contends that where a bid is low
under one interpretation but not under another, the bid may not be
accepted if the intended bid can only be established by resort to
information outside the bid. As the total of the individually priced
items contained in Webb-LKM's bid exceeded Shipco's lump-sum bid price
and as Webb-LKM's intended bid price could not be ascertained without
resort to information outside the bid, Shipco argues that Webb-LKM's bid
should not have been accepted.
HUD disputes Shipco's contention that the Housing Authority acted
improperly in permitting Webb-LKM to clarify its intended bid. HUD
states that "(c)onsistent with the practice in Federal procurement of
ascertaining mistakes in bid * * * the contracting officer called
(Webb-LKM) to determine whether a mistake has been made because of (the)
disparity and to confirm (Webb-LKM's) lump sum bid." HUD contends that
we have held that a bidder may confirm a bid "provided that the
confirmation is not inconsistent with a reasonable interpretation of the
bid submitted * * * ." The agency argues that Webb-LKM's explanation
that the discrepancy was due to an overlap of work in the various
categories listed in the IFB was consistent with the bid as submitted
and that therefore Webb-LKM's bid was properly accepted. We believe the
Housing Authority erred in accepting Webb-LKM's bid.
The ACC required the Housing Authority to follow all HUD regulations
in developing the project. HUD regulations specifically required it to
award the contract to the "lowest, responsible bidder." Where
competitive bidding is required as a condition to receipt of Federal
assistance, certain basic principles of Federal procurement law must be
followed by the recipient in award contracts. Copeland Systems, Inc.,
55 Comp.Gen. 390, 393 (1975), 75-2 CPD 237. Basic principles of Federal
procurement law require that procurement officials treat all bidders
fairly and equally. RAJ Construction, Inc., B-191708, March 1, 1979,
79-1 CPD 140. One fundamental aspect of these principles which we have
applied to recipients of Federal assistance is that a bidder should not
be permitted to decide after bid opening whether its bid is, in fact,
the low bid.
RAJ Construction, Inc., supra. Likewise, a bid which is subject to two
reasonable interpretations may not be accepted if under one
interpretation the bid is low and the other it is not. Broken Lance
Enterprises, Inc., 57 Comp.Gen. 410 (1978), 78-1 CPD 279. On the other
hand, however, 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 CPD 379, affirmed August 21, 1979, 79-2 CPD 140.
We believe that Webb-LKM's bid is subject to two reasonable
interpretations and should not have been accepted because it is the low
bid under only one of those interpretations. Although the discrepancy
between the lump-sum price and the individually priced items may have
resulted for the reason proffered by Webb-LKM, an equally reasonable
explanation is that Webb-LKM made a mistake in adding the total of the
individual items comprising the lump sum and that the total of
individually priced items was the intended bid price. 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. See Broken Lance
Enterprises, Inc., supra. Since the ambiguity could not be resolved
from the bid itself, but only through a communication with Webb-LKM,
Webb-LKM's bid should not have been accepted.
Shipco complains that it was not notified prior to the award as
required by Federal Procurement Regulations Sec. 1-2.407-8(b)(4). These
regulations are only applicable to direct procurements by Federal
agencies. In addition, even if these regulations were applicable to
this procurement, the Housing Authority and HUD's failure to notify
Shipco of its plans to proceed with an award notwithstanding the protest
would constitute a procedural, not a substantive, defect and would not
affect the validity of the award. New Haven Ambulance Service, Inc., 57
Comp.Gen. 361 (1978), 78-1 CPD 225.
The complaint of Curtiss is denied; the complaint of Shipco is
sustained in part and denied in part. In sustaining the complaint,
however, we cannot recommend corrective action for the procurement
involved because of the substantial time that has elapsed since contract
award.
We are, however, advising the Secretary of Housing and Urban Development
of the need to inform appropriate personnel of the basic Federal
principles which must be followed in HUD-assisted procurements.
/1/ As noted above the ACC provided for 29 units. The record does
not indicate the reason the IFB was for only 27 units.
B-202382, November 12, 1981, 61 Comp.Gen. 83
Leaves of Absence - Sick - Recredit of Prior Leave - Break in Service -
What Constitutes - Service With Federally Funded Private, etc.
Organizations
Employee who had a break in Federal service of over 3 years seeks
recredit of sick leave on basis that he was employed by various
organizations and instrumentalities that receive Federal funding.
Employee contends that such employment avoids a break in service in
excess of 3 years. Under 5 C.F.R. 630.502(b)(1), a recredit of sick
leave is permitted when an employee's break in service does not exceed 3
years. Since service with private organizations or state
instrumentalities that receive Federal funding does not constitute
Federal service, employee may not have sick leave recredited.
Matter of: Irving A. Taylor - Recredit of Sick Leave, November 12,
1981:
Mr. Irving A. Taylor appeals the settlement of our Claims Group which
denied his request for recredit of sick leave because he had had a break
in Federal service in excess of 3 years. Mr. Taylor's appeal is denied.
Mr. Taylor has been employed as a Public Health Advisor by the Public
Health Service (PHS) since February 1979 following a break in Federal
service of over 11 years. In July 1980, he was advanced 240 hours of
sick leave to help him cover a period of incapacitation from July 23 to
October 4, 1980. The agency states that as of June 13, 1981, Mr. Taylor
had reduced the balance of the advance of sick leave to 178 hours.
Apparently, faced with the uncertain condition of his health, Mr. Taylor
is interested in eliminating this negative sick leave balance.
Therefore, he asked the PHS personnel office whether he could be
recredited with a portion of the 840 hours of sick leave he had to his
credit when he was separated from the Agency for International
Development in 1967. The personnel office advised him that the sick
leave could not be recredited since applicable regulations do not permit
the recredit of leave when the employee has had a break in Federal
service in excess of 3 years. Mr. Taylor appealed that determination to
our Claims Group, which issued a settlement concurring with the PHS
personnel office.
In his appeal of the Claims Group settlement, Mr. Taylor states that
he originally requested recredit of only enough sick leave to cover the
advance of sick leave. However, he notes that, although he did not
serve as a Federal employee following his departure from AID in 1967
until his appointment with the PHS in 1979, all of the interim positions
that he held were with various private organizations and state
instrumentalities that were federally funded. He concludes, therefore,
that there was no break in service. Accordingly, he now requests
recredit of the full 840 hours of sick leave to his credit at the time
of his separation from AID in 1967.
Finally, Mr. Taylor requests that, in the event his appeal is denied,
the matter be considered for submission to Congress as a meritorious
claim under 31 U.S.C. 236 (1976).
Under the authority of 5 U.S.C. 6311 (Supp. III 1979), the Office of
Personnel Management (OPM) has issued regulations governing the recredit
of sick leave. See 5 CFR 630.502 (1981). These regulations provide at
paragraph (b)(1):
* * * an employee who is separated from the Federal Government or the
government of the District of Columbia is entitled to a recredit of his
sick leave if he is reemployed in the Federal Government or the
government of the District of Columbia, without a break in service of
more than 3 years.
As to what constitutes a "break in service," our Office has held that
it means an actual separation from the Federal service. See 54
Comp.Gen. 669 (1975); and 47 id. 308 (1967). The fact that an employee
does not accrue leave in a position is not determinative of his
entitlement to later recredit of prior accrued sick leave. 31 Comp.Gen.
485 (1952). However, because the regulations at section 630.502 do not
define what type of service qualifies as Federal service, this Office
has decided these questions on a case-by-case basis. Thus, we have held
that service as a Peace Corps volunteer does not constitute "service"
for the purpose of this regulation. B-175209, August 14, 1972. We have
also held that service with the Food and Agricultural Organization of
the United Nations does not constitute service for the purposes of the
regulation. Richard E. Corso, B-180857, August 27, 1974. On the other
hand, we have held that congressional employment, although not subject
to a statutory leave system, does constitute Federal service for the
purpose of this regulation. Anthony J. Gabriel, 59 Comp.Gen. 704
(1980). See also the discussion and table of creditable civilian and
military service contained in Appendix B of the Federal Personnel Manual
Supplement 296-31.
Service with a private organization or state instrumentality where
the sole connection with the Federal Government is that it is the
recipient of Federal funds pursuant to a program authorized by Congress
does not qualify under any of the above-cited references. Accordingly,
we hold that such service does not constitute Federal service within the
meaning of 5 CFR 630.502. It follows that, for the purposes of section
630.502(b)(1), Mr. Taylor had no qualifying service between his
separation from AID in 1967 and his employment with the PHS in 1979.
Thus, his break in service exceeds the 3 years permitted by section
630.502(b)(1). For this reason, he is not entitled to a recredit of the
sick leave to his credit at the time of his separation from AID in 1967.
Finally, Mr. Taylor has requested that in the event his claim for
recredit of sick leave is denied, we consider his claim has a
meritorious claim under 31 U.S.C. 236. That section authorizes the
Comptroller General to submit to the Congress a claim which may not
lawfully be allowed, but which contains such elements of legal liability
or equity to be deserving of consideration by Congress.
The problem that gave rise to Mr. Taylor's recredit of sick leave was
his concern about being indebted for the advance of the 240 hours of
sick leave. We have been advised that Mr. Taylor is about to submit an
application for disability retirement. Section 630.209(b) of title 5 of
the Code of Federal Regulations (1981) provides that an employee who is
indebted for unearned leave and who retires for disability or is
separated or resigns on such account is not required to refund the
amount of that indebtedness. See Jay Sisco, B-188903, July 6, 1977. If
Mr. Taylor's application for disability retirement is acted upon
favorably, then he will not be required to refund the advance sick
leave. For this reason, we will take no action on his request for
referral of this matter to Congress as a meritorious claim at this time.
B-203301, November 6, 1981, 61 Comp.Gen. 79
Small Business Administration - Contracts - Contracting With Other
Government Agencies - Procurement Under 8(a) Program - Contractor
Eligibility - Termination
Small Business Administration (SBA) regulations which interpret Small
Business Act as requiring full hearing prior to termination from 8(a)
program of firm found to be a large business are to be accorded great
deference, and will be accepted where the protester has not shown
interpretation to be unreasonable. Small Business Administration -
Contracts - Contracting With Other Government Agencies - Procurement
Under 8(a) Program - Award Validity - Adverse Size Determination After
Award
Award of 8(a) contract is not affected by adverse size determination
made by SBA subsequent to award. Contracts - Small Business Concerns -
Awards - Small Business Administration's Authority - Size Determination
- Procurement Under 8(a) Program
Although SBA may have committed an oversight by awarding to firm it
arguably should have known was large, protester has not shown that SBA
acted fraudulently or in bad faith.
Matter of: Computer Data Systems, Inc., November 6, 1981:
Computer Data Systems, Inc. (CDSI), protests the award of a contract
to Systems and Applied Sciences Corporation (SASC) under the Small
Business Administration's (SBA) section 8(a) program. The contract is
for the provision of data processing services to the Department of
Energy. CDSI had been providing portions of these services under
previous contracts with Energy. CDSI essentially contends that at the
time of award SBA was aware that SASC was in fact a large business and
not eligible for the award. We deny the protest.
Section 8(a) of the Small Business Act authorizes the SBA to enter
into contracts with any Government agency that has procuring authority
and to arrange for the performance of such contracts by letting
subcontracts to socially and economically disadvantaged small business
concerns. 15 U.S.C. 637(a) (1976). CDSI argues that the award of SASC
violates both the Act and SBA regulations which require that assistance
be given only to small businesses. CDSI also asserts that SBA's award
of a contract to a firm known to be a large business constitutes bad
faith.
CDSI claims that knowledge by SBA officials that SASC was not a small
business is evidenced by a press release issued by SBA on May 1, 1981,
the date of award to SASC. The release announced that the SBA
administrator had directed regional offices to perform size
determinations on the 50 largest firms in the 8(a) program. The release
listed SASC as the 20th largest 8(a) firm, having received more than $34
million in 8(a) awards through September 30, 1980. CDSI also refers to
a May 14 newspaper article which indicated that SASC's receipts for 1979
and 1980 were $5.7 million and $13.2 million, respectively. CDSI
alleges the applicable size standard is $4 million in average receipts
in the previous 3 years. CDSI further points out that on June 22, 1981,
the SBA Philadelphia Regional Office found that SASC was not a small
business. This determination was not specifically made in reference to
this particular procurement.
SASC has appealed this determination.
SBA contends that award to SASC was proper because SBA is not
precluded from providing contract support to a firm in the 8(a) program
until that firm is formally terminated from the program following a
statutorily required adjudicatory hearing. Section 8(a)(9) of the Small
Business Act provides that no firm previously deemed eligible for 8(a)
assistance "shall be denied total participation in any program conducted
under the authority of (section 8(a)) without first being afforded a
hearing on the record in accordance with the Administrative Procedure
Act (APA)." 15 U.S.C. 637(a)(9) (Supp. III 1979). Implementing SBA
regulations provide that prior to termination for failure to meet
eligibility standards, a firm must be granted an opportunity for a
hearing. 13 CFR 124.1-1(e) (1981). The regulations further provide
that formal size determinations are merely advisory to the Assistant
Administrator for Minority Small Business and Capital Ownership
Development and to the administrative law judge in termination
proceedings, 46 Fed.Reg. 2591, 2594 (1981) (to be codified in 13 CFR
121.3-17). SBA reports that termination action is instituted after a
firm has exhausted its size appeal rights under the regulations.
CDSI contends that the legislative history of section 8(a)(9)
indicates that the provision applies only to terminations based upon
determinations unique to section 8(a), such as the determination that a
firm is not socially and economically disadvantaged. Terminations based
upon size status, a determination germane to all assistance under the
Act, are not subject to the provision.
Although CDSI has presented a well reasoned interpretation of section
8(a)(9), it has not demonstrated that the SBA's interpretation is
unreasonable. Great deference is to be accorded to the interpretation
of a statute by an agency which is authorized to enforce and implement
that statute. Such an interpretation will not be questioned unless it
is unreasonable. Udall v. Tallman, 380 U.S. 1 (1965); Budd Co. v.
Occupational Safety and Health Review Commission, 513 F.2d 201 (3d Cir.
1975). Section 8(a)(9) does not on its face qualify in any way the
requirement for a hearing prior to termination. Additionally, the
conference report accompanying section 8(a)(9) evidences an intent to
give due process rights to all 8(a) firms and states that, "once a firm
is certified as eligible it cannot be terminated, graduated or in any
other way removed from the program without the opportunity for a hearing
under the terms of the Administrative Procedure Act, at the option of
the firm." H.R. Rep. No. 1714, 95th Cong., 2d Sess. (1978).
Under the circumstances, we cannot find SBA's interpretation that
8(a)(9) requires a proper hearing prior to termination because of size
is unreasonable.
CDSI alternatively argues that even if section 8(a)(9) requires a
hearing prior to termination based upon size, the denial of a particular
contract in recognition of an adverse size determination does not
constitute termination. Thus, CDSI contends that SBA should have
withheld the award from SASC pending a final decision on its program
eligibility. We agree that following an adverse size determination SBA
could withhold a particular contract from a firm without effectuating a
de facto program termination and engaging the hearing requirement. See
Quality Dry Cleaner & Industrial Laundry-- Reconsideration, B-202751,
August 12, 1981, 81-2 CPD 131; cf. Greenwood's Transfer and Storage
Co., Inc., B-186438, August 17, 1976, 76-2 CPD 167. In fact, where a
firm is found to be a large business in the course of an SBA size
determination, we think SBA should curtail subcontracting with the firm
until a termination hearing, which should be held promptly, conclusively
resolves the issue. Otherwise SBA will run the risk of going beyond the
clear mandate of the Act to aid only small businesses.
In this case, however, the initial adverse size determination was not
made until June 22, 1981, nearly 2 months after award. SASC has
appealed the determination. Since a size determination has only
prospective application unless it is the result of a protest timely
filed with SBA (which is not the case here), the award on May 1 was not
affected by the size determination. See 13 CFR 121.3-4 and 3-5. We
also point out that at the time of award, SASC had not been given an
opportunity to refute any possible allegations pertaining to size.
CDSI also argues that the award constituted bad faith by SBA because
SBA knew (at least institutionally) at the time of award that SASC was a
large business. We disagree, because at the time of award SASC was
still legally a small business, that is, no contrary size determination
was in existence at the time of award. Although SBA may have had
records in its possession indicating an eligibility problem, the record
is devoid of evidence which indicates a willful disregard of facts.
Thus, to the extent SBA was lax by failing to initiate and make a size
determination at an earlier date, it would appear to have been the
result of administrative problems rather than the type of animus which
would normally be associated with bad faith. In any event, we find that
CDSI has failed to sustain its burden to prove bad faith or violation of
statute or regulation.
The protest is denied.
B-202159, NOVEMBER 6, 1981, 61 COMP.GEN. 69
Attorneys - Hire - Independent-Contractor Basis - Advisory Commission
Authority - United States Advisory Commission on Public Diplomacy
Contract entered into by the United States Advisory Commission on
Public Diplomacy with private law firm for legal services concerning
authority of the Advisory Commission and extent of its independence does
not constitute illegal personal services contract, since law firm was
hired on an independent contract basis requiring no more than minimal
supervision and not on employer-employee basis. Furthermore, type of
legal services required, involving legal analysis of authority and
independence of Advisory Commission, was not related to litigation
within jurisdiction of Department of Justice. Also, Advisory
Commission's need for second legal opinion, unencumbered by conflict of
interest, was not unreasonable under circumstances. Boards, Committees,
and Commissions - Advisory Commissions - Procurement of Services From
Parent Agency - Statutory Exemptions, etc. - United States Advisory
Commission on Public Diplomacy
Although advisory committees ordinarily must obtain needed services
from parent agency, authority granted the U.S. Advisory Commission on
Public Diplomacy in 22 U.S.C. 1469(b) to procure services to the same
extent as authorized by 5 U.S.C. 3109 is sufficiently broad to allow
Advisory Commission to enter into contract with private law firm on
independent contractor consultant basis. Experts and Consultants -
Compensation - Aggregate Limitation - Not for Application - Independent
Contractor's Services
Since contract U.S. Advisory Commission on Public Diplomacy entered
into with private law firm was on independent contractor basis,
statutory limitation in 22 U.S.C. 1469, which only applies when services
are procured from individuals as employees, was not applicable and did
not limit amount of compensation that could be paid to law firms.
Personal Services - Contracts - Compliance with Federal Procurement,
etc. Statutes
When agency contracts under authority of 5 U.S.C. 3109 with
consultant on independent contractor basis, it is still required to
follow formal contracting procedures and otherwise comply with the
applicable statutory and regulatory provisions governing Federal
procurements and the recording of obligations. Although the U.S.
Advisory Commission on Public Diplomacy did not follow proper procedures
in this respect in contract it entered into with private law firm we do
not object to payment of contract claim in this case because the
Advisory Commission has authority to contract and because the law firm
satisfactorily performed its obligations under the contract. Also, the
parent agency-- the International Communication Agency-- has indicated
its willingness to pay the claim.
Matter of: United States Advisory Commission on Public Diplomacy,
November 6, 1981:
This decision is in response to a request from Certifying Officer
James Q. Kohler, Jr., Chief, Financial Operations Division of the
International Communication Agency (ICA), for a legal opinion as to the
authority of the ICA to pay a claim presented to it by the United States
Advisory Commission on Public Diplomacy (Advisory Commission).
The claim, totaling $2850.00, represents legal fees charged by the
private law firm of Glassie, Pewett, Beebe and Shanks (law firm) for
legal services rendered to the Advisory Commission. For the reasons set
forth below, it is our view that the ICA is authorized to pay the full
amount of the claim in question.
On July 30, 1980, ICA's Contract and Procurement Division received
from the Advisory Commission, a "Request for supplies/Services"
standardized form, dated July 11, 1980, requesting ICA to pay the
attached invoice from the law firm in the amount of $2850.00, covering
legal services that the law firm had already provided to the Advisory
Commission. The request form justified the Advisory Commission's need
for the legal services in question as follows:
To provide expert advice on certain matters of concern to the
Advisory Commission. The Chairman of the Commission determined this was
a necessary expenditure for the new Commission.
The attached invoice from the law firm further explained the bill as
representing the firm's charges for professional services rendered:
From January 18, 1980, to date (March 27, 1980) in connection with
research and consultations on the statutes and legislative history
relative to the mission, status and authority of the Commission.
Subsequently, ICA requested and received an itemized bill, which
stated that a total of 33.25 hours of legal work was performed by the
law firm for the Advisory Commission. In his letter to us, the
Certifying Officer stated that the itemized bill "revealed that legal
advice was received by the Commission on substantially the same matters
which were the subject of review and advice by the Agency's (ICA) Office
of the General Counsel and by OPM (Office of Personnel Management)."
Until ICA received the request form, its officers were unaware that the
Advisory Commission had been seeking or had obtained any legal advice
from this or any other law firm. In requesting a legal opinion from our
Office as to the propriety of paying this claim, the Certifying Officer
states his view that the Advisory Commission had no authority to enter
into this contract. Nevertheless, he requests our concurrence in his
recommendation that the claim be paid on the basis of "quantum meruit."
In order to determine whether the ICA is authorized, or obligated, to
pay any or all of the claim in question, we must resolve two separate
although related questions. The initial question is whether the
Advisory Commission has authority to procure the services of a private
law firm by contract for the purpose and at the rate of compensation
involved here. Assuming that question is answered affirmatively, the
second question is whether the informal contracting procedures followed
by the Advisory Commission were so improper as to nullify what would
otherwise be a binding contractual obligation.
In order to answer the initial question, we must first examine the
historical background and evolution of the Advisory Commission.
The United States Advisory Commission on International Communication,
Cultural and Educational Affairs (ICCEA Advisory Commission), the
predecessor of the current Advisory Commission, was created on April 1,
1978, under section 8 of Reorganization plan No. 2 of 1977. 42 Fed.Reg.
62461, 91 Stat. 1636, 5 U.S. Code Appendix. All of the functions that
had previously vested in the United States Advisory Commission on
Information and the United States Advisory Commission on International
Educational and Cultural Affairs, both of which were abolished by
section 9 of Reorganization Plan No. 2 of 1977, were consolidated and
vested in the then newly created ICCEA Advisory Commission. The primary
responsibility of the reconstituted Advisory Commission was stated in
section 8(b) of the Reorganization Plan No. 2 of 1977 as follows:
The Commission shall formulate and recommend to the Director (of
ICA), the Secretary of State, and the President policies and programs to
carry out the functions vested in the Director or the Agency, (ICA), and
shall appraise the effectiveness of policies and programs of the Agency.
* * *
Notwithstanding the functional independence with respect to policy
and program matters that is inherent in being granted such authority, as
an advisory committee, the ICCEA Advisory Commission was completely
dependent on ICA for administrative and budgetary support. Cf.
B-143181, October 9, 1975 and B=179188, April 15, 1975. In this
connection, section 12(b) of the Federal Advisory Committee Act, 5
U.S.C.App. I 12(b), authorizes agencies to provide support to their
advisory committees as follows:
Each agency shall be responsible for providing support services for
each advisory committee established by or reporting to it unless the
establishing authority provides otherwise. * * *
Also, under 22 U.S.C. 1467(h), ICA is specifically authorized "to
provide the necessary secretarial and clerical assistance" for its
advisory commission.
The legal status of the ICCEA Advisory Commission was modified again,
effective October 1, 1979, pursuant to section 203(f) of the Department
of State Authorization Act, Fiscal Years 1980 and 1981, Pub. L. No.
96-60, 22 U.S.C. 1469 (Supp. III, 1979). The primary mission of the
Advisory Commission, as set forth in Reorganization Plan No. 2 of 1977,
was left unaltered. However, Pub. L. No. 96-60 changed the name of the
Advisory Commission to what it is today-- the United States Advisory
Commission on Public Diplomacy-- and granted the renamed Advisory
Commission the following new authority:
(b) The Commission shall have a Staff Director who shall be appointed
by the Chairman of the Commission. Subject to such rules and
regulations as may be adopted by the Commission, the Chairman of the
Commission may--
(1) appoint such additional personnel for the staff of the Commission
as the Chairman deems necessary; and
(2) procure temporary and intermittent services to the same extent as
is authorized by section 3109(b) of Title 5, but at rates for
individuals not to exceed the daily equivalent of the annual rate of
basic pay payable for grade GS-18 of the General Schedule under section
5332 of Title 5, United States Code.
According to the Certifying Officer, the ICA argues that, even with
the new authority provided the Advisory Commission in Pub. L. No. 96-60,
the Advisory Commission was not authorized to contract with the law firm
for the purposes and at the rate of compensation involved. For the
reasons discussed below, we disagree.
First, ICA maintains that as a general matter no governmental entity
can procure by contract the type of legal services involved here from a
private source since Government functions must be performed by
Government employees. The general rule, established by decisions of our
Office and the former Civil Service Commission, is that "personal
services may not be obtained on a contractual basis and must be
performed by personnel employed in accordance with the civil service and
classification laws." B-190118.2, January 24, 1978. However, an
exception to the general rule, allowing services normally performed by
governmental personnel to be performed under a proper contract with a
private contractor, has been commonly recognized "if that method of
procurement is found to be more feasible, more economical, or necessary
to the accomplishment of the agency's task." 51 Comp.Gen. 561, 562
(1972). Also see B-193035, April 12, 1979; 45 Comp.Gen. 649 (1966);
43 id. 390 (1963), and numerous other cases cited in those decisions.
In this connection, a "proper contract" for services is one in which the
relationship between the Government and the contracting personnel is not
that of employer and employee. B-193035, supra; B-190118.2, supra; 51
Comp.Gen. 561, supra, and other cases cited therein.
In other words, if the Advisory Commission has authority to contract
for services, the basic issue is whether the present contract created a
relationship between the Government and the law firm of employer and
employee-- in which case it would be prohibited-- or whether the law
firm's status is that of an independent contractor-- in which case it
would not be prohibited. In making this determination our Office has
relied primarily on the degree of supervision involved. For example, in
B-193035, supra, we said the following:
Where services directed at the performance of a Federal function are
obtained by contract rather than appointment, the question of whether
contractor personnel are functioning in an employer-employee
relationship with respect to the Government is one of supervision. If
contractor personnel are in fact supervised by a Federal officer or
employee, the contract is not one for independent contract services but
involves the procurement of services in avoidance of civil service laws
and regulations. * * *
Also see B-183487, April 25, 1977; B-186700, January 19, 1977.
(Specific guidelines for determining whether an employer-employee
relationship exists are set forth in Federal Personnel Manual Letter
300-8, December 12, 1967.)
We believe that the nature and type of legal services required by the
instant contract could necessarily only be performed on an independent
contractor basis, with no more than minimal supervision by the Advisory
Commission. In essence, the Advisory Commission requested an end
product-- a legal review of its authority and a determination of the
extent of its independence from ICA-- and it was the responsibility of
the law firm to determine how best to achieve the desired goal. This
necessarily required the law firm to perform its own research and to
conduct an independent "unsupervised" legal analysis.
Furthermore, our decisions in this area support the view that the
contract in question did not violate the limitation on personal service
type contracts to perform functions which could otherwise be performed
by Government personnel. On several occasions we have upheld the
authority of agencies to procure the services of private attorneys for
purposes other than the conduct of litigation, which under 5 U.S.C. 3106
must be conducted by the Department of Justice. For example, in
B-133381, July 22, 1977, we upheld the authority of the International
Trade Commission (ITC) to contract out for legal services
notwithstanding the availability of attorneys within the agency who
could have performed that task. In our opinion we said the following:
In general, Government agencies may not procure services on a
contractual basis where regular employees of the Government are
qualified and available to perform the work involved. Thus, where an
agency has employees available, whether attorneys or not, to perform a
particular task, it should not contract for performance of the same
task. Each agency is responsible for determining, in each case, whether
the particular services could be performed by agency employees. With
respect to the particular contract here under consideration, the ITC
apparently determined that its Office of General Counsel could not be
asked to represent the Commission's views upon appeal, given its prior
advocacy of the opposing position and hence that ITC's legal staff was
not able to provide the legal assistance necessary to that appeal.
Based on the information that we have been provided, we are unable to
conclude that such a determination is altogether lacking in foundation.
Also see B-192406(2), October 12, 1978; B-114868.18, February 10,
1978; and B-141529, July 15, 1963.
The Advisory Commission's rationale for entering into the contractual
arrangement with the law firm in the present case is substantially the
same as was involved in the above-quoted opinion, i.e., the Advisory
Commission's need and desire to obtain a second legal opinion concerning
the extent of its independence "unencumbered by a conflict of interest."
(Letter dated January 21, 1981, from the Advisory Commission Acting
Staff Director to ICA.) Obviously, it would have been impossible for the
Advisory Commission to obtain an independent second opinion from the
ICA. Therefore, as in B-133381, supra, if the contract is otherwise
authorized, we cannot conclude that the Advisory Commission's
determination that it was necessary to contract out for legal services
was so unjustified and without foundation as to violate the general rule
restricting personal services contracts. Furthermore, since the legal
services required involved research and analysis of the "statutes and
legislative history relative to the mission, status and authority of the
Commission," and not litigation or other matters within the sole
jurisdiction of the Department of Justice, the contract was not
prohibited by 5 U.S.C. 3106.
The second issue raised by ICA in relation to the Advisory
Commission's contracting authority focuses on the specific limitations
and restrictions that are applicable to the Advisory Commission because
it is an advisory committee. In this connection, ICA points out that
the Federal Advisory Committee Act, 5 U.S.C. App. I, requires the parent
agency to provide support services (including, presumably, legal
services) to its advisory committees, unless the establishing authority
provides otherwise. Furthermore, the ICA states that since the primary
purpose of the Advisory Commission is an advisory one, a review of
"Federal Advisory Committee Act procedures and the Commission's own
personnel functions may be outside the scope of permissible activity for
the Commission, especially if authority for these activities is vested
elsewhere."
Ordinarily, we would agree that an advisory committee lacking its own
appropriated funds and having no authority to hire staff or contract for
services would be required, under Section 12(b) of the Federal Advisory
Committee Act, to obtain services of the type involved here from the
parent agency. In fact, it is our view that the Advisory Commission
would not have had the authority to enter into this contract prior to
enactment of Pub. L. 96-60. However, the contract in question was
entered into after enactment of Pub. L. 96-60, which granted the
Advisory Commission specific authority to "appoint" additional personnel
for the staff of the Commission and to "procure temporary and
intermittent services to the same extent as is authorized by section
3109(b) of Title 5, of the United States Code * * * ." 22 U.S.C. 1469(b)
(Supp. III, 1979).
Although ICA suggests that the Advisory Commission's authority under
this provision is insufficient to encompass a contract for the purpose
and at the rate of compensation involved here, it is our view, for the
following reasons, that the language in 22 U.S.C. 1469(b) is broad
enough to authorize the Advisory Commission to enter into a contract of
this type.
First, as recognized by ICA, section 12(b) of the Federal Advisory
Committee Act specifically provides that the parent agency is
responsible for providing support services to its advisory committee
(thereby implying that the advisory committee does not have authority to
obtain such services directly) unless the establishing authority
provides otherwise. Thus, since 22 U.S.C. 1469(b) does provide
otherwise, it supersedes the requirement in the Federal Advisory
Committee Act that the Advisory Commission receive all necessary support
services from the ICA.
Second, our Office has, on numerous occasions, upheld the authority
of Federal agencies to contract for legal services under the authority
of 5 U.S. 3109, which 22 U.S.C. 1469(b) makes specifically applicable to
the Advisory Commission and which defines the extent of its hiring
authority. For example, in B-133381, supra, we said the following:
* * * Under 5 U.S.C. 3109, when authorized by an appropriation, as
here, the services of experts or consultants may be obtained either on
an independent contract or employment basis. In our opinion, since the
contract at issue does not appear to involve matters covered by 5 U.S.C.
3106 or otherwise under the jurisdiction of the Department of Justice,
the contract for the services of * * * (the law firm) would appear to be
within the authority of 5 U.S.C. 3109. * * *
Also see B-192406(2), October 12, 1978, supra.
Our holding in another case-- B-114868.18, supra-- is of special
significance here. In that case we considered whether the Navajo and
Hopi Indian Relocation Commission, an independent entity in the
executive branch, had the authority to hire outside counsel. Like the
Advisory Commission, which received administrative support from ICA, the
Indian Relocation Commission was furnished necessary administrative and
housekeeping services by the Department of the Interior pursuant to
statute. Also, like the Chairman of the Advisory Commission, the
Chairman of the Indian Relocation Commission was authorized to procure
the services of experts and consultants to the same extent allowed by 5
U.S.C. 3109. Finally, like the Advisory Commission, the Indian
Relocation Commission was concerned that representation of the
Commission by Interior Department attorneys would create a conflict of
interest. We concluded that the Indian Relocation Commission could
"execute a contract for legal services with an expert or consultant as
an independent contractor-- that is, one not subject to the Commission's
supervision and control * * * ."
With respect to the subject matter of the Advisory Commission's
contract, we do not agree that a legal analysis by a private law firm of
"Federal Advisory Committee Act procedures and the (Advisory)
Commission's own personnel functions" is not the type of service that
can be contracted for under the authority of 22 U.S.C. 1469(b). We
believe that no serious argument can be made restricting any Federal
entity from reviewing the extent of its own authority either from a
substantive or procedural standpoint. In other words, if a Federal
entity is otherwise allowed to procure legal services from a private law
firm for any purpose, it may exercise such power in order to determine
the parameters of its authority.
In accordance with the foregoing, we believe that the Advisory
Commission did have authority to enter into a contract with the law firm
on an independent contractor basis pursuant to 22 U.S.C. 1469(b) and 5
U.S.C. 3109.
The final issue concerning the Advisory Commission's contracting
authority is whether the Advisory Commission was authorized to approve a
contract in which the total amount of compensation to be paid exceeds
the express statutory limitation in 22 U.S.C. 1469(b) restricting pay
for consultants to "rates for individuals not to exceed the daily
equivalent of the annual rate of basic pay for grade GS-18 * * * ."
Specifically, the Certifying Officer's submission reads as follows:
Because the firm charged $2850 for 33.25 hours of work, the daily
equivalent of an eight hour workday is $685.68. This far exceeds the
maximum daily equivalent of the rate payable for a GS-18 ($192.74 with
current pay cap, or $275.90 daily if GS-18 set at $71,7734 annual rate).
The statutory responsibility for establishing the maximum rate for
consultant services to Federal advisory committees was granted to the
Office of Management and Budget (OMB) by section 7(d)(1) of the Federal
Advisory Committee Act, 5 U.S.C.App. I 7(d)(1), which provides as
follows:
The Director after study and consultation with the Civil Service
Commission, shall establish guidelines with respect to uniform fair
rates of pay for comparable services of members, staffs and consultants
of advisory committees in a manner which gives appropriate recognition
to the responsibilities and qualifications required and other relevant
factors. * * *
Guidelines were issued by OMB pursuant to Executive Order No. 11769,
February 21, 1974, and are set forth in section 11 of OMB Cir. No. A-63,
March 27, 1974. (Although the authority granted by OMB was transferred
to the General Services Administration by Exec. Order No. 12024,
December 1, 1977, OMB Cir. No. A-63 was left standing.) With respect to
pay for consultants to an advisory commission, section 11(c) of the
Circular reads as follows:
An agency shall fix the pay of a consultant to an advisory committee
after giving consideration to the qualifications required of the
consultant and the significance, scope, and technical complexity of the
work. The rate of pay shall not exceed the maximum rate of pay which
the agency may pay experts and consultants under 5 U.S.C. 3109.
Together, section 7(d)(1) of the Federal Advisory Committee Act and
section 11(c) of OMB Circular No. A-63 would appear to make it the
responsibility of the parent agency, rather than the advisory committee,
to set the pay of advisory committee consultants. Although that may be
true generally, we do not believe that such is the case here. It is our
view that the authority provided the Advisory Commission in 22 U.S.C.
1469(b) to "procure * * * services" carries with it the implied
authority to establish the rate of compensation to be paid for those
services, subject to any applicable statutory limitations or
restrictions.
In our opinion, the pay restrictions imposed by 22 U.S.C. 1469(b) and
5 U.S.C. 3109 are not applicable to a contract for the services of a
legal consultant engaged on an independent contractor basis. As stated
above, under 22 U.S.C. 1469(b) the Advisory Commission is authorized to
procure services to the same extent as authorized by 5 U.S.C. 3109(b).
Ordinarily, the procurement of experts or consultants pursuant to 5
U.S.C. 3109 is limited to a rate of compensation not to exceed the pay
schedule of a GS-15, unless a higher rate of pay is specifically
authorized. See 55 Comp.Gen. 1237 (1976); 51 id. 224 (1971); 43 id.
509 (1964); and 29 id. 267 (1947). However, we have consistently held
that the maximum compensation limitation of 5 U.S.C. 3109 is applicable
only to the procurement of personal services on an employer-employee
basis. See e.g., 26 Comp.Gen. 188 (1946). For example, in B-191865,
November 13, 1978, we considered whether a Department of the Interior
contract for consultant services was subject to the compensation
limitation of 5 U.S.C. 3109. In that case we said the following:
* * * With respect to procurement of the services from individuals in
circumstances amounting to employment, that section (5 U.S.C. 3109)
makes the provisions of title 5, United States Code, governing
appointments in the competitive service, classification of positions and
pay under the General Schedule inapplicable. However, a limitation is
contained in the statute which precludes payment in excess of the daily
equivalent of the highest rates payable under the General Schedule
unless an appropriation act or other statute authorizes a higher rate.
This restriction is applicable when services are procured from an
individual as an employee. When services are procured on other than an
employment basis the effect of 5 U.S.C. 3109 is to provide an exception
from the formal advertising requirement applicable to Government
contracting.
On the other hand, the limitation of 5 U.S.C. 3109 concerning the
rate of compensation is not applicable to a contract for expert or
consultant services, which results in an independent contractor
relationship. That is, it does not establish an employer-employee
relationship between the Government and the contractor. See 26
Comp.Gen. 188 (1946). * * *
While the language of 22 U.S.C. 1469(b) raised the maximum
permissible rate for experts and consultants hired as employees by the
Advisory Commission from the GS-15 level, otherwise mandated by 5 U.S.C.
3109(b), to that of a GS-18, it did nothing to alter the manner and/or
circumstances in which the salary restriction is applicable.
In other words, like the limitation in 5 U.S.C. 3109, the compensation
limitation contained in 22 U.S.C. 1469 applies only when services are
procured from an individual as an employee. The actual statutory
language in 22 U.S.C. 1469(b) "but at rates for individuals" clearly
supports this view that the GS-18 maximum rate was only intended to
apply to individuals hired as employees. Thus, since the contract in
question was entered into on an independent contractor basis, the
restrictive language in 22 U.S.C. 1467(b) does not limit the total
amount of compensation that can be paid to the law firm for the services
it rendered.
Having concluded that the Advisory Commission was authorized to
contract for the services of a private law firm on an independent
contractor basis for the purpose and at the rate of compensation
involved here, we must address the second question, concerning the
propriety of the contracting procedures that were actually used by the
Advisory Commission. In this regard, we believe that the procedures
followed by the Advisory Commission were clearly inadequate in several
respects.
First, in entering into the contractual agreement with the law firm,
the Advisory Commission did not follow a formal contract procedure. For
example, except for the invoice prepared by the law firm, the only
document supporting the instant claim is the "Request for
Supplies/Services" from that the Advisory Commission submitted to ICA
for payment. This type of informal procedure is not proper and should
not be used. As stated in B-191865, supra, a formal contracting
procedure should be followed when expert or consultant services are
obtained on an independent contractor basis. Also see B-174226, March
13, 1972, and B-174226, January 12, 1972. In other words, even though 5
U.S.C. 3109 provides an agency with limited contracting authority, as
discussed herein, and specifically exempts an agency from having to
comply with the advertising requirements imposed by the Federal Property
and Administrative Services Act of 1949, 40 U.S.C. 471 et seq., and the
Federal Procurement Regulations, 41 CFR Chapter 1, on Government
contracts for goods or nonpersonal services. (Although we recognize
that the Advisory Commission is obviously not an independent
establishment or executive agency, we believe that since 5 U.S.C. 3109,
which ordinarily only applies to the head of an agency, is specifically
made applicable to the Chairman of the Advisory Commission, the Advisory
Commission should be treated as an agency for the purpose of determining
the applicability of the procurement statutes and regulations.)
Second, having no specific appropriation of its own or separate line
item included within the ICA appropriation, the Advisory Commission
should have advised the ICA of the intended contract before it was
agreed to in order to ensure that sufficient funds were available within
ICA's appropriation to satisfy the cost of the contract. This would
have also allowed ICA to comply with the requirements set forth in 31
U.S.C. 200 concerning the recording of obligations.
Nevertheless, we have no objection, under the particular facts and
circumstances of this case, to ICA's payment of the full amount of the
claim. First, it is clear, as explained above, that the Advisory
Commission was authorized to enter into a proper contract with the law
firm for the purpose and at the rate of compensation involved here.
Second, it appears that the law firm was in fact "hired" on an
independent contractor basis and, as such, satisfactorily performed its
contractual obligations. Third, as stated by the Certifying Officer in
his submission:
* * * Because the Commission's authority to procure temporary
services is new there was a reasonable basis for confusion about the
scope of the authority.
Fourth, ICA obviously does not object to payment of this claim since
it specifically recommended payment on a "quantum meruit" basis.
Finally, in several other cases of this type in which the contracting
agency, under 5 U.S.C. 3109, used an informal contracting procedure
similar to that used here, we did not object to payment of the contract
costs after pointing out that formal contracting procedures should have
been followed. See B-191654, supra, and B-174226, supra.
In accordance with the foregoing, this claim can be certified for
payment by ICA's Certifying Officer in the full amount of $2850.00, if
otherwise correct. However, the Advisory Commission should be advised
that in future procurements it will have to comply with all of the
applicable statutory and regulatory requirements governing Federal
procurements and the recording of obligations.
B-204404, November 3, 1981, 61 Comp.Gen. 67
Pay - Readjustment Payment to Reservists on Involuntary Release -
Recoupment - Retirement - Bankruptcy Effect
An Air Force officer who received readjustment pay upon discharge
subsequently enlisted and completed 20 years of active duty for
retirement. Upon retirement the member's retired pay was withheld until
an amount equal to 75 percent of his readjustment pay was recouped as is
required under 10 U.S.C. 687(f). Although the member received a
discharge in bankruptcy effective shortly after he retired, this did not
entitle him to receive the retired pay withheld under section 687.
Deduction from retired pay in the amount of 75 percent of readjustment
pay is not a debt and, therefore, it is not discharged by an
adjudication of personal bankruptcy.
Matter of: Major Peter J. Mullen, USAF, Retired, November 3, 1981:
This case concerns the effect of a discharge in bankruptcy granted a
service member on the retired rolls who is not receiving retired pay
because of the statutory requirement that his retired pay be withheld in
the amount of 75 percent of any readjustment pay he received. The
specific question is whether the amount to be withheld constitutes a
debt which is dischargeable in bankruptcy. We find that it is not a
debt and hence is not dischargeable in bankruptcy.
The question was submitted for an advance decision by the Accounting
and Finance Officer, Air Force Accounting and Finance Center, Denver,
Colorado. The Department of Defense Military Pay and Allowance
Committee approved the submission and assigned it Control Number
DO-AF-1370.
On July 31, 1975, Major Peter J. Mullen was involuntarily released
from active duty. Since he met the requirements for readjustment pay
under 10 U.S.C. 687, he was paid $15,000 at the time of his release.
On the day following his involuntary release, he enlisted in the Air
Force in the rank of sergeant. With this additional service as an
enlisted member, he subsequently completed 20 years of active service
and became entitled to retired pay under 10 U.S.C. 8911. The Air Force
correctly determined that retired pay could not be paid to him until an
amount equal to 75 percent of the readjustment pay he received had been
deducted immediately from his retired pay. Such action was required by
the explicit language of 10 U.S.C. 687(f).
Major Mullen retired on February 29, 1980, and received no retired
pay until November 30, 1980, when the retired pay withheld equaled
$11,250, 75 percent of his readjustment pay. Generally, no question
would be raised by such action since the action is mandated by 10 U.S.C.
687(f); however, Major Mullen filed a petition in bankruptcy on April
24, 1980. Therefore, the Air Force asked whether Major Mullen is
entitled to be repaid any amount of the retired pay withheld after April
24, 1980.
The specific question is whether the requirement to withhold retired pay
in the amount of 75 percent of readjustment pay is to be considered a
debt which could be discharged in bankruptcy or simply a reduction in
retired pay entitlement.
The applicable statute, 10 U.S.C. 687(f), provides in part:
If a member who received a readjustment payment * * * qualifies for
retired pay * * * upon completion of twenty years of active service, an
amount equal to 75 percent of that payment, without interest, shall be
deducted immediately from his retired pay.
We have indicated that the withholding of retired pay pursuant to
section 687(f) is not the collection of a claim; that is, it is not a
debt due the United States and the amount to be deducted, 75 percent of
readjustment pay, cannot be deducted from other than retired pay.
B-199155, July 24, 1980. In essence, once the member retires his
readjustment pay is viewed as a substitute for retired pay until 75
percent of the amount he received for readjustment pay is withheld.
Thus, readjustment pay is considered to be in lieu of retired pay. In
other words, his entitlement to receive retired pay does not begin until
the time period expires in which the amount of retired pay he would have
received equals 75 percent of his readjustment pay. Since the
withholding of retired pay required under 10 U.S.C. 687(f) creates no
debt due the United States, it cannot be discharged in bankruptcy.
B-197624, October 3, 1980. In reaching this conclusion, we have not
relied exclusively on the general rule discussed above, but also have
considered the bankruptcy laws as they relate to the question at hand.
A debt under the bankruptcy law is liability on a claim. 11 U.S.C.
101(11) (Supp. III, 1979). A claim is basically a right to payment. 11
U.S.C. 101(4) (Supp. III, 1979). And a creditor is one who has a claim
against the individual filing the bankruptcy petition which arose before
the filing of the petition. 11 U.S.C. 101(9) (Supp. III, 1979). A
discharge in bankruptcy does not extinguish a debt but rather frees the
debtor from personal liability and provides him with a personal defense
to debt collection actions by a creditor. United States v. Midwest
Livestock Producers, Cooperative, 493 F.Supp. 1001, 1002 (E.D. Wis.
1980); see 11 U.S.C. 524 (Supp. III, 1979). As concerns this
readjustment pay Major Mullen received, he has no personal liability to
repay it. Instead of having a debt for readjustment pay, under the
statutory provisions he has a reduced retired pay entitlement. If, for
example, the member were to die, then the United States would be unable
to recover any further amounts.
Accordingly, the withholding of Major Mullen's retired pay in the
amount of 75 percent of the readjustment pay he was paid is required,
and none of the amount so withheld may be repaid to him.
B-205087, October 29, 1981, 61 Comp.Gen. 65
Officers and Employees - Contracting With Government - Public Policy
Objectionability - Exception - Unwarranted
Agency did not act improperly in rejecting low bid from concern owned
by employee of Federal Government because, while such contracts are not
expressly prohibited by statute, except in certain situations not
present here, they are undesirable and should not be authorized except
where Government cannot otherwise be reasonably supplied. Fact that
service would be more expensive from other sources provides no support
for determination that service cannot be reasonably obtained except from
concern owned by employee of the Government.
Matter of: Valiant Security Agency, October 29, 1981:
Valiant Security Agency, through its owner, Lawrence W. Bartolo,
protests rejection of its low bid for security services under invitation
for bids No. 82-01-09-11-81 issued by the National Institute for
Occupational Safety and Health, Department of Health & Human Services.
The bid was rejected because Mr. Bartolo has been employed by the
Federal Government since 1968, and the contracting officer relied on
Federal Procurement Regulations (FPR) Sec. 1-1.302-3 (1964 Ed.amend. 95)
which provides as follows:
(a) Contracts shall not knowingly be entered into between the
Government and employees of the Government or business concerns or
organizations which are substantially owned or controlled by Government
employees, except for the most compelling reasons, such as cases where
the needs of the Government cannot reasonably be otherwise supplied.
(b) When a contracting officer has reason to believe that an
exception as described in paragraph (a) of this section, should be made,
approval of the decision to make such an exception shall be handled in
accordance with agency procedures and shall be obtained prior to
entering into any such contract.
Valiant contends it has a proven performance record extending back to
1972 and the agency which employs Mr. Bartolo has awarded a contract to
Valiant when no other bids were received. Valiant asserts it was not
reasonable for the agency to award a contract to the awardee at a price
$20,456 higher than the bid of Valiant and such a savings by itself
should have compelled the contracting officer to make an award to
Valiant.
We believe the issue presented may be decided on the basis of the
protester's submission without further development under our Bid Protest
Procedures, 4 C.F.R.Part 21(1981), because the material submitted by the
protester, when read in the light most favorable to the protester,
affirmatively demonstrates that the protester is not entitled to relief.
See Hawthorne Mellody, Inc., B-190211, November 23, 1977, 77-2 CPD 406.
Contracts between the Government and its employees are not expressly
prohibited by statute 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 contractor in
his capacity as a Government employee. 18 U.S.C. 208(1976); Hugh
Maher, B-187841, March 23, 1977, 77-1 CPD 204. However, it has long
been recognized that such contracts are undesirable because among other
reasons they invite criticism as to alleged favoritism and possible
fraud and that they should be authorized only in exceptional cases where
the Government cannot reasonably be otherwise supplied. 27 Comp.Gen.
735(1948); Capitol Aero, Inc., 55 Comp.Gen. 295(1975), 75-2 CPD 201;
Burgos & Associates, Inc., 59 Comp.Gen. 273(1980), 80-1 CPD 155. The
fact that a service would be more expensive if not obtained from an
employee of the Government does not by itself provide support for a
determination that the service cannot reasonably be obtained from other
sources. 55 Comp.Gen. 681(1976).
Therefore, we see no basis for questioning the contracting officer's
decision not to seek approval for an exception to the basic policy set
forth in FPR Sec. 1-1.302-3.
The protest is summarily denied. G366120A 61-2 Comp.Gen. (C.D.P. -
4/2/82)
B-202543, October 29, 1981, 61 Comp.Gen. 62
Joint Travel Regulations - Proposed Amendments - Military Personnel -
Overseas - Return Transportation of Ex-Family Members - Time Limitation
Extension
Proposed amendment to the Joint Travel Regulations, to increase from
6 months to 1 year after relief of uniformed services member from his
overseas duty station during which transportation of ex-family members
must take place, should not be implemented. Any extension of time for
travel beyond that currently allowed may be authorized only if justified
on an individual case basis when it can be shown that the return took
place as soon as reasonably possible after the divorce and departure of
the member from the overseas station.
Matter of: Return travel to United States for dependents of
uniformed services member following divorce, October 29, 1981:
The Acting Assistant Secretary of the Army (Manpower and Reserve
Affairs) has requested our decision as to whether Volume 1 of the Joint
Travel Regulations (1 JTR) may be amended to eliminate the requirement
that in cases where a member's marriage is dissolved, entitlement to
transportation of ex-family members will terminate 6 months after the
relief of the member from the overseas duty station incident to a
permanent change of station. The request has been assigned Control No.
81-2 by the Per Diem, Travel and Transportation Allowance Committee.
Since return to the family members must be reasonably related to the
termination of the family member status, we cannot authorize a general
increase in the time allowable. However, a provision which would
authorize the granting of exceptions were allowed only in cases where
the delay was not merely a matter of personal preference and return to
the United States was accomplished as soon after the divorce or
annulment as was reasonably possible.
In decision 53 Comp.Gen. 960(1974), we stated that we would have no
objection to an amendment to Volume 1 of the JTR that would permit
members of the uniformed services stationed overseas to be reimbursed
for the return travel to the United States of a spouse who traveled to
the foreign post as a dependent but ceased to be dependent as of the
date the member became eligible for their return travel because of
divorce or the annulment of the marriage. The decision also applied to
a member's minor children who because of custody and support agreements
would not qualify as the member's dependents after the divorce or
annulment. The JTR was amended accordingly and currently includes this
entitlement in paragraph M7104. Paragraph M7104-7 also provides that
such transportation "must be completed within 1 year after the effective
date of the final decree of divorce or annulment as applicable, or 6
months after the date of relief of the member from the overseas duty
station incident to a permanent change of station, whichever occurs
first."
The proposed change to paragraph M7104-7 would eliminate the 6-month
time limitation and in lieu thereof entitle the member to the
transportation of the ex-family members up to 1 year after the final
divorce decree regardless of when the member departed from the overseas
duty station, provided the divorce occurred prior to the member's
permanent change of station.
The legality of that part of the proposed revision which would provide
an entitlement 1 year after the member travels has been questioned.
Since the return travel must be linked to the member's entitlement to
return his dependents, we cannot approve of the proposed revision.
The change to the regulation is proposed because, it is stated, the
6-month requirement is creating hardships for many ex-family members
who, for legitimate reasons such as being hospitalized, and having
medical problems, and completion of the school year, desire to remain in
the overseas area beyond the 6-month period allowed. The proposal would
provide authority for the ex-family members to remain overseas up to 1
year after the final divorce decree without regard to the reason for the
delay.
In 52 Comp.Gen. 246(1972) we stated that the travel regulations
recognize an obligation on the part of the Government to return members
of certain civilian employees' families who were transported overseas
for the convenience of the Government although the families ceased to be
dependents of the employees when they became eligible for return travel.
In subsequent decisions, citing 52 Comp.Gen. 246 as support, we have
not objected to proposed revisions to the travel regulations extending
return travel to ex-family members of other civilian employees and
military personnel. See 53 Comp.Gen. 960(1974) and 53 Comp.Gen.
1051(1974). Regarding the children, we noted that amendments to the
regulations approved in those decisions were not a radical departure
from the previous practice since the employee or member would, in many
cases, continue to be responsible for their support and they would
remain members of his family. See B-163138, January 17, 1968. Also,
although an ex-wife would not technically be a dependent of the member
following a final divorce, often the member would be responsible for her
support and it would impose a financial hardship upon him to provide for
her return travel. We took into consideration the legislative history
of 37 U.S.C. 406(h), under which the change in the military regulations
was authorized, which indicated that Congress was aware of the potential
problems that could result for both a member and the United States if
dependents were to remain overseas because the member could not afford
to provide for their return travel to the United States after marital
difficulties had arisen. Also, the providing of return travel avoids
the potential embarrassment to the United States caused by the presence
overseas of ex-family members who are unable to return home due to lack
of funds.
However, the entitlement to travel is related to the status of the
spouse and children as dependents of the member. It is not a travel
entitlement any such dependent has in his or her own right. Thus, when
the marriage ends there is no further right to travel except as
recognized in 52 Comp.Gen. 246. Under that authority travel is allowed
incident to the divorce and this must be accomplished within a
reasonable time after that event. Although we do not now question the
time allowed under current regulations, it does not appear to be within
the intent of the holding in 52 Comp.Gen. 246 to permit the ex-spouse of
a member to remain overseas for 1 year after the member has been
transferred without regard to the reason for such an extended stay.
Accordingly, if the length of time specified is considered inadequate in
some instances, provision should be made for granting exceptions to the
general rule on the basis of a showing that the delay was not merely a
matter of personal preference and that the return to the United States
was accomplished as soon after the divorce or annulment as was
reasonably possible in the circumstances.
The regulations should not be amended except in accordance with the
above.
B-201633, October 29, 1981, 61 Comp.Gen. 57
Statutes of Limitation - Claims - Date of Accrual - Relocation Expenses
- Erroneous Separation - Back Pay Act Applicability
Employee was mistakenly returned to California from Vietnam in 1973
for separation. About 1 1/2 months later he was reemployed in
Washington State. After a timely appeal of the separation the Civil
Service Commission, in 1978, found that he had been improperly
separated. The separation action was canceled and he was retroactively
shown in a pay status during the 1 1/2 months interim period. His claim
for relocation expenses from California to Washington did not accrue
until the CSC determination was made; therefore, it was not barred by
the 6-year time limit on filing claims (31 U.S.C. 71a) when filed in GAO
in 1980. Officers and Employees - Transfers - Expenses - Relocation,
etc. - Erroneous Separations - Back Pay Act Applicability
Employee's claim for relocation expenses which he would have received
but for an improper personnel action may be paid under the Back Pay Act,
5 U.S.C. 5596. Therefore, he may be paid travel expenses of his
dependent and transportation of household goods to his new official
station. He may also be paid temporary quarters subsistence allowance
at the new station which is within the United States, but he is not
entitled to a house-hunting trip or expenses of purchase and sale of
residences because his old station is not within the United States, its
territories or possessions, Puerto Rico, or the Canal Zone.
Matter of: Ralph C. Harbin, October 29, 1981:
Mrs. Irene N. Harbin has submitted an appeal of our Claims Group's
settlement dated June 24, 1980, which disallowed the claim of her late
husband (Ralph C. Harbin) for reimbursement of certain relocation
expenses including those of travel, transportation of household goods,
and purchase and sale of residences. As will be explained below, the
claim for travel expenses and transportation of household goods may be
allowed in part, but the claim for the expenses of purchase and sale of
residences may not be allowed.
During the period November 1971 to August 1973, Mr. Harbin was a
civilian employee with the Army Defense Attache Office in Saigon,
Vietnam. By travel orders dated August 14, 1973, he was authorized
return travel for separation and transportation of not in excess of
5,000 pounds of household goods from Saigon to Downey, California, his
place of residence in the United States. His resignation from his
position with the Army became effective October 31, 1973. On December
17, 1973, Mr. Harbin reported for duty as an employee of the Department
of the Navy, Supervisor of Shipbuilding, in Seattle, Washington. He
also moved his dependents and household goods to Seattle, with him, from
their home in Downey. However, their home in Downey was not sold until
November 14, 1975.
Also, a piano was shipped from Los Angeles, California, to their
residence in Seattle during November 1975.
In November 1973 Mr. Harbin appealed his October 31, 1973,
resignation from his Army position, arguing that he had not expected to
resign but to be separated as a retired annuitant, apparently as a
result of a reduction in force. Thus, he alleged that his separation
was involuntary, and had been accomplished erroneously. Eventually, the
Federal Employees Appeals Authority, Civil Service Commission, by
decision of November 17, 1978, ruled in his favor in that regard. As a
result, by memo dated March 23, 1979, the Chief of Naval Operations
informed the Director of the Consolidated Civilian Personnel Office
(Naval Support Activity) that Mr. Harbin's 1973 separation from his
position with the Army had been cancelled, that "he must be considered
as being appointed SUPSHIP (employee of Supervisor of Shipbuilding,
Seattle) without a break in service" and that "Mr. Harbin is entitled to
reimbursement of expenses incurred in his movement from Viet Nam to
Seattle." Accordingly, the Director issued an amendment dated September
9, 1979, to Mr. Harbin's 1973 travel orders, which retroactively
authorizes reimbursement for travel and relocation expenses. The
amendment to his travel authorization contains the following notation:
Based on the decision of the Federal Employees Appeals Authority, Mr.
Harbin's resignation processed by the Army in 1973 was in error.
Therefore, his travel orders for his return to U.S. for separation were
inappropriate. These orders are to amend the original orders and move
him from Saigon to Seattle, WA vice Saigon to Downey, CA. Based on CNO
decision * * * Mr. Harbin's travel entitlement is not to exceed the
constructed cost from Saigon to Seattle.
As a result, Mr. Harbin claimed relocation expenses incident to his
move in December 1973 from Downey to Seattle, including a house hunting
trip in November 1973, the expenses of purchase and sale of residences
in 1974 and 1975, transportation of dependents and household goods in
1973, and transportation of a piano in 1975.
The Navy forwarded the claim to our Office for settlement where it
was first received on March 21, 1980. In its June 23, 1980 settlement,
our Claims Group stated that any expenses incurred prior to March 21,
1974 (6 years prior to receipt of the claim in our Office) are barred by
the act of October 9, 1940, ch. 788, 54 Stat. 1061, as amended, 31
U.S.C. 71a(1976). Also, our Claims Group disallowed the real estate
expenses on the basis that reimbursement of such expenses is not
authorized for a transfer from Vietnam. In the absence of evidence that
the piano was owned by Mr. Harbin or one of his dependents prior to
December 17, 1973, the claim for its transportation was disallowed.
Mr. Harbin died January 4, 1980, and Mrs. Harbin has pursued the
claim since that time.
Essentially, Mrs. Harbin maintains that we should consider payment of
those travel and relocation expenses incurred prior to March 21, 1974,
because no basis existed upon which to file a claim until December 6,
1978, when the Navy decided to retroactively issue an amendment to the
original travel orders.
As is indicated previously, Mr. Harbin submitted an appeal of his
separation. In its November 17, 1978 decision, the Federal Employees
Appeals Authority, of the Civil Service Commission, in response to his
appeal concluded that Mr. Harbin had been misinformed concerning his
eligibility to retire and since he apparently had no intention to leave
his position in Vietnam except for the purpose of retirement, he was
involuntarily separated from his position without the benefit of
procedures required in 5 C.F.R.Part 753B. Accordingly, the Appeals
Authority directed the following:
* * * that the action terminating appellant from his position of
Supervisory Marketing Specialist, GS-1104-12, effective October 31,
1973, by resignation be canceled. In addition, the official personnel
records should be changed to show appellant continuously in a duty and
pay status when he received a reinstatement career appointment to the
position of Contract Price Analyst, GS-1102-11, effective December 17,
1973, with Thirteenth Naval District, Seattle, Washington.
The Appeals Authority had authority to make final decisions on
appeals to the Commission, subject to agency petition for
reconsideration. See 5 C.F.R. 772.101 and 772.309(1978). Apparently
the agency involved made no such request, and the decision of the
Appeals Authority became final. Accordingly, the employee's status
became fixed by the record as corrected and he became entitled to travel
and relocation expenses due upon application of the authorizing statute
to the facts of his case as shown by the corrected records.
Backpay is authorized under 5 U.S.C. 5596(1976) for an employee who
is found by an "appropriate authority under applicable law, rule,
regulation, or collective bargaining agreement," to have been affected
by an unjustified or unwarranted personnel action which has resulted in
the withdrawal or reduction of all or part of the pay, allowances, or
differentials of the employee. Section 5596(b)(1)(A) (Supp. III, 1979)
provides in part that such an employee--
(A) is entitled, on correction of the personnel action, to receive
for the period for which the personnel action was in effect--
(i) an amount equal to all or part of the pay, allowances, or
differentials, as applicable which the employee normally would have
earned or received during the period if the personnel action had not
occurred * * *
The regulations prescribed under 5 U.S.C. 5596 to carry out its
provisions (in effect when the Appeals Authority issued its decision)
provided at 5 C.F.R. 550.803(d)(1978) that the "appropriate authority"
to make the finding that an employee had suffered an unwarranted
personnel action included the Civil Service Commission of which the
Appeals Authority was a part.
As is indicated above, the Appeals Authority rendered its decision on
Mr. Harbin's case in 1978 and, pursuant thereto, the Navy took its
corrective action in 1979. We have held that backpay claims accrue at
the time the work is performed and the 6-year barring act, 31 U.S.C.
71a, begins to run at that time. However, when a claim is based on
another agency's determination of the validity of the claim, we have
held that the claim does not accrue, for the purposes of the barring
act, until the designated agency makes its determination. See 58
Comp.Gen. 3, 4(1978).
It is our view that this claim falls into the latter category. That
is, while the expenses for which reimbursement is claimed were incurred
in 1973, 1974, and 1975 incident to the move to Seattle, any right to
reimbursement was not established until 1978 when the Appeals Authority
acted. Therefore, since any claim Mr. Harbin had incident to that move
must have accrued under the Appeals Authority decision in 1978, and his
claim was filed in our Office in 1980, it is not barred by 31 U.S.C.
71a.
As is indicated above, Mr. Harbin's claim arose under the Back Pay
Act, 5 U.S.C. 5596. That act, as applicable here, authorizes payment
only of the "pay, allowances or differentials" the employee would have
received but for the unwarranted personnel action. Apparently, Mr.
Harbin was paid the backpay he lost between the time of his involuntary
resignation and his reemployment in Seattle since the current claim is
for travel and transportation expenses and the costs of buying and
selling residences.
Entitlement to Travel, Transportation and Relocation Allowances
We have held that the Back Pay Act does not authorize payment of
travel, transportation, or moving expenses when they are incidental
expenses incurred by an employee as a consequence of the unwarranted
personnel action. Such expenses are not allowances that the employee
would have received if he had not undergone the improper personnel
action.
See B-181514, May 9, 1975; B-182282, May 28, 1975; and B-184200, April
13, 1976. However, in this case, as a result of the improper personnel
action, Mr. Harbin was denied certain travel and transportation
allowances which he would have received but for the improper personnel
action. Those allowances may be paid under the Back Pay Act.
Under the revised travel order issued by the Navy to carry out the
Appeals Authority's decision, Mr. Harbin was transferred from Vietnam to
Seattle, Washington, in lieu of Vietnam to Downey, California. His
travel and transportation entitlements must be determined based on the
revised travel order and the applicable statutes and regulations.
Travel and transportation entitlements of civilian employees of
Department of Defense agencies are set out in Volume 2, Joint Travel
Regulations (2 JTR), which effectuates the Federal Travel Regulations
for such employees.
When Mr. Harbin was transferred to Vietnam, he was not authorized to
bring his dependents with him and he was authorized transportation of
not in excess of 5,000 pounds of household goods. Apparently his
dependents remained at his actual place of residence in California
during his overseas assignment. The record does not show the weight of
the household goods he took overseas or returned to California at
Government expense.
Under the revised travel order, incident to his employment in
Seattle, he was entitled to travel and transportation allowances for
himself and his household goods directly from Vietnam to Seattle, less
what he already received in allowances for travel and transportation
from Vietnam to California. He is also entitled to the transportation
of his dependents at Government expense from his residence in Downey,
California, to Seattle, not to exceed the constructive cost of such
travel from Vietnam to Seattle, 2 JTR paragraph C7003-3a. Claim is made
for such travel for his wife and daughter as his dependents. His wife
qualifies as a dependent and the claim for her travel may be allowed.
However, his daughter was 24 years old when the travel was performed in
1973. To qualify as a dependent child, the daughter would have had to
have been under 21 years of age or physically or mentally incapable of
self-support. 2 JTR Appendix D, Dependent. Since those conditions have
not been shown to exist, reimbursement for the daughter's travel may not
be allowed.
As to transportation of household goods, Mr. Harbin was entitled to
the return of not in excess of 5,000 pounds of his goods from Vietnam to
his new official duty station in Seattle. He is also entitled to the
transportation of his goods from California to Seattle to the extent
that the combined weight of the shipments does not exceed this maximum
entitlement of 11,000 pounds.
2 JTR paragraphs C8000 and C8003-6.
Claims have been submitted for the transportation of 4,200 pounds of
household goods from California to Seattle. This amount consists of
1,670 pounds which Mr. Harbin moved himself, 2,080 pounds moved by
household goods carrier, and a piano weighing 540 pounds shipped
separately from storage by household goods carrier. While previously it
was unclear as to whether the piano was owned by Mr. Harbin or his
dependents prior to December 1973, Mrs. Harbin has now furnished
information satisfactorily establishing that it was owned by them prior
to that time. Since the claim for shipment of the 4,290 pounds of
household goods would be within the total allowable weight even if the
full shipment from overseas had been made it may be allowed.
Claim is also made for travel allowances for Mr. Harbin and his wife
to travel from Downey to Seattle on a house-hunting trip prior to their
move there, temporary quarters subsistence expenses while occupying
temporary quarters following their move to Seattle, and the expenses of
purchase and sale of residences incident to that move. Under the
authorizing statute the expenses of a house-hunting trip may be paid
only when both the old and the new official stations are located within
the United States, and the expenses of purchase and sale of residences
may be paid only when both the old and the new stations are within the
United States, its territories and possessions. See 5 U.S.C.
5724a(a)(2) and (4); 54 Comp.Gen. 1006(1975) and 47 Comp.Gen. 93(1967).
Since Mr. Harbin's old official station was in Vietnam, he did not
qualify for these allowances upon the move to his new official station
in Seattle and, thus, the claim for these allowances may not be paid.
However, since the new station was located within the United States,
temporary quarters subsistence expense may be paid. See 5 U.S.C.
5724a(a)(3) and 58 Comp.Gen. 606, 608-609(1979). Accordingly, this
allowance may be paid for the 10-day period for which it is claimed.
A settlement will be issued on this basis in due course.
B-196275, October 29, 1981, 61 Comp.Gen. 53
Claims - Assignments - Erroneous Payments to Assignor - After Notice of
Assignment - Tuftco Case - Lease Payments
Where the Government has received notice of a valid assignment, but
thereafter erroneously pays assignor, it remains liable to assignee for
the amount of the erroneous payment. Claims - Assignments - Assignment
of Claims Act - Notice Requirements - Noncompliance - Waiver Evidence
Although assignment did not comply with requirements of the
Assignment of Claims Act, the record establishes that the Government was
aware of, assented to and recognized the assignment of a contract.
Therefore, the Government should pay money owed under contract to
assignee.
Matter of: Centennial Systems, Incorporated, October 29, 1981:
The Department of Health and Human Services (HHS) requests our
decision as to the propriety of paying Centennial Systems,
Incorporated's (Centennial), claim for $8,654, arising from the apparent
assignment to the firm of the proceeds from two HHS purchase orders,
Nos. FPH-78-29 and RO II-79-79, under contract No. GS-005-43360.
In our view, HHS should pay Centennial's claim for $3,258 under
purchase order FPH-78-29 and the $5,387 under purchase order RO
II-79-79.
In fiscal year 1978, HHS contracted with LCS Corporation (LCS) for
the lease of word processing equipment for its New York regional office.
In July of 1978, LCS sold the equipment to Centennial and assigned the
remaining proceeds of its contract lease with HHS under purchase order
No. FPH-78-29 to Centennial.
Under this agreement, Centennial leased back all the purchased
equipment to LCS, with the understanding that this equipment would be
subleased to the Government. The parties agreed that all proceeds due
LCS under the LCS-Government leases would be assigned to Centennial, and
that LCS would issue the necessary Notices of Assignment for subsequent
orders to effect the assignment of orders under the Assignment of Claims
Act (Act), 31 U.S.C. 203(1976), 41 U.S.C. 15(1976). Centennial or its
assignee was to receive all proceeds from all orders during the period
involved here. In exchange for financing the leases, American Security
Bank (ASB) was to receive the lease rental proceeds at issue here. The
GAO has approved a similar lease-financing arrangement in Alanthus
Peripherals Incorporated, 54 Comp.Gen. 80(1974), 74-2 CPD 71. In that
decision, an assignment of lease payments (under certain ADPE leases) to
a lease-financing company which purchased title to the underlying
equipment was recognized since the purchaser could be regarded as a
"financing institution" under the Act.
The notice of assignment was served on the contracting officer and
the assignment was acknowledged by the contracting officer in writing.
However, ASB was not paid the rental for August and September of 1978.
Apparently, the rental was paid to LCS instead.
For fiscal year 1979, beginning October 1, 1978, HHS renewed its
leasing agreement with LCS under the same contract number, but with a
new purchase order No. RO II-79-79 (renewal agreement). There is no
evidence submitted to show that a valid assignment of the renewal
agreement exists. HHS retained the payments owed under this contract
because of its dissatisfaction with the equipment and service and its
belief that LCS was no longer in business. HHS attempted to exercise
its cancellation option with LCS beginning in November 1978, but it was
not until February 1979 that HHS discovered that Centennial was the
current owner of the equipment.
In April 1979, however, LCS sent HHS an invoice for $4,887,
representing the rental for October through December 1978, under the
renewal agreement. LCS apparently accepted the validity of the HHS
cancellation notice of November. The LCS invoice directed that payment
be made to ASB as assignee for Centennial.
HHS has refused to pay the $4,887 to ASB without proof of assignment
of the renewal agreement by LCS to Centennial or ASB. Centennial and
ASB have submitted a copy of the assignment of FPH-78-29 and HHS's
acknowledgment of the assignment. In a letter to this Office,
Centennial and ASB agree to hold the Government harmless from any other
claims against monies due and owing under either purchase order.
Centennial claims $3,258 for the contract period of August and
September 1978, $4,887 for the contract period October through December
1978, and $500 for an equipment removal charge. While HHS does not
question the amounts owed, it requests our determination whether
Centennial's claim to the money is valid.
This claim is for rental proceeds from August and September 1978,
under the initial purchase order FPH-78-29. LCS assigned the proceeds
from this contract-purchase order on June 30, 1978, to ASB. Notice of
this assignment was given to and acknowledged by the contracting officer
in compliance with the Act. HHS does not dispute the fact that the
contract was performed for those 2 months. Centennial claims that it
has not received the payments from HHS. HHS states that payment to the
party it contracted with, LCS, constitutes satisfaction of its
obligation to Centennial.
Ordinarily, once the Government has received notice of a valid
assignment and thereafter erroneously pays the assignor, it remains
liable to the assignee for the amount of the erroneous payment. See
Tuftco Corporation v. United States, 614 F.2d 740 (Ct.Cl. 1980);
Central National Bank of Richmond v. United States, 91 F.Supp. 738
(Ct.Cl. 1950).
Here, HHS had notice of a valid assignment to ASB, but apparently
paid the assignor, LCS, not the assignee. Therefore, once HHS verifies
these facts, it should pay ASB the $3,258 for the August and September
1978 rental. See Tuftco, supra, and Central National Bank, supra. HHS
should take steps to recover the monies erroneously paid to LCS, if
feasible.
Centennial also claims $4,887 as the rental fee for October through
December 1978 and a $500 equipment removal fee under the renewal
agreement. The problem concerning this claim is that a valid written
assignment under the renewal agreement was not executed.
Although neither Centennial nor HHS has found a copy of an assignment
for the renewal agreement acknowledged in writing by HHS in accordance
with the Act, Centennial contends that it is entitled to this money
nonetheless. It refers to a March 6, 1981, letter from HHS wherein HHS
apparently recognizes Centennial's right to the rental from October
through December as assignee in interest of LCS. (In an earlier letter,
dated December 15, 1980, also cited by Centennial, HHS recognized that
it owed "LCS or its rightful assignee" the monies, not referring
specifically to Centennial's right as assignee to the money.) Centennial
argues that since HHS recognized the assignment's existence, it is
binding upon HHS, despite the fact that notice of the assignment was not
given as required under the Act. Centennial cites Tuftco, supra, in
support of its position.
In Tuftco, supra, the court held that, although an assignment did not
comply with the requirements of the Act, the assignment was nevertheless
binding on the Government where the Government was aware of, assented to
and recognized the assignment. Here, in its March 6, 1981, letter, HHS,
in effect, recognized the assignment of the renewal agreement. The LCS
invoice of April 1979 sent to HHS, prepared after the original
assignment, states that payment for October through December 1978, under
the renewal agreement, should be made to ASB as assignee to Centennial.
Centennial and ASB have offered to issue hold-harmless letters
indemnifying the Government against any claims for the money claimed.
In our view, the evidence substantiates Centennial's claim under the
Tuftco decision. HHS should pay the claim upon receipt of the
hold-harmless letters.
We authorize payment of Centennial's claim.
B-204729, October 28, 1981, 61 Comp.Gen. 51
Compensation - Downgrading - Saved Compensation - Effect of Civil
Service Reform Act of 1978
Employee who held a GS-13 position with the Department of the Air
Force transferred to a GS-12 position with the Department of Energy
after receiving notice that his GS-13 position would be transferred from
Colorado to Virginia incident to a transfer of function. He is not
entitled to grade and pay retention under 5 C.F.R. 536.202(a), since he
was not placed in a lower-grade position as a result of declining to
transfer with his function but, rather, as a result of his voluntary
action based on his behalf that he might be separated.
Matter of: R. Dewayne Noell - Claim for Grade and Pay Retention,
October 28, 1981:
Mr. R. Dewayne Noell has appealed our Claims Group's denial of his
claim for grade and pay retention. Mr. Noell accepted a lower-grade
position with another agency after receiving notice that his position
would be transferred to another area incident to a transfer of function.
Mr. Noell is not entitled to grade and pay retention since he was not
placed in a lower-grade position as a result of his declining to
transfer with his function, but rather as a result of his voluntary
action.
Mr. Noell was employed as a grade GS-13 Realty Officer with the
Aerospace Defense Command, Peterson Air Force Base, (AFB), Colorado. By
letter dated May 11, 1979, entitled "Preliminary Offer of Transfer of
Function" Mr. Noell was advised by the Air Force that the function with
which his position was identified was scheduled to transfer to Langley
Air Force Base, Virginia, on or about October 1, 1979. He was asked to
return the letter and indicate whether he was interested in accompanying
the transfer of function. Mr. Noell replied that he was interested in
accompanying the transfer of function. Mr. Noell received another
"Preliminary Offer of Transfer of Function" dated September 4, 1979,
wherein he was advised that his function was scheduled to transfer to
Langley AFB no earlier than January 4, 1980. On September 5, 1979, he
informed the Air Force that he declined the offer to transfer with his
function.
By letter dated September 5, 1979, Mr. Noell was offered employment
in Montrose, Colorado, with the Western Area Power Administration,
Department of Energy, as a grade GS-12 Realty Specialist. The letter
stated in part that it confirmed an earlier verbal offer and Mr. Noell's
acceptance. Effective September 23, 1979, Mr. Noell transferred to the
grade GS-12 position with the Western Area Power Administration.
Mr. Noell contends that he is entitled to grade and pay retention
since he accepted the lower grade position rather than waiting to be
separated.
Title VIII of the Civil Service Reform Act of 1978 amended title 5 of
the United States Code to provide grade and pay retention for certain
Federal employees who have been subject to reductions in grade as a
result of grade reclassification actions or reductions in force; 5
U.S.C. 5361-5366 (Supp.III, 1979). A qualifying employee who is reduced
in grade as the result of a reduction in force is entitled to retain his
grade for 2 years and thereafter retain his pay indefinitely unless his
entitlement ceases under prescribed conditions. Under its authority at
5 U.S.C. 5365(b)(3) to provide for application of all or portions of the
statutory grade and pay retention provisions of that subchapter to
justifiable situations, the Office of Personnel Management, at 5 C.F.R.
536.202(a)(1980), has extended grade retention and pay retention to
individuals who decline to transfer with their functions and who, prior
to separation "for declining the transfer" are placed in a lower-grade
position, provided:
(1) The transfer of function is to a location outside the employee's
commuting area; and
(2) The employee has served for 52 consecutive weeks or more in one
or more positions at a grade or grades higher than that of the
lower-graded positions in which placed.
In this instance, Mr. Noell was not placed in a lower-grade position
as a result of declining to transfer with his function, but rather as a
result of his applying for and accepting a lower-grade position with the
Western Area Power Administration prior to the scheduled transfer of
function. As pointed out by Mr. Noell, he chose to avoid the risk of
being separated from Government service as a result of not being able to
find suitable employment subsequent to the transfer of function. While
this was an understandable decision in view of the preliminary notices
of a transfer of function, the fact remains that Mr. Noell voluntarily
accepted a lower-grade position prior to any definite action by the
agency that would have separated him or placed him in a lower-grade
position as a result of the prospective transfer of function. We have
held that such circumstances do not qualify an employee for the remedy
of grade and pay retention. See Louis Rubinstein, B-198941, August 19,
1980, Albert D. Minear, B-201775, August 3, 1981.
Mr. Noell also contends that he should be entitled to grade and pay
retention because the personnel office at Peterson AFB advised employees
that they would be eligible for all the benefits and protection normally
afforded employees during a reorganization or a reduction in force.
While it is not precisely clear what Mr. Noell may have been advised
with respect to entitlement to grade and pay retention, any erroneous or
incorrect advice he may have received would not expand the circumstances
under which he would be entitled to grade and pay retention not
authorized by the applicable statute and regulations. See Elton L.
Smalley, B-181311, August 21, 1974, and court cases cited therein.
Accordingly, Mr. Noell is not entitled to grade and pay retention and
our Claims Group's disallowance of his claim is sustained.
B-203539, October 28, 1981, 61 Comp.Gen. 48
Contracts - Protests - General Accounting Office Procedures - Timeliness
of Protest - Date Basis of Protest Made Known to Protester - Doubtful
Protest that evaluation was improper, filed within 10 working days
from the time the protester was informed by the agency that another
bidder had been awarded the contract, is timely even though protester
could possibly have discovered grounds of protest earlier since doubts
as to timeliness are resolved in favor of protester and timeliness is
measured from the time protester learns of agency action or intended
action which protester believes to be inimical to its interests.
Contracts - Awards - Delayed Awards - Awardee No Longer Low Bidder
Where award date was unavoidably delayed so as to shorten contract
performance period by one month, award to bidder evaluated as low under
performance period specified in solicitation is not improper even though
awardee would not be low under evaluation based on shorter actual
performance period, since competition was fair, prices had been exposed,
and probable cost of resolicitation would exceed difference in prices
bid by protester and awardee.
Matter of: Alliance Properties, Inc., October 28, 1981:
Alliance Properties, Inc. protests the award of a contract to The
McMillan Corporation by the U.S. Air Force at Wright-Patterson Air Force
Base under invitation for bids (IFB) No. F33601-81-B-0022. The
solicitation called for bids to provide maintenance for military family
housing. Alliance contends the award to McMillan requires the Air Force
to pay more than it would have to pay Alliance for the same services.
For reasons discussed below, this protest is denied.
When the solicitation was issued on March 3, the agency intended to
make award by May 1 and to have the contractor start work on June 1.
The original bid opening date of April 2 was extended to April 10 by an
amendment dated March 30. The solicitation called for fixed prices for
a four-months base period in fiscal year 1981, for each of two one-year
options and for a third option of six months for a total of 34 months.
The solicitation stated that bids would be evaluated by adding the total
price of all options to the price for the basic quantity and that award
would be made to the responsible bidder whose bid, conforming to the
solicitation, would be most advantageous to the Government, price and
other factors considered. The solicitation also provided that the
contract period would be from June 1 or date of receipt of the executed
contract, whichever was later.
Because of a delay in conducting a preaward survey of McMillan, the
contract was not awarded to that firm until May 27. Since the contract
required a one-month phase-in period, this made it impossible for
McMillan to start work until July 1, thus eliminating one month from the
planned base performance period of four months. Although McMillan's bid
was low under the specified 34-month evaluation period, all parties
agree that if the evaluation were based on a three-month base period and
a 33-month total period reflecting the actual performance time caused by
the delay in the award, Alliance would be low. McMillan's bid was
evaluated at $965,764.66 for the 34-month period; $3,404.54 below
Alliance's bid for that period. Alliance's bid would have been
evaluated at $937,319.18 were the 33-month period used; $699.48 under
McMillan's bid for the same period.
Alliance contends that since the award did not include the month of
June as originally planned, its bid, as evaluated using the shortened
three month base period and 33-month total, is low and should have been
accepted. The Air Force maintains that since the solicitation did not
provide for an evaluation on any basis other than the 34-month period,
its only alternative would have been to reject the bids and resolicit.
In view of the cost of resolicitation, which would include the cost of
extending the incumbent's contract, and considering the fact that the
prices had been exposed and that there was no great difference between
them, the Air Force did not consider this alternative desirable or
feasible. The Air Force also contends Alliance's protest is untimely
under our Bid Protest Procedures, 4 C.F.R.Part 21(1981), because it was
submitted four days after award and more than ten days after Alliance
should have known (May 1) that the actual period of performance would be
less than 34 months.
We believe Alliance's protest, which was received by this Office
within three working days of that firm's receipt of notification of
award, should be considered timely. The record is not clear as to what
transpired during the evaluation period. Alliance did submit a letter
dated May 13 which set forth its view that it considered itself the low
bidder under the 33-month evaluation scheme. The Air Force never
provided Alliance a written answer to the letter but contends that
during several telephone calls it informed Alliance that that firm's
analysis had not been accepted and the evaluation would be made on the
basis of 34 months. Alliance, however, maintains it was told the Air
Force was checking its mathematics and that the implications of
Alliance's letter were unclear and would receive appropriate
consideration. Under such circumstances, we believe any doubt should be
resolved in favor of the protester. Dictaphone Corporation, B-196512,
September 17, 1980, 80-2 CPD 201. Moreover, timeliness is measured from
the time the protester learns of an agency action or intended action
which the protester believes is inimical to its interests.
Werner-Herbison-Padigett, B-195956, January 23, 1980, 80-1 CPD 66. That
final action did not take place until the Air Force actually made award
to McMillan based on the 34-month evaluation period.
As the solicitation clearly stated that the evaluation would be based
on the total price for the 34 months, the Air Force had no authority to
base its evaluation on 33 months or on any other basis than that set
forth in the IFB. Jacobs Transfer, Inc., 53 Comp.Gen. 797(1974), 74-1
CPD 213; Refre and Associates, B-196097, April 25, 1980, 80-1 CPD 298,
affirmed upon reconsideration July 7, 1980, 80-2 CPD 13.
Therefore, when the Air Force found that unforeseen delays prevented
start of performance until July 1, it was faced with the question as to
whether it should solicit new bids or make an award for 33 months
including the 3-month base period and 30-month option period.
The general rule is that an award must be made on the basis of the
most favorable cost to the Government measured by the work actually to
be performed and the evaluation should not include any period greater
than that for which a contract could be awarded. See Linolex Systems,
Inc., et al., 53 Comp.Gen. 895(1974), 74-1 CPD 296; Crown Laundry and
Cleaners, B-196118, January 30, 1980, 80-1 CPD 82; Chemical Technology,
Inc., B-187940, February 22, 1977, 77-1 CPD 126.
We have held, however, that this general rule does not have to be
strictly applied to all cases. International Technical Services
Corporation, B-198314, January 13, 1981, 81-1 CPD 18. Here, all
competitors, including the protester, competed on the basis of 34
months, which was clearly required by the terms of the solicitation.
The prices had been exposed and the difference in the prices was less
than the probable cost to the agency of a resolicitation. Under these
circumstances, we believe the agency acted reasonably in not following
the general rule and making award under the original solicitation.
International Technical Services Corporation, supra.
The protest is denied.
B-201518, October 28, 1981, 61 Comp.Gen. 46
Officers and Employees - Transfers - Temporary Quarters - Absences -
Effect on Subsistence Expense Reimbursement
After reporting to his new duty station in Albuquerque, New Mexico,
and beginning occupancy of temporary quarters, employee and family moved
to Aberdeen, South Dakota, for balance of authorized 30-day period.
Employee was also on temporary duty and annual leave for several days
during this period. The fact that the employee was away from both his
old and new duty stations and that he was on annual leave is not
determinative of his entitlement. He may be paid temporary quarters
expenses for the days he was on annual leave, provided the agency
determines that his taking leave did not cause an unwarranted extension
of the period of his occupancy of temporary quarters.
Matter of: Jon C. Wade - Subsistence expenses while occupying
temporary quarters, October 28, 1981:
This responds to a request for an advance decision by Lupe Calabaza,
an authorized certifying officer of the Department of the Interior. She
seeks an opinion on the propriety of paying the claim of Jon C. Wade, an
Interior employee, for subsistence expenses while occupying temporary
quarters incident to a permanent change of duty station. The claim may
be paid subject to an agency determination as explained below.
Mr. Wade was transferred from Phoenix, Arizona, to Albuquerque, New
Mexico, and was authorized reimbursement for temporary quarters
subsistence expenses (TQSE). Mr. Wade and his family moved into
temporary quarters in Albuquerque on June 8, 1975, and remained in such
quarters through June 13, 1975. He has been reimbursed for this period.
It is the period following June 13, 1975, for which the certifying
officer has requested our decision.
On June 14, 1975, Mr. Wade departed Albuquerque at his own expense to
travel with his family to Aberdeen, South Dakota. The Wades spent the
night of June 14, 1975, in Ogallala, Nebraska, and arrived in Aberdeen
on June 15, 1975. Mr. Wade's family remained in Aberdeen through July
5, 1975, arriving back in Albuquerque on July 7, 1975, after staying
overnight in Dodge City, Kansas. Mr. Wade departed Aberdeen on June 17,
1975, on official business travel, returning on June 28, 1975, at which
time he began a period of annual leave through July 3, 1975. On July 6,
1975, Mr. Wade traveled with his family to Albuquerque, arriving on July
7, 1975.
Mr. Wade and his family had access to lodging at no cost to them
during the period they spent in Aberdeen, June 15-- July 5, 1975. Thus,
his claim is limited to meal expenses for this period, in addition to
TQSE for June 14 in Ogallala, July 6 in Dodge City, and July 7 in
Albuquerque.
Under the provision of 5 U.S.C. 5724(a)(3), an employee may be
reimbursed subsistence expenses for himself and his immediate family for
up to 30 days while occupying temporary quarters. The implementing
regulations contained in the Federal Travel Regulations (FTR) (FPMR
101-7, May 1973) provide that the period for temporary quarters should
be reduced or avoided if the employee has had adequate opportunity to
complete arrangements for permanent quarters (FTR para. 2-5.1), and that
temporary quarters are to be regarded as an expedient to be used only if
or for so long as necessary until the employee can move into permanent
residence quarters (FTR para 2-5.2d).
Our decisions have held that the location of the temporary quarters
need not be in the vicinity of either the old or new official duty
stations so long as the quarters constitute temporary quarters under the
applicable regulations. See James W. Nicks, B-191374, September 21,
1978, and decisions cited therein. We have also held that an employee
may be reimbursed for subsistence expenses while on annual leave. Henry
J. Kessler, B-185376, July 23, 1976.
Many of our prior decisions in this area concerned employees who had
taken annual leave during the period of temporary quarters which raised
the question of whether they were on "personal business." Because the
regulations provide that temporary quarters should be regarded as an
expedient for only so long as necessary until the employee can move into
permanent residence quarters, that determination is dependent on whether
the employee's taking of annual leave and traveling away from his new
duty station caused an unwarranted extension of the period of temporary
quarters or a delay in occupying permanent quarters. See Russell E.
Archer, B-184137, December 29, 1975. If the employee has acted
expeditiously in attempting to locate permanent quarters and has
occupied permanent quarters as soon as available, he is entitled to
temporary quarters expenses for the days he was on annual leave away
from his old and new duty stations, since under those circumstances, he
would have occupied temporary quarters regardless of whether he had
taken leave. In this context, the term "personal business" refers to
the necessity for the employee's occupancy of temporary quarters.
Andrew J. Howard, B-195506, October 26, 1979.
We are unable to determine from the record if Mr. Wade's taking of
leave during the days in question caused an unwarranted extension of the
period of his occupancy of temporary quarters. For example, there is
nothing in the record that indicates when his household goods were
shipped, or when it was necessary that he vacate his old residence and
occupy his new residence. If it is administratively determined that his
actions did not cause an unwarranted extension of the period of
temporary quarters occupancy, the voucher may be paid.
B-200722, October 23, 1981, 61 Comp.Gen. 42
Contracts - Protests - General Accounting Office Procedures - Timeliness
of Protest - Additional Information Supporting Timely Submission
Additional materials submitted in support of a timely protest will be
considered as part of the protest. The additional materials provide
only the rationale for the protest basis clearly stated in the initial
protest. Contracts - Protests - Interested Party Requirement - Protest
to Contract Modification
A potential competitor for equipment which has been the subject of a
contract modification is an "interested party" to challenge the
modification as a change beyond the scope of the contract requiring a
new competition. General Accounting Office - Jurisdiction - Contracts -
Modification
Although protests against contract modifications usually are matters
of contract administration which we will not review, we will consider
protests which contend that a modification went beyond the scope of the
contract and should have been the subject of a new procurement.
Contracts - Modification - Beyond Scope of Contract - Options Exercised
- Purchase Changed to Lease - New Competition Recommended
A modification which converts a contract for the acquisition of disk
drives from a purchase, with virtually no post-acquisition Government
right to assure equipment performance, to a 5-year lease-to-ownership
plan, with expansive rights in the Government to enforce newly added
performance requirements over the full term of the lease, so
substantially alters the rights of the parties as to be beyond the scope
of the original contract and results in a contract substantially
different from that for which the competition was held. Therefore, a
new competition should be conducted.
Matter of: Memorex Corporation, October 23, 1981:
Memorex Corporation (Memorex) protests a modification issued by the
Social Security Administration (SSA), Department of Health and Human
Services, under a contract option for the acquisition of disk drives, a
type of information storage device used with computers. The
modification substituted a newer type disk drive and changed the terms
of the contract. Memorex contends that SSA should have procured the
newer model disk drives competitively rather than by modifying the
option. We agree with Memorex.
On January 18, 1978, SSA awarded a contract to Storage Technology
Corporation (STC) for the purchase of STC 8800 disk drives to provide
30.4 billion characters of disk storage capacity. On October 28, 1978,
SSA exercised an option in the contract to acquire additional STC 8800
disk drives to provide a further 30.4 billion characters of storage.
SSA deferred delivery of the option quantity as the result of delays in
the availability of SSA's new computer center. After SSA exercised the
option, but prior to delivery of the option quantity, SSA experienced
problems with the already installed initial quantity of STC 8800 drives
and eventually decided it could not accept the option quantity. SSA
also determined that it could not establish STC responsibility or
liability under the purchase contract for the problems with the model
8800 drives. While SSA was debating whether to terminate the option and
expect a claim from STC, or to negotiate a settlement, SSA declined to
accept delivery under the option on the last extended delivery date.
STC asserted that SSA's failure to take delivery was a breach of the
contract. On September 23, 1980, SSA and STC agreed to modification 10
to STC's contract.
Modification 10 provides for the substitution of STC 8650 disk drives
for the older model 8800 equipment and converts the option from an
outright purchase to a "lease-to-ownership" plan which contemplates
Government ownership of the disk drives at the end of a 5-year lease
period. The cost of the 5-year lease of the 8650's is more than
$200,000 greater in absolute terms than the purchase option cost of
8800's. (SSA asserts that the cost is lower when compared on a present
value basis-- purchase price of the 8800's versus the amount of cash,
adjusted for interest, required to pay the lease costs for the newer
8650's over the 5-year period.)
Approximately nine of modification 10's 46 pages establish stringent
performance requirements for the 8650's over the 5-year lease and
specify SSA's remedies for unsatisfactory performance.
Memorex contends (1) that the option was improper; (2) that the
exercise of the option was improper; and (3) that modification 10 so
changed the nature of the contract that it should have been the subject
of a competitive procurement. SSA contends (1) that Memorex is not an
interested party under our Bid Protest Procedures, 4 C.F.R.part
21(1981); (2) that Memorex's various protests are untimely under our
Procedures; (3) that the modification was a matter of contract
administration not for consideration by our Office; and (4) that the
modification was proper, in any event. STC has offered additional
reasons as to why Memorex's protest is untimely. We will confine our
discussion to those issues which we consider dispositive of the protest.
Timeliness of Memorex's Protest
Memorex filed an initial short protest with our Office on October 7,
1980, contesting, in part, SSA's "failure to obtain competition" under
modification 10. On October 17, 1980, Memorex filed a substantial
expansion of its protest, charging in part that the substitution of
equipment, the change from straight purchase to lease-to-ownership, and
the increase in price, so substantially changed the nature of the option
that competition was required. SSA contends that this aspect of
Memorex's protest cannot be deduced from Memorex's October 7 protest and
is therefore untimely because it was not raised until October 17, more
than 10 working days after Memorex received a copy of modification 10 on
September 26. STC adds that we should not consider Memorex's letter of
October 17 because Memorex did not submit these "deatils" of its protest
within the 5 working days contemplated under our Procedures.
Our Bid Protest Procedures, 4 C.F.R.part 21(1981), generally require
that initial protests to our Office contain a concise statement of the
grounds for the protest, supported to the extent feasible, and also
provide that any additional details required by our Office must be
furnished within 5 working days of the protester's receipt of our
request for the statement. 4 C.F.R. 21.1(c), 21.2(d). With certain
exceptions not relevant here, protests must be filed within 10 working
days of the date on which the protester knew or should have known of the
basis for its protest. 4 C.F.R. 21.2(b)(2). Although each new basis
for protest must independently satisfy our timeliness criteria, we will
generally consider later-filed materials and/or arguments which merely
provide further support for an already timely protest. Kappa Systems,
Inc., 56 Comp.Gen. 675(1977), 77-1 CPD 412.
We find this protest to be timely. Memorex's timely initial protest
letter of October 7 specifically objects to SSA's failure to conduct a
competition for the disks acquired under the modified option. Despite
STC's suggestion to the contrary, we find Memorex's October 17
submission to be only an explanation of the rationale for Memorex's
fundamental objection which, we note, the protester provided voluntarily
and not at our request. Consequently, this material will be considered.
Interested Party
SSA argues that Memorex is not an "interested party" as required
under our Procedures (4 C.F.R. 21.1(a)(1981)) in order to have its
protest considered by our Office because Memorex did not compete in the
original procurement.
The protest is that changes to the contract were so substantial that
the contract should be terminated and a new competition conducted for
the modified requirements. As a potential offeror on a new procurement,
Memorex has a direct and established interest in the opportunity to
compete for the award. Consequently, Memorex is an interested party.
Webcraft Packaging, Division of Beatrice Foods, Co., B-194087, August
14, 1979, 79-2 CPD 120.
Contract Administration
We do not consider protests against contract modifications unless it
is alleged that the modification went beyond the scope of the contract
and should have been the subject of a new procurement. Webcraft
Packaging, Division of Beatrice Foods Co., supra; Brandon Applied
Systems, Inc., 57 Comp.Gen. 140(1977), 77-2 CPD 486. This contention is
the substance of Memorex's protest. Therefore, the protest is
appropriate for our consideration.
Change v. New Procurement
We have consistently held that preservation of the integrity of the
competitive procurement system requires that contracting parties not
make changes to contracts which have the effect of circumventing the
competitive procurement statutes. Lawson Division of Diebold,
Incorporated, B-196029.2, June 30, 1980, 80-1 CPD 447; American Air
Filter, 57 Comp.Gen. 285(1978), 78-1 CPD 136. This principle is
violated when a modification so substantially changes the purpose or
nature of a contract that the contract for which the competition was
held and the contract which is to be performed are essentially
different. Webcraft Packaging, Division of Beatrice Foods Co., supra.
We find this to be the case here.
Modification 10's conversion of the option from a purchase to a
5-year lease-to-ownership plan with continuing performance requirements
has shifted the burden and risk of nonperformance from the Government to
the contractor.
STC's only continuing responsibility in connection with the original
option was to provide maintenance services and SSA's only remedy for an
inoperable disk was to obtain credits against the maintenance agreement.
Under modification 10, however, STC has a continuing obligation to
assure continuous satisfactory performance of the disks measured by
objective standards; if a piece of equipment fails and cannot be
repaired, STC must replace it. If a piece of equipment is
unsatisfactory, even though it is repaired, SSA may deduct a portion of
the rental charge. If deficiencies warrant, SSA may terminate the
contract for default and hold STC liable for the excess costs of
reprocurement. In effect, SSA now has acquired a right to continued
satisfactory performance which it did not possess under the original
option. STC has assumed correspondingly enlarged contractual
obligations. We conclude that a change of this magnitude in the
fundamental relationship of the contracting parties goes beyond the
scope of the original contract and has resulted in a contract which is
substantially different from that originally competed.
Memorex's protest is sustained.
SSA should initiate a competitive procurement for the disk drives.
Because SSA has expressed a particular need for uninterrupted system
availability, we will not object if in conducting the competitive
procurement SSA elects to provide for the phased introduction of the
replacement equipment. If STC is presently performing, STC's contract
should be modified to reflect the lower price. If STC is unsuccessful,
the lease whould be terminated for the convenience of the Government in
accordance with the "no-cost" termination provisions in the contract
option. We recognize that implementation of this decision may result in
the revival of STC's breach claim. However, that matter is for
consideration under the Disputes Clause of the contract.
B-202238, October 20, 1981, 61 Comp.Gen. 35
Communication Facilities - Contracts - Automatic Call Distributing
Systems - Restrictive Specifications - Reasonableness - Regulated
Carrier's Protest
General Accounting Office (GAO) has no basis to conclude that
provisions in solicitation for an automatic call distributing system do
not reflect agency's legitimate needs where protester, a regulated
public utility offering telephone services, complains that provisions
make it impossible for a regulated carrier to bid, but does not show
that the agency's rationale for including the provisions is
unreasonable. Contracts - Negotiation - Requests for Proposals -
Specifications - Minimum Needs - Detailed Requirements
Specification which describes with particularity the performance
objectives of the telephone call distributing system being procured,
including the manner and sequence for accomplishing specific functions,
will not be questioned by GAO when protester does not show that
contracting agency has no reasonable basis for imposing detailed
requirements of this type. Contracts - Negotiation - Requests for
Proposals - Specifications - Restrictive - Inability to Meet
Fact that the protester, or even all regulated public utilities,
cannot meet Government's requirements is not per se indicative that
solicitation unduly restricts competition. Contracts - Protests -
General Accounting Office Procedures - Timeliness of Protest - New
Issues - Unrelated to Original Protest Basis
Timeliness of protest depends upon timeliness of specific bases of
protest. Information submitted in support of timely raised bases of
protest will be considered. However, where protester in its initial
protest complains that several specific solicitation provisions are
restrictive and later in its comments on the agency report alleges that
a different provision is restrictive, allegation contained only in
report comments is untimely. Similarly, specific arguments first raised
in protester's report comments are untimely where protester first
contended in the report comments that specific portions of the
specification describe a competitor's product, but only contended in its
initial protest that the specification was generally limited to one
product. Contracts - Protests - General Accounting Office Procedures -
Information Sufficiency - Clarification Requests by GAO - Duty to Make
GAO's duty under section 21.2(d) of Bid Protest Procedures to seek
clarification of inadequately stated protest is applicable only where
initial protest letter fails to state any basis for protest. Where
initial protest adequately states basis of protest for one or more
issues, section 21.2(d) is not applicable; it is the protester's duty
to diligently pursue all other aspects of protest in a timely manner.
Contracts - Negotiation - Offers or Proposals - Time Limitation for
Submission - Sufficiency of Time for Response
When offeror had solicitation available for review for period of
months, and agency issued amendment deleting restriction affecting that
offeror and extending date for receipt of initial proposals by 13 days,
offeror had adequate opportunity to respond to solicitation. Contracts
- Negotiation - Pre-Proposal Conference - Agency Discretion
Agency was under no obligation to hold a preproposal conference since
such conferences are held at the agency's discretion.
Matter of: Illinois Bell Telephone Company, October 20, 1981:
Illinois Bell Telephone Company (Bell) protests that request for
proposals (RFP) No. IRS 81-29, issued by the Internal Revenue Service
(IRS) to procure an automatic call distributing system, is restrictive
of competition mainly because the specification describes one
manufacturer's equipment and certain RFP terms limit the ability of
regulated public utilities to compete.
The IRS responded to certain of Bell's objections by amending the
solicitation. The remaining issues are either without merit or
untimely.
As a result of a recent consolidation of its telephone inquiry
function, the IRS anticipated that its Chicago office would receive
approximately 20,000 calls daily from taxpayers seeking guidance. The
IRS therefore determined that it needed automatic equipment to
systematically distribute these calls to some 200 agents handling
telephone inquiries and for other related functions.
The subject solicitation sought offers for an integrated system to
automatically perform this call distribution function, which includes
agent stations, supervisory control stations, processors for electronic
switching between lines, and auxiliary equipment, plus maintenance.
The IRS issued its original solicitation on January 22, 1981, which
called for the submission of proposals on February 9. By letters dated
January 30 and February 3, Bell pointed out a number of errors and
inconsistencies in the solicitation and requested additional time to
prepare a proposal. On February 4 the IRS contacted the offerors by
telephone to advise them that the date set for receipt of proposals was
to be extended. The IRS issued amendment No. 1 to the solicitation on
February 13 correcting the deficiencies noted by Bell and extending the
date for submission of proposals to February 26. This amendment in
effect revised the entire solicitation.
Bell filed a protest with this Office on February 19, complaining
that it was precluded from submitting a proposal because of the
deficiencies in the original solicitation and stating that it had not
received the amendment to the solicitation that the IRS had promised and
that its request for a preproposal conference had not been honored.
Further, the protester argued that certain specific terms and conditions
in solicitation prevented it, as a regulated public utility, from
submitting a proposal. Bell finally maintained that the specification
"described the mechanical functions" of another firm's equipment,
therefore making it impossible for Bell to compete.
Shortly thereafter, on February 27, the IRS issued amendment No. 2 to
the solicitation deleting one of the allegedly restrictive provisions
and extending the date for receipt of proposals to March 12. Bell did
not submit a proposal by the amended closing date. On April 20 the
competition was reopened to incorporate minor revisions into the
solicitation. Although the amendment was sent to Bell, it did not
respond by the April 30 closing date.
The contracting officer subsequently determined that immediate award
was in the Government's best interest and proceeded under Federal
Procurement Regulations Sec. 1-2.407-8(b)(4) to award the contract
despite Bell's protest.
Solicitation Provisions
Bell contends that the proposed contract provisions contained in the
solicitation were unnecessarily restrictive in a number of areas. The
first of these provisions precluded the consideration of special
assembly tariffs proposed by communication carriers. This prohibition
was deleted by amendment No. 2 to the solicitation and thus this aspect
of the protest has been resolved.
Bell also asserts that the solicitation contained other terms which
Bell, as a regulated communications carrier, could not satisfy due to
tariff restrictions. The provisions in question: (1) provide for a one
year fixed-price contract with fixed-price one year options; (2)
prohibit the assessment of termination or cancellation charges; and (3)
permit the Government to assess penalties for equipment downtime.
In reply, the IRS states that as it must operate on annual funds
appropriated by Congress and in view of the rapidly changing technology
in this area the most advantageous arrangement for the Government is an
annual lease without cancellation charges and with option periods. The
agency also states that fixed-price offers were required for accurate
price comparison and because it is the preferred contract form for this
type procurement. Finally, the IRS notes that the provisions relating
to downtime penalties are needed to motivate the contractor to repair
phone lines as quickly as possible and in effect constitute an equitable
adjustment for lines which become inoperable.
The IRS argues that these contract provisions reflect its judgment as
to the best business arrangement for procuring a complex system of this
kind. IRS further states that where the solicitation conditions reflect
the legitimate needs of the Government, they are not unduly restrictive
of competition simply because they exclude one or more offerors.
A tariffed communications carrier, whose rates are subject to change
and which by law must treat all classes of customers receiving similar
service in the same manner, generally cannot be considered for the award
of a fixed price contract for services covered by the tariffs. American
Telephone and Telegraph Company, 60 Comp.Gen. 654(1981), 81-2 CPD 157;
but see Anchorage Telephone Utility, B-197749, November 20, 1980, 80-2
CPD 386. Fixed price contracts, however, are accorded a statutory
preference under 41 U.S.C. 254(b) and this Office will not take legal
objection to their use. National Veterans Law Center, 60 Comp.Gen.
223(1981), 81-1 CPD 58.
With respect to Bell's contentions that the solicitation provisions
prohibiting cancellation changes and assessing penalties for downtime
are restrictive, the determination of the Government's minimum
requirements and the best methods for accommodating them are properly
the responsibility of the contracting agency. Maremont Corporation, 55
Comp.Gen. 1362(1976), 76-2 CPD 181. This Office will not substitute its
judgment for that of the contracting agency unless it is shown that the
agency's judgment is unreasonable. General Telephone Company of
California, B-190142, February 22, 1978, 78-1 CPD 148.
While the solicitation must be drafted in a manner to maximize
competition, the fact that one or more potential offerors may be
precluded from participating because of its terms does not render those
terms restrictive if they reflect the legitimate needs of the agency.
Willard Company, Inc., B-187628, February 18, 1977, 77-1 CPD 121. The
prohibition against undue restriction of competition does not require
that a Government need be compromised in order to accommodate all
potential offerors.
Here, although Bell argues that these provisions unduly restrict
competition by preventing it from competing, the protester does not
question the rationale set forth by IRS for the inclusion of the
provisions. In view of this and since the provisions appear reasonable
we have no basis to conclude that they do not reflect legitimate agency
needs.
After receipt of the agency report on the protest, Bell objected to
the solicitation provision concerning the Government's right to order
optional equipment. Bell states that while the provision indicated the
amount of optional equipment which would be required over the ten-year
option period, it did not indicate in which of the ten years the
equipment would be needed. The protester argues that no common carrier
can possibly bid without knowing when the equipment would be required.
Our Bid Protest Procedures require that alleged improprieties in the
solicitation be protested prior to the closing date for receipt of
initial proposals. 4 C.F.R. 21.2(b)(1)(1981); AIL West, B-190239,
January 17, 1978, 78-1 CPD 38. In our opinion, Bell could and should
have advanced these arguments in its initial protest letter or at least
prior to the March 12 closing date for receipt of proposals. We will
therefore not consider this element of Bell's protest which it did not
raise until its comments on the agency report were filed on May 29.
Specification Restrictions
Bell's initial letter of protest contended that the specification was
unnecessarily restrictive, in that it allegedly described the mechanical
functions of the automatic call distributing system manufactured by
another firm. Bell pointed out that the IRS originally intended to
procure the other firm's equipment without competition, as evidenced by
the November 12, 1980, announcement in the Commerce Business Daily.
The IRS responds that the specification was drafted to meet its
legitimate needs for increased service, and that the protester must
demonstrate how the agency has failed to satisfy this test. The IRS
further states that because Bell's allegations were so indefinite, it
cannot speculate as to the parts of the specification Bell believed were
unduly restrictive.
It is the protester's responsibility to establish that the
specification is, in fact, unduly restrictive by showing that the
alleged restrictions are not reasonably related to the agency's needs.
Alan Scott Industries, B-193530, April 27, 1979, 79-1 CPD 294. We do
not believe that Bell can satisfy its burden of showing that the
specification is unduly restrictive by simply asserting that it is
functional in nature and that those functions describe the manner in
which a competing product operates. Oshkosh Truck Corporation,
B-198521, July 24, 1980, 80-2 CPD 161.
Further, the specification is functional only in the limited sense
that it describes the manner in which the performance objectives are to
be met; it does not impose physical design requirements upon offerors.
Consequently, offerors were free to choose any combination of equipment
which would perform the described operations in the manner and sequence
indicated.
Subsequently, when commenting upon the agency report to this Office,
Bell specified a number of particular specification provisions which it
alleged were unduly restrictive of competition. For example, Bell notes
that the specification required that incoming calls be connected
directly to an agent when one is available while Bell's equipment would
process such calls through a recorded message. The specification also
required that incoming calls be placed with the agent who has been idle
the longest while Bell's equipment would assign incoming calls randomly
to available agents.
The IRS argues that Bell's belated challenge of these particular
aspects of the specification is untimely. The IRS also notes that one
of the contested specification provisions has been deleted by amendment
No. 3 to the solicitation. Without admitting the timeliness of Bell's
contentions, the IRS also points out its rationale justifying each of
the remaining specification requirements. The IRS also identifies other
manufacturers which produce equipment satisfying the challenged
specification provisions.
In a situation where a protester merely listed the relevant paragraph
numbers from the challenged specification without further explanation,
we held that subsequent amplifying arguments amounted to untimely,
piecemeal presentation of the issues. Radix II. Inc., B-186999,
February 8, 1977, 77-1 CPD 94. It follows that Bell's initial protest,
which did not even list particular paragraphs, did not adequately convey
Bell's intent to challenge specific portions of the specification.
Accordingly, Bell's detailed challenge is untimely since the provisions
in question were apparent on the face of the solicitation and the
protest identifying them was first received by this Office after the
date for receipt of initial proposals.
Bell, however, contends that this Office was obliged to request
additional information from Bell under section 21.2(d) of our Bid
Protest Procedures. In Bell's view, our failure to request additional
details meant that those aspects of its protest had been presented
properly. Bell therefore concludes that it was free to present any
argument which was relevant to its initial allegation that the
specification was restrictive.
Under section 21.2(d) of the Procedures, we request details when an
initial protest filing is so vague or incomplete that neither we nor the
procuring activity could be expected to identify a basis for protest.
When the initial filing does adequately state at least one ground for
protest, we do not seek details of other issues, no matter how
incompletely they may be presented, since the agency involved can
identify and respond to what the protester appears to care about most of
all. In the final analysis, it is the protester's duty to diligently
develop its own protest, not this Office's responsibility. Thus, if
portions of a protester's initial submission do not suffice to identify
some issues adequately, we view any subsequent submissions from the
protester as having to satisfy the timeliness test of Radix II.
Meaningful Opportunity To Respond
Bell contends that the restrictive specification and solicitation
provisions, the short time allowed for proposal preparation, and the IRS
failure to conduct a preproposal conference, taken together, denied it a
meaningful opportunity to compete.
The allegations relating to the restrictiveness of the specification
and solicitation provisions have been discussed above. In our opinion,
when IRS issued amendment Nos. 2 and 3 deleting the prohibition against
special assembly tariffs and one of the protested specification
requirements, the remaining solicitation provisions and the
specification reflected the agency's minimum needs and were therefore
not unduly restrictive of competition. Thus, if they excluded Bell from
submitting a proposal; that firm simply could not meet the agency's
needs.
As to the alleged lack of time to prepare a meaningful response to
the solicitation, Bell received the original solicitation in January
1981 and sought its revision by letters dated January 30 and February 3.
The record shows that Bell received amendment No. 1, which
substantially revised the solicitation, on February 20. Amendment No.
2, which was sent to Bell by telegram on February 27, extended the date
for submission of initial proposals to March 12. In view of Bell's
familiarity with the IRS requirements gained in its review of the
initial and revised solicitation, Bell should have been able to respond
rapidly once the prohibition against the use of special assembly tariffs
was dropped.
In these circumstances, we believe that the nearly two weeks allowed for
submission of proposals by amendment No. 2 was adequate. Further, Bell
was given another opportunity to submit an offer when the competition
was reopened on April 20 by amendment No. 3.
Finally, Bell questions the IRS failure to hold a preproposal
conference, contending that the conference would have given Bell an
opportunity to seek clarification of the solicitation provisions it now
protests. As noted in A. J. Fowler, B-191636, October 3, 1978, 78-2 CPD
252, preproposal conferences are not held routinely but are used when
the procuring agency believes that a conference is necessary to explain
complex aspects of the procurement. While recognizing that a
preproposal conference may prove useful to offerors in certain
instances, we will not question the agency's discretionary decision not
to hold such a conference. Fox & Company, B-197272, November 6, 1980,
80-2 CPD 340.
Consequently, we do not believe that Bell was denied a meaningful
opportunity to respond to the solicitation.
The protest is dismissed in part and denied in part.
B-201789, October 20, 1981, 61 Comp.Gen. 33
Compensation - Overtime - Inspectional Service Employees - Customs
Inspectors - Sunday and Holiday Compensation - Additional Overtime
Compensation Entitlement
Under Customs overtime provision at 19 U.S.C. 267 Customs inspector
who worked 8 1/4 hours on Sunday was paid 2 days' extra compensation for
Sunday work of up to 8 hours. He is not entitled to additional overtime
compensation under 19 U.S.C. 267 for 15-minute period he worked in
excess of 8 hours on a Sunday. Regulations at 19 C.F.R. 24.16(g)
require employee to perform overtime services of at least 1 hour to be
entitled to overtime compensation under 19 U.S.C. 267.
Matter of: Customs Inspector - Entitlement to overtime compensation,
October 20, 1981:
This action is in response to a request for an advance decision by
Mr. William T. Archey, Acting Commissioner of Customs, as to whether
Customs Inspectors who perform services in excess of 8 hours but less
than 9 hours on a Sunday or holiday are entitled to receive an extra 1/2
day's pay for overtime work in addition to 2 days' pay for services
performed for up to 8 hours on such days.
The Commissioner advises that this matter arises out of a claim for
overtime compensation under 19 U.S.C. 267 for work performed in excess
of 8 hours on a Sunday. The submission states that on Sunday, December
11, 1977, the inspector worked from 1 p.m. to 2 p.m. and from 8:45 p.m.
to 9:15 p.m. which is considered a continuous period of 8 1/4 hours
under the Customs Service overtime compensation regulations. On another
occasion, Sunday, October 22, 1978, he commenced work at 6 a.m., and
including waiting time, completed his assignment at 2:15 p.m., a
continuous period of 8 1/4 hours for Customs overtime purposes. On each
occasion the inspector received the extra 2 days' pay provided under 19
U.S.C. 267 for Sunday work plus overtime compensation under such
provision in the amount of 1/2 day's pay for the 1/4-hour period worked
in excess of 8 hours. The Customs Service later determined that the
employee was not entitled to overtime compensation for the time he
worked in excess of 8 hours on each Sunday. The Customs Service has
obtained a refund from the employee for the overtime compensation paid
under 19 U.S.C. 267 for the additional 1/4-hour period of work and the
employee has appealed this action to the agency.
The employee contends that he is properly entitled to overtime
compensation under the Customs Service regulation set forth at 19 C.F.R.
24.16(d) which he argues provides that any time worked over 8 hours in a
day should be construed as at least 1 hour's work.
Customs Inspectors are entitled to overtime compensation for
inspectional duties under the authority of 19 U.S.C. 267 which provides
in part as follows:
The Secretary of the Treasury shall fix a reasonable rate of extra
compensation for overtime services of customs officers and employees who
may be required to remain on duty between the hours of five o'clock
postmeridian and eight o'clock antemeridian, or on Sundays or holidays *
* * such rates to be fixed on the basis of one-half day's additional pay
for each two hours or fraction thereof of at least one hour that the
overtime extends beyond five o'clock postmeridian (but not to exceed two
and one-half days' pay for the full period from five o'clock
postmeridian to eight o'clock antemeridian), and two additional days'
pay for Sunday or holiday duty. * * *
The Customs Service regulations implementing 19 U.S.C. 267 are set
forth at 19 C.F.R. 24.16(1980). Subsection 24.16(h) provides in part
that the rate of extra compensation for Sunday work is fixed at 2 days'
pay for work of up to an aggregate of 8 hours. It further provides that
work in excess of an aggregate of 8 hours during the 24 hours of a
Sunday shall be compensated for on the same basis as for overtime
services performed at night on a weekday.
With regard to overtime compensation under 19 U.S.C. 267, 19 C.F.R.
24.16(g) provides as follows:
(g) Rate for night services. The reasonable rate of extra
compensation for authorized overtime services performed by Customs
employees at night on any weekday is hereby fixed at one-half of the
gross daily rate of the regular pay of the employee who performs the
service for each 2 hours of compensable time, any fraction of 2 hours
amounting to at least 1 hour to be counted as 2 hours * * *
The above requirement that compensable overtime must consist of at
least 1 hour's actual service is consistent with our decisions which
have long held that entitlement to overtime compensation under the
similar overtime provision for immigration inspectors, 8 U.S.C. 1353a
requires that an employee perform at least 1 hour of overtime work. See
16 Comp.Gen. 757(1937) and 49 id. 577(1970). Such a construction would
be equally applicable to the requirements for overtime for Customs
Inspectors under 19 U.S.C. 267 since the courts have routinely applied
payment of the special rate of overtime in the same manner under both
statutes. See Bishop v. United States, 174 Ct.Cl. 31, 38(1966).
The employee contends that the 1/4-hour period he worked on each
occasion should be regarded as 1 hour's work in view of the Customs
regulation at 19 C.F.R. 24.16(d) which provides in pertinent part as
follows:
* * * Customs employees shall not be deemed available to perform
reimbursable overtime services at night unless the total time of
service, including waiting time, will be at least one hour, but nothing
in this section shall prohibit the district director or other
administrative officer from requiring an employee to perform, before he
leaves his duty status and without extra compensation under the act of
February 13, 1911, as amended, any work which is pending at the
beginning of the night and can be completed in less than 1 hour. * * *
We view the above regulation as establishing an administrative policy
as to when an off-duty Customs Inspector may be called for duty. It
does not require that any overtime work performed is automatically to be
regarded as 1 hour's work so as to entitle the employee to overtime
compensation. To conclude otherwise would be altogether inconsistent
with the regulatory provision that a Customs Inspector who is on duty
status may be required to perform overtime services of less than 1 hour
without extra compensation under 19 U.S.C. 267.
Accordingly, since the employee in question did not perform at least
1 hour of overtime work on each Sunday for which he claims additional
compensation he would not be entitled to overtime compensation under 19
U.S.C. 267 in addition to the 2 days' extra compensation he received for
up to 8 hours' work on a Sunday.
B-203777, October 14, 1981, 61 Comp.Gen. 30
Bids - Mistakes - Correction - Still Lowest Bid - Two Mistakes Claimed
Where the low bidder, alleging two mistakes in bid before award,
presents clear and convincing documentary evidence of mistake and
intended bid with respect to only one error, correction is allowed as to
that error, and waiver of second mistake due to omission of costs is
allowed where record discloses that "intended bid" would remain low.
Matter of: Bruce-Andersen Co., Inc., October 14, 1981:
Bruce-Andersen Co., Inc. (B-A), protests the failure of the Army
Corps of Engineers (Corps) to award it a contract because the Corps
denied correction of two errors in its apparent low bid under invitation
for bids (IFB) No. DACA63-81-B-0061 issued by the Corps, Fort Worth
District, for the construction of an Army Reserve Center at Houston,
Texas.
We conclude that correction of one error may be permitted, the second
error may be waived, and the B-A bid may be considered for award.
B-A bid $3,634,026 for the base bid and $233,000 for additive No. 1.
The second low bid was submitted by Fortec Constructors in the amount of
$4,172,000 for the base bid and $282,000 for additive No. 1.
After bid opening, B-A alleged two mistakes in its bid and requested
correction or permission to withdraw. The errors consisted of omitted
costs for specification requirements covering chemical composition
concrete ($44,239 for the base bid, $6,972 for additive No. 1) and
interior grade beam framing, excavation and backfill ($174,258 for the
base bid, $23,432 for additive No. 1). B-A subsequently offered to
waive the concrete error only. B-A would remain the low bidder by over
$300,000 if correction was permitted.
The Corps found clear and convincing evidence of the mistake and
intended bid with respect to interior grade beam framing, excavation and
backfill. This was based on a detailed review of B-A's worksheets which
showed that the firm failed to carry forward these costs into the bid.
The Corps found clear and convincing evidence of an inadvertent omission
of concrete costs. However, no clear and convincing evidence of an
intended amount was found because the worksheets did not reflect this
omitted item and the requested correction was based on B-A's
post-bid-opening estimate. Therefore, the Corps decided that B-A should
be allowed only to withdraw the bid.
B-A contends that there is no dispute as to the error relating to
other than concrete since the amount of that error has been established
by clear and convincing evidence; therefore, the only issue of any
consequence is whether B-A may waive the concrete error. The protester
argues that waiver of a claimed error is allowed where the evidence is
clear that, even with correction, the bidder will still be low. B-A
further states that, although the amount of any error of omission can
never be ascertained with any absolute degree of certainty, in cases
involving requests for correction, reasonable approximations are
accepted as being consistent with the standard of "clear and convincing"
evidence. B-A finally contends that no reasonable estimation of the
omitted costs for concrete would approach the amount necessary to
displace B-A as the low bidder.
Fortec argues that bid correction is not proper here since B-A is
unable to establish a "precise intended bid prior to bid opening." The
firm also questions whether B-A's workpapers demonstrate by clear and
convincing evidence that any mistake occurred. Fortec contends that, in
any event, the claimed errors were of judgment and estimating, which do
not attain the certainty or credibility requisite for bid correction.
Fortec argues that B-A's offer to waive the costs of concrete is an
attempt to redefine the legal requirements respecting an acceptable
intended bid; by excluding consideration of these costs, B-A is
attempting to avoid the very costs which signify the absence of an
intended bid.
Where a bidder, whether intentionally or not, is in the position,
after the other bid prices have been revealed, of withdrawing its bid,
asking for correction or requesting waiver of an error, whichever is in
the bidder's best interest, consideration of that bid ordinarily would
be detrimental to the Federal procurement system. 42 Comp.Gen.
723(1963). A bidder may not be permitted to waive a claim of error or
waive part of its claim of error (selective correction) to remain the
low bidder. 42 Comp.Gen., supra; 37 Comp.Gen. 851(1958); North Star
Electric Contracting Corporation, National Electrical Contractors
Association, B-187384, January 28, 1977, 77-1 CPD 73; Technology
Incorporated, B-185829, May 10, 1976, 76-1 CPD 305. However, where
correction of a low bid could not be permitted because the amount of the
intended bid was not established with the certainty required by the
rules applicable to correction of mistakes in bids, the acceptance of
such a low bid would not be prejudicial to other bidders if the evidence
clearly indicated that the correct or "intended" bid would have been
lowest. See 52 Comp.Gen. 258(1972) (sales); 42 Comp.Gen., supra;
B-155432, December 1, 1964; B-165405, October 24, 1968; B-168673,
April 7, 1970. Waiver of mistake has been permitted in these
circumstances even where the mistake involved the bidder's failure to
consider and include cost items in computing the bid. See B-165405,
supra. Whether the corrected or "intended" bid would have been lowest
may be ascertained by reference to reasonable estimations of omitted
costs. See 42 Comp.Gen., supra; B-165405, supra; B-168673, supra;
B-155432, supra.
Our examination of B-A's workpapers confirms the Corps' conclusion
that clear and convincing evidence shows that B-A intended to bid
$3,808,284 for the base bid ($3,634,026 bid plus $174,258 for the
interior grade beam framing, excavation and backfill) and $256,432
($233,000 plus $23,432) for additive No. 1. Therefore, we find no legal
objection to correction. Defense Acquisition Regulation Sec. 2-406.3
(1976 ed.). As for the omitted concrete costs, we agree with the Corps
that B-A inadvertently omitted costs for this item. Although the record
does not show what price the other bidders included for this item, the
contracting officer indicates that the estimates prepared by B-A "may be
reasonable," and Fortec has not submitted any evidence to the contrary.
Of particular significance, the monetary amounts of the two errors,
whether considered in the aggregate or separately, provide reasonable
assurance that B-A's bid remained materially lower than Fortec's absent
the mistakes.
In these circumstances, we conclude that B-A's bid may be corrected
upward with respect to the interior grade beam framing, excavation and
backfill to $3,808,284 for the base bid and $256,432 for additive No. 1,
the concrete error may be waived, and the B-A bid may be considered for
award.
Protest sustained.
B-201084, 201085, October 9, 1981, 61 Comp.Gen. 27
Officers and Employees - Hours of Work - Traveltime - Travel Inseparable
From Work - Federal Aviation Administration Employees - Uncommon Tours
of Duty
Federal Aviation Administration employees assigned to remote radar
site at Sawtelle Peak, Idaho, are entitled to be compensated for travel
time to and from Ashton, Idaho, where employees are required to pick up
and return Government vehicles and other special purpose vehicles
necessary to negotiate route to radar site. This duty is an inherent
part of and inseparable from their work and is compensable as hours of
work under 5 U.S.C. 5542(b)(2).
Matter of: Dwain L. Baxter and H. Russell Hunter, October 9, 1981:
By letters dated June 2, 1980, and May 23, 1980, Messrs. Dwain L.
Baxter and H. Russell Hunter, employees of the Federal Aviation
Administration (FAA), Western Region, appeal the determination of our
Claims Group, dated April 10, 1980, which disallow their claims for
additional overtime compensation for the period January 1967, to
December 1974. The claims are for overtime compensation under the
provisions of the Federal Employees Pay Act of 1945, as amended, 5
U.S.C. 5542(1970), for time spent in a standby duty status at the
Sawtelle Peak, Idaho, radar facility. The employees were found to have
been entitled to overtime compensation and were paid in August 1975.
The essence of the present appeal is that travel time, under the
circumstances to be enumerated below, should also be considered
compensable time in calculating the employees' overtime.
For the reasons which follow, we believe the travel time should be
considered compensable hours of work, and the employees are, therefore,
due additional compensation.
The FAA paid both claimants for the overtime duty based on a formula
approved by our Office. The formula equated standby time to the total
elapsed time minus the hours for which the claimants had already been
compensated with regular or overtime pay, minus 8 hours for each 24-hour
period in accordance with the two-thirds rule, under which an employee
who is required to remain for a 24-hour period at his duty station in a
standby status is entitled to compensation for 16 of those hours.
Under the two-thirds rule, time spent sleeping or eating, during which
no substantial labor is performed, is not compensable. See B-170264,
December 21, 1973. We note that the FAA excluded travel time from the
total elapsed time in its computation of the amount due the claimants,
whereas the claimants included that time in their original claims. For
that reason Mr. Baxter and Mr. Hunter now claim additional compensation
of $4,916.23, and $4,713.41, respectively, for the time spent traveling
in Government-owned vehicles from the pickup site in Ashton, Idaho, to
the work site, and return.
In its computation of the hours of standby time, the FAA began the
total elapsed time with the employees' arrivals at the long range radar
site, and ended it with their departures from the site. However, it
appears that the duty hours which the FAA subtracted from the total
elapsed time were the total duty hours, including the hours spent
traveling to and from the site. In effect, this offset the travel time
against the standby overtime. Therefore, the formula applied by the FAA
might be expressed as: the total hours at the radar site minus hours at
the site for which the claimants have previously been compensated, minus
8 hours per 24-hour period at the site, and minus hours spent traveling
to and from the site in a Government-owned vehicle.
The FAA's administrative report addressed the question of when tours
of duty for the long range radar sites begin and end. The employees at
Sawtelle Peak are required to use a Government vehicle because road
conditions are such as to cause excessive wear and tear on vehicles or
to require a special purpose vehicle (snowcat, four-wheel drive, etc.).
The employee must report to a designated point to pick up the vehicle
and return it to that point so that it can be used by others. In these
cases, this is an inherent part of the employee's work and the pickup
point becomes a check-in point and is designated as part of their duty
station. Therefore, it was administratively determined by the FAA on
August 26, 1974, in a letter to Regional Directors from the Acting
Associate Administrator for Administration that the employees' tours
begin at the time they report to the check-in point and end when they
return the vehicle to that point.
The official pickup point for Messrs. Baxter and Hunter was
established by FAA Order NW 4670.1, June 16, 1975, as Ashton, Idaho, a
distance of approximately 49 miles from Sawtelle Peak. The FAA has
recommended denial of the claims because: (1) it was not until August
26, 1974, that an official determination was made as to when tours of
duty for long range radar sites began and ended; (2) it was not until
June 16, 1975, that Ashton, Idaho, was designated an official pickup
point; (3) the Sawtelle Peak did not qualify for a remote worksite
allowance; and (4) all due entitlement was paid to the claimants in
August 1975.
We disagree.
Section 5542(b)(2) of Title 5 of the U.S. Code (1970), as amended,
states the following with respect to compensating an employee for time
spent in travel:
(2) Time spent in a travel status away from the official-duty station
of an employee is not hours of employment unless--
(A) The time spent is within the days and hours of the regularly
scheduled administrative workweek of the employee, including regularly
scheduled overtime hours; or
(B) The travel (i) involves the performance of work while traveling,
(ii) is incident to travel that involves the performance of work while
traveling, (iii) is carried out under arduous conditions, or (iv)
results from an event which could not be scheduled or controlled
administratively.
There is no doubt that under section 5542(b)(2)(A) an employee having
a regularly scheduled workweek must be compensated for time spent in
travel on official business which is within regularly scheduled work
hours. Artis Holcomb, B-194297, August 22, 1979. The difficult
question here is the application of section 5542(b)(2)(B) to these
claims.
The Civil Service Commission (now Office of Personnel Management),
has explained the limited conditions in section 5542(b)(2)(B), under
which traveltime is considered hours of work, in section 3(b)(2) of
subchapter S1, Federal Personnel Manual (FPM) Supplement 990-2, Book
550. However, subparagraph (c)(v) of section 3(b)(2) of the FPM states
that those conditions are not applicable in certain circumstances, as
follows:
(v) The above conditions do not apply to work situations involving
travel which is an inherent part of, and inseparable from, the work
itself. In such events when an agency determines that the travel
represents an additional incidental duty directly connected with the
performance of a given job, and is therefore considered to be an
assigned duty, the time spent in travel is work time and will be payable
at regular or overtime rates, as appropriate. (See Comptroller General
decisions B-146389, February 1, 1966, and B-163042, May 22, 1968.)
Our decisions B-146389, February 1, 1966, and B-163042, May 22, 1968,
which relied on B-143074, September 29, 1960, sanctioned the agency
practice of treating as compensable traveltime, travel which is an
inherent part of and inseparable from the work itself. In B-143074,
supra, we held it was proper for the Army to prescribe by regulation
that the traveltime of a survey party between assembly point and survey
site was inherent to the work at the survey site and was thus
compensable as work. In B-146389, supra, we approved FAA regulations
which stated that employees who reported to headquarters, received
assignments, picked up vehicles, tools, and supplies, and then traveled
to one or more facilities for maintenance work, may be paid compensation
for such traveltime.
The FAA found that the traveltime was a part of the employee's
established tour of duty.
The same principle outlined above of treating as compensable travel
time travel which is an inherent part of and inseparable from the work
itself is applicable here. The record shows that as early as 1965, the
employees were using Government vehicles to travel to and from Sawtelle
Peak to Ashton, Idaho. Thus, the official determination as to when the
tour began in 1974, and the designation of Ashton as an official pickup
point, appears to merely clarify that which had been a standard practice
for many years. The administrative report, while recommending denial of
the claim on the one hand, also states "that travel to the site was
supposed to be performed during duty hours."
Accordingly, we conclude, as we did in B-143074 and B-146389, supra,
that in these circumstances, the travel time was an inherent part of and
inseparable from the work itself. Hence it is compensable under 5
U.S.C. 5542(b)(2)(B)(i). Therefore, the FAA computation based on the
exclusion of the travel time from the total elapsed time is in error.
The claims of the two Sawtelle Peak employees are returned to our
Claims Group for a determination of the amounts due, either by Claims
Group or the agency as appropriate. Payment may also be made in
accordance with the above to other employees similarly assigned to the
Sawtelle Peak radar facility, provided that the claims were received in
this Office within the limitations period in 31 U.S.C. 71(a)(1976).
B-200004, October 9, 1981, 61 Comp.Gen. 20
General Accounting Office - Jurisdiction - Labor-Management Relations -
Civil Service Reform Act Effect - Grievance Not Filed - Rights Not
Solely Based on Agreement
Civilian employee of Dept. of Army was detailed to higher-grade
position for period of 42 days. Collective bargaining agreement
provided for temporary promotion with backpay for details beyond 30
days. Agency objects to submission of the matter to GAO since same
collective bargaining agreement provides that employees must use
negotiated grievance procedures to resolve grievable issues. GAO will
not assume jurisdiction over claims filed under 4 C.F.R.Part 31 where
the right relied upon arises solely under the collective bargaining
agreement and one of the parties to the agreement objects to submission
of the matter to GAO. However, if otherwise appropriate, GAO will
consider, under 4 C.F.R.Part 31, matters subject to a negotiated
grievance procedure, despite the objection of a party, where the right
relied upon is based on a law or regulation or other authority which
exists independently from the collective bargaining agreement and no
grievance has been filed. General Accounting Office - Jurisdiction -
Labor-Management Relations - Civil Service Reform Act Effect - Grievance
v. Claims' Settlement - Jurisdictional Policy Differences
The jurisdictional policies established in this case for claims filed
with GAO under 4 C.F.R.Part 31 involving matters of mutual concern to
agencies and labor organizations differ from those established in 4
C.F.R.Part 22(1981). The differences are based upon differences in the
respective procedures and are designed to achieve a balance between
GAO's statutory obligations under title 31 of the United States Code and
the smooth functioning of the procedures authorized by the Federal
Service Labor-Management Relations Statute, 5 U.S.C. 7101-7135.
Matter of: Samuel R. Jones - Claims on matters subject to a
negotiated grievance procedure - GAO jurisdiction, October 9, 1981:
In this decision we are considering the claim of Mr. Samuel R. Jones
for a retroactive temporary promotion and backpay in connection with an
overlong detail which Mr. Jones asserts is remediable pursuant to our
Turner-Caldwell decisions, 55 Comp.Gen. 539(1975) and 56 Comp.Gen.
427(1977).
Since Mr. Jones' claim is based on a right that arises solely under the
collective bargaining agreement, and the agency has objected to
consideration of the claim by the General Accounting Office, we will not
take jurisdiction over Mr. Jones' claim.
At the same time, we are extending the analysis contained in a
companion case decided today, Schoen and Dadant, 61 Comp.Gen. 15,
B-199999, regarding this Office's jurisdictional policy for settling
claims on matters of mutual concern to agencies and labor organizations
when those claims are filed pursuant to 4 C.F.R.Part 31.
The administrative record establishes that Mr. Jones was employed as
a Railroad Maintenance Vehicle Operator at the Hawthorne Nevada Army
Ammunition Plant. For a period of 42 days, from June 19 through July
30, 1978, Mr. Jones was officially detailed to and performed the
higher-grade duties of the position of Railroad Maintenance Vehicle
Operator Foreman. During the period of Mr. Jones' detail there was a
negotiated agreement in effect between the agency and the American
Federation of Government Employees (AFGE Local 1630), the exclusive
representative of unit employees, including Mr. Jones. Article 15,
Section 3 of the agreement provided that an employee of the unit would
not be detailed to a position of higher grade for more than 30 days
within a period of 1 year. On this factual basis Mr. Jones, through his
authorized representative, AFGE Local 1630, filed a claim with our
Claims Group under Part 31 of title 4, Code of Federal Regulations, on
June 19, 1979, seeking backpay for the period of the detail beyond 30
days. Unlike Schoen and Dadant, supra, no grievance was ever filed
under the negotiated agreement.
The Personnel Division of the Hawthorne Army Ammunition Plant has
strenuously objected to our consideration of Mr. Jones' backpay claim.
The agency points out that at the time of Mr. Jones' detail from June
19, 1978, to July 30, 1978, there was a negotiated agreement in effect
between the agency and American Federation of Government Employees Local
1630. As a wage grade Railroad Maintenance Vehicle Operator, Mr. Jones
was a unit employee. The same agreement that provides in Article 15,
Section 3, that an employee of the unit may not be detailed to a
position of higher grade for more than 30 days within a period of 1
year, also provides in Article 11, Section 1, that the " * * *
negotiated procedure shall be the exclusive procedure available to the
Union and the employee in the bargaining unit for resolving employee
grievances * * * excluding those for which a statutory appeals procedure
exists."
The agency asserts that even if Mr. Jones' detail exceeded the 30-day
limitation, it was a grievable issue, and as such, the negotiated
grievance procedure was the exclusive procedure available for redress.
The agency therefore contends as follows:
This agency contends that when a grievable matter subject to an
exclusive negotiated procedure may arguably constitute an unwarranted or
unjustified personnel action, the appropriate authority to make any
finding must be those individuals including arbitrators entitled to make
such decisions under the terms of the operative collective bargaining
agreement. To reason otherwise would result in redressing one arguable
violation of a mandatory provision of a negotiated agreement by
deliberately circumventing another. This can only serve to subvert the
statutory scheme governing labor relations in the Federal sector.
Hence, the agency argues that the Comptroller General should not
assume jurisdiction over any matter which could be grieved under a
collective bargaining agreement, and would deny all consideration of Mr.
Jones' claim because he did not file a grievance under the negotiated
grievance procedures.
In order to understand the jurisdictional policies established in
this case, it is necessary to first consider the source of the right to
backpay relied upon by the claimant. The type of overlong detail
provision used to support the claim for backpay in this case is commonly
referred to as a Turner-Caldwell type of claim. However, as discussed
below, there is an important distinction in that the right in this case
arises solely under the collective-bargaining agreement and is for 30
days, rather than 120 days.
In our Turner-Caldwell cases, supra, we established the rule that,
for purposes of the Back Pay Act, 5 U.S.C. 5596(1976), an agency has no
authority, absent prior Civil Service Commission approval, to detail an
employee to a higher-graded job beyond 120 days. Where an agency does
not obtain such approval and keeps an employee on overlong detail, the
employee is deemed to have been temporarily promoted from the 121st day
of the detail until the employee is returned to regular duty and is
entitled to backpay for that period. Federal Personnel Manual (FPM)
Bulletin No. 300-40, May 25, 1977, was issued by the Civil Service
Commission to provide additional information to assist agencies in the
proper application of these decisions.
The type of negotiated 30-day detail provision asserted in Mr. Jones'
claim was discussed in a line of decisions of this Office which predated
the enactment of the Federal Service Labor-Management Relations Statute
/1/ and the publication of our rules governing requests for decisions on
matters of mutual concern to agencies and labor organizations. /2/
In that line of cases we stated that although the remedy of retroactive
temporary promotion recognized by the Turner-Caldwell line of decisions
is based on the Civil Service Commission's instructions at FPM chapter
300, subchapter 8, requiring the Commission's approval of certain
details in excess of 120 days, an agency, by its own regulation or by
the terms of a collective bargaining agreement, may establish a shorter
period under which it becomes mandatory to promote an employee who is
detailed to a higher-grade position. Thus, an agency may bargain away
its discretion and thereby make a provision of a collective bargaining
agreement a non-discretionary agency policy, if the provision is
consistent with applicable Federal laws and regulations. The violation
of such mandatory provision in a negotiated agreement which causes an
employee to lose pay, allowances or differentials may be found to be an
unjustified or unwarranted personnel action under the Back Pay Act, 5
U.S.C. 5596, thus entitling the aggrieved employees to retroactive
compensation for the violation.
For a comprehensive analysis of our case law in this regard, see John
Cahill, 58 Comp.Gen. 59(1978). And see also, as a specific case
example, Burrell Morris, 56 Comp.Gen. 786(1977), where we held that an
8-day detail of a prevailing rate employee to perform the duties of a
higher-level General Schedule position was a violation of a collective
bargaining agreement provision. We concluded that the violation
constituted an unwarranted personnel action which entitled the employee
to corrective action under the Back Pay Act.
In summary then, Mr. Jones' 42-day detail is not justifiable under
the 120-day provisions of our Turner-Caldwell decisions and FPM Bulletin
No. 300-40. Rather, under Article 15, Section 3 of the collective
bargaining agreement and the line of Comptroller General decisions
represented by the Cahill and Morris cases cited above, Mr. Jones
asserts that he is entitled to a retroactive temporary promotion with
backpay as of the 31st day of his detail.
Turning now to the jurisdictional issue, the question presented is
whether GAO will assume jurisdiction over a claim filed under 4
C.F.R.Part 31 when the issue is subject to a grievance procedure
authorized by the Federal Service Labor-Management Relations Statute,
and one of the parties to the agreement objects to GAO's consideration
of the matter, even though no grievance has been filed.
The agency's argument that GAO should not assume jurisdiction over
any matter subject to a negotiated grievance procedure overlooks the
fact that the Federal Service Labor-Management Relations Statute did not
amend title 31 of the United States Code. The Comptroller General has
been rendering decisions on matters involving the expenditure of
appropriated funds and settling claims by or against the Government
since 1921 and, therefore, the radical change in our jurisdiction
proposed by the agency in this case cannot be lightly assumed.
See, in particular, 31 U.S.C. 71, 74, and 82d. Since the statute did
not amend title 31, we cannot assume that Congress intended employees to
be totally barred from having their claims considered by GAO, as argued
by the agency. To permit such a total withdrawal of our jurisdiction
without a specific directive from Congress would be an abrogation of our
statutory duty to settle and adjust claims against the United States.
Such a far-reaching result is unsupported and unintended by the express
terms and legislative history of the Federal Service Labor-Management
Relations Statute.
Having established that the mere existence of a negotiated grievance
procedure does not in itself preclude the Comptroller General from
considering a claim filed under 4 C.F.R.Part 31, we do however conclude
that some restrictions on our jurisdiction are appropriate in
recognition of the intent of Congress in enacting the Federal Service
Labor-Management Relations Statute. We believe the proper balance
between our function under title 31 and the smooth functioning of the
procedures authorized by that statute can best be achieved if we decline
to assert jurisdiction over cases where the right upon which the claim
is based arises solely under the collective bargaining agreement and one
of the parties to the agreement objects to consideration of the matter
by GAO.
While this restricts the right of individual claimants to have claims
adjudicated by GAO, it preserves the right to file a claim on those
matters which have traditionally been adjudicated by GAO where the right
is based on law or regulation or other authority which exists
independently from the collective bargaining agreement. At the same
time, in recognition of the important role of collective bargaining in
the civil service, it preserves the exclusivity of the grievance
procedure where the right relied upon arises solely under the agreement.
We recognize that very often the collective bargaining agreement
incorporates rights which may also exist outside of the contract. For
example, an agency regulation could provide for backpay after the 60th
day of an overlong detail and the collective bargaining agreement could
simply incorporate that regulation.
In such cases, as in all matters filed with GAO, the burden is on the
claimant to establish that the right relied upon also exists outside of
the negotiated agreement, GAO will generally consider such a claim under
4 C.F.R.Part 31 even though the other party to the agreement objects to
consideration of the matter by GAO, provided no grievance has been
filed.
In summary then, the jurisdictional policies which will apply to
claims filed under 4 C.F.R.Part 31, as expressed in this case and its
companion case decided today, Schoen and Dadant, supra, are as follows:
(1) GAO will not review or comment on the merits of an arbitration
award which is final and binding pursuant to 5 U.S.C. 7122(a) or (b).
/3/ Gerald M. Hegarty, B-202105, July 7, 1981, 60 Comp.Gen. 578; 4
C.F.R. 22.7(a).
(2) Where a grievance has been filed and one of the parties to the
agreement objects to our jurisdiction, GAO will decline to assert
jurisdiction. Schoen and Dadant, supra.
(3) Where no grievance has been filed and where otherwise
appropriate, GAO will consider a claim on a matter subject to a
negotiated grievance procedure over the objection of one of the parties
only where the right relied upon is based on law or regulation or other
authority existing independently from the collective bargaining
agreement. Claims based upon rights which arise solely under the
collective bargaining agreement will not be adjudicated by GAO where a
party to the agreement objects to consideration of the matter by GAO.
We recognize that the policy in paragraph (3) above, regarding
matters subject to a grievance procedure differs somewhat from the
policy which would apply to matters submitted pursuant to 4 C.F.R.Part
22(1981). Specifically, 4 C.F.R. 22.7(b) provides that the Comptroller
General will not issue a decision or comment on the merits of a matter
which is subject to a negotiated grievance procedure when one of the
parties to the agreement objects to submission of the matter to GAO.
Thus, under Part 22, an objection by one of the parties to the agreement
will always operate to preclude assertion of our jurisdiction, whether
or not the right relied upon is based upon authorities which exist
outside of the agreement. /4/
These different policies under Part 22 and Part 31 are based upon the
differences in the procedures themselves. Under 4 C.F.R.Part 22(1981),
heads of agencies (or their designees), heads of labor organizations (or
their designees), or authorized certifying and disbursing officers may
request a decision from the Comptroller General on any matter of mutual
concern to agencies and labor organizations. Arbitrators and other
neutrals may request an advisory opinion from the General Counsel of the
General Accounting Office. The procedures provide for service on the
parties, a period for comment, and provide that a decision or opinion
will normally be issued within 60 days after expiration of the period
for written comments. Because of the type of procedure involved,
particularly the 60-day provision, it would be inappropriate to permit
one of the parties to unilaterally seek and obtain a decision on a
matter subject to the grievance procedure within 60 days. The potential
for a disruptive impact on the grievance-arbitration process in such
circumstances prompted our decision to preclude consideration of such
unilateral requests for decisions under this expedited procedure.
In contrast, the claims procedure set forth at 4 C.F.R.Part 31 is a
less formal procedure available to all individual employees, whether or
not they are represented by a labor organization. Under Part 31,
individual employees or their authorized representatives may file claims
directly with the employing agency or with our Claims Group. Following
receipt of a report from the agency, the Claims Group issues a
settlement certificate which is appealable by the employee or the agency
to the Comptroller General under additional procedures set out at Part
32. Historically, this Part 31 procedure has always provided a forum
for any Federal employee to seek review by the General Accounting Office
of agency action in regard to his or her compensation and other
employment entitlements without the expense and delay of litigation.
Because Part 31 is a different type of procedure, we do not believe
it would be disruptive to the grievance-arbitration process to consider
claims filed under that Part, provided the basis for the claim exists
independently from the collective bargaining agreement and no grievance
has been filed. Moreover, as discussed above, since the Federal Service
Labor-Management Relations Statute did not amend title 31, we cannot
totally bar consideration of all claims which could be subject to a
negotiated grievance procedure.
Rather, we seek a balance between our function under title 31 and the
smooth functioning of the procedures authorized by the Federal Service
Labor-Management Relations Statute.
Accordingly, in the circumstances presented in Mr. Jones' case, we
are declining jurisdiction of his claim because the right relied upon
arises solely under the collective bargaining agreement and the agency
has objected to GAO's consideration of the claim.
/1/ Title VII, Civil Service Reform Act of 1978, Pub. L. 95-454,
October 13, 1978, 5 U.S.C. 7101-7135.
/2/ 4 C.F.R.Part 22(1981) (originally published as 4 C.F.R.Part 21 at
45 Fed.Reg. 55689-92, August 21, 1980).
/3/ However, payments made pursuant to such an award do not serve as
precedent for payment in similar situations not covered by the award.
45 Fed.Reg. 55690, August 21, 1980.
/4/ A limited exception was provided for in the case of requests from
certifying and disbursing officers because these individuals have
statutory authority, independent of agency management, to decline
payment of a voucher and because they are not a party to the collective
bargaining relationship and do not have direct access to the procedures
established by the Federal Service Labor-Management Relations Statute.
B-199999, October 9, 1981, 61 Comp.Gen. 15
General Accounting Office - Jurisdiction - Labor-Management Relations -
Civil Service Reform Act Effect - Grievance Procedure Elected - Party
Objection to GAO Review
Employees of Library of Congress asserting claims for retroactive
temporary promotion and backpay in connection with overlong details
filed grievances under collective bargaining agreement. After receipt
of agency decision at step two of grievance procedure, union filed
claims with General Accounting Office (GAO) pursuant to 4 C.F.R.Part 31,
seeking to extend the remedy granted by the agency. The agency objects
to submission of the matter to GAO. In instances where a claimant has
filed a grievance with the employing agency, GAO will not assert
jurisdiction if a party to the agreement objects since to do so would be
disruptive to the grievance procedures authorized by 5 U.S.C. 7101-7135.
Moreover, the issue of the timeliness of the grievances is primarily a
question of contract interpretation which is best resolved pursuant to
grievance-arbitration procedures.
Matter of: Ira Schoen and Melissa Dadant - Claims on matters subject
to a negotiated grievance procedure - GAO jurisdiction, October 9, 1981:
The issue in this case is whether the General Accounting Office
should assert jurisdiction over a claim filed pursuant to 4 C.F.R.Part
31 where a grievance has been filed under a negotiated grievance
procedure and one of the parties to the agreement objects to the
submission.
We hold that GAO will not assert jurisdiction in such circumstances.
Ms. Melissa Dadant and Mr. Ira Schoen have filed claims with the
General Accounting Office pursuant to 4 C.F.R.Part 31 for retroactive
temporary promotions and backpay based on alleged overlong details to
higher-grade positions in the Copyright Office of the Library of
Congress. The two claims were presented by their authorized
representative, the American Federation of State, County and Municipal
Employees (AFSCME), Capital Area Council of Federal Employees (Local
2910).
Ms. Dadant, a GS-11 employee of the Library of Congress, claims that
she was assigned the duties of a GS-12 position for approximately 1 year
(October 10, 1978, through October 22, 1979). Similarly, Mr. Schoen, a
GS-11 employee, claims that he was assigned duties of a GS-12 position
for approximately 15 months (July 3, 1978, through October 22, 1979).
On August 23, 1979, both employees filed grievances under the negotiated
agreement. In the final agency decision at step two of the grievance
procedure the agency admitted that it had violated Article XII, Section
3, of the collective bargaining agreement between the Library and Local
2910, which states, in part, that "if a detail to a higher grade-level
position extends beyond two months, or if it is known in advance it will
extend beyond two months, a temporary promotion shall be made."
The Library of Congress concluded that it had erred in failing to
give Ms. Dadant and Mr. Schoen temporary promotions beginning the day
following the first 2 months of their respective details. However, the
agency refused to grant retroactive pay for the entire overlong period
of the respective details because Article XXVIII, Section 12, of the
collective bargaining agreement provides that grievances must be filed
"within ten (10) work days from the date the grievant knew or should
have reasonably known of the condition which prompted the grievance."
Having determined that the grievants knew or should have known, on or
about the date their detail began, that they are performing the duties
of a higher-grade position, the agency granted back-pay to Ms. Dadant
and Mr. Schoen only for the period starting 10 work days preceding the
date that the grievances were filed.
If dissatisfied with the agency's position, the union had the right
to invoke binding arbitration. Instead, the union filed a claim with
GAO under 4 C.F.R.Part 31, the claims settlement authority of this
Office, seeking backpay for the entire period of the overlong detail.
This course of action on the part of the claimants prompted the
Library of Congress to raise the following objections to our
consideration of these claims:
(1) The Library contends that the instant claim for back pay is
premature in view of the binding arbitration provisions (Article XXIX)
of the collective-bargaining agreement between the Library and AFSCME
(Local 2910). The contract provides for binding arbitration to resolve
those agency grievance decisions at step 2 that are unacceptable to the
union. By failing to invoke arbitration; the union has, in effect,
waived its right to any further adjudication of these grievances. The
request for GAO intervention in this matter, at this time, raises
questions of jurisdiction, and we argue respectfully that any further
adjustment of these grievances would not only interfere with the
relevant due process provisions outlined in our contract with AFSCME but
subvert and dilute the meaning and intent of these provisions.
(2) The Library also argues that it is not required to pay claimants
any more than the back pay awarded in the attached grievance report and
recommendation because the grievants failed to file their complaints
within the time prescribed by the collective bargaining agreement
between the Library and AFSCME (See attached: Article XXVIII, Section
12). There is no dispute that the grievants and their exclusive
representative knew of the circumstances giving rise to the complaint
well before the grievances were filed, but did not file the instant
grievances until August 23, 1979, almost a year after the details in
question took place (October 10, 1978) and 8 months after the details to
the higher grade were in process for 60 days (December 10, 1978). The
Library contends that the time requirements for filing grievances as
incorporated in its contract with AFSCME, must be faithfully followed to
prevent prospective grievants from the unreasonable delay of asserting a
right which would disadvantage the Library by placing the agency in a
position where its rights may be imperiled and its defenses embarrassed.
The type of overlong detail provision relied upon by claimants has
been discussed in a line of decisions of this Office which predated the
passage of the Federal Service Labor-Management Relations statute /1/
and the publication of our rules governing requests for decisions on
matters of mutual concern to agencies and labor organizations. /2/ In
that line of cases we held that an agency may bargain away its
discretion and thereby make a provision of a collective bargaining
agreement a nondiscretionary agency policy, if the provision is
consistent with applicable Federal law and regulations. The violation
of such a mandatory provision in a negotiated agreement which causes an
employee to lose pay, allowances or differentials may be found to be an
unjustified or unwarranted personnel action under the Back Pay Act, 5
U.S.C. 5596, thus entitling the aggrieved employees to retroactive
compensation for such violation of a negotiated agreement. For a
comprehensive analysis of our decisions in this regard, see John Cahill,
58 Comp.Gen. 59(1978).
As a result, under our authority under title 31 of the United States
Code, we have in the past reviewed provisions of collective bargaining
agreements in this type of case to determine whether the remedy sought
is consistent with applicable laws, regulations, and Comptroller General
decisions so that it may be validly implemented through the expenditure
of appropriated funds for backpay. See, for example, Roy F. Ross and
Everett A. Squire, 57 Comp.Gen. 536(1978).
However, since the enactment of the Federal Labor-Management
Relations Statute, we have reconsidered our jurisdictional policies on
matters of mutual concern to agencies and labor organizations in
recognition of the intent of Congress in establishing a statutory basis
for the Federal labor-management program. We have already established
the jurisdictional policies which will apply to such matters when filed
pursuant to 4 C.F.R.Part 22(1981). See 45 Fed.Reg. 55689-91, August 21,
1980, for a full explanation of these policies. In this case, and in
our companion case of today, Samuel R. Jones, B-200004, 61 Comp.Gen. 20,
we consider the jurisdictional policies which will apply when matters of
mutual concern are filed as claims under 4 C.F.R.Part 31.
GAO's jurisdiction over Federal personnel matters is based upon title
31 of the United States Code. The claims settlement authority invoked
in this case by filing pursuant to 4 C.F.R.Part 31 is based primarily on
31 U.S.C. 71 which provides that all claims by or against the Government
of the United States shall be settled and adjusted in the General
Accounting Office.
The Federal Labor-Management Relations Statute did not amend title
31. Accordingly, except to the extent that Congress has expressed a
contrary intent, individuals still have a right to file a claim with GAO
on any matter involving the expenditure of appropriated funds. However,
as a matter of policy, and in an effort to fulfill our statutory
responsibilities in a manner which will facilitate the smooth
functioning of the labor-management program, we believe some
restrictions on our willingness to assert jurisdiction over matters of
mutual concern to agencies and labor organizations is appropriate.
One area in which GAO will decline jurisdiction concerns arbitration
awards. Consistent with the intent of Congress, the Comptroller General
will not review or comment on the merits of an arbitration award which
is final and binding pursuant to 5 U.S.C. 7122(a) or (b). 4 C.F.R.
22.7; Gerald M. Hegarty, B-202105, July 7, 1981, 60 Comp.Gen. 578;
H.R. Rep. No. 95-1403, 95th Cong., 2 Sess. 56 (1978); S.Rep. No.
95-1272 and H.Rep. No. 95-1717, 95th Cong., 2d Sess. 158 (1978).
This restriction applies equally to claims filed under 4 C.F.R.Part 31
and to requests for decisions filed under 4 C.F.R.Part 22. /3/
The second area in which GAO will decline to assert jurisdiction,
either under 4 C.F.R.Part 31 or Part 22, involves instances where to do
so would be disruptive to the procedures authorized by the Federal
Service Labor-Management Relations Statute. /4/ Thus, while the
enactment of that statute did not amend title 31 of the United States
Code, it is our intent to exercise discretion in determining which cases
are appropriate for adjudication by GAO so as to insure compatibility
with the labor-management program.
We believe our adjudication of the claims of Ms. Dadant and Mr.
Schoen in the circumstances of this case would be disruptive to the
grievance-arbitration process authorized by the labor-management
statute. Therefore, we are declining to assert jurisdiction.
Having elected to invoke the negotiated grievance procedure, neither
the claimants nor the union should now be permitted to abandon that
procedure over the agency's objection and seek redress in another forum.
While we will generally consider matters filed under either Part 22 or
Part 31 of title 4 of the Code of Federal Regulations where neither
party to the collective bargaining agreement objects to submission of
the matter to GAO, we will not, in the circumstances of this case,
assert jurisdiction over the objection of one of the parties to the
agreement. See Samuel R. Jones, 61 Comp.Gen. 20, our companion case of
today, for an explanation of when we will assert jurisdiction over
claims filed under 4 C.F.R.Part 31 over the objection of one of the
parties to the collective bargaining agreement. If the union was
dissatisfied with the agency's decision at step two of the grievance
procedure, the matter should have been pursued through the provisions in
the contract for binding arbitration. The claims settlement authority
of GAO is not an appropriate forum in which to seek review or reversal
of a grievance decision.
We also note that in order to adjudicate these claims we would
necessarily have to address not only the overlong details provisions of
Article XII, Section 3, of the negotiated agreement, but also, the
timeliness issues raised in connection with Article XXVIII, Section 12,
of that agreement. We would have to make a determination as to whether
the 10-day period allowed for filing grievances under the negotiated
agreement barred the claimants from receiving backpay for the entire
overlong period of the detail.
This timeliness issue is primarily an issue of contract interpretation
which is customarily adjudicated solely under the grievance-arbitration
provisions of the contract. While GAO frequently considers the type of
overlong detail issue presented by this case, the timeliness issue is
not appropriate for consideration by GAO. Such labor-management issues
are best resolved pursuant to the procedures authorized by Congress with
the enactment of the Federal Service Labor-Management Relations Statute.
Therefore, without reaching the merits of the compensation claims
presented by Ms. Dadant and Mr. Schoen, we are, for the reasons stated
above, declining to exercise jurisdiction over these claims.
/1/ Title VII, Civil Service Reform Act of 1978, Pub. L. 95-454,
October 13, 1978, 5 U.S.C. 7101-7135.
/2/ 4 C.F.R.Part 22(1981) (originally published as 4 C.F.R.Part 21 at
45 Fed.Reg. 55689-92, August 21, 1980).
/3/ However, payments made pursuant to a final and binding
arbitration award do not serve as precedent for payment in similar
situations not covered by the award. See 45 Fed.Reg. 55690, August 21,
1980.
/4/ GAO will also decline to consider matters which are more properly
within the jurisdiction of other administrative bodies or courts of
competent jurisdiction, or matters which are unduly speculative or
otherwise inappropriate for decision. See 4 C.F.R. 22.8(1981).
B-201554, October 8, 1981, 61 Comp.Gen. 13
Subsistence - Actual Expenses - Maximum Rate - Reduction - Meals, etc.
Cost Limitation - Lodging Costs Not Incurred
Employee on temporary duty assignment questions agency's authority to
issue guidelines limiting reimbursement for meals and miscellaneous
expenses to 46 percent of the maximum rate for actual subsistence
expenses when traveler incurs no lodging expenses. Agency may issue
guideline alerting employees that the maximum amount considered
reasonable under ordinary circumstances is 46 percent of the statutory
maximum, but it should also provide that amounts in excess of 46 percent
may be paid if adequate justification based on unusual circumstances is
submitted.
Matter of: Harry G. Bayne - Claim for Actual Subsistence Expense,
October 8, 1981:
The issue in this case is whether an agency has the authority, by
written memorandum, to limit reimbursement of the cost of meals to 46
percent of the maximum rate for actual subsistence expenses when a
traveler on a temporary duty assignment incurs no lodging expenses.
This request for a decision was filed by Jefferson Wyatt, Jr.,
Certifying Officer and Chief, Financial Management Branch, Department of
Energy (DOE), Dallas, Texas. It concerns the claim of Harry G. Bayne,
Chief Counsel, Crude Production Audit Division, Office of Special
Counsel, DOE.
Mr. Bayne traveled from Dallas, Texas, to Houston, Texas, to perform
temporary duty for the period August 13-15, 1980. He stayed with
friends and so incurred no lodging expenses. With regard to meals, he
submitted a voucher claiming $27.95 for August 13, $33 for August 14,
and $37.50 for August 15, for a total of $98.65.
The agency disallowed $29.65, based upon its subsistence allowance
policy as evidenced by a memorandum to all employees from the Director,
Management and Support, dated March 27, 1980. That memorandum reads as
follows:
Occasionally employees stay with friends or relatives during their
temporary duty assignments. In such cases reimbursement for food and
miscellaneous expenses will be limited to 46% of the total subsistence
(sic) allowance. (ie: When employee does not incur lodging cost
generated by a Hotel, Motel, etc.) (The 46% is the same as for food and
miscellaneous expense on regular per diem.)
Since the maximum rate for Houston at the time of Mr. Bayne's travel
was $50 per day, the agency disallowed all amounts exceeding 46 percent
of $50, that is, amounts over $23 per day. The agency advises that this
policy was issued because of a recurring problem the agency has
experienced with travelers who incur no commercial lodging expenses, but
then submit claims for high meal costs.
Mr. Bayne contests the disallowance of the amounts claimed. He
argues that "actual expenses" means just that and, as long as the amount
is below the $50 limit, it should be allowed. He states that if an
employee stayed in a $50 per night hotel the Government would pay for it
and the employee would have to pay for meals out of his own pocket.
Similarly, Mr. Bayne believes that if an employee spent $50 on food the
Government should pay for it, but the employee would then have to pay
for his own hotel. Thus, Mr. Bayne believes the agency policy is
erroneous and seeks a ruling as to the agency's authority to issue such
a policy.
The authority for payment of actual expenses in lieu of per diem is
found in 5 U.S.C. 5702(c), which at the time of Mr. Bayne's travel
provided as follows:
(c) 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 $50 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.
Mr. Bayne is not correct in his belief that an employee is entitled
to be reimbursed for meals up to the maximum rate. We have held that
employees are entitled to be reimbursed only for reasonable expenses for
meals since travelers are required to act prudently in incurring
expenses while on official business. Charles J. Frisch, B-186740, March
15, 1977. The employing agency is responsible in the first instance for
determining what constitutes reasonable expenses for meals in each case,
and, where it has exercised that responsibility, we will not substitute
our judgment for that of the agency unless the agency's determination is
clearly erroneous, arbitrary, or capricious. Norma J. Kephart,
B-186078, October 12, 1976. Reimbursement for actual subsistence
expenses in high rate areas is intended to compensate the traveler for
the higher expenses usually incurred while traveling in large
metropolitan areas, not to allow an employee who saves in one area
(e.g., lodgings) to claim additional expenditures in another area (e.g.,
meals). Kephart, supra.
In Kephart, we also suggested that agencies should consider issuing
written guidelines, under the authority of paragraph 1-8.3b of the
Federal Travel Regulations, to serve as a basis for review of an
employee's expenses. We said that such guidelines could provide advance
guidance to employees who are able to obtain lodgings at substantial
savings. This is essentially what the Department of Energy has done in
the present case.
Moreover, we do not think it was unreasonable to establish guidelines
alerting employees to the fact that the maximum amount considered
reasonable for meals and miscellaneous expenses is 46 percent of the
statutory maximum. See Frisch, supra, and Micheline Motter and Linn
Huskey, B-197621 and B-197622, February 26, 1981, where, after a
determination that the amount claimed for meals was clearly excessive,
the agency allowed only $18.28 for meals, or 46 percent of the $40
maximum.
However, such a guideline may not operate as an absolute bar to
payment of additional amounts when the additional amounts can be
adequately justified as reasonable because of the unusual circumstances
involved. Since the statute, 5 U.S.C. 5702(c), states that employees
may be reimbursed for actual and necessary expenses, payment of an
additional amount should be permitted when justified by unusual
circumstances.
Hence, in this case, it is clear that the Department of Energy had
authority to issue the memorandum dated March 27, 1980, imposing a limit
of 46 percent of the statutory maximum on meals and miscellaneous
expenses. However, the policy should be revised to reflect the fact
that while payment will normally be limited to 46 percent of the
statutory maximum, amounts in excess of that figure may be paid if
adequate justification based on unusual circumstances is submitted by
the employee.
In Mr. Bayne's case, no additional justification has been offered to
provide a basis for payment of the additional amounts. Accordingly,
absent further justification for the additional amounts, the agency's
denial of Mr. Bayne's claim for the additional amounts spent for meals
is sustained.
B-201613, October 6, 1981, 61 Comp.Gen. 6
Contracts - Grant-Funded Procurements - General Accounting Office Review
- Exhaustion of Administrative Remedies Requirement
General Accounting Office will review complaints regarding
procurements under EPA construction grants, provided complainant has
exhausted administrative remedies by seeking review by grantor agency.
This decision extends 60 Comp.Gen. 414. Contracts - Grant-Funded
Procurements - Protest Timeliness - Non-Solicitation Impropriety
Allegations - Reasonable-Time Standard
In future, grant complaints regarding matters other than alleged
solicitation deficiencies must be filed with GAO within reasonable time,
and 4 months after adverse decision by grantor agency will not be
considered reasonable time. Contracts - Grant-Funded Procurements -
General Accounting Office Review - Modification of Contract - Scope of
Modification
General Accounting Office will consider complaint regarding contract
modification when it is alleged that modification changed scope of
contract and therefore should have been subject of new procurement.
Contracts - Grant-Funded Procurements - Competitive System - Compliance
- Scope of General Accounting Office Review - Grantor-Agency Decisions
General Accounting Office review of grantor agency decision on
complaint regarding grantee procurement will be limited to whether
decision was reasonable, in light of agency regulations encouraging free
and open competition. Contracts - Grant-Funded Procurements -
Competitive System - Compliance - Award With Intent To Materially Modify
Contract Performance Conditions
Contracting officer may not make award which he knows is not based on
conditions under which performance will occur, since such action
undermines integrity of competitive procurement system and deprives
Government of lower or better terms which it might otherwise obtain.
Contracts - Grant-Funded Procurements - Bid Preparation Costs - Recovery
Criteria
When complainant has not shown what actual bid price would have been
under revised specifications, complainant has not shown that it had
substantial chance for award, entitling it to bid preparation costs.
Matter of: Brumm Construction Company, October 6, 1981:
Brumm Construction Company has filed a complaint with our Office
regarding modification of a contract for construction of sanitary sewers
by an Environmental Protection Agency (EPA) grantee. Brumm appeals a
decision by an EPA regional administrator holding that the grantee
properly used the changes clause of the contract to reduce the scope of
work involved and that readvertisement therefore was not necessary.
We find that by awarding the contract with the apparent intent to
modify it, the grantee undermined the integrity of the competitive
procurement system. We therefore are sustaining the complaint.
Background:
The grantee is the Marquette County, Michigan, Board of Public Works,
which received approximately $8.8 million, or 75 percent of the total
estimated cost of a sewage collection system and treatment plant
addition, from EPA under the Clean Water Act, 33 U.S.C. 1251-1376(1976).
The apparent low bidder for the contract in question was Proksch
Construction Company at $620,041. Shortly after opening Proksch claimed
a mistake of $150,000, which would have brought its price to within two
percent of the second-low bidder's price of $786,598. Brumm was
third-low at $833,720.
The grantee refused to allow Proksch to withdraw or correct its bid
and instead made award to it on June 7, 1978. A notice to proceed was
issued on June 22, 1978, and on the same day the grantee's engineer and
Proksch executed the protested change order. Approximately a month
later, Brumm obtained copies of the original plans for the sewers and
compared them to the work in progress. Brumm subsequently obtained
copies of the new plans and made similar comparisons, then protested to
the grantee in a letter dated August 4, 1978.
Brumm's Protest
Brumm alleged that changes in alignment of the sewer lines reduced
the amount and difficulty of work; that these changes represented an
attempt to compensate Proksch for its claimed mistake-in-bid, since
Proksch would have met financial disaster if it had been required to
install the sewers according to original specifications; and that the
integrity of the competitive procurement system had been compromised
because Brumm was not given an opportunity to bid on the sewers as
actually constructed. The second-low bidder joined Brumm in this
protest, but has not complained to our Office.
Grantee and EPA Decisions
Following a hearing, the grantee found Brumm's protest untimely
because it had not been filed within one week after receipt of revised
drawings, which had been mailed by the city engineer on June 29, 1978.
(The one-week requirement is contained in EPA regulations covering
protests on grantee procurements, 40 C.F.R. 35.939(b)(1).)
On appeal, EPA's Region V administrator, in a decision dated August
14, 1980, found that there was no obligation for an unsuccessful bidder
to monitor construction and that Brumm had acted promptly upon actual
knowledge that the sewers were being installed according to plans other
than those on which its bid had been based. The regional administrator
therefore considered the extent and effect of the changes.
There is no dispute as to the facts. The completed sewer line was
approximately 200 feet shorter than the 10,200 feet originally
specified, due to having been moved from the north to the south side of
the street for 1/10 of its length.
In addition, the line was not as deep as originally specified for 3/4 of
its length. The horizontal realignment reduced the amount of sod and
the number of driveways and curbs which had to be restored, and the
vertical realignment enabled the contractor to avoid two existing
12-inch sewer lines. As a result of these changes, Proksch's contract
price was reduced by $53,000; Brumm, however, contends that actual
savings were much greater.
Using Brumm's prices per linear foot for various depths, the regional
administrator calculated that the changes in specifications would have
reduced Brumm's bid by $219,000, but that Brumm's price for the revised
job would still have been $48,000 more than Proksch's, given the
difference between the two original bids. The regional administrator
seemingly rejected Brumm's argument that its unit prices might have been
different if it had been bidding to the new specifications, because
these prices did not appear to be based on any exact formula
incorporating factors such as type of soil, depth to groundwater,
terrain, commercial development, or location of water, sewer, and gas
mains. Nevertheless, the regional administrator stated that he was
"inclined to agree" that there was no way to predict what the bids would
have been if the project had been readvertised.
Readvertisement was ruled out, however, by the regional
administrator's finding that the changes were not in the nature of
cardinal changes. Citing American Air Filter Co., Inc., 57 Comp.Gen.
285(1978), 78-1 CPD 136, and a reconsideration of that decision, 57
Comp.Gen. 567(1978), 78-1 CPD 443, as well as later decisions by our
Office and the Court of Claims, the regional administrator stated that
the cardinal change cases were useful because they provided standards
for determining whether a changed contract was essentially the same as
the original.
The regional administrator found that the initial and final points of
the sewer line had remained the same under both contracts. In addition,
he stated, the sewer followed essentially the same route as originally
planned and carried the same wastewater in the same quantity to the same
destination. He therefore concluded that the changes had not resulted
in a fundamentally different undertaking between Proksch and the
grantee; that they properly had been dealt with under the changes
clause of the contract; and that they were not so extensive as to
require readvertisement.
These conclusions are the subject of Brumm's complaint to our Office.
Although the contract has been fully performed, Brumm requests that we
issue a decision "analogous to a declaratory judgment" and award it bid
preparation costs.
GAO Analysis-- Preliminary Issues:
There are several preliminary issues which must be considered before
we reach the questions of the propriety of the contract modification and
the applicability of the cardinal change standards.
A. Comptroller General Authority
First, as it has in the past, EPA argues that our Office lacks
authority to resolve complaints regarding procurements under EPA
construction grants unless the agency specifically requests or
acquiesces in our review. We frequently have exercised such authority,
however. See, for example, Garney Companies, Inc., B196075.2, February
3, 1981, 81-1 CPD 62, and Carolina Concrete Pipe Company, B-192361,
March 4, 1981, 81-1 CPD 162. Our review is particularly appropriate
where the complaint involves the fundamental requirement for full and
free competition. Id., and cases cited therein. Our only requirement
is that complainants first exhaust their administrative remedies when,
as here, the grantor agency has procedures for complaints to it.
Sanders Company Plumbing and Heating, 59 Comp.Gen. 243(1980), 80-1 CPD
99. Brumm's complaint meets this criterion.
B. Timeliness
Second, EPA argues that under a new timeliness standard set forth in
Caravelle Industries, Inc., 60 Comp.Gen. 414(1981), 81-1 CPD 317,
Brumm's complaint to our Office is untimely.
We formerly held that the specific time limits of our Bid Protest
Procedures, 4 C.F.R. 21.2(1981), apply only to protests of direct
Federal procurements. Carolina Concrete Pipe Company, supra. In
Caravelle, however, we stated that while it might not always be
appropriate to establish strict time limits for grant complaints, they
must be filed within a "reasonable" time so that we can decide an issue
while it is still practicable to recommend corrective action if
warranted. We added that in most instances, the only "reasonable" time
for filing complaints in which solicitation deficiencies were alleged
would be the time required by the Bid Protest Procedures, i.e., before
bid opening or the time for receipt of proposals.
In Brumm's case, the EPA administrator's decision was signed on
August 14, 1980, and mailed to all parties on August 23, 1980; however,
Brumm's complaint was not filed with our Office until December 22, 1980.
If the Bid Protest Procedures had been applied, any request for our
review should have been filed within 10 days after Brumm knew or should
have known of the EPA decision. Again, while it may not always be
appropriate to apply the 10-day rule to grant complaints involving
matters other than alleged solicitation deficiencies, we believe such
complaints must be filed within a "reasonable" time after the basis for
them is known.
We will, however, consider Brumm's complaint on the merits because it
was filed before the Caravelle decision was issued. It took EPA more
than six months to respond to our request for a report, and Caravelle
was decided during the interim. Although we do not think it appropriate
to apply the new timeliness standards for grant complaints
retroactively, in the future, a complaint filed four months after an
adverse agency decision will not be considered filed within a
"reasonable" time.
C. Scope and Standard of Review
Other preliminary questions involve the scope and standard of our
review. As a general rule, we do not consider protests concerning
contract modifications, since these are matters of contract
administration and thus for resolution by procuring agencies. We will,
however, consider protests or complaints on this basis when, as here, it
is alleged that the modification changed the scope of the contract and
should have been the subject of a new procurement. Die Mesh
Corporation, B-190421, July 14, 1978, 78-2 CPD 36.
Since it involves review of an EPA decision, however, our
consideration will be limited to whether that decision was reasonable,
Carolina Concrete Pipe Company, supra, in light of the agency's
regulations which encourage free and open competition in grantee
procurements. See 40 C.F.R. 35.936-3(1980).
GAO Analysis-- Substantive Issues:
A. Award With Intent To Modify
Turning to the substance of Brumm's complaint, we see the primary
issue as whether the award was made with the intent to change contract
specifications. We recognize that circumstances may change during
performance, and that the Changes Clause is designed to permit the
Government and the contractor legally to modify their agreement to
reflect conditions which were not anticipated at the time of award.
However, a contracting officer may not make an award which he knows or
should know is not based on the conditions under which the performance
will occur, since such action tends to undermine the integrity of the
competitive procurement system. The potential injury is the same
whether there is a material change in specifications or a material
change in the conditions of performance. In either case the Government
(or in this case the grantee) is deprived of the full benefit of
competition-- a lower price or better terms which it might otherwise
have obtained.
Moore Service, Inc., B-200718, August 17, 1981, 81-2 CPD 145, citing A&J
Manufacturing Company, 53 Comp.Gen. 838(1974), 74-1 CPD 240.
In its arguments to EPA, Brumm asked why, if realignment of the
sewers was desirable after bid opening or at time of award, was it not
equally desirable during design or bidding, especially since it
significantly reduced the contract price. The EPA decision does not
address this issue.
The change was agreed to two weeks after award, on the same day that
the contractor was notified to proceed. It closely followed Proksch's
claimed mistake-in-bid and the grantee's refusal to allow correction or
withdrawal. Moreover, the contract price was reduced, but the record
contains no evidence (other than the grantee's statement) that this
accurately reflected reductions in length and depth of the sewer, the
amount of restoration, and the number of existing sewer lines to be
avoided.
In our opinion, the execution of the modification, making changes
which were at least arguably significant, and simultaneous issuance of
the notice to proceed, under such circumstances were tantamount to award
of a contract with the intent to modify it. These actions, in our view,
effectively distorted the competition on which the award was based. See
Lamson Division of Diebold, Incorporated, B-196029.2, June 30, 1980,
80-1 CPD 447.
We therefore cannot conclude that the EPA decision was reasonable
and, by letter of today, are so advising the Administrator of EPA. We
do not find it necessary to consider whether, as Brumm alleges, EPA's
reliance on the cardinal change doctrine was misplaced.
The complaint is sustained.
B. Bid Preparation Costs:
As for bid preparation costs, the Court of Claims requires a bidder
or offeror to show, among other things, that it had a substantial chance
of receiving an award before it is eligible for reimbursement of such
costs. Decision Sciences Corporation-- Claim for Proposal Preparation
Costs, 60 Comp.Gen. 36(1980), 80-2 CPD 298. We do not believe Brumm has
made such a showing, since what it actually would have bid for the sewer
construction job under the revised specifications is an open question.
Under these circumstances, we do not reach the question of whether bid
preparation costs are available on a procurement by a Federal grantee.
See The Eagle Construction Company, B-191498, March 5, 1979, 79-1 CPD
144.
B-199207, October 6, 1981, 61 Comp.Gen. 3
Federal Communications Commission - Ship Radio Inspectors - Holiday v.
Regular Overtime Compensation
Federal Communications Commission employee performed ship inspection
duties on Saturday, Nov. 11, 1978 (Veterans Day)-- a holiday. Pursuant
to 5 U.S.C. 6103(b)(1) (1976), employee had received Friday, Nov. 10,
1978, as a paid holiday off. Employee is not entitled to 2 days'
additional holiday pay for work on Saturday because meaning of term
"holiday" in controlling agency regulation requires reference to 5
U.S.C. 6103 to determine established legal public holidays and section
6103(b)(1) provides that instead of a holiday that occurs on Saturday,
the Friday immediately before is a legal public holiday. Holidays -
Created by Executive Order - Inspectional Services - Compensation Rate -
Ship Radio Inspectors
Federal Communications Commission employee performed ship inspection
duties on Monday, Dec. 24, 1979, which was considered a holiday by
Executive order for purposes of pay and leave of specified Federal
employees. Express limitation of Executive order to executive branch
employees precludes consideration of Monday, Dec. 24, 1979, as a holiday
within the meaning of 47 C.F.R. 83.74(a)(4) (1979), and 5 U.S.C. 6103,
which limit the term "holiday" to Government recognized legal public
holidays and other designated national holidays. We conclude for
purposes of applying the ship inspection overtime provisions that days
which are declared to be holidays for Government employees by Executive
order are not to be considered holidays which would entitle the employee
to the special pay. 26 Comp.Gen. 848 (1947).
Matter of: Donald W. Bogert and Joe E. Coleman - Holiday Pay -
Federal Communications Commission - Ship Inspection Overtime, October 6,
1981:
Mr. Wayne B. Leshe, Chief Accountant, Federal Communications
Commission, has requested an advance decision concerning two vouchers.
The vouchers involve payments to Mr. Donald W. Bogert (Voucher No. 7806)
and Mr. Joe E. Coleman (Voucher No. 7907) as employees of the Federal
Communications Commission (FCC) for extra compensation-- commonly
referred to as "Ship Inspection Overtime"-- for inspection of ships in
accordance with the provisions of the Communications Act of 1934, 47
U.S.C. 154(f)(3), and FCC regulations set out at 47 C.F.R. 83.48 (1978),
and 47 C.F.R. 83.74 (1979).
Mr. Bogert, an engineer with the FCC, was ordered to perform a ship
inspection of a certain vessel on Saturday, November 11, 1978, Veterans
Day.
Mr. Bogert accomplished this inspection on the appointed day at
Baltimore, Maryland, between the hours of 1 p.m. and 4:30 p.m. On
November 13, 1978, Mr. Bogert submitted a collection bill to the
vessel's owner for the ship inspection in an amount equal to 2 days'
pay. At the same time, Mr. Bogert submitted a claim to his agency for 2
days' pay for performing a ship inspection on a holiday in accordance
with section 83.48(a)(4) of title 47, Code of Federal Regulations
(1978).
On December 6, 1978, the Chief of the Enforcement Division of the
Field Operations Bureau (Mr. Bogert's supervisor) rejected the
collection bill and claims voucher. This action was based on a finding
that, while November 11, 1978, was a "holiday" within the meaning of 47
U.S.C. 154(f)(3), the provisions of 5 U.S.C. 6103(b) require that a
designated holiday that falls on a Saturday (such as the Veterans Day in
question) be given to Federal employees on the preceding Friday. Thus,
because Mr. Bogert received that preceding Friday as a holiday with pay
he was not entitled to claim Saturday as a double holiday. The Division
Chief instructed the Engineer-In-Charge of the Baltimore office to
submit a request for regular overtime for Mr. Bogert for the hours
worked on November 11, 1978.
Mr. Bogert did not accept this interpretation of the "Ship Inspection
Overtime" provisions of 47 C.F.R. 83.48(a)(4) (1978). Following
subsequent review and rejection of his claim within his agency, Mr.
Bogert's contention remains that he performed the ship inspection duties
on November 11, and that date is a national holiday specifically listed
in section 83.48(a)(4) of the 1978 edition of title 47, Code of Federal
Regulations, and therefore 2 days' pay is the proper charge for the
holiday work. Although Mr. Bogert's interpretation is arguable, we
conclude that it is not meritorious.
Under 47 U.S.C. 154(f)(3) and 47 C.F.R. 83.48(a)(9) (1978)
(applicable at the time Mr. Bogert performed the ship inspection), for
any authorized services performed on Sundays and holidays, totaling not
more than 8 hours, extra compensation is payable equivalent to 2 days'
pay in addition to any regular compensation for such days. The term
"holiday" is explained in 47 C.F.R. 83.48(a)(4) as follows:
* * * The term "holiday" shall include only national holidays, viz.
January 1, February 22, May 30, July 4, the first Monday in September,
November 11, Thanksgiving Day (when designated by the President),
December 25, and such other days as may be designated national holidays
by the President or Congress.
In our opinion, the term "holiday" as used in 47 U.S.C. 154(f)(3) and
the implementing regulation quoted above must be construed in the light
of the provisions of 5 U.S.C. 6103 (1976) which specifically establishes
legal public holidays.
Section 6103(b) specifically provides that, for purposes of statutes
relating to pay and leave of Federal employees, the following rules
apply:
(1) Instead of a holiday that occurs on a Saturday, the Friday
immediately before is a legal public holiday for--
(A) employees whose basic workweek is Monday through Friday * * * .
Since subsection (b)(1) establishes that instead of holidays--
including November 11-- that occur on a Saturday, the Friday before is a
legal public holiday, it follows that Mr. Bogert was entitled to and in
fact received a paid holiday on November 10, 1978. Therefore, the hours
of work Mr. Bogert performed on Saturday, November 11, 1978, are
compensable as regular overtime.
Mr. Coleman was ordered to perform a ship inspection of a certain
vessel on Monday, December 24, 1979. Mr. Coleman accomplished this
inspection on the appointed day at Port Arthur, Texas, between the hours
of 11 a.m. and 4 p.m. On December 31, 1979, Mr. Coleman submitted a
collection bill to the vessel's owners for the ship inspection in an
amount equal to 2 days' pay. At the same time, Mr. Coleman submitted a
claim to his agency for 2 additional days' pay for performing a ship
inspection on a holiday in accordance with 47 C.F.R. 83.74(a)(4) (1979).
The agency has forwarded Mr. Coleman's voucher for our consideration of
the propriety of compensating Mr. Coleman for 2 additional days' pay for
work performed on that day.
By Executive order all executive departments and agencies were closed
and employees, other than those required to be at their posts for
reasons of national security or other public reasons, were excused from
duty on Monday, December 24, 1979. The Executive order also provided
that December 24 would be considered a holiday for the purposes of the
pay and leave of employees of the United States. Thus, by the very
terms of the order, the holiday was limited only to a specific group of
Federal employees of the executive branch of the Government. This
limitation precludes consideration of Monday, December 24, 1979, as a
holiday within the meaning of the ship inspection holiday pay rule
contained at 47 C.F.R. 83.74(a)(9) (1979).
Under 47 C.F.R. 83.74(a)(9)(1979), which implements the "Ship
Inspection Overtime" provisions of 47 U.S.C. 154(f)(3), for any services
performed on a holiday, totaling not more than 8 hours, extra
compensation is payable equivalent to 2 days' pay in addition to regular
compensation for such days.
The term "holiday" is explained in section 83.74(a)(4) of the 1979
edition of title 47, Code of Federal Regulations, as follows:
* * * The term holiday shall include only government recognized
holidays, and such other days as may be designated national holidays by
the President or Congress.
As we noted in our conclusion in Mr. Bogert's case, this explanation
of the term "holiday" makes the provisions of 5 U.S.C. 6103
indispensable to the proper understanding of qualifying holidays under
the regulation. We think it is clear that the "government recognized
holidays" provided for in the regulation refer to the "legal public
holidays" established in 5 U.S.C. 6103(a); and, that the provision for
"such other days as may be designated national holidays" clearly
contemplates the establishment of a holiday for all of the public and
not just a specified group of Federal employees.
Accordingly, we conclude here as we did in B-153107, October 30,
1969, for purposes of applying the similar customs overtime law, 19
U.S.C. 267, 19 U.S.C. 1451(1976), that the ship inspection overtime
provisions of 47 U.S.C. 154(f)(3), and 47 C.F.R. 83.74(a)(1979), do not
apply to holidays established by Executive order for Federal employees
but only to "those holidays specifically set out, which days generally
are understood not only by Government employees but by the public to be
holidays." 26 Comp.Gen. 848 at 852(1947). As a result, Mr. Coleman is
not entitled to compensation under the holiday pay provision of 47
C.F.R. 83.74(a)(9)(1979) for ship inspection services performed on
Monday, December 24, 1979. Any payment of holiday compensation for that
date must be in accordance with 5 U.S.C. 5546(b)(1976).
Additional inquiries formulated by the certifying officer are
deferred for future consideration as they do not present questions of
law involved in the payment of these vouchers in accordance with 31
U.S.C. 82d(1976). The vouchers are returned for disposition in
accordance with the above.
B-198630, October 5, 1981, 61 Comp.Gen. 1
General Accounting Office - Jurisdiction - Contracts - Disputes -
Contract Disputes Act of 1978 - Election Effect
Contractor under pre-March 1, 1979, contracts has filed "constructive
change" claim originally made to contracting officer in March 1980. If,
regardless of filing, contractor has made conscious election to proceed
under Contract Disputes Act of 1978, General Accounting Office (GAO) may
not consider claim since consideration would give contractor a forum it
would not otherwise have under Act. Alternatively, if contractor has
elected to proceed under disputes clause of its contracts, GAO may not
consider claim because claim involves a question of fact. General
Accounting Office - Jurisdiction - Contracts - Disputes - Under Disputes
Clause - Fact Questions
Even though Army alleges that constructive change claim filed at GAO
is time-barred, allegation does not entitle GAO to decide legal validity
of defense. Fact remains that claim, on its face, is not for GAO's
review since claim involves a question of fact; moreover, Armed
Services Board of Contract Appeals (or Court of Claims) may ultimately
decide legal validity of defense under all relevant factual
circumstances.
Matter of: Freund Precision Inc., October 5, 1981:
Freund Precision, Inc. (Freund), has submitted a claim for losses
allegedly incurred in the performance of Department of the Army
contracts Nos. DAAA08-77-C-0035, DAAA08-78-C-0249, DAAA08-78-C-0321 and
DAAA08-77-C-0085. These fixed-price contracts were awarded to Freund by
the Army before March 1, 1979, for the supply of "gun shields and upper
gun rotors."
By letter dated March 19, 1980, and received by the Army on March 27,
1980, Freund submitted a claim for costs of repairs and replacements
required by the Army so that the gun shields would properly assemble on
the Army's gun frames. According to Freund, the gun shields that it
originally shipped met the basic drawing requirements contained in the
contracts and "were not deficient in any way." Therefore, in Freund's
opinion, the Army is responsible for the costs involved.
By letter dated April 21, 1980, the Chief of Adversary Proceedings
Division in the Army's Office of Counsel responded to Freund's claim.
The letter stated as follows:
A review of the contracts indicates that final payments under
contracts -0035 and -0085 were completed in 1978. Final payment under
contract -0249 was made in March of 1979. The records also disclose
that final payment under the last of your contracts, No.
DAAA08-78-C-0321, was made on 25 March 1980.
Although not stated as such in your letter, it is assumed that your
claim for additional compensation is premised on the basis that a
(constructive) change occurred due to drawing errors. Certain changes
are, of course, compensable pursuant to the Changes clause of the
contracts. However, your attention is called to the fact that the said
clause provides that a claim for adjustment must be asserted within 30
days from the date of receipt by the contractor of the notification of
change. The contracting officer, however, may receive and act upon any
such claim asserted at any time prior to final payment under the
contract.
Accordingly, final payment is a total bar to the assertion of any
claim that you may have otherwise submitted.
Freund contends that Army's disclaimer of any obligation to pay
simply because final payment has been made is "incorrect." Freund
believes that it has every right to further compensation for these
costs.
Under section 16 of the Contract Disputes Act of 1978, 41 U.S.C.
601-613 (Supp. III, 1979), a contractor who initiates a claim after the
effective date (March 1, 1979) of the Contract Disputes Act with regard
to a contract made before the effective date of the act may elect to
have its claim considered under the act rather than under the disputes
clause of its contract.
In order to permit the contractor to make an informed decision as to
which alternative remedy is to be chosen, section 6(a) of the act
requires the contracting officer to "inform the contractor of his rights
as provided in this act" when a contractor makes a claim to the
contracting officer "relating to a contract." A contractor's subsequent
"conscious election" of one of the alternative remedies is final. Cf.
Tuttle/White Constructors, Inc. v. United States, Court of Claims No.
205-80C, July 29, 1981, where the court held that a contractor who had
made a conscious election to proceed under the disputes clause was
foreclosed from later electing to proceed under the act.
If, under the circumstances, Freund has made a conscious election to
proceed under the act, we may not consider the claim because
consideration of the claim would provide the contractor with a forum it
would otherwise not have under the act. See Thurman Contracting
Corporation, B-196749, June 13, 1980, 80-1 CPD 415.
If, on the other hand, Freund has made a conscious election to
proceed under the disputes clause of its contract, it is still our view
that the claim is not for our consideration. Prior to the act, we would
not decide a claim involving a disputed fact, as here. See Consolidated
Diesel Electric Company, 56 Comp.Gen. 340, 343 (1977), 77-1 CPD 93.
Specifically, the "Changes" clause in Freund's contracts makes the
"(f)ailure to agree to any adjustment a dispute concerning a question of
fact." Thus, the claim for a constructive change involves a question of
fact for resolution by the authorities described in the disputes clause
and not by our Office.
Although the Army has asserted that the claim is time-barred, it is
not appropriate for our Office to decide the validity of the defense
since the claim, on its face, is not for our decision. Moreover, the
Armed Services Board of Contract Appeals (ASBCA) has decided that it may
determine, under all the relevant factual circumstances involved,
whether a claim for a constructive change is time-barred by the mere
fact of final payment as claimed by the Army here. See Adamation, Inc.,
ASBCA No. 22495, March 11, 1980, 80-1 BCA 14385.
Ultimately, therefore, it may be appropriate for the Board (or the Court
of Claims), not our Office, to decide the validity of the Army's defense
to the present claim in deciding any possible appeal or suit that Freund
may initiate.
Claim dismissed.
B-202599, September 29, 1981, 60 Comp.Gen. 718
Travel Expenses - Air Travel - Fly America Act - Employees' Liability -
Travel by Noncertificated Air Carriers - Government-Contractor Booking
Error
Employees who travel overseas on foreign air carrier when service by
U.S. air carriers is available in violation of Fly America Act are
personally liable for cost even though they may have been ignorant of
the Act and relied upon arrangements made by Government contractor.
However, if contract contains provision by which contractor may be held
accountable for such scheduling errors, employee's liability may be
shifted to contractor.
Matter of: Jasinder S. Jaspal and Claude A. Goode - Fly America Act
- Travelers' Liability, September 29, 1981:
The authorized certifying officer for the Chicago Operations and
Regional Office, Department of Energy (DOE), has asked whether Mr.
Jasinder S. Jaspal and Mr. Claude A. Goode may be reimbursed for certain
transoceanic portions of their air travel to and from the United States
via foreign air carriers although U.S. air carrier service was
available. The issue in this case is whether the DOE employees may be
relieved of liability for travel by foreign air carriers because the
flights in question were booked by a DOE contractor.
We find that the fact that travel arrangements were made for a
Government traveler does not amount to adequate justification for use of
a foreign air carrier under 49 U.S.C. 1517, as amended, commonly
referred to as the Fly America Act.
The chief of the Production Branch, Mr. Goode, and one of his mining
engineers, Mr. Jaspal, both from the Pittsburgh Mining Technology
Center, DOE, were scheduled to travel together to visit certain mines
and factories abroad which were the subject of a DOE contract. Boeing,
Services Int., a DOE contractor responsible for booking transportation
for DOE employees, made travel arrangements for Mr. Goode and Mr. Jaspal
and booked them on the same foreign air carriers for the portions of the
trip from New York to London and return. Although the travelers were
originally scheduled on the supersonic foreign air carrier, Concorde,
from New York to London, the Government Travel Request (GTR) did not
authorize payment of the amount by which the Concorde fare exceeded the
regular economy fare. Upon arriving at the airport and finding they
would otherwise be responsible for the substantial fare differential,
the employees rescheduled their travel from New York to London aboard a
British Airways Flight which departed 5 hours later. The travelers
departed together on the same foreign air carrier although U.S. air
carrier service to London was available at the same time.
Mr. Jaspal included a certificate with his travel voucher explaining
the use of the foreign air carrier in these words:
I certify that it was necessary for Jasinder S. Jaspal to use British
Airways Flight 174 between New York City, New York and London, England
on April 6, 1980 due to the following reason:
Boeing Services, Int. erroneously booked the traveler on the Concorde
- traveler waited for the next available flight which was 10 hours later
on the British Airways flight BA174.
Mr. Goode also included a certificate with his travel voucher that
was substantially the same.
After performing duty in Germany, Poland, and Hungary, Mr. Jaspal and
Mr. Goode returned from Hungary through London to Pittsburgh. Mr. Goode
took the foreign air carrier from London to New York that the contractor
booked him on without providing any justification for its use, even
though a U.S. air carrier departed at exactly the same time. Mr. Jaspal
delayed his return 2 days for personal business and rescheduled his
travel aboard a U.S. air carrier from London to New York.
Since 1975 the Fly America Act has required the use of U.S. air
carriers for international air travel paid for from appropriated funds
if service by such carriers is available, and has imposed a
nondiscretionary duty on the Comptroller General to disallow
expenditures from appropriated funds for such travel by foreign air
carriers in the absence of satisfactory proof of the necessity therefor.
The implementating guidelines, B-138942, issued March 12, 1976, and
revised March 31, 1981, as the result of a 1980 amendment to the Act,
define for travelers the conditions under which U.S. air carriers will
be considered to be available, for the use of foreign air carriers will
be considered to be necessary. Under the guidelines U.S. air carriers
were available for travel from New York to London and Mr. Goode's travel
from London to New York because U.S. carriers were scheduled for
departure at exactly the same time as the foreign air carriers on which
the employees performed their travel. The only justification given by
the travelers for the use of the foreign air carriers was that the
Government contractor had made a booking error.
Because the requirement for the use of U.S. air carriers is imposed
directly by statute, all persons are charged with knowledge of it.
Catherine Benton, B-188968, August 8, 1977. For this reason and because
Government funds may not be used to pay for unnecessary travel by
foreign air carrier, we have held that the traveler is personally liable
for any costs incurred because of his failure to comply with this
requirement. He is not relieved of this responsibility merely because
he relied upon the advice or assistance of others in arranging his
travel. See B-189711, January 27, 1978, and Robert A. Young, B-192522,
January 30, 1979.
Accordingly, reimbursement for the cost of Mr. Goode's travel between
New York and London and Mr. Jaspal's travel from New York to London may
not be allowed. In most situations the determination to the exact
amount to be disallowed by the formula set forth in 56 Comp.Gen.
209(1977) and the revised guidelines is a routine matter. However, in
this case the fare authorized on the GTR and presumably paid by DOE
appears to be excessive. In order to avoid charging the employees more
than is required, the General Services Administration should be asked to
verify the fares charged under the procedures at 41 C.F.R.
101-40.301(1980).
Further, although the matter was not brought up in the submission,
the contractor rather than the employees might be liable for the penalty
assessed because it scheduled the travel in violation of the Fly America
Act. Its liability would of course depend upon the provisions of the
contract with DOE which has not been furnished us. G360610A 61
Comp.Gen. (C.D.P. - 4/2/82)
B-202410, September 29, 1981, 60 Comp.Gen. 716
Travel Expenses - Air Travel - Fly America Act - Applicability -
Exceptions - Repatriation Loan Cases
The "Fly America Act," 49 U.S.C. 1517, does not require the use of
United States air carriers in repatriation cases where the individuals
are loaned funds by the Department of State for their subsistence and
repatriation. Transportation procured by the individual with funds
borrowed from an executive department is not Government-financed
transportation to which the "Fly America Act" applies.
Matter of: Fly America Act - Repatriation Loans, September 29, 1981:
This action is in response to a letter dated March 3, 1981, from the
Comptroller, Department of State, requesting an advance decision
concerning the legality of a proposed change in Department of State
regulations dealing with the repatriation of destitute Americans.
Section 2671 of title 22 of the United States Code (1976) authorizes
the Secretary of State to make emergency expenditures and to delegate
authority pertaining to the certification of those expenditures.
Historically, Congress has appropriated monies to the Secretary's
Confidential Fund, established for this emergency purpose, with the
understanding that the fund would not be used to provide loans to
Americans needing financial assistance in returning to the United
States. To ensure the proper use of these funds, the Department of
State has promulgated regulations which define the circumstances in
which financial assistance to be provided and the procedures which must
be followed. See 7 Foreign Affairs Manual (FAM) 370 and 375.
Generally, the individual is responsible for resolving his personal
financial difficulties. However, when a United States national is
seeking to return to the United States after a relatively brief period
of absence, is destitute, and is without relatives and friends who are
able and willing to help, the Department of State will provide temporary
financial assistance. See 7 FAM 375.1-1. In these circumstances, the
Department of State will provide a 60-day, interest-free loan to be used
for subsistence and repatriation. The individual will not be furnished
a passport for travel abroad until the obligation has been fully
discharged.
Existing Department of State regulations at 7 FAM 375.3-le(1) and (2)
require the use of the United States air carriers in repatriation cases
where such service is available. The amendment proposed by the
Department would permit foreign carriers to be used where they are less
costly than their United States counterparts. The issue presented here
is whether the Fly America Act, 49 U.S.C. 1517(1976), as amended by Pub.
L. No. 96-192, 94 Stat. 43(1980), requires the Department of State to
condition the receipt of a repatriation loan on the use of United States
air carriers. As explained below, we find that the Fly America Act
imposes no such requirement and the Department of State may implement
the new regulation.
Section 1517(a), of title 49, states in relevant part that:
* * * whenever any executive department or other agency or
instrumentality of the United States shall procure, contract for, or
otherwise obtain for its own account or in furtherance of the purposes
or pursuant to the terms of any contract, agreement, or other special
arrangement made or entered into under which payment is made by the
United States or payment is made from funds appropriated, owned,
controlled, granted, or conditionally granted or utilized by or
otherwise established for the account of the United States, or shall
furnish to or for the account of any foreign nation, or any
international agency, or other organization, of whatever nationality,
without provision for reimbursement, any transportation of persons (and
their personal effects) or property by air between a place in the United
States and a place outside thereof, the appropriate agency or agencies
shall take such steps as may be necessary to assure that such
transportation is provided by air carriers holding certificates under
section 1371 of this title * * * .
The statute applies only to the activities of an "executive
department or other agency or instrumentality of the United States." An
individual's actions in procuring air transportation is not covered
unless payment for the transportation is made by the United States or
from funds "appropriated, owned, controlled, granted, or conditionally
granted or utilized by or otherwise established for the account of the
United States."
In the case of repatriation, the transportation is obtained for the
individual. As a condition to his receipt of repatriation assistance,
the individual is required to execute a note by which he agrees to repay
the Department of State the amount advanced for travel, subsistence, and
related purposes.
The funds are not granted or conditionally granted for these purposes by
the United States. They are loaned to the individual. Because they are
furnished with specific provision for reimbursement, we find that their
expenditure is not subject to 49 U.S.C. 1517, as amended. That is
consistent with the statement in 57 Comp.Gen. 546 at 547 that nothing in
the Act or its legislative history suggests that any person is required
to use U.S. air carriers when no expenditure of Government revenues is
involved. By virtue of the repatriated individual's obligation to make
repayment, the expenditure involved in purchasing air transportation by
such an individual must be viewed as an expenditure of individual funds.
This determination is predicated on the assumption that the
Department will not purchase air transportation directly from the
carrier but that the purchase of transportation will be made from funds
loaned to the repatriated individual. Some changes in the wording of 7
FAM 375.3-1e(4) and in procedures used for obtaining such travel may be
required so that purchase of the transportation will not be by the
Department directly. Accordingly, we find no objection to the proposed
amendment to permit the use of foreign air carriers for the repatriation
of destitute Americans where such service is less costly than United
States air carrier service.
B-201003, September 29, 1981, 60 Comp.Gen. 710
Interest - Intergovernmental Claims - Federal Agency, etc. Against
State, Local, etc. Governments - Federal Law Applicability - Claims
Originating in Federal Law
As a general rule, interest is not allowed on claims brought against
governmental entities unless expressly authorized by statute or
stipulated to by contract. However, where a claim is inter-governmental
in nature, and has its origin in Federal law, the liability of the
debtor will depend on Federal law and not local law. If Federal law
fails to resolve this question, then agencies must be guided by
considerations of equity and public convenience and due regard should be
paid to local institutions and interests including local law.
Government Printing Office - Printing and Binding Agreements - Debt
Collection - Interest Claim - District of Columbia Indebtedness
Government Printing Office (GPO) may charge interest from the date
payments were due under agreement between GPO and the District of
Columbia for printing and binding services, or if no date was
established by agreement, from the date payment was demanded due.
Agreement and action on the agreement had their origins in Federal law
and interest has been authorized by courts and in statutes on claims
brought against District of Columbia in the past. District of Columbia
- Status - Debts Owed to United States - Set-Off Right
Although the District of Colombia receives an annual lump-sum payment
from the Federal Government, a valid claim may exist between the
District of Columbia and the Federal Government since they are separate
and distinct legal entities. Therefore, claims by Federal Government
against District of Columbia may be collected through setoff against
unappropriated funds of the District in the hands of the Federal
Government. Set-Off - Authority - State, etc. Government Debts -
Against Federal Salary Deductions for State, etc. Income Taxes - Public
Policy Considerations
Government Printing Office (GPO) may not set off debts owed to it by
District of Columbia against taxes withheld by GPO from wages of its
employees for payment of employees income taxes. The withheld taxes,
while they constitute an employer indebtedness, are held in trust for
the benefit of the District of Columbia. Strong public policy
consideration precludes the setting off of debt against demands for
payment of taxes in the absence of statutory authority.
Matter of: Collecting Debts from the District of Columbia Government
by Offset, September 29, 1981:
This decision to the Public Printer is in response to an inquiry from
the General Counsel, Government Printing Office (GPO), asking:
- Whether GPO can charge the District of Columbia Government interest
on its overdue accounts.
- Whether GPO can settle the past due District Government account by
setting off its debt against money the GPO has withheld from wages and
salaries for payment of its employees' District income taxes.
For the reasons stated below we conclude that the GPO can charge the
District of Columbia Government interest on its overdue accounts but for
policy considerations recommend against setting off this indebtedness
against money withheld from wages and salaries for payment of its
employees' District income taxes.
The General Counsel has informed us that pursuant to 31 U.S.C. 685a,
GPO provided printing and binding services to the District of Columbia
Government for which it is owed in excess of $150,000. 31 U.S.C. 685a
authorizes Federal agencies to enter into agreements to provide certain
services to the District of Columbia Government upon the approval of
both the Office of Management and Budget and the Mayor. In return,
Federal agencies are to be reimbursed their actual costs in providing
these services. The General Counsel has also informed us that GPO's
attempts to collect this amount have thus far proved unsuccessful.
However, while charging interest and setting off debts are measures
generally available to Federal agencies for use against private persons,
the General Counsel is concerned over the propriety of using these
measures against the District of Columbia Government which, in addition
to revenues generated by local taxes or assessments, receives a lump-sum
payment from the Federal Government as part of its annual operating
budget.
The Federal Claims Collection Standards (issued jointly by the
Attorney General and the Comptroller General pursuant to authority set
forth in the Federal Claims Collection Act, 31 U.S.C. 951-953) require
the charging of interest on delinquent debts. 4 C.F.R. 102.11, provides
that:
In the absence of a different rule prescribed by statute, contract,
or regulation, interest should be charged on delinquent debts and debts
being paid in installments in conformity with the Treasury Fiscal
Requirements Manual. When a debt is paid in installments, the
installment payments will first be applied to the payment of accrued
interest and then to principal, in accordance with the so-called "U.S.
Rule," unless a different rule is prescribed by statute, contract, or
regulation * * * .
1 Treasury Fiscal Requirements Manual, (TFRM) 6-8020.40, requires
late charges be applied and collected for overdue payments at a
percentage rate based on the current value of funds to the Treasury.
Additionally, in United States v. United Drill and Tool Corp., 183
F.2d 998(D.C. Cir., 1950), the court held that statutory obligations in
the nature of a debt bear interest even though the statute creating the
obligation fails to provide for it. Also, we have held that Federal
agencies are authorized to charge interest on the equitable theory that
a creditor is entitled to be compensated for the detention of his money
without regard to the manner in which the obligation arose. See 59
Comp.Gen. 359(1981).
We note that as a general rule, Courts have held that interest is not
allowed on claims brought against governmental entities (Federal State
or local government) unless expressly authorized by statute or
stipulated to by contract. See for example United States v. Thayer
West-Point Hotel Co., 329 U.S. 585(1947); United States v. North
Carolina, 136 U.S. 211(1890); Follmer v. State of Nebraska; 142 N.W.
908, (Neb. 1913); Blum v. City of San Francisco, 19 Cal.Rptr. 574(Cal.
App., 1962) and 51 Comp.Gen. 251(1971). However, the rule is not
uniformly applied by the States. See cases collected at 24 ALR
2d928-999.
However, regardless of the rule followed by a particular State's
courts, where a claim is inter-governmental in nature and has its origin
in Federal law, the liability of the debtor (State or local government)
will depend on Federal law, not local law. If the Federal law fails to
resolve this question, then agencies must be guided by consideration of
equity and public convenience. Board of County Commissioners of the
County of Jackson, Kansas v. United States, (Board of Commissioners),
308 U.S. 343(1939). Of course, in considering public convenience, due
regard will be paid to local institutions and interests (including local
law) in the absence of any legislative policy to the contrary. Board of
Commissioners, above, 351-352.
In the present case since the action arose under Federal law - 31
U.S.C. 685a authorizing the agreement and requiring reimbursement based
on actual cost - it should be governed by Federal rather than local law.
United States v. Allegheny County, 322 U.S. 174, 172-183(1943).
Additionally, interest has previously been allowed against the District
Government at the rate of 6 percent per year (notwithstanding D.C. Code
28-3302 providing for interest at 4 percent per year) from the date
payment was due in a contract action where payment was wrongfully
withheld. Kenney Construction Co., v. D.C., 262 F.2d 926(D.C. Cir.,
1959). Thus in our opinion, interest may be assessed on the unpaid
debts of the District Government at the rate prescribed in 1 TFRM
6-8020.40 from the date payment was due under the agreement of demand
made upon the District.
Generally, the right of setoff is inherent in the United States
Government and is grounded in the common law right of every creditor to
apply the moneys of his debtor in his hands to the extinguishment of
claims due to him from the debtor. Gratiot v. United States, 40 U.S.
(15 Pet.) 336, 370(1841); United States v. Munsey Trust Co., 322 U.S.
234, 239(1946); 41 Comp.Gen. 178(1961). This is the case even though
the claim has not been reduced to judgment. Shay v. Agricultural
Stabilization and Conservation State Committee For Arizona, 299 F.2d
516, 524-525 (9th Cir., 1962). This is reflected by the Federal Claims
Collection Standards which provide in pertinent part, that:
Collections by offset will be undertaken administratively on claims
which are liquidated or certain in amount in every instance in which
this is feasible * * * . Appropriate use should be made of the
cooperative efforts of other agencies in effecting collections by
offset, including utilization of the Army Holdup List, and all agencies
are enjoined to cooperate in this endeavor. 4 C.F.R. 102.3. See also 4
GAO 69.
Furthermore, we have specifically approved collection of interest as
well as principal on debts collected by setoff. 59 Comp.Gen. 359.
(1980).
Collection of claims by setoff has been approved for use in
collecting debts owed to the Federal Government by State governments.
See United States v. Louisiana, 127 U.S. 182(1888), B-163922.53,
February 10, 1978. 20 Op.Atty.Gen. 363(1892).
While not a State, the District Government has been held to be a
municipal corporation with its own powers and functions, its own funds
and its own obligations and liabilities, separate and distinct from
those of the Federal Government. 25 Comp.Gen. 579(1946) and 36 id.
457(1956). See also Bradshaw v. United States, 443 F.2d 759(D.C. Cir.,
1971), holding that United States is not liable for claims against
District of Columbia on grounds that they are separate and distinct
legal entities. This being the case, the reverse should also be true,
that is, the District of Columbia is not liable for claims against the
United States. Since neither government is responsible for claims
against the other government, it follows that claims may exist between
the two governments. While these decisions were rendered prior to the
passage of the District of Columbia Self-Government and Governmental
Reorganization Act (Home Rule Act) Pub. L. No. 93-198, December 24,
1973, 87 Stat. 774, this status has remained unchanged by virtue of
717(a) of the Home Rule Act, 87 Stat. 820. See also 102(a) of the Home
Rule Act, 87 Stat. 777, which, if anything, indicates that the purpose
of the Home Rule Act was to give the District Government even more
control over local affairs.
Generally, Federal inter-agency claims for damages to property are
not reimbursed (when not necessary to accomplish the purpose of some
law, 59 Comp.Gen. 515(1980)), on the theory that all property of
agencies and instrumentalities of the Federal Government is not the
property of separate entities but rather of the Government as a single
entity. Thus there can be no reimbursement by the Government to itself
for damage to or loss of its property.
Although the District receives a lump-sum Federal payment as part of
its annual operating budget, this does not affect the nature of the
claim GPO has against the District Government. In 46 Comp.Gen.
586(1966) we held that the fact that the Government of American Samoa (a
territory of the United States) received direct Federal appropriations
and grants-in-aid from the Federal Government in addition to its
revenues, was insufficient to preclude the Department of Agriculture
from recovering a claim for damages to property resulting from improper
storage of donated commodities. See also Bradshaw v. United States, 443
F.2d 759-770(D.C. Cir., 1971).
Consequently, since District of Columbia Government and United States
Government are separate legal entities, a valid claim may exist between
the District And gpo, notwithstanding the fact that the District of
Columbia receives a lump-sum payment from the United States.
Furthermore, setoff is available to GPO as a means for collecting this
claim.
Although as a general proposition the GPO can set off debts owed to
it by the District of Columbia Government against Government funds due
and owing to the District, we do not think that the District's
indebtedness may be set off against a Federal employee's District income
tax withholdings.
Federal agencies are directed to enter into agreements with the
District of Columbia to withhold money from the salaries of employees
for payment of the employees' District income taxes by 5 U.S.C. 5516,
which also directs agency heads to comply with the provisions of
Subchapter II of chapter 15 of title 47, D.C. Code. Under this
subchapter, employees are required to withhold employee taxes and are
made personally and individually liable to the District for failure to
withhold or pay any amounts required to be withheld and paid. D.C. Code
Sec. 47-1586g(b), (f)(1) and (h). Furthermore, employee taxes actually
withheld at the source are deemed paid by the employee of April 15 for
tax purposes, D.C. Code 47-1586j. The employee's right to claim a tax
credit for withholding is not conditioned upon the employer paying over
the withheld amount by the District. Finally, amounts withheld by
employers are held in trust for the District. D.C. Code 47-1586g(f)(1).
Thus it is clear that under District law, the employee is not liable
for payment of the amounts withheld. Instead he is entitled to a tax
credit up to the amount withheld and his tax liability is extinguished
up to the amount withheld. Thus, the funds withheld should not be
considered assets of the employees since what happens to the funds will
not affect their tax indebtedness. Instead, they are held for the
purpose of extinguishing what, by law, has become an employer
indebtedness. Thus, any action against these funds will not affect the
employee. However, the withholdings are apparently trust funds held for
the benefit of the District and as such are not subject to diversion
even for the payment of the District's debts. Compare United States v.
Louisiana, 127 U.S. 182(1887).
Even if these funds are not considered to be held in trust for the
benefit of the District Government (in contradiction to the express
pronouncement of D.C. Code 47-1576g(f)(1)), another consideration
militates against exercising this remedy in these circumstances. While
this Office, the Attorney General and the courts have been amendable to
setting off debts owed by taxpayers against refunds owed to them, 55
Comp.Gen. 1329(1976); 20 Op.Atty.Gen. 363(1892); Belgard v. United
States, 232 F.Supp. 365(W.D.La., 1964); Cherry Cotton Mills, Inc. v.
United States, 59 F.Supp. 122(Ct.Cl., 1945), they have been reluctant,
as a matter of public policy, to permit setting off of debts against
demands for the payment of taxes in the absence of express statutory
authority, United States v. Pacific Railroad Co., Fed. Case No. 15,983
(C.C.E.D. Mo., 1877); Apperson v. Memphis, Fed. Case No. 497 (C.C.W.D.
Tenn., 1879); Crabtree v. Madden, 54 F. 426, 431 (8th Cir., 1893);
State v. Humble Oil and Refining Co., 169 S.W.2d 707, 708 (Tex., 1943;
Boston Five Cents Saving Bank v. City of Boston, 61 N.E.2d 124, 126
(Mass., 1945). See also cases collected in 90 A.L.R. 433-438; 20
Am.Jur.2d Counterclaim Recoupment, etc. 113; 80 C.J.S.Set-off and
Counterclaim 20; 61 C.J. Taxation 1391; 57 C.J.Set-off and
Counterclaim 31; and, McQuillin Mun. Corp. (3rd Ed) Sec. 44.138.
We note that the collection of taxes is vital to the functioning and,
in fact, to the existence of Government, United States v. Kimbell Foods,
Inc., 440 U.S. 715, 734 (1979). Obviously, if individual creditors of a
governmental unit are permitted to sett off debts owed to them by that
governmental unit against taxes they owe to the governmental unit, this
would result in a severe disruption in the orderly collection of taxes
and the orderly administration of government.
Furthermore, it would increase the risk of erroneous duplicate payments
being made to creditors.
While in the present situation the Federal Government would not be
setting off a debt against taxes it owes to the District Government, but
instead against funds withheld by it pursuant to agreement authorized by
law for payment of its employees' District income taxes, this
distinction is insufficient to remove it from the public policy
prohibition. The purpose of the enactment of the employee withholding
tax provision was to facilitate the payment and collection of employee
income taxes. To permit setoff of the funds withheld would contravene
this purpose. Consequently, in view of the strong public policy
favoring noninterference in the collection of taxes, we would recommend
against taking such action in the absence of clear legislative mandate
to do so.
B-189712, September 23, 1981, 60 Comp.Gen. 700
Loans - Loan Guarantees - Rural Development Program - Obligation
Authority Beyond Fiscal Year - Ceilings on Loan Amounts - Substituted
Borrower Effect
Loan guarantee by Farmers Home Administration (FmHA) initially
charged against level of guarantee authority for particular fiscal year
in which guarantee was first approved cannot, as general rule, continue
to be charged against the authority for that year when entirely new
borrower is substituted in subsequent fiscal year, since determination
of whether to approve guaranteed loan to particular borrower is an
individual one requiring specific eligibility determination by FmHA.
However, if substituted borrower bears close and genuine relationship to
original borrower, such as would exist between corporation and
partnership controlled by same individuals, and loan purpose remains
substantially unchanged, FmHA would have authority to charge loan
guarantee to substitute borrower against ceiling for fiscal year in
which original guarantee was approved. Loans - Loan Guarantees - Rural
Development Program - Obligation Authority Beyond Fiscal Year - Ceilings
on Loan Amounts - Revision of Loan Agreement Terms Effect
Loan guarantee by FmHA initially charged against level of loan
guarantee authority for particular fiscal year in which guarantee was
first approved cannot continue to be charged against ceiling for that
year when major changes to character of the project or loan terms occur
during subsequent fiscal year. However, if less substantial changes are
involved where the purpose and scope of the revised loan guarantee
agreement are consistent with the purpose and scope of the original
guarantee and the need for the project continues to exist, FmHA would
have authority to change amended loan guarantee against ceiling for
fiscal year in which it was first approved. Loans - Loan Guarantees -
Rural Development Program - Obligation Authority Beyond Fiscal Year -
Ceilings on Loan Amounts - Substituted Lender Effect
Loan guarantee by FmHA initially charged against level of loan
guarantee authority for particular fiscal year in which guarantee was
first approved can continue to be charged against authority for that
year if new guaranteed lender is substituted in subsequent fiscal year,
provided the borrower loan purpose, and loan term remain substantially
unchanged. Although the guarantee is actually extended to the lender,
the lender is merely a conduit through which FmHA provides assistance to
an eligible borrower to achieve the statutory objectives. Therefore,
new lender can be designated without changing the essence of the
agreement. Agriculture Department - Farmers Home Administration - Loan
Guarantees - Approval/Disapproval - Written Notice Requirement
FmHA's regulations as well as terms of relevant FmHA forms indicate
that applications for loan guarantees are to be approved or disapproved
in writing. Oral notification of loan guarantee approval thus would not
be sufficient to create a valid guarantee.
Matter of: Farmers Home Administration - Loan Guarantee Program,
September 23, 1981:
This decision is in response to a request from the Acting
Administrator of the Farmers Home Administration (FmHA), concerning
several questions that have arisen in connection with FmHA's business
and industrial guaranteed loan program.
In essence, FmHA is concerned as to whether a commitment by FmHA to
guarantee a loan by a private lender to an eligible borrower can still
be counted against the authorized loan guarantee ceiling for the fiscal
year in which the commitment was made, when changes affecting different
aspects of the guarantee occur in a subsequent fiscal year.
Specifically, FmHA's written submission requests that we answer the
following three questions:
1. Whether guarantee authority reserved ("obligated") during a
previous fiscal year must be lost irrevocably when the lender is changed
during a subsequent fiscal year.
2. Whether guarantee authority reserved during a previous fiscal
year must be lost irrevocably when the borrower is changed during a
subsequent fiscal year.
3. Whether guarantee authority reserved during a previous fiscal
year must be lost irrevocably when major changes to the character of the
project or loan terms occur during a subsequent fiscal year.
Subsequently, in informal discussions with representatives from FmHA
these questions were further amplified and clarified. Also, we were
informally requested to address a fourth issue involving the extent to
which a valid guarantee commitment can be viewed as having been created
in a particular fiscal year on the basis of FmHA's oral rather than
written notification to the lender. We conclude, with exceptions we
shall discuss below, that each of the changes indicated by FmHA with
respect to questions 2 and 3 would create a new guaranteed loan which
must be charged against the guarantee ceiling for the fiscal year in
which the change was made. On the other hand, the change indicated in
question 1 would create a new guarantee and could continue to be charged
against the ceiling for the fiscal year in which the guarantee was first
approved. Further, with respect to the informal question, we conclude
that oral notification does not create a valid guarantee commitment.
FmHA's business and industrial loan program, also known as the rural
or industrial development loan program, is authorized by section 310B of
the Consolidated Farm and Rural Development Act, as amended (Act), 7
U.S.C. 1932(a), as follows:
The Secretary may also make and insure loans to public, private, or
cooperative organizations organized for profit or nonprofit, to Indian
tribes on Federal and State reservations or other federally recognized
Indian tribal groups, or to individuals for the purposes of (1)
improving, developing, or financing business, industry, and employment
and improving the economic and environmental climate in rural
communities, including pollution abatement and control, * * * Such
loans, when originated, held, and serviced by other lenders, may be
guaranteed by the Secretary under this section without regard to
subsections (a) and (c) of section 1983 of this title. * * *
The word "insure" as used in this subsection is specifically defined
in 7 U.S.C. 1991 as including "guarantee, which means to guarantee the
payment of a loan originated, held, and serviced by a private financial
agency or other lender approved by the Secretary * * * ."
The rural development loan program established by 7 U.S.C. 1932 is
funded out of a special revolving fund - the Rural Development Insurance
Fund - created under section 309A of the Act, 7 U.S.C. 1929a. Maximum
limitations on the amount of industrial development loans that can be
made out of, or under, the fund in a particular fiscal year are set
forth in section 346(b) of the Act, as amended, 7 U.S.C. 1994(b), /1/ as
follows:
Loans for each of the fiscal years 1980, 1981, and 1982 are
authorized to be insured, or made to be sold and insured, or guaranteed
under the Rural Development Insurance Fund as follows:
(B) industrial development loans $1,500,000,000 of which $100,000,000
may be for insured loans and $1,400,000,000 may be for guaranteed loans
with authority to transfer amounts between categories * * * .
Under 7 U.S.C. 1994(a), Congress can impose additional limitations on
the amount of guaranteed and insured industrial development loans that
can be made in a particular fiscal year as follows:
(a) * * * There shall be two amounts so established for each of such
programs and for any maximum levels provided in appropriation Acts for
the programs authorized under this chapter, one against which direct and
insured loans shall be charged and the other against which guaranteed
loans shall be charged. * * *
For the 1980 and 1981 fiscal years, such limitations have been
included in FmHA's annual appropriation. For example, the following
provision is set forth in the Agriculture, Rural Development, and
Related Agencies Appropriations Act, Fiscal Year 1981, Pub. L. No.
96-528, 94 Stat. 3095, 3106, December 15, 1980:
For an additional amount to reimburse the rural development insurance
fund for interest subsidies and losses sustained in prior years, but not
previously reimbursed, in carrying out the provisions of the
Consolidated Farm and Rural Development Act, as amended (7 U.S.C.
1988(a)), $143,282,000.
For loans to be insured, or made to be sold and insured, under this
fund in accordance with the subject to the provisions of 7 U.S.C. 1928
and 86 Stat. 661-664, as follows: Insured water and sewer facility
loans, $750,000,000; guaranteed industrial development loans,
$741,000,000; and insured community facility loans, $260,000,000.
Similar language setting a $1.1 billion overall limitation on the
total amount of rural development loans for the 1980 fiscal year,
including $10 million for insured loans and the remainder for guaranteed
loans is contained in the Agriculture, Rural Development, and Related
Agencies Appropriations Act, Fiscal Year 1980, Pub. L. 96-108, 93 Stat.
821, 831, November 9, 1979.
Although the language in the appropriation legislation for both the
1980 and 1981 fiscal years is written in a form that might appear to
appropriate $1.1 billion and $741 million for guaranteed industrial
development loans for the 1980 and 1981 fiscal years respectively, it is
apparent that what was intended by the Congress was the imposition of
ceilings on the total amounts of guaranteed rural development loans that
could be made by FmHA in each fiscal year. /2/ It is the existence of
precisely these limitations in FmHA's annual appropriation on the total
amount of industrial development loans that can be guaranteed in a
particular fiscal year that resulted in FmHA's request to us for a legal
opinion as to the proper treatment of a guaranteed loan approved in a
particular fiscal year which is modified in a subsequent fiscal year.
FmHA urges us to take the position that a guaranteed loan that has
been modified should continue to count against the authorized guaranteed
loan level for the year in which it was first approved rather than the
level of the subsequent fiscal year in which the guarantee was changed.
Before considering the specific issues raised by FmHA, we believe it
is necessary to clarify FmHA's use of the term "obligation" in referring
to approved loan guarantees. 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. 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. See GAO Audit Report "Legislation Needed to
Establish Specific Loan Guarantee Limits for the Economic Development
Administration," FGMSD-78-62, January 5, 1979. 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. See 58
Comp.Gen. 138, 147(1978).
Based on informal discussions with FmHA representatives, it appears
that FmHA's practices and procedures in connection with its guaranteed
loan program are consistent with our interpretation that a loan
guarantee approval does not result in an actual obligation of funds.
Apparently, what FmHA actually does upon approval of a loan guarantee is
"charge" the amount of the loan guarantee against the authorized ceiling
for that year. Also, it may administratively reserve, or earmark, in
its revolving fund a certain percentage of the total amount of the
guarantee based on the estimated default rate for such loans.
The primary case cited by FmHA in its submission, B-189712, January
5, 1978, (57 Comp.Gen. 205) and most of the other related cases in this
general area involved Federal grants. The issue in these cases was the
availability in a later fiscal year of appropriated funds that were
obligated in a prior fiscal year where the underlying agreement that
formed the basis for the obligation was modified in the later fiscal
year, after the end of the period of availability of the funds.
Although the situation in the instant case is somewhat different -
since, as explained above, it does not involve an actual obligation of
appropriated funds - the same legal principles are involved. The
applicable limitation on loan guarantees, which is set forth in an
annual appropriation act, refers to the total amount of loan guarantees
that can be approved in a particular fiscal year. The basic question in
the "obligation" cases is whether an otherwise binding commitment of
funds in a particular fiscal year remains valid if the purpose or the
recipient of the funds is changed after the funds are no longer
available for a new commitment. Similarly, the basic question here is
whether a loan guarantee, once approved, remains a valid and binding
commitment if a change affecting the purpose, recipient, or nature of
the guarantee occurs after the period of loan guarantee authority
expires.
With these considerations in mind, we shall address the specific
questions raised by FmHA in its submission (as clarified in informal
discussions with FmHA officials) although we have changed the order in
which these questions are answered. The first question is whether a
loan guarantee authority for a particular fiscal year can continue to be
charged against the authority for that year when the borrower is charged
during a subsequent year. When the question is presented in this form,
without further amplification, the answer is necessarily "no."
We have consistently held in the grant cases that, when the recipient
of an original grant is unable to implement the grant as originally
contemplated and an alternate grantee is designated subsequent to the
expiration of the period of availability for obligation of the grant
funds, the award to the alternate grantee must be treated as a new
obligation and is not properly chargeable to the appropriation current
at the time the original grant was made. See 57 Comp.Gen. 205, supra;
B-164031 (5), June 25, 1976; and other cases cited in those decisions.
The rationale behind the general rule is set forth in B-114876, January
21, 1960, as follows:
The awards here involved are made to individuals based upon their
personal qualifications. Whether the award is considered an agreement
or a grant, it is a personal undertaking and where an alternate grantee
is substituted for the original recipient, there is created an entirely
new and separate undertaking. The alternate grantee is entitled to the
award in his own right under the new agreement or grant and not on
behalf of, on account of, or as an agent of, the original grantee. It
seems clear that the award to an alternate grantee is not a continuation
of the agreement with, or grant to, the original grantee executed under
a prior fiscal year appropriation, but is a new obligation.
Similarly, in the case at hand, the determination of whether to
approve a loan guarantee to a particular borrower is an individual one,
necessarily requiring a specific determination by FmHA of the borrower's
eligibility under the relevant statutory and regulatory provisions.
Obviously, the determination by FmHA with respect to the eligibility of
one borrower and the extent to which approval of a guaranteed loan to
that borrower would achieve one of the legislative objectives of the
rural development loan program, as set forth in 7 U.S.C. 1932, would be
of no value in making such a determination about an entirely different
and unrelated borrower, even if a similar project was involved. Thus,
adherence to the general rule, as set forth in B-114876, January 21,
1960, and similar cases, requires us to hold that when a loan guarantee
is approved for a new borrower having no relationship to the original
borrower it must be treated as an entirely new undertaking and must be
charged against the authorized loan guarantee level in effect when it,
as opposed to the original guarantee, is approved.
Although the above conclusion answers the question set forth in
FmHA's written submission, there are exceptions to the general rule.
FmHA's representatives informally advised us of some specific situations
that may arise in which the originally approved borrower and the
proposed substitute are linked in some way. One example is the
situation in which the originally approved borrower - a corporation - is
replaced with a substitute borrower - a partnership - (or the reserve).
In this example, the individuals controlling both the corporation and
the partnership are the same and the purpose of the loan presumably
remains the same as well. In this or similar situations, the
substituted borrower is not a new and independent entity that is
separate and apart from the original borrower.
This distinction is significant. Our Office has held that " * * * it
may be possible in certain situations to make an award to an alternate
grantee after expiration of the period of availability for obligation
where the alternate award amounts to a a 'replacement grant' and is
substantially identical in scope and purpose to the original grant."
B-164031(5) June 25, 1976, supra.
Our decisions in two cases are especially relevant. In B-157179,
September 30, 1970, we held that the unexpected balance of a grant funds
originally awarded to the University of Wisconsin could properly be used
in a new fiscal year to support Northwestern University's completion of
the unfinished project. Essentially, we took this position because the
designated project director had transferred from the University of
Wisconsin to Northwestern University and was viewed as the only person
capable of completing the project. Further, we found that the original
grant was made in response to a bona fide need and that the need for
completing the project continued to exist. Our decision analogized the
circumstances of that case to the situation involving replacement
contracts.
Concerning replacement contracts, we take the position that the funds
obligated under a contract are, in the event of the contractor's
default, generally available in a subsequent fiscal year " * * * for the
purpose of engaging another contractor to complete the unfinished work,
provided a need for the work, supplies, or service existed at the time
of execution of the original contract and that it continue to exist up
to the time of execution of the replacement contract. * * * " See 34
Comp.Gen. 239(1954); and 60 Comp.Gen. 5#91(1981).
The second relevant decision - 57 Comp.Gen. 205, supra - was the one
cited in FmHA's submission. In that case we considered whether to allow
an alternate grantee to be substituted for the original grantee after
the period of availability had expired where the original grant
application had been jointly filed by both. We held that, provided the
original and revised grants were for the same needs and purposes and
were of the same scope (which determination was left to the agency),
replacement of the designated grantee by the other applicant did not
require a new obligation because " * * * the alternative proposal
amounts to a replacement grant rather than a new and separate
undertaking."
In both these cases a genuine and tangible relationship existed
between the original and substituted grantee. Also, in both cases the
purpose and scope of the grants, as well as the need for the grant
project, remained the same. In the situation suggested informally by
FmHA, the original and substituted borrowers would have a similar, if
not greater, connection with each other. For example, in the case of a
change from a partnership to a corporate borrower, or the reverse the
names of the controlling individuals presumably would appear on both the
original and the revised applications. Similarly, we assume that the
purpose and the scope of the project supported by the loan guarantee
would remain substantially the same since the same individuals would be
involved.
Therefore, we would not object if FmHA charges a substitute loan
guarantee against the authorized ceiling of the fiscal year for which
the guarantee was initially approved, provided the substituted borrower
bears a close and genuine relationship to the originally approved
borrower (such as has been discussed herein) and the purpose for which
the loan funds are to be used by the substitute borrower is
substantially unchanged.
The next question is whether a loan guarantee can continue to be
charged against the ceiling for the year in which it was approved "when
major changes to the character of the project or loan terms occur during
a subsequent fiscal year." Examples of such major changes are listed in
the submission as including "major changes to the facility design,
project's purpose, loan terms." As was true of the previous question,
when the issue is characterized in this fashion, the answer is clearly
"no."
Our office has consistently held that an agency has no authority to
amend a grant so as to change its scope after the underlying
appropriation has ceased to be available for obligation. For example in
39 Comp.Gen. 296, 298(1959) we said the following:
We cannot agree that authority to make one grant in a fiscal year
necessarily carries with it authority to amend that grant where the
amendment would alter the scope of the original grant and require
additional funds. The execution of a grant based upon a proposal
containing specific objectives, research methods to be followed, and
estimates of project costs would ordinarily give rise to a definite and
maximum obligation of the United States. To enlarge such a grant beyond
the scope of the original is to create an additional obligation and must
be considered as giving rise to a new grant. * * *
More recently, in 57 Comp.Gen. 459(1978), we considered whether the
Department of Agriculture could substitute one research grant project
for another - to the same grantee. We held that although the grant as
modified retained some aspects of the original proposal, the research
objective and scope of the original grant was changed, creating a new
obligation chargeable to the appropriation of the year in which the
substitution was made.
Applying these grant decisions to the area of loan guarantees, when a
major change to the "character" of the project supported by the
guarantee is made, the revised loan guarantee must be charged against
the ceiling in effect when the revision is made. We believe that just
as a significant change in the terms and conditions under which a grant
was made would be viewed as creating a new grant, a significant change
in the terms and conditions under which a loan guarantee was approved
would create a new loan. 60 Comp.Gen. 464(1981).
However, the answer to this question as FmHA submitted it does not,
as before, completely resolve this issue. FmHA's representatives
informally advised us that in some instances the only revisions to
projects supported by FmHA loan guarantees were relatively minor ones
(although no specific examples of such changes were stated.)
The question then becomes much more difficult to resolve definitively,
since we have recognized the existence of exceptions to the general rule
concerning modifications of the substantive terms of a grant. For
example, in B-74254, September 3, 1969, we did not object to the
amendment of an approved grant application after the period of
availability of the grant allotments had expired, where the amendments
involved changes in the use of the funds from construction to renovation
or the reverse.
In 58 Comp.Gen. 676(1979), we considered a similar question as to
whether a proposed modification of a grant by ACTION in effect created a
new grant where the changed involved an enlargement of the area from
which participants in the grant project were to be selected. We said
the following in that decision:
Our earlier decisions concerning changes in grants after the period
of availability of the grant funds for obligation has ended have
identified three closely related areas of concern:
(1) Whether a bona fide need for the grant project continues:
(2) Whether the purpose of the grant will remain the same; and
(3) Whether the revised grant will have the same scope as the
original grant.
Thus, the test of whether a modification of the terms of the grant
agreement constitute an amendment to the original grant or a new and
separate undertaking is substantially the same test as is used in
determining whether an alternate grantee can be substituted for the
original grantee. That is, the need for the project must continue to
exist and the purpose and scope of the original grant.
Application of this test to FmHA loan guarantees can only be
accomplished, in our view, on a specific case-by-case basis, considering
the specific circumstances of a loan and the type of modification
involved. However, as stated above, the type of changes mentioned in
FmHA's written submission, including "major changes to the facility
design, project, purpose, (and) loan terms," would in our view be so
significant as to change the scope of the guarantee and therefore would
have to be viewed as a new and separate undertaking.
The final question in the submission involves the substitution of one
lender for another in a subsequent fiscal year. Based on the preceding
discussion this question can be readily resolved. As stated above, the
basic purpose of the FmHA rural development loan guarantee program is to
provide assistance to eligible borrowers to enable them to accomplish
one or more of the statutory objectives. In other words, although the
guarantee is extended to the lender, it is clear that the purpose of
doing so is not to provide a Federal benefit to the lending institution
but to induce the lender to make the loan to the borrower.
In this sense, the lender is just a conduit or funding mechanism through
which FmHA provides assistance to an eligible borrower so that the
statutory objectives can be realized. Thus, the particular lender
involved is of relatively little consequences. In this respect, the
relevant statutory provisions do not contain any specific eligibility
requirements for lenders. This is clearly distinguishable from the
situations discussed above in which the proposed change in the borrower
or scope of the project would necessarily have affected the very essence
of the agreement.
Accordingly, provided the other relevant terms of the agreement,
including the borrower, loan purpose, and loan terms remain
substantially the same, we believe that a change in the lender can
legitimately be viewed as an amendment of the original loan guarantee.
Therefore, the loan can continue to be charged against the authorized
loan guarantee level for the year in which the agreement was initially
approved.
Informally, we were requested to consider a fourth question - whether
the notification of loan guarantee approval by FmHA has to be in writing
in order to be effective within a particular year and therefore be
charged against the loan guarantee ceiling for that year, or whether
oral notification supported by an internal memorandum is sufficient.
There are not statutory provisions in the legislation governing the
rural development loan program or elsewhere, of which we are aware, that
require loan guarantee approval to be in writing. Further, since a loan
guarantee does not constitute an actual obligation of funds until the
borrower has defaulted and the Government becomes legally "obligated" to
make an expenditure in order to honor its guarantee, recording of
guarantees is not required by 31 U.S.C. 200, which requires that
obligations be supported by written documentation.
However, FmHA's regulations set forth in 7 C.F.R. 1980.452 provide in
pertinent part as follows:
FmHA will evaluate the application. FMHA will make a determination
whether the borrower is eligible, the proposed loan is for an eligible
purpose, and that there is reasonable assurance of repayment ability,
sufficient collateral, and sufficient equity. If FmHA determines it is
unable to guarantee the loan, the Lender will be informed in writing.
Such notification will include the reasons for denial of the guarantee.
If FmHA is able to guarantee the loan, it will provide the Lender and
the applicant with Form FmHA 449-14, listing all requirements for such
guarantees. * * *
In our view, this regulation clearly contemplates written
notification to lenders of FmHA's decision to approve or disapprove the
application for a guaranteed loan. Similarly, the terms and provisions
set forth in the various forms and documents used by FmHA in approving
loan guarantees (including Forms FmHA 449-35, FmHA 440-1, and FmHA
449-14) indicate that loan guarantee approval must necessarily be in
writing to be effective.
In B-187445, January 27, 1977, we concluded that similar provisions in
the regulations and contract governing the guaranteed loan portion of
the Small Business Administration required that "the approval of a
guarantee must, at a minimum, be in writing in order to be valid." Also,
see 54 Comp.Gen. 219(1974). Accordingly, it is our view that under
FmHA's current regulations, oral notification would not be sufficient to
create a valid guarantee.
The questions presented to us by FmHA are answered in accordance with
the foregoing.
/1/ Although guaranteed loans are included within the statutory
definition of insured loans, this provision (7 U.S.C. 1994(b) sets one
limit for insured industrial development loans and a separate limit for
guaranteed industrial development loans. In this context, the term
"Insured loan" refers to loans which are initially made by FmHA directly
out of the revolving fund and are then promptly sold by FmHA with
recourse in the secondary market. The term "guaranteed loan" refers to
loans which form their inception are made, held, and serviced by a
participating financing institution or other approved lender, with
FmHA's assurance that upon default by the borrower it will assume up to
90 percent of the lender's loss on the loan.
/2/ As is explained at greater length hereafter, funds are not
ordinarily appropriated for loan guarantees since no obligation or
disbursement of Federal funds occurs when a loan guarantee is approved.
B-203374, September 21, 1981, 60 Comp.Gen. 694
Contracts - Awards - Labor Surplus Areas - Qualification of Bidder -
Eligibility Certification - Place of Manufacture in Lieu of
Failure of a bidder to complete a clause in its bid indicating that
it is a labor surplus area (LSA) concern, even though a place of
manufacture was listed elsewhere in its bid, prevents consideration of
the bidder as an LSA concern not subject to a five percent evaluation
penalty; place of manufacture is not by itself determinative of whether
a contractor is an LSA concern. Distinguished by B-204531, B-204531.2,
Feb. 4, 1982.
Contracts - Awards - Labor Surplus Areas - Failure to Furnish
Information Effect - Minor v. Material Omissions - Eligibility
Certification
Failure of a bidder to complete a clause in its bid indicating that
it is an LSA concern is not a minor informality which could be waived by
the agency; the omission affects the relative standing of bidders, and
is material since the bidder thereby fails to commit itself to incur the
requisite proportion of costs in LSAs. Contracts - Awards - Labor
Surplus Areas - Geographical Location - Place of Performance - Changes
After Bid Opening
Where a bidder represents in eligibility clause set forth in the IFB
that 100 percent of contract costs will be incurred in a particular LSA,
but after bid opening indicates that a significant portion of contract
costs will be incurred in previously unspecified LSAs, the bidder's LSA
status is not affected since the bidder has committed itself to incur
the required minimum costs (50 percent) in LSAs and it is not material
in which LSAs such costs will be incurred. Contracts - Awards - Labor
Surplus Areas - Subcontractor, Supplier, etc. - Size Status
A bidder qualifies as a small business, even though it buys materials
from, or subcontracts a major portion of work to a large business, so
long as the bidder makes a significant contribution to the manufacture
or production of end items.
Matter of: Chem-Tech Rubber, Inc., September 21, 1981:
Chem-Tech Rubber, Inc. protests the award of a contract for 14,000
yards of coated nylon cloth, to any other firm, under invitation for
bids (IFB) No. DLA100-81-B-0793, issued by the Defense Logistics
Agency's (DLA) Defense Personnel Support Center in Philadelphia,
Pennsylvania, Chem-Tech contends DLA improperly refused to consider it
eligible for a labor surplus area (LSA) evaluation reference on the
ground that Chem-Tech failed to indicate on the bid form that it was an
LSA firm, and that no other bidder qualified for the preference. We
deny the protest.
This solicitation was issued as a total small business/LSA small
business set-aside which provided that non-LSA small businesses were
subject to a five percent evaluation factor. /1/ The criteria for
eligibility as an LSA small business set forth generally under section K
of the IFB. Paragraph K17, entitled "ELIGIBILITY FOR PREFERENCE AS A
LABOR SURPLUS CONCERN," instructed bidders as follows:
Each offeror desiring to be considered for award as a Labor Surplus
Area (LSA) concern on the set-aside portion of this procurement,
specified elsewhere in the schedule, shall indicate below the
address(es) where costs incurred on account of manufacturing or
production (by offeror or first tier subcontractor) will amount to more
than fifty percent (50%) of the contract price. * * *
The paragraph concluded with a warning to bidders:
Caution: Failure to list the location of manufacturer or production
and the percentage, if required, of cost to be incurred at each location
will preclude consideration of the offeror as a LSA Concern.
Similar warnings were set forth on the IFB cover sheet, and the
notation "FILL IN ALL CLAUSES" was also handwritten in both margins
alongside paragraph K17.
Chem-Tech's bid of $3.45 per yard was the lowest of the five bids
received. Aldan Rubber Company was the second low bidder at $3.47 per
yard. Aldan completed paragraph K17 of its bid indicating that 100
percent of the contract would be performed at its plant in Philadelphia,
Pennsylvania, an LSA, and thus was not subject to the five percent price
increase assessed against non-LSA firms. Chem-Tech's sole manufacturing
facility apparently is located in New Haven, Connecticut, and LSA, but
Chem-Tech did not complete paragraph K17 in its bid and thus failed to
indicate that at least 50 percent of the contract costs would be
incurred in an LSA, DLA accordingly determined that Chem-Tech was not an
LSA concern and, in evaluating Chem-Tech's bid, increased its price by
five percent. Consequently, Chem-Tech was displaced as the low bidder
by Aldan. The award has been postponed pending the outcome of this
protest.
Chem-Tech characterizes its failure to complete the LSA eligibility
clause as a clerical omission which DLA should have waived as a minor
informality, since the missing information had no bearing on the
contract price or terms or the relative standing of the bidders.
Chem-Tech believes DLA's position emphasizes form over substance
inasmuch as its manufacturing facility is actually located in an LSA and
it indicated in paragraph K39 of the IFB that the contract would be
performed at that facility. Chem-Tech asks that the omission be waived
and that it now be permitted to certify itself as an LSA concern even
though bids have been opened.
Paragraph K39 of the IFB, entitled "PLACE OF PERFORMANCE," required
bidders to insert the name and location of the manufacturing facility
where the contract work would be performed. The paragraph further
stated that "the performance of any of the work contracted for in any
place other than that named in the offer and any resulting contract is
prohibited unless the same is specifically approved in advance by the
Contracting Officer," Chem-Tech inserted its New Haven plant address and
indicated that the total contract would be performed there.
This offer by Chem-Tech to perform the contract at its New Haven
plant does not satisfy the requirements of the LSA eligibility clause
set forth in paragraph K17 of the IFB.
The place at which the contractor will perform may be immaterial with
respect to the determination of whether the contractor is an LSA concern
if costs greater than 50 percent of the contractor is an LSA concern if
costs greater than 50 percent of the contract price will be incurred for
subcontracting or purchase of materials. Voss Industries, Inc.,
B-184258, November 12, 1975, 75-2 CPD 298. We have specifically
recognized, for example, that the cost of purchased materials is a cost
of production which alone may be sufficient to qualify or disqualify a
firm as an LSA; the determining factor is the location of the seller.
See 41 Comp.Gen. 160, 164(1961). It appears that significant portions
of the production costs here were attributable to purchases of material
and other non-manufacturing expenses. Aldan's cost breakdown indicates,
for example, that approximately 45 percent of its costs will be incurred
in purchasing various materials. DLA thus properly concluded that
Chem-Tech's offer to perform the manufacturing at its plant was not
necessarily a promise to incur costs constituting at least 50 percent of
the total contract price in an LSA.
We further disagree with Chem-Tech's view that its omission here
should have been waived as a minor irregularity. The regulations
provide for such a waiver by the contracting officer where the
irregularity or informality would have a negligible effect on price,
quality, quantity or delivery, and the correction would not affect the
relative standing of, or otherwise prejudice bidders. Defense
Acquisition Regulation (DAR) Sec. 2-405 (1976 ed.). If Chem-Tech became
eligible as an LSA concern after bid opening, the five percent
differential would affect its contract price only for evaluating
purposes, and other contract terms would not be effected. However, the
relative standing of the bidders would obviously be altered since
Chem-Tech would displace Aldan as the evaluated low bidder. Indeed,
Chem-Tech desires to qualify for the LSA preference only because its bid
would thereby be reduced below Aldan's. Moreover, a bidder's failure to
complete the LSA certification clause is, in effect, a failure to enter
a commitment to perform the requisite proportion of the contract in
LSAs. We have thus specifically held that this is a material omission
which cannot be waived, as a minor informality. Voss Industries, Inc.,
supra; Standard Bolt, Nut and Screw Co. Inc., B-184755, July 21, 1976,
76-2 CPD 62. We reach the same conclusion regarding the clause in this
case.
Chem-Tech also maintains that no other bidder qualified as an LSA
concern. DLA considered Aldan an LSA concern based on its indication in
paragraph K17 that it would incur 100 percent of the contract costs in
Philadelphia. After Chem-Tech protested, however, the contracting
officer asked Aldan to submit a cost breakdown. The information
submitted by Aldan indicated that significant portions of the contract
costs would be incurred in Wilmington, Delaware, and New Bedford,
Massachusetts.
Both of these areas are LSAs and the contracting officer determined
Aldan was still eligible for the LSA preference inasmuch as at least 50
percent of the contract costs would be incurred in LSAs. Chem-Tech
argues that Aldan should be ineligible as an LSA concern because the
information supplied in its bid was inaccurate. Chem-Tech believes that
by allowing corrections in Aldan's list of locations where costs would
be incurred, DLA, in effect, was allowing Aldan to establish its
eligibility as an LSA concern after bid opening. We disagree.
Aldan established its eligibility as an LSA concern when it submitted
its bid indicating that at least 50 percent of the contract costs would
be incurred in an LSA, thereby obligating itself to incur that
proportion of the contract costs in LSAs. In Clark Division of Euclid
Design and Development Company, B-185632, April 21, 1976, 76-1 CPD 270,
a bidder represented in its bid that 100 percent of contract costs would
be incurred in a particular LSA, but after bid opening, reduced that
amount to 30 percent (which still exceeded the 25 percent minimum set
forth in that IFB). In concluding that the change did not affect the
bidder's eligibility for award, we stated that:
We interpret clause B17 to require a commitment in the bid to perform
not less than the designated percentage of the work at the stated
locations in order to qualify for the preference category sought. Any
indication of a commitment to perform more: than the minimum called for
cannot affect the bidder's eligibility for the preference. Therefore,
if a bidder indicates at least the minimum percentage called for to
qualify for the preference category and the contracting officer is
satisfied that he can and will meet that commitment in performance, he
should not be disqualified because his bid showed a percentage exceeding
the minimum which he cannot in fact meet.
The only factor distinguishing this case from Clark is that Aldan's
cost breakdown showed that Aldan would not incur the minimum percentage
in the stated location (Philadelphia). We do not think this
disqualifies Aldan from eligibility as an LSA concern. The cost
breakdown confirmed that Aldan intended to incur approximately 70
percent of the contract costs in LSAs and thus, that Aldan would satisfy
the minimum requirements of the solicitation. Although two of those
LSAs were not indicated in Aldan's bid, the solicitation does not
prohibit substitution of a subcontractor in one LSA for a subcontractor
in another LSA, and we do not see how substitution in this manner would
prejudice the Government or other bidders. Again, the determining
factor is that Aldan clearly committed itself in its bid to perform in
accordance with the minimum requirements for LSA concerns. These
requirements are that more than 50 percent of the work represented by
the contract price be performed in LSAs. It is not legally significant
which LSAs ultimately are involved; Aldan qualifies simply by virtue of
its commitment reflected in its bid. We thus conclude that DLA properly
determined that Aldan qualified as an LSA concern.
It is true, as Chem-Tech observes, that Aldan, after its status was
challenged, could have chosen to submit a cost breakdown which would
make it ineligible as an LSA concern, and thus had the option of
accepting or rejecting the award after bid opening. However, this same
possibility is always present when a firm's eligibility or
responsibility is in question; a firm can usually take steps after bid
opening to assure its ineligibility or nonresponsibility. The deterrent
in these situations is the threat of sanctions if a firm has acted in
bad faith. We finally note that if Aldan decided after award not to
perform in an LSA, it would be subject to default. Cf. Hendry
Corporation, B-195197, March 31, 1980, 80-1 CPD 236.
In its comments submitted in response to the agency report on this
matter, Chem-Tech complains it was confused by the criteria used to
determine a bidder's status as an LSA concern. It is Chem-Tech's view
that in small business/LSA small business set-aside procurements, the
solicitations should not permit bidders to qualify as LSA concerns by
contracting with suppliers and other subcontractors in LSAs unless those
firms are also small businesses. Absent such a prohibition, the
protester maintains, a small business could qualify for the award even
though its own manufacturing or production costs would constitute only a
small percentage of the contract price; the small business portion of
the set-aside would be defeated.
We have held that as long as a small business firm makes some
significant contribution to the manufacture or production of the items
to be supplied under the contract, it has fulfilled its contractual
requirement that the end item be manufactured or produced by a small
business. /2/ Fire & Technical Equipment Corp., B-191766, June 6, 1978,
78-1 CPD 415. Thus, it is of no consequence that a firm may get its raw
materials from or subcontract a major portion of the work to a large
business if it satisfies this significant contribution requirement.
This rule is not changed by addition of the LSA requirement. The record
here indicates Aldan will make a significant contribution to the
manufacture of the end item; more than one third of the contract costs
will be incurred at its Philadelphia plant. In any event, if the
protester did not understand the terms of the IFB, or objected to them,
it should have protested prior to bid opening. See Bid Protest
Procedures, 4 C.F.R. 21.2(b)(1)(1981).
The protest is denied.
/1/ Historically, a provision known as the Maybank Amendment was
included in the annual Department of Defense (DOD) appropriation acts to
prohibit the use of appropriated funds to pay price differentials on
contracts for the purpose of relieving economic dislocation. In the
1981 DOD Appropriation Act, Pub. L. No. 96-527, 94 Stat. 3085, however,
the Maybank Amendment was modified to permit DLA, on a test basis, to
pay up to 5 percent price differential on these contracts. The contract
here was issued pursuant to this authorization.
/2/ This requirement is contained in paragraph 1 on page 14 of the
subject IFB, Standard Form 33, Part 2.
B-201313, September 18, 1981, 60 Comp.Gen. 689
Station Allowances - Military Personnel - Housing - Government Quarters
Inadequate, etc. - Refusal to Occupy - Nonentitlement to Allowance
A service member may, if necessary, be involuntarily assigned to
Government quarters classified as inadequate or substandard when
reporting to an overseas duty station for a tour of duty he is to
perform unaccompanied by his dependents. In such circumstances, he may
not secure private housing near his duty station, decline the
involuntary assignment to "inadequate" quarters, and thereby gain
entitlement to overseas housing and cost-of-living allowances, which are
payable under prescribed conditions to service members overseas when
they are not furnished with Government quarters. 37 U.S.C. 405.
Station Allowances - Military Personnel - Housing - Government Quarters
Inadequate, etc. - Refusal to Occupy - Reassignment of Quarters' Effect
If a service member declines an assignment to Government quarters or
elects to move out of his assigned quarters, the responsible
installation commander may properly reassign the quarters to another
person without thereby incurring any liability on behalf of the United
States for payment of allowances to the member on the basis that
Government quarters are then unavailable for assignment to him, since
commanders of military installations have no obligation to maintain
unoccupied quarters for service members who have voluntarily elected to
reside elsewhere. Station Allowances - Military Personnel - Dependents
- Moving Overseas - Not Command-Sponsored - Nonentitlement to Allowances
A service member on an unaccompanied overseas tour of duty may not be
paid military overseas housing and cost-of-living allowances on account
of dependents who move to the overseas area, because in those
circumstances the dependents' overseas residence is purely a matter of
personal choice. 37 U.S.C. 405; 53 Comp.Gen. 339. Station Allowances
- Military Personnel - Members Unaccompanied by Dependents - Dependents
Individual-Sponsored-Government Quarters Inadequate, etc. -
Nonentitlement to Certificate of Unavailability
A Marine Corps officer serving an unaccompanied tour of duty in
Okinawa chose to bring his family to Okinawa at personal expense, and he
moved off base into private family housing. His Government quarters
were reassigned to another, but he was offered substitute, substandard
quarters for potential emergency use. He is not entitled to a
certificate of nonavailability of quarters nor to payment of overseas
housing and cost-of-living allowances on his own account based on a
theory that he was thereby personally forced to reside and take his
meals off base since his move was a matter of personal choice.
Matter of: Lieutenant Colonel Joseph E. Underwood, USMC, September
18, 1981:
This action is in response to a request from a disbursing officer of
the Marine Corps Finance Center for an advance decision concerning the
propriety of crediting Lieutenant Colonel Joseph E. Underwood, USMC,
000-00-8855, with military overseas housing and cost-of-living
allowances for periods in 1978 and 1979 after he moved out of his room
at the bachelor officers quarters at Marine Corps Air Station, Futenma,
Okinawa, Japan, to reside off base in private living quarters with his
family. The disbursing officer's request was given Control Number 80-31
and forwarded to our Office by the Department of Defense, Per Diem,
Travel and Transportation Allowance Committee. In light of the facts
presented, and the applicable provisions of law and regulation, we have
concluded that Colonel Underwood is not entitled to the overseas housing
and cost-of-living allowances in question.
Certain Fleet Marine Force units in the Western Pacific are kept in a
constant state of combat readiness, and it has been the practice of the
Marine Corps to assign personnel to those units on unaccompanied,
"dependents-restricted," tours of duty lasting 12 months.
Marine Corps directives define a "dependents-restricted duty station" as
an overseas location where dependents of marines are not authorized to
be present, but the directives recognize that the families of marines on
"dependents-restricted" assignments may be able to visit those overseas
locations if the visits are otherwise permitted by the United States
Government as well as by the concerned foreign governments. See
generally Marine Corps Order 1300.8L, January 22, 1979. Families
joining marines on "dependents-restricted" assignments, through the use
of tourist visas or other means, must make arrangements to do so
privately and at personal expense, without assistance from the Marine
Corps. They have the status of being "individual sponsored" rather than
"command sponsored" dependents under the terms of the administrative
directives.
In June 1978 Colonel Underwood reported to the Air Station, Futenma,
Okinawa, for a 12-month "dependents-restricted" tour of duty. He was
assigned a private room in the installation's bachelor officers quarters
which was, according to guidelines contained in applicable housing
regulations, "adequate" for an unaccompanied officer of his rank. An
officers mess was also available at the installation for his meals.
Apparently, Futenma remained a "dependents-restricted duty station"
throughout 1978 and 1979, and Colonel Underwood was not eligible to have
his wife and children join him as "command sponsored" dependents. He
chose, however, to bring them to Okinawa at personal expense as his
"individual sponsored" dependents. They arrived on about the first of
October 1978, and he then moved into private off-base living quarters
with them.
By letter dated October 17, 1978, the base commander of the Air
Station advised Colonel Underwood that since he was residing off base,
his private room at the bachelor officers quarters was being reassigned
to someone else who had a "bona-fide" need for it. The base commander
further advised him that "minimal" accommodations in a four-man room
would be kept available for his possible use, adding, "The minimal
support is a contingency should something occur requiring (your)
presence on base for a short period." It is undisputed that under
applicable housing regulations, the space in the four-man room then
assigned to him for his potential on-base use did not constitute
"adequate" Government quarters for an unaccompanied officer of his rank.
Colonel Underwood responded by advising the base commander that he
had vacated his private room in the bachelor officers quarters, but that
he declined to accept the space in the four-man room assigned to him
because he believed he could not properly be required to accept an
assignment to "inadequate" Government quarters.
He simultaneously applied to the base commander for a certificate of
nonavailability of quarters and messing facilities in order to obtain
eligibility for overseas housing and cost-of-living allowances. The
base commander denied his application for that certificate.
Subsequently, Colonel Underwood filed a claim for overseas housing
and cost-of-living allowances for the period from November 1, 1978 (the
date of his reassignment to inadequate on-base quarters), through June
11, 1979 (the date his 12-month tour of duty at Futenma ended). In
substance, he expressed the belief that since adequate on-base
Government quarters were not assigned to him during that time, he had
been forced to reside and take most of his meals off base in
non-Government facilities. He suggested that he should, therefore, have
been entitled to the housing and cost-of-living allowances payable to
service members stationed overseas who are not furnished with Government
quarters and dining facilities.
In requesting an advance decision in the matter, the disbursing
officer essentially questions whether, on the basis of his assignment to
inadequate Government quarters, Colonel Underwood may be paid the
overseas housing and cost-of-living allowances he has claimed.
Provisions of statutory law governing the payment of military
allowances are contained in chapter 7 of title 37, United States Code
(37 U.S.C. 401-429). The overseas housing and cost-of-living allowances
at issue here are payable under 37 U.S.C. 405, which states in pertinent
part that:
* * * the Secretaries concerned may authorize the payment of a per
diem, considering all elements of the cost of living to members of the
uniformed services under their jurisdiction and their dependents,
including the cost of quarters, subsistence, and other necessary
incidental expenses, to such a member who is on duty outside of the
united States or in Hawaii or Alaska * * * .
No reference is made in 37 U.S.C. 405 to either "adequate" or
"inadequate" Government quarters.
Regulations implementing 37 U.S.C. 405 are contained in chapter 4 of
Volume 1, Joint Travel Regulations (1 JTR). Paragraph M4300-2, 1 JTR,
provides that a service member on an unaccompanied tour of duty,
including one "who has individual sponsored dependents residing in the
vicinity of his permanent duty station," is considered to be a "member
without dependents" for purposes of establishing eligibility for the per
diem authorized by 37 U.S.C. 405. This is consistent with our decisions
holding that a service member on an unaccompanied assignment overseas
may not be paid allowances under 37 U.S.C. 405 on account of dependents
residing with the member overseas, since in those circumstances the
dependents' overseas residence is purely a matter of personal choice.
See 53 Comp.Gen. 339(1973) and 40 id. 548(1979).
Paragraph M4301, 1 JTR, provides for payment of housing and
cost-of-living allowances at different rates and under different
conditions for service members classified as being either "with" or
"without" dependents. Subparagraph M4301-3f(1) generally precludes
payment of a cost-of-living allowance to a "member without dependents"
if Government dining facilities are available to him. Moreover,
subparagraph M4301-3f(3) directs that the housing allowance is payable
to a "member without dependents" only "for any day upon which Government
quarters are not assigned to him at his permanent duty station," and
there is no qualifying language in the regulation requiring that the
assigned Government quarters be "adequate."
It is our view that a service member may acquire no entitlement to a
housing allowance under the above-cited provisions of law and regulation
on the basis of an involuntary assignment to Government quarters
classified as "inadequate" since, as noted, 37 U.S.C. 405 makes no
provision for any payment based on an assignment to "inadequate"
Government quarters, and subparagraph M4301-3f(3), 1 JTR, specifically
precludes payment of a housing allowance if the member is assigned
Government quarters, regardless of their classification as adequate or
inadequate. Furthermore, our Office has long held that the military and
naval departments are under no requirement to close housing units
classified as inadequate or substandard, and that a finding of
inadequacy of quarters does not in and of itself establish their
nonavailability. See B-196628, December 19, 1979, and decisions there
cited. Hence, we conclude that a service member on an unaccompanied
overseas tour of duty may not secure private off-base housing, decline
an involuntary assignment to "inadequate" Government quarters and
thereby gain entitlement to overseas housing and cost-of-living
allowances.
This conclusion is consistent with the regulatory rule barring an
unaccompanied service member involuntarily assigned to "inadequate"
Government quarters overseas from entitlement to the Family Separation
Allowance, Type I, which is payable under 37 U.S.C. 427(a) to reimburse
a member for extra housing expenses when he must maintain one home for
his dependents and another for himself. See paragraph 3030a(3),
Department of Defense Military Pay and Allowances Entitlements Manual.
When Colonel Underwood was joined by his wife and children in Okinawa
in October 1978, he established a private off-base family residence with
them near the Air Station at Futenma.
Because the members of his family were his "individual sponsored"
dependents who had been brought to the overseas area as matter of
personal choice, he remained classified as a "member without dependents"
under the provisions of paragraph M4300-2, 1 JTR, and was ineligible to
draw overseas housing and cost-of-living allowances on their account.
Furthermore, at the time Colonel Underwood moved into the private
off-base residence with his family near Futenma, adequate on-base
Government quarters remained assigned to him for his personal use, and
Government dining facilities remained available to him at the base if he
elected to occupy those quarters. Consequently, under the provisions of
paragraph M4301, 1 JTR, he remained ineligible to draw overseas housing
and cost-of-living allowances on his own account as a "member without
dependents." Moreover, it is our view that at that point the base
commander could properly have assigned his on-base Government quarters
to another person without giving him any substitute quarters at all and
without incurring any liability on behalf of the Government for payment
of housing and cost-of-living allowances to him, since commanders of
military installations have no obligation to maintain unoccupied
quarters for service members who have voluntarily elected to reside
elsewhere. See 57 Comp.Gen. 194, 197(1977), and McVane v. United
States, 118 Ct.Cl. 500(1951), concerning the entitlement of members to
the Basic Allowance for Quarters after they voluntarily vacate adequate
Government quarters. Thus, while the base commander did assign Colonel
Underwood substitute "inadequate" quarters for his potential on-base use
in the interests of military preparedness, such action does not support
a conclusion that Colonel Underwood was "forced" by the Marine Corps to
move off base and was, therefore, entitled to overseas housing and
cost-of-living allowances.
Accordingly, Colonel Underwood may not be credited with the housing
and cost-of-living allowances in question.
B-200007, September 17, 1981, 60 Comp.Gen. 688
Appropriations - Availability - Personal Property Furnished by Army -
Replacement for Damage, Loss, etc. - Difference Between Purchase and
Depreciated Price
Proposed Army program which would permit a member of the service who
loses, damages, or destroys an item of Government property issued for
personal use to purchase a replacement at an Army Self-Service Supply
Center for a sum equivalent to the depreciated value of the item, and
would automatically obligate the Government for the difference between
the full purchase price and the depreciated price, is acceptable. GAO
sees no violation of 31 U.S.C. 628 since Army appropriations are
available to pay such replacement costs wholly or partially. The
proposed program does not violate the Antideficiency Act, 31 U.S.C. 665,
per se, but Army must establish adequate funding controls to assure that
no replacement purchases are authorized unless Army has sufficient funds
available to cover its share.
Matter of: Army Self-Service Supply Centers - Sales of replacement
items, September 17, 1981:
The Acting Assistant Secretary of the Army (Installations, Logistics
and Financial Management) asks whether a proposed Army program is
consistent with the intent of Title 31, U.S. Code, Secs 628 and 665(a).
The program would permit a member of the service, who loses, damages, or
destroys an item of Government property issued to him or her for
personal use, to purchase a replacement at an Army Self-Service Supply
Center for a sum equivalent to the value of the depreciated item.
Appropriated funds would be obligated for the difference between the
purchase price of the replacement item and the amount paid by the
individual soldier. The Army asks specifically whether the payment of
such a "depreciation allowance" by the Government would constitute an
unauthorized augmentation of private funds with appropriated funds in
violation of 31 U.S.C. 628.
The Army also questions whether the procedure would violate subsection
(a) of the Antideficiency Act, 31 U.S.C. 665, since a soldier's purchase
of a replacement item would result in an automatic obligation of
appropriated funds for the amount of the depreciation.
The proposed scheme of payment would not violate 31 U.S.C. 628.
Section 628 limits the availability of appropriations to the objects for
which they are made. Under the Army proposal, the appropriated funds
would be used for acquisition of replacement property, a purpose for
which they are clearly available, even at full cost. Moreover, in
recognizing depreciation of the lost property as a cost when the
property is replaced in kind, the Army would not be "augmenting" the
private funds of the service members who lost the property, just as it
is not doing so now when it collects the depreciated value from him in
cash. It has merely determined that the total amount of his debt to the
Government is the lesser amount.
The proposed program does not inherently violate the Antideficiency
Act, although conceivably, in practice, the "automatic" obligation of
appropriated funds could occur at a time when the procurement account
has insufficient funds remaining in its allotment to cover the
obligation. We assume that the Army will develop fund control
procedures to ensure that sufficient appropriated funds are available
before authorizing the service member's purchase from the Self-Service
Supply Centers. (See also the restriction in 10 U.S.C. 2208(f)).
In this connection, we note that the Army intends to reimburse the
stock fund on a quarterly basis. While this is a matter of
administrative determination, stock fund billings and reimbursements are
usually accomplished more frequently than quarterly, affording tighter
financial controls on the amount of obligations incurred.
B-203554, September 10, 1981, 60 Comp.Gen. 686
Officers and Employees - Executive Development Programs - Civil Service
Reform Act - Agencywide Implementation - Pooling of Appropriations -
Authority
The appropriations made to various bureaus and offices within the
Department of the Treasury may be pooled so as to permit implementation
of the Legal Division's Executive Development Program, under the Civil
Service Reform Act of 1978, on an agencywide basis.
Matter of: Funding the Executive Development Program Under the Civil
Service Reform Act, September 10, 1981:
The General Counsel of the Treasury asks whether section 403(a) of
the Civil Service Reform Act of 1978 (CSRA), 5 U.S.C. 3396(Supp. II,
1978), permits the pooling of appropriations made to the 16 distinct
bureaus and offices to which Treasury Department attorneys provide legal
services so as to permit the implementation of the Treasury Department
Legal Division's Executive Development Program on an agencywide basis.
We agree with the General Counsel that the various constituent
appropriations may be collectively administered for the benefit of a
comprehensive department wide Legal Division program.
Section 403(a) of CSRA provides:
The Office of Personnel Management shall establish programs for the
systematic development of candidates for the Senior Executive Service
and for the continuing development of senior executives, or require
agencies to establish such programs which meet criteria prescribed by
the Office, 5 U.S.C. 3396(a).
The Office of Personnel Management (OPM) has elected to implement the
latter of these statutory alternatives. The implementing regulations (5
C.F.R.Part 412) set for OPM's criteria for agency executive and
management development programs. These criteria include the following,
with regard to program management:
Overall planning and management of the agency executive and
management development program(s) shall be provided by a departmental or
independent agency executive resources board or a complex of executive
boards at agency and subordinate levels. * * * 5 C.F.R.
412.107(a)(1980).
The regulations also provide that "(e)ach program * * * shall include
provisions for the funding and staffing needed to support the program."
5 C.F.R. 412.107(b)(1980).
The Treasury submission cites a recent decision by our Office as
support for the argument that the pooling of appropriations is
allowable. In B-195775, September 10, 1979, we were asked whether the
CSRA authorized transfers of appropriations so as to permit
implementations of the Merit Pay System on an agencywide basis. In
reaching a decision, we noted that two statutory provisions would
preclude establishment of the proposed OPM implementation plan for the
Merit Pay System unless CSRA authorized the transfer of funds from
several appropriations to a common fund. The first of these provisions
is 31 U.S.C. 628, which prohibits the expenditure of appropriated funds
for objects other than those for which they were appropriated, except as
otherwise provided by law. The second is 31 U.S.C. 628-1, which bars
the transfer of funds between appropriation accounts, except as
authorized by law. We found that, although neither CSRA itself nor the
legislative history of the Act addressed the issue of pooling, a reading
of the language of the Act in the light of the apparent purpose of the
Merit Pay System indicated that agency level implementation was
permissible. We thus concluded that a pooling of funds was otherwise
"authorized by law" for purposes of 31 U.S.C. 628 and 628-1.
In the case now before us, we find the language of the statutory
provision itself and the legislative history of the Act to be similarly
silent. However, we again conclude that agencywide implementation of
the program in question is permissible. The purpose of the executive
development program is to ensure that the executive management of the
Government is of the highest quality. See 5 U.S.C. 3131. The General
Counsel urges that the goal is most effectively pursued in the Legal
Division if the program is administered on a departmentwide level since
all attorney SES candidates can be provided the same training
opportunities, which "substantially insulates the program from bias or
favoritism that might occur at a subordinate level."
The implementing regulations (5 C.F.R. 412.107(a)) indicates that OPM is
also of the view that executive development programs are best
administered at the agency level.
Since it appears to Treasury and OPM that the congressional objective
of providing Government agencies with highly competent executive
management is best served through the administration of executive
development programs on an agencywide level, we conclude that a pooling
of Treasury Department appropriations to implement this Legal Division
program is "provided" or "authorized" by law within the meaning of 31
U.S.C. 628 or 628-1, and is accordingly permissible.
B-198385, B-198386, B-198400, September 10, 1981, 60 Comp.Gen. 681
Compensation - Overtime - Traveltime - Criteria for Entitlement -
Non-Compliance
Entitlement to overtime compensation while in travel status under 5
U.S.C. 5542(b)(2)(B)(iv) requires at least that: (1) travel result from
event which could not be scheduled or controlled administratively, and
(2) immediate official necessity in connection with event requiring
travel to be performed outside employee's regular duty hours. In
instant case, neither condition was fulfilled, and request for overtime
compensation is denied. B-192839, May 3, 1979, overruled in part.
Compensation - Overtime - Traveltime - Criteria for Entitlement -
Separate From Those for Per Diem
Our so-called "two-day per diem" rule merely governs payment of per
diem when employee delays travel in order to travel during regularly
scheduled working hours. Entitlement to overtime compensation, however,
is determined by the distinct criteria under 5 U.S.C. 5542(b)(2) as
interpreted by our decisions. Mere compliance with "two-day per diem"
rule will not result in payment of overtime compensation since per diem
and overtime are governed by different criteria.
Matter of: John B. Schepan, et al. - Overtime Compensation for
Travel, September 10, 1981:
This decision is in response to consolidated appeals by Messrs. John
B. Schepman, H. Paul Ringhand, and Leland R. Alexander, employees of the
Food and Drug Administration (FDA), Department of Health and Human
Services, Cincinnati, Ohio, from our Claims Group's actions of December
21, 1979, Settlement Certificate Nos. Z-2818652, Z-2818653, and
Z-2819227, respectively, denying their requests for overtime
compensation.
The above-named employees (hereafter claimants), along with several
others, were required to travel from their duty station in Cincinnati,
Ohio, to Cleveland, Ohio, on November 6 or 7, 1978, on very short
notice. A Temporary Restraining Order had been issued by the United
States District Court, and these employees, who were FDA investigators
and analysts, had to assist the United States Attorney in the
preparation of his case and had to be prepared to testify as witnesses
on behalf of the Government at a hearing on November 9, 1978. The
claimants traveled to Cleveland within regularly scheduled working hours
which were 8 a.m. to 4:30 p.m. On Thursday, November 9, 1978, the
hearing took place. At approximately 5:30 p.m., when the hearing was
over, the claimants were released and instructed to return to their duty
stations. The claimants returned to Cincinnati that evening by
Government car which took approximately 6 hours. The following day was
Friday, November 10, 1978, a Federal holiday. The next regularly
scheduled workday for the claimants did not begin until 8 a.m. on
Monday, November 13, 1978.
After returning to their duty stations, the claimants reported the
hours spent in travel for the return trip as overtime, and submitted
expense vouchers for the trip. Their supervisors requested overtime
compensation for the travel time back to Cincinnati as compensable
overtime work as provided for in 5 U.S.C. 5542(b)(2)(B)(iv)(1976).
All parties involved and our Claims Group agree that the initial trip
to Cleveland resulted from an administratively uncontrollable event,
i.e., the Court's scheduling of the hearing. Furthermore, FDA now
agreeds that Friday, November 10, 1978, was a holiday for all purposes,
and cannot be considered an ordinary workday for travel purposes.
The proper resolution of the instant case depends upon an
understanding of two distinct legal concepts which often appear in the
same case: (1) the so-called "two-day per diem" rule, and (2) the
employees' entitlement to overtime compensation or compensatory time for
time spent traveling.
The former concept governs payment of per diem when an employee
delays travel in order to travel during regularly scheduled working
hours, and was set forth in our decision, James C. Holman, B-191045,
July 13, 1978 as follows:
* * * insofar as permitted by work requirements, travel may be
delayed to permit an employee to travel during his regular duty hours
where the additional expenses incurred do not exceed 1 3/4 days' per
diem costs. 56 Comp.Gen. 847(1977). * * *
This rule originally evolved as a prohibition against delaying travel
over a weekend for the sole purpose of allowing an employee to travel
during working hours. It was predicated in part on the statutory policy
of 5 U.S.C. 6101(b)(2) calling for the scheduling of employee travel, to
the maximum extent practicable, within the regularly scheduled workweek
(which will be discussed further, below).
56 Comp.Gen. 847, 848(1977). Thus, the "two-day per diem" rule, as
stated in that decision and in 55 Comp.Gen. 590, 591(1975), provides
that where scheduling to permit travel during normal duty hours would
result in the payment of 2 days or more of per diem, the employee may be
required to travel on his own time rather than on official time.
In order to be entitled to overtime compensation, however, the
circumstances of an employee's travel must meet the distinct and
additional criteria for payment of overtime compensation set forth at 5
U.S.C. 5542(b)(2). The mere fact that the "two-day per diem" rule
applies is not sufficient to create an entitlement to overtime. We have
held that the travel time on nonworkdays may be compensated when the
above statutory criteria are met. 51 Comp.Gen. 727, 732(1972) and 50
id. 674, 676(1971). Similarly, an employee may be paid overtime under
the Fair Labor Standards Act (FLSA), 29 U.S.C. 201 et seq. when travel
must be performed on a nonworkday during regular working hours in order
to avoid the payment of more than 1 3/4 days' per diem costs. Shirley
B. Hjellum and Gary B. Humphrey, B-192184, May 7, 1979.
In the instant case, since the claimants as professional employees
are exempt from coverage under FLSA, their entitlement to overtime
compensation is governed by the applicable provisions of 5 U.S.C.
5542(b)(2)(B) which, in relevant part, provides:
(b) For the purpose of this subchapter -
(2) time spent in travel status away from the official duty station
of an employee is not hours of employment unless -
(B) the travel (i) involves the performance of work while traveling,
(ii) is incident to travel that involves the performance of work while
traveling, (iii) is carried out under arduous conditions, or (iv)
results from an event which could not be scheduled or controlled
administratively.
There is nothing in the administrative record which indicates the
applicability of items (i), (ii), or (iii). Thus, the issue presented
is whether the claimants' return trip can be considered as resulting
from an event which could not be scheduled or controlled
administratively as that phrase has been interpreted by our decisions.
In addition, an employee's travel is to be scheduled in accordance with
the provisions of 5 U.S.C. 6101(b)(2) which provides:
To the maximum extent practicable, the head of an agency shall
schedule the time to be spent by an employee in a travel status away
from his official duty station within the regularly scheduled workweek
of the employee.
As interpreted by our decisions, 5 U.S.C. 5542(b)(2)(B)(iv) requires
that, for the purpose of allowing overtime compensation or compensatory
time, the following conditions be present: (1) travel resulting from an
event which could not be scheduled or controlled administratively, and
(2) an immediate official necessity in connection with the event
requiring the travel to be performed outside the employee's regular duty
hours. 51 Comp.Gen. 727(1972) and Mark Burstein, B-172671, March 8,
1977. The interrelationship between our "two-day per diem" rule and
entitlement to overtime compensation can be seen in cases where, for
example, we have required that in addition to the two foregoing
conditions, both of which must be met, the employee must also fulfill a
third condition, namely, notwithstanding that there is sufficient notice
of the uncontrollable event to permit scheduling of the travel during
his regularly scheduled duty hours, the scheduled start of the event
must require travel during a period of at least two successive off-duty
days. 51 Comp.Gen. 727, 732(1972) and 50 id. 674, 676 (1971).
There is
Although initial travel to a place may fall within one or more of the
conditions of 5 U.S.C. 5542(b)(2)(B) to qualify as hours of employment,
we have consistently held that the return travel itself must meet one of
those conditions in order to qualify the travel time involved as hours
of employment. 51 Comp.Gen. 727(1972) 50 id. 519(1971); 50 id.
674(1971); and William C. et al., B-196195, February 2, 1981. In the
instant case, the record fails to reveal that the claimants were
required to return to Cincinnati by an administratively unscheduled or
uncontrollable "event," i.e., anything which necessitates an employee's
travel, 51 Comp.Gen. 727(1972) and Mark Burstein, B-172671, March 8,
1977. While FDA obviously had no control over the time that the Court
dismissed the hearing, the fact that the return travel began at that
time is not determinative. To meet the requirements of the statute, the
event which necessitated the claimants' travel outside of regular duty
hours must have been one which could not be scheduled or controlled
administratively. As found by our Claims Group, the only purpose of the
claimants' travel was to return to their duty station. Furthermore, an
employee's mere presence at his permanent duty station on the next
workday is not normally considered an administratively uncontrollable
event. John B. Currier, 59 Comp.Gen. 96(1979) and Raymond Ratajczak,
B-172671, April 21, 1976.
Even if the first condition had been fulfilled, however, there is no
indication in the record that there was an immediate official necessity,
in connection with the event, and, thus, the second condition was not
fulfilled either. While an FDA memorandum in the file of this case
indicates the claimants were not "ordered" to return to their duty
station, another notes that at 5:30 p.m. they were "instructed to return
to their duty stations." nothing in the record to show that there was
any official necessity for them to return immediately to Cincinnati, so
neither of the requirements for the entitlement to overtime compensation
for travel time is met.
In their submissions, claimants have placed great emphasis on the
"two-day per diem" rule. Their argument is to the effect that this rule
required their return on Thursday night. Furthermore, they argue that
their actions are in accord with the Federal Personnel Manual Supplement
(FPM) Supp.) 990-2, Book 550, subchapter S1-3b (Case No. 5), relating to
premium pay, which states in part as follows:
On the other hand, if the employee (whose regular hours of work are 8
a.m. to 5 p.m., Monday through Friday) completes the course at 5 p.m.
Friday, his travel on either Friday night or Saturday (depending on
availability of transportation) will be payable because, under a
decision of the Comptroller General (B-160258, November 21, 1966), he is
not entitled to per diem if he should remain until Monday, and thus, his
travel time cannot be controlled realistically.
The above line of argument, however, represents a confusion between
the two distinct legal concepts of the "two-day per diem" rule, and
entitlement of overtime compensation. As explained in more detail
above, the former concept merely governs payment of per diem when an
employee delays travel in order to travel during regularly scheduled
working hours. The latter concept is governed by the district and
additional criteria for payment set forth at 5 U.S.C. 5542(b)(2). It is
true that the policies of 5 U.S.C. 6101(b)(2) requiring scheduling, to
the maximum extent practicable, of travel within an employee's regularly
scheduled workweek are common to both concepts. However, merely because
an employee complies with the "two-day per diem" rule, it does not
follow that he is entitled to overtime compensation under 5 U.S.C.
5542(b)(2)(B)(iv), which requires at least that (1) the travel results
from an event which could not be scheduled or controlled
administratively, and (2) an immediate official necessity in connection
with the event requiring the travel to be performed outside the
employee's regular duty hours. 51 Comp.Gen. 727(1972) and Mark
Burstein, B-172671, March 8, 1977. As can be seen from some of our
cases, the proper application of these two different but related
concepts will result, in certain cases, in the conclusion that there is
no statutory authority for allowing payment of either per diem for
delaying travel until it can be accomplished during normal working hours
or overtime compensation when the employee travels outside normal
working hours. Charles C. Mills B-198771, December 10, 1980 and
B-163654, January 21, 1974. See Barth v. United States, 568 F.2d
1329(Ct.Cl.1978).
In regard to claimants' argument based on the FPM Supp. example, we
must reluctantly conclude that the FPM Supp. has improperly applied the
case of B-160258, November 21, 1966, which is published at 46 Comp.Gen.
425(1966). That decision, while it is still legally valid, deals only
with per diem and its relevant rules. It did not purport to deal with
the question of overtime compensation. While the FPM Supp. example is
correct in finding that there would be no entitlement to per diem in the
example given if the employee should remain until Monday, it incorrectly
assumes that such compliance will necessarily entitle the employee to
overtime compensation merely because his travel time cannot be
controlled realistically. As shown above, such an assumption is
unfounded, and the "two-day per diem" rule and entitlement to overtime
compensation are governed by different criteria. Accordingly, the
claimants' argument fails because 46 Comp.Gen. 425(1966) in this context
was only concerned with per diem, and has no applicability to the
question of entitlement to overtime compensation. We have provided the
Office of Personnel Management with a copy of this decision.
For the foregoing reasons, we affirm the disallowance by our Claims
Group of claimants' request for overtime compensation for travel.
We note that the answer to question 2 in our decision Earl S.
Barbely, B-192839, May 3, 1979, is inconsistent with this decision. To
the extent of the inconsistency, Barbely will no longer be followed.
B-201451, September 4, 1981, 60 Comp.Gen. 678
Contracts - Payments - Assignment of Claims Act - Lease Payments to New
Owner - Propriety - Real v. Personal Property
General Accounting Office (GAO) concludes that claimant, as alleged
assignee of contractor, has not presented sufficient evidence to
establish entitlement to proceeds of two contracts because (1) contracts
could not be legally transferred to assignee, (2) evidence does not
indicate valid assignment of the contracts' proceeds, and (3) in the
circumstances, requirements of Assignment of Claims Act should not be
waived. Contracts - Payments - Withholding - Doubtful Claims - Court
Suit or Private Settlement Recommended
GAO concludes that the contractor's actions give rise to substantial
doubt concerning its entitlement to proceeds of two contracts.
Accordingly, GAO recommends that payment be withheld pending agreement
of the parties or judgment of a court of competent jurisdiction.
Matter of: Payment of Proceeds Under Magna Cool Corporation
Contracts, September 4, 1981:
The Associate Deputy Assistant for Pay, Travel and Disbursing
Systems, Navy Accounting and Finance Center, a disbursing officer,
requests our decision on the propriety of payment of the claim of
Southern Equipment, Inc. (Southern), in the amount of $24,287.13,
representing the unpaid balance under two Navy contracts. Southern
contends that it is entitled to the money as the assignee of the
proceeds of the two Navy contracts with Magna Cool Corporation (Magna
Cool). Magna Cool contends that it is entitled to the money because the
proceeds of one contract were not assigned to Southern and, under the
other contract, only the proceeds for the first of the contract, which
are not involved here, were assigned to Southern.
We conclude that Southern has not sufficiently established its
entitlement to the unpaid balance and that there is enough doubt
concerning Magna Cool's entitlement to recommend withholding payment on
either claim pending an agreement of the parties or a judgment from a
court of competent jurisdiction.
On April 26, 1978, the Navy entered into contract No.
N00612-78-C-T222 for rental of one 75-ton portable heat pump from Magma
Cool. On June 29, 1978, the Navy entered into contract No.
N00612-78-C-T286 for rental of another 75-ton portable heat pump from
Magna Cool. By modifications, the terms of the contracts were extended
from earlier ending dates to August 31 and October 31, 1979,
respectively. These extensions cost $7,737.13 and $16,550,
respectively, for a total of $24,287.13. Payment for the rental through
the earlier ending dates was made to the order of Magna Cool and,
pursuant to Magna Cool's instructions, sent to an address which was
subsequently determined to be Southern's office. Southern received
Magna Cool's payments, stamped them with the Magna Cool's bank stamp,
and deposited the proceeds into Southern's bank account. On October 10,
1979, Southern contacted the Navy regarding late payments under the
Magna Cool contracts; this way the Navy's first notice that Southern
was involved in the matter.
Southern's inquiry resulted in a Navy investigation revealing that
Southern and Magna Cool had made some agreement regarding the proceeds
of the two Navy contracts possibly involving the sale of the two heat
pumps by Magna Cool Southern. Southern contends that the proceeds of
both contracts were assigned to it, thus it is entitled to the balance
of the unpaid account. Documentation supporting the assignments
consists of an agreement regarding only one contract covering a period
for which payment has already been made. The file contains no written
agreement involving the other contract. In addition to the
documentation, Southern argues that oral assignments are valid between
the parties under applicable state law and Southern has offered to post
a bond to protect the Government against the possibility that a payment
to Southern might later be determined to be erroneous.
Magna Cool demands payment because in essence Magna Cool is the
contractor and there has been no valid assignment of the proceeds of the
contracts. The Navy notes that if it is determined that the now defunct
Magna Cool is entitled to the proceeds, the Internal Revenue Service and
a judgment creditor of Magna Cool contend that they should receive Magna
Cool's entitlement.
The Navy reports that, under applicable state law, the oral
assignment may be binding between Southern and Magna Cool; however, the
Magna Cool contracts permit assignment of the proceeds to a bank, trust
company or other financial institution, if certain conditions were met
including notice to the contracting officer. Here, it was on October
10, 1979, when the Navy first learned that Southern and Magna Cool had
some type of arrangement - that was after one contract had ended and 3
weeks before the other one was scheduled to end. To date, the precise
details of that arrangement are not certain. No notice of assignment or
true copy of the assignment was filed with the Navy at any time during
performance of the contracts and, there is some doubt about Southern's
ability to be considered a bank, trust company or financial institution
within the meaning of the contractors' provisions regarding assignments.
In the Navy's view, the requirements of the Assignment of Claims Act
should not be waived.
Further, the Navy reports that there is some evidence that Magna Cool
sold the two heat pumps to Southern, raising the possibility that
Southern may have a valid equitable claim for rental payments flowing
from the Navy's use of Southern equipment.
First, as the Navy points out, there is precedent holding that the
Assignment of Claims Act does not bar payment of lease payments to the
new owner of real property. Freedman's Savings and Trust Co. v.
Shepherd, 127 U.S. 494(1888); 4 Comp.Gen. 193(1924). We are not aware,
however, of any authority holding that the act does not bar payment of
rental payments to the new owner of personal property. Second, it is
not clear from the record that Magna Cool's rental contracts were meant
to be sold to Southern along with the heat pumps. Third, documentation
is not adequate to establish the precise Magna Cool and Southern
arrangement.
In our view, therefore, Southern has not presented sufficient
evidence to establish its entitlement to the proceeds. Magna Cool's
contracts could not be legally transferred to Southern and no novation
occurred.
We are not persuaded that Magna Cool validly assigned the proceeds of
its contract to Southern in accord with the terms of the contracts and
the Assignment of Claims Act. While the requirements of the Assignment
of Claims Act may be waived (Maffia v. United States, 163 F.Supp.
859(Ct.Cl. 1958)), we concur with the Navy that it should not be waived
here.
Further, in our view, Magna Cool's actions - in at least attempting
to assign certain contracts proceeds, permitting Southern to deposit
contract payments into Southern's bank account, and purportedly selling
the heat pumps to Southern, all without proper notice to the Navy - give
rise to (1) substantial doubts concerning Magna Cool's entitlement and
(2) possibility that the Navy would be required to reimburse Southern
for rental value of its equipment.
Accordingly, we recommend that payment of the proceeds be withheld
pending an agreement of the parties or a judgment of a court of
competent jurisdiction. See B-155504, July 8, 1966; 20 Op.Atty.Gen.
578(1893).
B-202611, September 1, 1981, 60 Comp.Gen. 677
Officers and Employees - Transfers - Relocation Expenses - Real Estate
Expenses - Condominium Purchase - Garage Space Acquisition
A transferred employee entitled to reimbursement of expenses required
to be paid by him in connection with the purchase of a residence at his
new duty station may be reimbursed under paragraph 2-6.1 of the Federal
Travel Regulations for expenses incurred separately in obtaining garage
parking space in connection with the purchase of a condominium, since
garage parking was reasonably necessary and since it was obtained in
conjunction with the condominium unit.
Matter of: Kaye D. Hollingsworth - Real Estate Expenses - Purchase
of Garage Space in Conjunction With Residence, September 1, 1981:
Mr. H. O. Miller, Accounting and Finance Officer, Defense Logistics
Agency, requests an advance decision regarding Mr. Kaye D.
Hollingsworth's supplemental claim for real estate purchase expenses in
the amount of $153 incurred in obtaining garage space in conjunction
with the purchase of a residence incident to transfer of station.
Payment of the claim is authorized since the garage parking space was
reasonably necessary and obtained in conjunction with his purchase of a
condominium unit even though it was purchased separately.
Mr. Kaye D. Hollingsworth was transferred from Atlanta, Georgia, to
Alexandria, Virginia. He has been reimbursed relocation expenses,
including real estate expenses incurred for the purchase of his new
residence, a condominium unit. His original voucher included a
statement that an additional claim would be submitted for reimbursement
of expenses to be incurred in the purchase of parking space in the
condominium's garage. He has now submitted a supplemental voucher for
these expenses.
Mr. Hollingsworth states in support of his claim that while the
initial sales of condominium units in his building were made without
garage spaces, new owners were given an option to obtain such space by a
separate purchase. Since the original owners from whom he purchased his
unit did not obtain garage space at the time they acquired the property,
it was necessary for him to purchase garage space separately. While he
was not required to make the purchase, he contends that the limited
parking space on the grounds at times would have left him with only an
alternative of dangerous and illegal curb side parking in the street.
The submission indicates that the Accounting and Finance Officer
believes that paragraph C1400 of Volume II, Joint Travel Regulations,
which authorizes for expenses required to be paid by an employee in
connection with the purchase of a residence at his new duty station,
does not permit payment of expenses incurred in connection with the
purchase of a garage when it can be acquired separately and sold
independently of the residence unit.
Allowances for expenses incurred in connection with residence
transactions incident to a permanent change of station are authorized by
5 U.S.C. 5724a (1976) and by the Federal Travel Regulations (FPMR
101-7). Paragraph 2-6.1 of the FTR provides that the Government shall
reimburse an employee for expenses required to be paid by him for
purchase of a dwelling at his new official station. Where an employee's
old or new residence includes a garage, we have routinely authorized
reimbursement for the associated real estate expenses and we have not
drawn a distinction between or required an apportionment of costs
associated with the dwelling and garage portions of the residence.
The record indicates that the residence purchased by Mr.
Hollingsworth had a reasonable requirement for adequate and protected
parking. It further establishes that the parking space in question was
obtained incident to his purchase of a condominium unit in the same
building and that both were purchased incident to his permanent change
of station. There is no evidence that Mr. Hollingsworth intends to use
the garage for any purpose other than in connection with the occupancy
of his condominium. Therefore, otherwise reimbursable real estate
expense incurred for the purchase of such garage space may be reimbursed
as a necessary expense in connection with the purchase of such
residence.
Accordingly, Mr. Hollingsworth's supplemental claim for real estate
expenses may be paid, if otherwise proper.
B-202037, August 31, 1981, 60 Comp.Gen. 674
Accountable Officers - Physical Losses, etc. of Funds, Vouchers, etc. -
Without Negligence of Fault
Relief is granted to IRS accountable officer for loss of $600 money
order stolen from wire basket where it was placed pending transmission
to cashier for deposit. Until the theft occurred, the office security
practices were thought to be adequate and the accountable officer
complied with them in every respect. Overrules in whole or in part
B-197616, Feb. 24, 1981, B-201840, Apr. 6, 1981, and similar cases.
Statutes of Limitation - Accountable Officers - Irregularities in
Accounts - Physical Losses/Shortages - Relief Requests - No Time Bar
The long period of time between the year the theft occurred and the
year in which relief was requested for the accountable officer is not a
bar to consideration of relief in physical loss cases. The three year
period prescribed in 31 U.S.C. 821 after which an accountable officer's
accounts must be considered settled is not applicable in physical loss
or shortage cases.
To Fiscal Assistant Secretary, The Department of the Treasury, August
31, 1981:
This is in response to your request that relief from liability be
granted to Mr. Henry P. Seufert, former Director of the Brookhaven
Service Center for the loss by theft on June 18, 1974, of a $600 money
order. We grant relief for the reasons detailed below.
The long period of time between the year the theft occurred (1974)
and the year in which you requested relief for the accountable officer
(1981) raises a threshold question about our authority to consider this
case. In two very recent cases (B-197616, February 24, 1981, and
B-201840, April 6, 1981), we held that the accountable officer's account
must be considered settled after the expiration of the 3-year period
prescribed by 31 U.S.C. 82i. No further charges could be raised against
him, and therefore no further adjustments to the account could be made.
It followed, we said, that we no longer had authority to grant or deny
relief.
We have reconsidered those decisions, in the light of the legislative
history of 31 U.S.C. 82i, and have concluded that we were wrong. It is
now clear that the statute was intended to protect disbursing,
certifying, and accountable officers from having to answer exceptions
raised by the General Accounting Office (GAO) to payments they made (not
involving fraud or criminal activities) more than 3 years after the
alleged erroneous payment was made.
In physical loss cases, however, the GAO is not concerned with erroneous
payments to which it wishes to take an exception. A debt against the
accountable officer arose automatically when his funds were discovered
to be short. The only question before the GAO is whether to grant the
officer relief, thereby absolving him from responsibility for the loss
and allowing restoration of the account.
Since the account can never be restored without restitution from the
accountable officer (assuming inability to collect from the thief)
unless the Department of Treasury receives a relief authorization, we
conclude that there is no time bar precluding our consideration of
requests for relief from responsibility for physical losses or shortages
of funds. B-197616, February 24, 1981; B-201840, April 6, 1981, and
any other cases which indicate that relief from responsibility for
physical losses or shortages, may not be considered if more than 3 years
has elapsed since the loss or shortage was discovered are hereby
overruled.
Turning now to the merits of this case, the Internal Revenue Service
(IRS) investigation reports indicate that the theft occurred on or about
June 18, 1974, in a Contact Unit of the Manhattan District Office. A
taxpayer, Mr. Roger Callendar, while being assisted by a tax examiner
removed a $600 money order from a wire basket located on the tax
examiner's desk.
Mr. Callendar confessed to the theft and state that there was no
collusion with any IRS employee. Mr. Callendar was sentenced to 2 years
in prison (suspended) and 3 years probation. The court did not order
Mr. Callendar to make restitution nor did IRS collection actions result
in recovery of the funds.
At the time of the theft, it was the common practice and control
procedures in the Manhattan District Office to accumulate remittances in
the wire baskets for transmission to the cashier for deposit. There was
no indication that any examiner deviated from prescribed practices then
required. The administrative report states that the security practices
of the office were considered adequate until the investigation following
the theft indicated serious deficiencies. Office security procedures
have been corrected.
Based on the above you have determined that the unrecovered loss of
the $600 occurred through no fault or negligence of Mr. Seufert and that
the loss occurred while Mr. Seufert was acting in discharge of his
official duties. Therefore, you have requested relief from liability in
accordance with the provision of 31 U.S.C. 82a-1.
31 U.S.C. 82a-1 (1976) authorizes this Office to relieve an
accountable officer from liability if we concur with a determination by
the agency head that the loss occurred (1) while the accountable officer
was acting in the discharge of his or her official duties and (2)
without fault or negligence of the accountable officer.
If relief is granted, the law also authorizes adjusting the account by
charging the appropriation or fund available for the disbursing function
when the adjustment is effected, absent another appropriation
specifically provided therefor. You have made the required
determination on behalf of Mr. Seufert.
With respect to this case, the record clearly shows that the loss
occurred as a result of a theft and that all employees were following
common practices and procedures. The deficiencies of the then
prescribed security procedures were not recognized until after the theft
had taken place.
IRS requires that reasonable security protection be afforded to
property entrusted to the IRS. See The Physical and Document Security
Handbook, IRM 1 (16) 41. It is a doubtful whether allowing funds to
accumulate in wire baskets accessible to anyone entering the office
would be considered "reasonable security precautions." If Mr. Seufert
had been aware of the lax security procedures then in effect at the
District office he would have been negligent in his duty not to have
taken corrective action. We have been informally advised, however, that
Mr. Seufert did not have this knowledge and since he was not directly
responsible for the security program, we cannot find him negligent.
Accordingly, we grant relief to Mr. Seufert.
However, your request for relief should have also included the tax
examiner who had physical control of the funds. There may be more than
one accountable officer in a given case and the concept of
accountability is not limited to the person in whose name the account is
officially held, B-193673, May 25, 1979; B-197324, March 7, 1980. Any
Government officer or employee who physically handles Government funds,
even if only occasionally, is "accountable" for those funds while in his
or her custody. Therefore, the tax examiner was also liable for the
loss. Collection action should be taken against the tax examiner unless
you decide to request relief from him or her also. B-191942, September
12, 1979.
Finally, the GAO Policy and Procedures Manual calls for a report of
financial irregularities (which have not been resolved administratively)
2 years after the date the accounts are made available to this Office
for audit. 7 GAO Policy and Procedures Manual 28.14; B-161457, August
1, 1969. (Fraud or other serious irregularities of substantial amount
or significance must be reported as soon as possible.) We recommend that
you take corrective measures to ensure that your personnel are aware of
the need for timely action to avoid any future delays in reporting
irregularities to this Office. G360600A 60-2 comp.gen. (C.D.P. -
4/2/82)
B-198590, August 26, 1981, 60 Comp.Gen. 668
General Accounting Office - Jurisdiction - Labor-Management Relations -
Civil Service Reform Act Effect - Arbitration Awards - Comptroller
General Decision Requested
Where an arbitrator has requested that the parties in dispute seek
the Comptroller General's opinion as to the legality of a
labor-management agreement provision, the Comptroller General will issue
a decision to the parties on their request, 4 C.F.R. 22.7(b) (1981).
Compensation - Negotiation - Savings' Clause Applicability - Applicable
Rate - Construction v. Operation and Maintenance Rates - Temporary
Employees
Negotiated labor-management agreement provision, which is protected
by savings provision of section 9(b) of Pub. L. 92-392, Aug. 19, 1972,
provides for payment of construction rates to pay to specified temporary
employees of Grand Coulee Project Office. The arbitrator found that as
of September 1979 the payment of construction rates of pay to temporary
employees was not a prevailing practice in the area. Since section 704
of the Civil Service Reform Act of 1978, Pub. L. 95-454, Oct. 13, 1978,
requires that agreement provisions protected by section 9(b) shall be
negotiated in accordance with prevailing rates and practices, we
conclude that these temporary employees may not continue to be paid at
construction rates of pay.
Matter of: Grand Coulee Project Office - Temporary Employees -
Construction or Operation and Maintenance Pay Rates, August 26, 1981:
This decision is issued pursuant to a joint request from the Columbia
Basin Trades Council and the United States Water and Power Resources
Service (formerly Bureau of Reclamation), Department of the Interior.
The issue presented is whether the Service's Grand Coulee Project Office
may pay construction rates of pay, rather than operation and maintenance
rates, to temporary blue collar employees in the occupations listed in
the negotiated labor-management agreement.
We decide, for the reasons stated below, that these temporary
employees of the Grand Coulee Project Office may not continue to be paid
at construction rates of pay.
The joint request from the Columbia Basin Trades Council and the
Water and Power Resources Service was directed by the arbitrator's
opinion and award in the Matter of the Arbitration between the Columbia
Basin Trades Council and all of its constituent Unions, Spokane,
Washington, and the Grand Coulee Project Office, Bureau of Reclamation,
U.S. Department of the Interior, Grand Coulee, Washington (W. J. Dorsey,
Jr., Arbitrator), FMCS #79k/18263, Case No. 3.
The arbitrator was presented with the question as to the propriety of
action taken by the Water and Power Resources Service to terminate the
payment of construction rates of pay to employees hired on a temporary
basis in 20 different blue collar occupations. At issue was whether the
Service violated a provision in the labor-management agreement by
discontinuing the payment of construction rates of pay to the temporary
employees who are covered by the agreement.
The contract language in dispute is found in the Supplementary
Labor-Management Agreement No. 2 (Wage Schedule 1977-1979) to the Basic
Labor-Management Agreement between the Bureau of Reclamation, Grand
Coulee Project Office, United States Department of the Interior, and the
Columbia Basin Trades Council and it states as follows:
Temporary employees in the following classifications will be hired at
local prevailing construction rates of pay. Such employees are not
entitled to either sick or annual leave but will receive appropriate
fringe benefit payments. All other temporary employees will receive the
negotiated rates of pay.
Boilermaker
Carpenter
Electrician (power systems)
Lineman
Rigger (structural and high line)
Utilityman
Sandblast operator
Laborer
Mechanic (heavy duty)
Machinist
Operator general (mobile power equipment) class 3
Operator general (mobile power equipment) class 2
Operator general (mobile power equipment) class 1
Oiler
Painter (brush)
Painter (spray)
Pipefitter
Concrete finisher
Truck driver class 2
Truck driver class 1
Night Differential: Night pay differential has been considered in
revising the above wage rates and does not apply to the above rates.
The arbitrator found that this contract language antedated the
signing of the Supplementary Labor-Management Agreement No. 2 (Wage
Scale, 1975) in July 1975. He stated that the language in dispute was
in place when the 1971 version of the Supplementary Labor-Management
Agreement No. 2 was agreed to by the parties.
In 1975, management sought to negotiate changes in this provision on
the ground that the temporary employees involved were intermingled with
the general operation and maintenance work force and could not be
identified as performing construction work. After unsuccessfully
attempting to negotiate changes, management on December 18, 1977,
discontinued payment of construction rates of pay to the temporary
employees in question, relying on the following legal analysis from the
Department of the Interior's Solicitor's Office.
Whether the temporary employees in question may be paid at
construction rates depends on the pay practices of those employers whose
rates are used as comparison points for the negotiated wage schedule.
If the prevailing practices justify the use of construction rates, and
thereby the description of the affected employees as "construction"
employees, then they may also receive additional hourly wage increments
in lieu of entitlement to certain fringe benefits they do not otherwise
receive. However, if they cannot legitimately be considered to be
construction workers, they are not entitled to such additional
increments in lieu of fringe benefits.
The Service conducted a survey and found that it was not the practice
in the area for private employers to pay construction rates of pay for
temporary operation and maintenance workers. Thus, since the Service
found that the temporary employees in the above-quoted job
classifications were not engaged in construction work, it unilaterally
decided not to pay them construction rates of pay any longer.
Grievances were filed by the employees in the bargaining unit which were
ultimately presented to the arbitrator for resolution.
Based on the survey questionnaires which were a part of the Service's
wage survey relating to the payment of construction rates of pay to
temporary employees by utilities in the Pacific Northwest Region, the
arbitrator found that as of September 29, 1979, " * * * the payment of
construction rates for temporary operation and maintenance workers in
the classification listed in the contract is not 'a prevailing practice
in the area surveyed for wages and working conditions.'" He then stated
that this raised the question as to whether the contract provision
calling for the payment of construction rates was illegal. The
arbitrator, however, declined to rule on the legality of this
longstanding contract language and stated the following:
Instead he (the arbitrator) will rule, as he must in view of the
contract language, that the Employer's unilateral actions in setting
aside and ignoring the clear and unambiguous contract language found in
Supplementary Labor Management Agreement No. 2 of the parties * * *
violated its contract with the Columbia Basin Trades Council and that
all of the Employer's temporary hourly employees on board prior to
December 18, 1977, and all temporary employees hired by the Employer on
and after December 18, 1977, in the express classifications listed in
the Supplementary Labor-Management Agreement No. 2, are entitled to back
wages based on the "local prevailing construction rates of pay" for
their classifications from December 18, 1977 (for new hires) or from the
start of the pay period beginning February 12, 1978 (for all temporary
employees on board prior to December 18, 1977) until the date of receipt
of a Comptroller General's decision which might declare such payment
invalid.
In addition, the Arbitrator in his Award has ordered that the parties
jointly, within sixty days of receipt of his Decision and Award in this
case, formally apply to the Comptroller General of the United States for
a ruling on the legality of the contract language in question and that
until such time as the Comptroller General may rule that this contract
language is illegal and therefore null and void under Section 1.4 of
Article I of the contract, the Employer must continue to pay its
temporary employees in the classifications in question the negotiated
rate appropriate to their classification, also as set forth in
Supplementary Labor-Management Agreement No. 2.
By this particular type of relief the Arbitrator has attempted to
make the members of the bargaining unit whole for the unilateral action
taken by the Employer, in direct violation of the particular, express
and long-standing contractual language of the parties, and at the same
time afford the Employer an opportunity to settle this dispute on the
legality of the contract language in question by a joint application
with the Columbia Basin Trades Council for an opinion of the Comptroller
General of the United States.
The arbitrator further explained his action as follows:
The Arbitrator is a creature of the parties, who, pursuant to their
express contractual provisions, chose him to hear their dispute in this
case and to make his decision on the basis of the contractual provisions
which the parties entered into. Under the particular, express and
long-standing contractual provisions of the parties which are clear and
unambiguous, the temporary hourly employees of the Employer in the
classifications listed in the contract were, and are, entitled to be
paid "at local prevailing construction rates of pay." All the Arbitrator
has done in his Decision and Award in this case is to find that the
Employer violated these express contractual provisions, that the
employees in question are due back pay, that the Employer should pay
this back pay, that within sixty days of the date on which the parties
receive his Decision and Award in this case they should jointly resort
to the Office of the Comptroller General for an opinion from the expert
in the field of pay statutes for federal employees for a permanent
resolution of their dispute on the legality of this contractual
provision, but that until such a decision declares the contractual
provision illegal, the Employer must continue to pay the local
prevailing construction rates to the employees in question.
Thus, the arbitrator ordered the union and management jointly to seek
our decision on the legality of the disputed language in the
labor-management agreement. Accordingly, we shall consider this matter
as a joint request of the parties and issue a decision thereon under our
"Procedures for Decisions on Appropriated Fund Expenditures Which are of
Mutual Concern to Agencies and Labor Organizations," 4 CFR Part 22
(1981) originally published as 4 CFR Part 21, at 45 Fed.Reg. 55689-92,
August 21, 1980. See specifically 4 CFR 22.7(b) (1981).
In deciding this case, we shall confine our opinion to the question
submitted as to the legality of the contract provision in question.
Under 5 U.S.C. 7122 (Supp. III, 1979) we no longer have the authority to
review arbitration awards. See H.R. Rep. No. 95-1403, 95th Cong., 2d
Sess., July 31, 1978, 56, 57. Thus, we express no opinion on the
arbitrator's ruling that the temporary employees are entitled to backpay
at construction rates until the date of receipt of a Comptroller General
decision declaring such payments invalid.
Any payments made by the agency pursuant to the arbitration award are
conclusive on the General Accounting Office. 4 CFR 22.7(a) (1981). See
58 Comp.Gen. 198, 200 (1979).
In submitting the legal question to us pursuant to the arbitrator's
instructions, the Water and Power Resources Service takes the position
that the payment of construction rates is illegal. The Service's
position is based on its view that these temporary employees are engaged
in the maintenance, repair, and upkeep of the powerplant and related
facilities and that the payment of construction rates to such employees
is not a prevailing practice among the northwest utilities that make up
the wage survey.
The Columbia Basin Trades Council does not dispute the Service's
contention that the employees are not engaged in construction work nor
does it dispute the Service's contention about the prevailing practice
in the area. The union's position is basically that the
labor-management agreement requires payment of construction rates and
that management had no authority to unilaterally terminate the payment
of construction rates in violation of the agreement.
We start with the arbitrator's finding that the payment of
construction rates of pay to the temporary operation and maintenance
employees involved is not a prevailing practice in the area surveyed for
wages and working conditions. This finding is consistent with the
Service's statements as to the work performed by the temporary employees
and with the survey results obtained pursuant to the recommendation of
the Solicitor's Office.
We now turn to the relevant statutes. Pay policies and procedures
for most prevailing rate employees are prescribed by subchapter IV of
chapter 53 of title 5, United States Code, as amended by Pub. L. 92-392,
August 19, 1972, 86 Stat. 564, 5 U.S.C. 5343 note, which requires that
rates of pay be fixed and adjusted from time to time as nearly as is
consistent with the public interest in accordance with prevailing rates.
This subchapter requires pay to be fixed by means of area wage
schedules established periodically from wage surveys made by lead
agencies or by the Office of Personnel Management. However, section
9(b) of Pub. L. 92-392 exempts certain employees who had negotiated
their wages on or before August 19, 1972.
Section 9(b) has been amplified by section 704 of the Civil Service
Reform Act of 1978, Pub. L. 95-454, October 13, 1978, 92 Stat. 1218, 5
U.S.C. 5343 note, which reads as follows:
(a) Those terms and conditions of employment and other employment
benefits with respect to Government prevailing rate employees to whom
section 9(b) of Public Law 92-392 applies which were the subject of
negotiation in accordance with prevailing rates and practices prior to
August 19, 1972, shall be negotiated on and after the date of the
enactment of this Act in accordance with the provisions of section 9(b)
of the Public Law 92-392 without regard to any provision of chapter 71
of title 5, United States Code (as amended by this title), to the extent
that any such provision is inconsistent with this paragraph.
(b) The pay and pay practices relating to employees referred to in
paragraph (1) of this subsection shall be negotiated in accordance with
prevailing rates and pay practices without regard to any provision of--
(A) chapter 71 of title 5, United States Code (as amended by this
title), to the extent that any such provision is inconsistent with this
paragraph;
(B) subchapter IV of chapter 53 and subchapter V of chapter 55 of
title 5, United States Code, or
(C) any rule, regulation, decision, or order relating to rates of pay
or pay practices under subchapter IV of chapter 53 or subchapter V of
chapter 55 of title 5, United States Code.
Accordingly, negotiated provisions of labor-management agreements
which were in effect on August 19, 1972, such as the provisions here in
question, are protected and may be continued under the provisions of
sections 9(b) and 704, even though these negotiated provisions may be in
conflict with certain other provisions of law or prior interpretations
thereof.
However, the application of section 704(a) is premised on the concept
that prevailing rates and practices shall be used in determining what
the terms and conditions of employment and other employment benefits
are. Moreover, section 704(b) specifically requires that the pay and
pay practices of employees under these negotiated contracts " * * *
shall be negotiated in accordance with prevailing rates and pay
practices * * * ." Thus, even though the Congress gave broad authority
for the negotiation of wages to those employees who had historically
negotiated their wages, Congress insisted that the authority shall be
governed by prevailing rates and pay practices.
As has been indicated, the contract provision here in question was in
existence before August 19, 1972, and thus falls within the purview of
sections 9(b) and 704. However, the arbitrator has found that, as of
September 1979, the payment of construction rates of pay for temporary
operation and maintenance workers in the occupations listed in the
agreement was not a prevailing practice in the area. Therefore, since
section 704 provides that contract provisions protected under section
9(b) of Pub. L. 92-392 shall be negotiated in accordance with prevailing
rates and practices, the arbitrator's finding compels us to conclude
that the agreement provision requiring payment of construction rates of
pay is not valid under section 704.
Accordingly, the temporary operation and maintenance workers at the
Grand Coulee Project Office may not continue to be paid at construction
rates of pay.
B-202961, August 25, 1981, 60 Comp.Gen. 666
Bids - Acceptance Time Limitation - Bids Offering Different Acceptance
Periods - Shorter Periods - Extension Propriety - Request Prior to
Expiration of Shorter Period
Bidder who offered a bid acceptance period shorter in duration than
that requested in invitation may not extend that period in order to
qualify for award. To permit such an extension would be prejudicial to
other bidders who offered the requested acceptance period.
Matter of: Ramal Industries, August 25, 1981:
Ramal Industries Inc. (Ramal) protests award to Revere Copper and
Brass Incorporated (Revere) under invitation for bids No.
DAAA09-81-B-0022, issued by the United States Army Armament Materiel
Readiness Command for procurement of copper cones for M483A1
projectiles.
Ramal contends that Revere should not be allowed to extend its bid
because it only offered a 30-day bid acceptance period while a 60-day
acceptance period was requested. The Army argues that the bid extension
made be allowed because it was offered before the Revere bid had
expired. We agree with Ramal.
In B-162000, September 1, 1967, we held that a bidder who submits an
acceptance period of a shorter duration than the period requested in the
solicitation has no right to extend its acceptance period. Also, in
Timberline Foresters, 59 Comp.Gen. 726 (1980), 80-2 CPD 195, we held
that a bidder who submits a bid acceptance period that is shorter than
that requested accepts the risk than an award may not be made before
that shorter acceptance period expires.
We recognize that both of these decisions involved situations where
the bid had expired before the bidder attempted to extend the acceptance
period. We are aware of no prior decision that involves the exact
situation here, i.e., whether a bid which offers less than the requested
bid acceptance period may be extended prior to the initial acceptance
period expiring.
However, we believe the same result is required. Where a bidder
offers less than the requested acceptance period, he has not assumed as
great a risk of price or market fluctuations as did other bidders.
Further, section 2-404.1(c) of the Defense Acquisition Regulation,
the regulatory guidance concerning acceptance period extensions, states:
(c) Should administrative difficulties be encountered after bid
opening which may delay award beyond bidders' acceptance periods, the
several lowest bidders should be requested, before expiration of their
bids, to extend the bid acceptance period (with consent of sureties if
any) in order to avoid the need for readvertisement.
We believe this regulation addresses the situation where the
requested bid acceptance period is about to expire. Here, only Revere's
bid would have expired prior to 60 days after bid opening. Since other
bids would have remained available for award, Revere should not have
been permitted to extend its bid beyond the original 30 days. See 42
Comp.Gen. 604, 607 (1963) and 48 Id. 19, 21 (1968).
Because of the above holding, it is unnecessary to discuss other
issues raised by Ramal.
The protest is sustained and Revere's bid should not be considered
for award.
B-202942, August 25, 1981, 60 Comp.Gen. 661
Contracts - Opinions - Not to be Exercised - Requirements to be
Resolicited
Issuance of competitive request for proposals was not in derogation
of option for same items under current contract because option in
protester's existing contract was not actually exercised. Where record
shows, as here, that option is exercisable at sole discretion of
Government, General Accounting Office will not consider, under Bid
Protest Procedures, incumbent contractor's contention that agency should
have exercised or is obligated to exercise contract option provisions.
Contract - Options - Exercising - What Constitutes - Evidence
Sufficiency
Where contracting officer did not actually execute modification
exercising option, GAO concludes that evidence is insufficient to
establish that binding agreement exercising option arose by actions of
parties. Contracts - Negotiation - Justification
GAO has no basis to object to agency's determination to use
negotiated procurement method because adequate time is unavailable to
assemble proper data package suitable for formal advertising and agency
has no basis to restrict competition to companies in specialized
container field. Contracts - Negotiation - Competition - Use of
Government Facilities, Materials, etc. - Competitive Disadvantage - Not
Resulting from Unfair Government Action
Protester contends that it has competitive disadvantages because it
previously acquired necessary equipment and has no need for
Government-furnished equipment which is to be furnished at no cost to
successful offeror. Agency has no legal obligation to eliminate
protester's competitive disadvantage because protester's situation did
not result from preference or unfair action by agency.
Matter of: Lanson Industries, Inc., August 25, 1981:
Lanson Industries, Inc. (Lanson), protests the issuance of request
for proposals (RFP) No. F33657-81-r-0319 by the Air Force for A-10, 30mm
ammunition container assemblies.
Lanson contends that the Air Force has no need to conduct the
procurement because the Air Force satisfied its requirement for these
assemblies by exercising the option in Lanson's current contract (No.
F33657-80-C-0043) with the Air Force for these assemblies.
Alternatively, Lanson contends that the Air Force is obligated to
exercise its option in lieu of conducting a competitive procurement.
Lanson also argues that if a competition is proper, then there should be
an evaluation factor included in the RFP to reflect the rental value of
Government-furnished equipment that offerors propose to use in
performing the contract.
The Air Force reports that it did not exercise the option in Lanson's
current contract, it is not obligated to exercise the option, and it
will permit the successful offeror to use the Government-furnished
equipment, making an evaluation factor unnecessary.
We conclude that Lanson's protest is without merit.
Lanson's current contract, awarded competitively, contained a
requirement for a basic quantity of 19,500 units and an option quantity
of 13,500 units. The option quantity was considered in the evaluation
of proposals. The Air Force needed more units than the basic quantity
but funding was available for only 11,084 units. Discussions between
the Air Force and Lanson and Lanson's letter dated January 13, 1981,
agreeing to a reduced quantity, led to the preparation of modification
P00004 to change the option quantity from 13,500 to 11,084. At the Air
Force's request, Lanson's president went to Wright-Patterson Air Force
Base and executed the modification. That day, the Air Force sent a
letter dated January 21, 1981, to Lanson enclosing a copy of the
unexecuted modification, stamped "advance copy for information only."
Before the contracting officer executed the modification, the Air Force
received an unsolicited proposal from Wayne H. Coloney Company, Inc.
(Coloney), which indicated that the Air Force could realize substantial
savings by conducting a competitive procurement in lieu of exercising
the Lanson option. On January 23, 1981, after receipt of the Coloney
proposal, the Air Force notified Lanson that the exercise of the option
would be delayed or prevented. Shortly thereafter, the Air Force
notified Lanson of its intention to test the market instead of
exercising the option.
First, Lanson contends that the Air Force's January 21, 1981 letter
constituted the written notice contemplated by the procurement
regulations, indicating that the option was exercised by the Air Force.
Lanson argues that the Air Force's request that its president visit
Wright-Patterson Air Force Base to execute the modification supports its
contention that a mutually binding obligation was created by the January
21, 1981 letter.
In Lanson's view, the Air Force has no need to issue the RFP.
In response, the Air Force reports that it did not exercise the
option because it did not execute the modification. The Air Force
explains that it would have exercised the option by (1) executing the
modification reducing the option quantity and (2) issuing notice that
the Air Force was exercising the option for the reduced quantity;
neither of the events occurred.
The modification states on page 1A that the supplemental agreement
"shall be subject to the written approval of the Secretary or his duly
authorized representative and shall not be binding until approved."
While Lanson's president executed the modification, the Air Force's
contracting officer did not. Further, the January 21, 1981 letter
transmitted two copies of the modification marked "advance copy for
information only" and requested Lanson to execute one copy and return it
to the Air Force. We find no evidence in the January 21, 1981 letter or
any other document in the record that the Air Force intended to exercise
the option prior to the time its contracting officer would execute the
modification, which did not occur. Thus, we must conclude that the Air
Force did not actually exercise its option in the Lanson contract.
Second, Lanson contends that the Air Force had an obligation to
exercise the option because the Air Force evaluated the option price in
selecting Lanson for its current contract on the grounds that (1) there
was a known requirement and (2) realistic competition for the option
quantity was impracticable. Lanson argues that it relied on these
factors and concluded that the option quantity would not be subject to a
second competition. Lanson states that the only risk it took was that
funds would not be available.
In response, the Air Force contends that the exercise of the option
was the unilateral right of the Government and there was no contractual
obligation to exercise the option. The Air Force notes that the RFP,
which led to the current Lanson contract, contained the standard clause
providing that while the option quantity would be evaluated,
"(e)valuation of option will not obligate the Government to exercise the
option or options." The Air Force also notes that Lanson's contract
contains an option provision stating that the contracting officer "may
exercise the option." Further, the Air Force notes that procurement
regulations permit the contracting officer to exercise an option only if
it is determined to be the most advantageous method of fulfilling the
Government's need.
Where the record shows, as here, that the option was exercisable at
the sole discretion of the Government, our Office will not consider
under our Bid Protest Procedures the incumbent contractor's contention
that the agency should have exercised or is obligated to exercise
contract option provisions. See C. G. Ashe Enterprises, 56 Comp.Gen.
397 (1977), 77-1 CPD 166. Accordingly, this aspect of Lanson's protest
is dismissed.
Third, Lanson contends that, even if the Air Force did not actually
execute the modification exercising the option, the actions of the
parties were enough to create a binding agreement to purchase the
reduced option quantity. Lanson points to its president's trip to
Wright-Patterson Air Force Base made with the understanding that both
parties would execute the modification. Lanson views the Air Force's
preparation and presentation of the modification to its president as an
offer and Lanson's execution as requested as its acceptance.
In our view, the record establishes that the Air Force did not intend
that the option be exercised when the modification was executed by
Lanson's president. Instead, it is clear that the Air Force believed
that, just as was stated on page 1A of the modification, the reduction
in the option quantity was not effective until the contracting officer
signed the modification. From the Air Force's perspective, there could
not be a binding agreement at least until the modification was signed by
its contracting officer. We believe that the Air Force's actions are
consistent with that view. Accordingly, we conclude that the actions of
the parties did not create a binding agreement.
Fourth, Lanson contends that, if a competition is to be held, it
should be on the basis of formal advertising, not negotiation. Lanson
notes that the existing data package is adequate for companies in the
specialized container field to provide the required container
assemblies. In reply, the Air Force reports that a data package
adequate for formal advertising is not available and could not be
prepared and approved within the available time. Further, the Air Force
did not determine that it was necessary to restrict the competition to
companies in the specialized container field.
We will not object to a determination to negotiate on the basis
advanced by the Air Force where any reasonable ground for the
determination exists. See 41 Comp.Gen. 484, 492 (1962). Here, the
record provides a reasonable basis for the Air Force's determination
because adequate time was unavailable to assemble a proper data package
and there was no basis to restrict the competition to companies in the
specialized container field.
Thus, this aspect of Lanson's protest is without merit.
Fifth, Lanson contends that any competitor other than Lanson would
receive a distinct competitive advantage unless there is an evaluation
factor for Government-furnished equipment. Lanson explains that, in
connection with its current contract, it developed its own production
equipment. Therefore, if the Government furnishes equipment to the
successful offeror under the instant RFP, Lanson will be at a
competitive disadvantage since it does not need the Government
equipment. Lanson argues that the RFP is improper because it does not
contain a factor to eliminate Lanson's competitive disadvantage as
required by Defense Acquisition Regulation (DAR) Sec. 13-503 (1976 ed.).
In response, the Air Force states that no adjustment factor is
necessary because the Government equipment is available to the
successful offeror. The Air Force notes that the RFP leading to
Lanson's current contract contained an evaluation factor for
Government-furnished equipment because only Coloney could use the
equipment at that time.
DAR Sec. 13-503 provides that, in negotiated procurements,
competitive advantage arising from the use of Government production and
research property shall be eliminated by the use of an evaluation
factor. Usually, the evaluation factor is employed in a solicitation
when only one firm is permitted to use Government-furnished equipment.
We are not aware of a situation, like this, where an evaluation factor
was employed because of a firm did not require Government-furnished
equipment, which the Government was willing to make available to any
firm.
Our analysis begins with the premise that there is no legal
requirement for the Government to furnish equipment to a successful
offeror to be used in performing a Government contract. See Southwest
Machine, Inc.; Triple "A" South, B-192251, November 7, 1978, 78-2 CPD
329. It is Government policy to eliminate competitive advantage by
employing an evaluation factor when only one firm is permitted to use
Government-furnished equipment in performing the required work. DAR
Sec. 13-501. However, when the Government equipment can be furnished to
any offeror, in our view, the Government has not participated in
establishing a competitive advantage. It is well settled that the
Government has no obligation to eliminate a competitive advantage that a
firm may enjoy because of its own particular circumstances or because it
gained experience under a prior Government contract or performed
contracts for the Government unless such advantage results from a
preference or unfair action by the agency.
See, e.g., Varo, Inc., B-193789, July 18, 1980, 80-2 CPD 44; ENSEC
Service Corp., 55 Comp.Gen. 656 (1976), 76-1 CPD 34.
Here, firms other than Lanson arguably have a competitive advantage--
or, in Lanson's terms, only Lanson has a competitive disadvantage--
because Lanson previously acquired the necessary equipment and has no
need for the Government-furnished equipment. Lanson has made no showing
that its situation results from a preference or unfair action by the
agency.
We conclude that Lanson's acquisition of equipment to perform its
current contract, based on its business judgment, is the reason that
Lanson believes it is now at a competitive disadvantage. Lanson's
situation did not result from Government preference or unfair action.
The Government has no legal obligation to eliminate Lanson's competitive
disadvantage by effectively increasing the cost to the Government for
the required assemblies. Accordingly, this aspect of Lanson's protest
is without merit.
Finally, we note that under DAR Sec. 13-506, where Government
production and research property is offered for use in a competitive
procurement, any costs incurred by the Government relating to making the
equipment available (such as transportation and rehabilitation costs)
will be included in the evaluation of bids or proposals to the extent
such costs are not assumed by the user. This regulation applies whether
or not a competitive advantage factor is included in the evaluation in
accordance with DAR Sec. 13-503. We assume that the Air Force will
consider the provisions of DAR Sec. 13-506 prior to any award in this
case.
Protest denied.
B-199339, August 25, 1981, 60 Comp.Gen. 659
Agriculture Department - Forest Service - Appropriations - Crediting
Salary Deductions for Rental Charges - Government-Furnished Quarters -
Applicable Fund
Forest Service may transfer amounts of payroll deductions for use of
Government quarters to separate appropriation accounts used to fund
maintenance and operation of such quarters, even though salary expenses
may be paid from several different accounts for a single employee. 5
U.S.C. 5911(c) does not preclude consolidation of various salary
deductions for administrative convenience in making payments for
maintenance expenses. 50 Comp.Gen. 235, modified.
Matter of: Payments for quarters maintenance and operation expenses
from salary deductions for quarters, August 25, 1981:
The Director, Office of Fiscal and Accounting Management, Forest
Service, Department of Agriculture, requests clarification of our
decision 59 Comp.Gen. 235 (1980), concerning the proper appropriation to
be credited with payroll deductions for use of Government quarters. The
specific inquiry is whether the Forest Service may credit the amount of
the deductions to the appropriation account that funds the maintenance
and operation services for quarters and facilities, rather than the
appropriations to which the employee salaries are charged. We conclude
that there is authority to credit the maintenance and operation
appropriation account customarily used to fund such services. 59
Comp.Gen. 235, supra, is clarified.
In our 1980 decision, we noted and agreed with the position of the
Office of Management and Budget that deductions from employees for
maintenance and operation expenses of Government quarters occupied by
them should be treated as reimbursements (rather than refunds of in-kind
salary payments) to be credited to the appropriation or fund account
that provides the service under the authority of 5 U.S.C. 5911(c).
That section provides that payroll deductions for these expenses
"shall remain in the applicable appropriation or fund." Because the
appropriations from which Forest Service salaries are paid are also
available for the payment of operation and maintenance expenses of
Government quarters, we interpreted section 5911(c) as allowing
retention of deductions in the salary appropriations for use in
defraying operation and maintenance expenses. The alternative, absent
section 5911(c), would have been deposit of the deductions in the
Treasury, pursuant to 31 U.S.C. 484.
The Forest Service's request for clarification, however, points out
that salaries for employees living in Forest Service housing are usually
"project financed" so that the appropriations to which their salaries
are charged can vary "from hour to hour" and can involve as many as six
different appropriations within a 2-week pay period. The request also
points out that Forest Service housing units are ordinarily maintained
from a single available appropriation-- that for Forest Management,
Protection and Utilization. Literal compliance with our decision,
therefore, would require what the Forest Service suggests is an
unnecessary administrative burden because quarters deductions would have
to be credited to the various salary accounts when employees' time and
attendance is recorded and operation and maintenance expenses would have
to be financed from these various accounts.
Our earlier decision was based on the assumption that all salaries
were paid from a single appropriation which was also available for
operating and maintaining the housing facilities in question. We
therefore held that "any funds remaining in the appropriation as a
result of payroll deduction for Government quarters would be available
for the expenses of operating and maintaining those quarters as well as
any other expenses properly payable from that appropriation."
This is still our view. The term "applicable fund" refers to the
appropriation account from which an employee's salary is paid-- whether
one account, as we had originally assumed, or several different
accounts, as we now learn is the practice. In any event, the amount of
the salary deductions "remain in the applicable appropriation or fund,"
as the statute requires-- whether one account or several-- and are
available for the quarters expenses.
This does not mean that the individual salary accounts must each be
charged separately with the costs of maintaining the employee's quarters
on some sort of pro rata basis. (As stated above, in our earlier
decisions, we had assumed that a single account would pay both salaries
and maintenance expenses. This erroneous assumption evidently caused
the confusion.) Section 5911(c) makes all the salary deductions
regardless of which account they are in, available for maintenance
purposes and therefore the Forest Service can use them for that purpose
utilizing any administrative mechanism which will facilitate accounting
for the expenses incurred. Thus, there is no legal objection to the
policy described in the submission whereby all quarters deductions would
be transferred from their respective salary accounts to the other
accounts established to fund maintenance expenses for employee housing.
This budgetary treatment, however, does not relieve the Forest
Service of its responsibility to properly account for its income and
expenses in connection with the providing of quarters and subsistence.
In this instance, the expenses incurred can reasonably be expected to
differ from the amounts collected. A proper matching and reporting of
the income and expenses is needed so that management can determine the
adequacy and reasonableness of the rates charged and make needed
adjustments.
B-200989, August 19, 1981, 60 Comp.Gen. 654
Contracts - Protests - Procedures - Bid Protest Procedures - Time for
Filing - "Adverse Agency Action" Effect
Acceptance of proposals on day following formal protest to agency
constitutes adverse agency action, and protest to General Accounting
Office (GAO) must be filed within 10 days thereafter to be considered
timely. Contracts - Protests - Timeliness - Significant Procurement
Issue Exception
When untimely protest raises previously unconsidered issues regarding
General Services Administration (GSA) classification of equipment and
applicability of regulations covering automatic data processing
equipment vs. those covering telecommunication acquisitions, GAO will
review matter pursuant to the significant issue exception to Bid Protest
Procedures. Equipment - Automatic Data Processing Systems - General
Services Administration - Responsibilities Under Brooks Act -
Classification of Equipment
Under Brooks Act, GSA has discretion to define type of equipment to
be considered automatic data processing equipment, and protester
disagreeing with recent reclassification of modems should seek change
through GSA, not bid protest process. Equipment - Automatic Data
Processing Systems - Acquisition, etc. - Fixed-Price Requirement - Not
Undue Restriction On Competition
In view of need to avoid buy-ins and to evaluate life cycle costs
accurately, thus insuring that Government obtains automatic data
processing equipment at lowest overall cost, requirement for fixed or
finitely determinable prices does not unduly restrict competition.
Equipment - Automatic Data Processing Systems - Acquisition, etc. -
Fixed-Price Requirement - Tariffed Carriers - Ineligibility to Compete
Tariffed carrier, whose existing rates are subject to change and
which must be law treat all classes of customers receiving similar
services in same manner, cannot be considered for award of fixed price
contract.
Matter of: American Telephone and Telegraph Company, August 19,
1981:
American Telephone and Telegraph Company (AT&T) protests the refusal
of the Social Security Administration (SSA), Department of Health and
Human Services, to amend a solicitation to permit tariffed carriers,
whose rates are subject to change by filing of revised tariffs with the
Federal Communications Commission, to compete for award of a contract
for equipment to be used in connection with SSA's nationwide
telecommunications system.
AT&T alleges that the equipment in question has been wrongly
classified as automatic data processing equipment, which must be
procured on a fixed-price basis. Rather, the protester argues, it
should be procured according to the regulations covering
telecommunications, which require that both tariffed and nontariffed
carriers be given an opportunity to compete.
We find the protest clearly untimely. However, because it raises
issues which we have not previously considered with regard to which
regulations apply to the equipment being procured and whether a tariffed
carrier may be excluded from competition for this type of equipment, we
have reviewed the matter pursuant to the significant issue exception to
our Bid Protest Procedures, 4 C.F.R. 21.2(c) (1981). For the following
reasons, we find that SSA properly applied the regulations covering
automatic data processing equipment, and that the fixed price
requirement does not unduly restrict competition.
The protested solicitation is one of three issued by SSA, under a
delegation of procurement authority from the General Services
Administration (GSA), for the purpose of acquiring equipment for a
system known as SSADARS (Social Security Administration Data Acquisition
and Response System). This particular solicitation was for 2,040 modems
(a modem is a device which modulates and demodulates signals transmitted
over data communications facilities) and 7 associated diagnostics (which
will detect and isolate malfunctions or mistakes) needed for the
attachment of terminals to the SSADARS network. About half of the
approximately 1,850 terminals are located in SSA field offices; the
remainder are on GSA's Advanced Records Systems, a teletype-based
message system serving Federal agencies.
The threshold issue is the timeliness of AT&T's protest. SSA issued
the solicitation on June 10, 1980, with a closing date of July 25, 1980.
It stated that fixed prices must be offered for the initial contract
period. For each separate option renewal period, prices were required
to be either fixed or finitely determinable. On June 27, 1980, AT&T
requested SSA to amend the solicitation so that proposals could be
submitted on other than a fixed price basis.
On July 8, 1980, SSA issued Amendment No. 1 in which it again stated
that fixed prices were required and that prices under a common carrier
regulatory tariff would not be considered fixed for purposes of this
solicitation. Although the amendment was mailed to all offerors, AT&T
states that it did not receive it until a special inquiry was made on
July 17, 1980. In any event, AT&T filed a formal protest with SSA on
July 24, 1980, one day before closing. The firm did not submit a
proposal or take any further action until it received a reply from the
contracting officer dated October 9, 1980; its protest to our Office
was received on October 23, 1980.
Although AT&T argues that it should not have been required to file a
protest with us until the contracting officer denied its protest to SSA,
this is not the case. Acceptance of proposals on the day following
AT&T's formal protest constituted adverse action by SSA, and any
subsequent protest to our Office should have been filed within 10 days.
Bird-Johnson Company, B-199445, July 18, 1980, 80-2 CPD 49. We
therefore find the protest untimely.
We have considered the matter, however, because AT&T argues that the
contracting officer, in deciding that fixed prices were required,
incorrectly relied on Federal Procurement Regulations (FPR) Subpart
1-4.11 (1964 ed.), which deals with automatic data processing equipment,
software, maintenance, and supplies, rather than on Subpart 1-4.12
(Temp. Reg. 51, 44 Fed.Reg. 41431 (1979)), which deals with
telecommunications. We have not previously considered which regulation
covers the equipment in question, although we have recognized that there
is considerable confusion in this general area. See Browne Time
Sharing, Inc., B-190038, May 9, 1978, 78-1 CPD 347. It is significant
because the telecommunications regulation, Sec. 1-4.1202-2(a)(3), states
in pertinent part:
(3) * * * Agency telecommunications shall not be limited to tariff
descriptions. Requirements shall be set forth in a manner that will
afford both tariff and nontariff suppliers opportunities to compete.
In commenting on the protest, GSA advises us that it agrees with
SSA's contracting officer that modems are considered automatic data
processing equipment, not telecommunications equipment. At one time,
according to GSA, modems were considered communications equipment and
appeared on the Federal Supply Catalog (FSC) Group 58 Schedule for
telecommunications equipment. As a result of a joint study by the
Federal Supply Service and the Automatic Data and Telecommunications
Service (ADTS), however, modems and other equipment which are closely
related to and used with automatic data processing equipment were
transferred to FSC Group 70, administered by ADTS.
All items appearing on the Group 70 Schedule must be procured in accord
with FPR Subpart 1-4.11, GSA states.
Under the Brooks Act, 40 U.S.C. 759, GSA is authorized to coordinate
and provide for the purchase and lease of automatic data processing
equipment by Federal agencies. The type of equipment to be considered
within this category is largely left undefined in the statute, although
the legislative history is replete with statements describing it as
commercially available, mass-produced, and general purpose. The House
Committee on Government Operations recognized:
* * * (R)apidly shifting developments in the interrelated fields of
defense, space, communications and ADP could make any presently
acceptable distinctions obsolete. * * * there is no pressing need for
strict statutory definition. * * * the specific definition of the
general-purpose ADP equipment is left to the BOB (Bureau of the Budget,
now Office of Management and Budget) and GSA and the issuance of
appropriate regulations. H.R. Rep. No. 802, 89th Cong., 1st Sess. 34
(1965).
In view of this legislative history, we believe it is within GSA's
discretion to categorize modems as automatic data processing equipment,
rather than as telecommunications equipment. AT&T takes issue with the
recent reclassification and notes that it was done as the result of an
internal study by GSA which was not subject to public comment.
Nevertheless, if AT&T believes modems have been wrongly classified, the
proper forum for requesting a change in GSA, rather than the GAO through
its bid protest process.
As for the fixed price requirement, the automatic data processing
regulation requires use of a standard clause covering fixed price
options. It states that when known requirements exceed the basic period
of the contract to be awarded, to avoid buy-ins and to insure that the
Government obtains the equipment at the lowest overall cost, both
initial and subsequent requirements must be satisfied on a fixed price
basis. See FPR Secs. 1-4.1107-14, Use of Standard Clauses, and
1-4.1108-4, Fixed Price Options. In addition, this requirement for
either a fixed price or, in the case of option years, a finitely
determinable price is necessary if the Government is to evaluate system
life costs accurately. See generally Computer Machinery Corporation, 55
Comp.Gen. 1151 at 1155 (1976), 76-1 CPD 358. Although the regulation
may restrict competition to firms offering fixed prices, in view of
these legitimate needs, we do not believe it is an undue restriction.
We cannot conclude that AT&T offered a fixed price, since its rates
are subject to the jurisdiction of the Federal Communications Commission
(FCC) and could be changed by the filing of a revised tariff during the
term of the contract. Under the Federal Communications Act of 1934, as
amended, a carrier may increase its rates merely by giving 90 days'
notice to the FCC and to the public. No action by the Commission is
needed to allow an increase to go into effect, although either upon
complaint or on its own initiative the FCC may conduct a hearing into
the lawfulness of any new charge.
47 U.S.C. 203(b)(1), 204(a) (1976); see also American Broadcasting
Companies, Inc. v. FCC, 643 F.2d 818, 822 (D.C. Cir. 1980). After a
hearing, the FCC is authorized to prescribe "just and reasonable" new
charges, 47 U.S.C. 205(a); however, the amount considered just and
reasonable will vary according to the carrier's capital expenses and
operating costs. In any event, existing rates clearly are not fixed.
AT&T argues that in Anchorage Telephone Utility, B-197749, November
20, 1980, 80-2 CPD 386, we found that a tariffed carrier could be
evaluated as if it were offering a fixed price. Our decision in that
case, however, turned on the unique nature of the equipment being leased
("AUTOVON" switches to be used by the Defense Communications Agency in
Anchorage and Fairbanks, Alaska). The agency found that the price of
this "special assembly" service had actually decreased over the term of
three other contracts; in addition, rates for this type of service
generally are developed to reflect actual costs, and thus are unlike
services where tariffs may be increased due to political and economic
factors. The agency therefore concluded, and we agreed, that the chance
of an increase in rates due to regulatory jurisdiction was remote.
The Anchorage case, however, is limited to its particular facts,
which are unlike those in the instant case. We also note that in
Anchorage, the carrier selected for award had agreed not to initiate any
rate increases from the start of service. AT&T, however, has not made
any such offer and is, in effect, attempting to reserve the right to
change its prices during the 96-month (with options) term of
performance.
Because AT&T's existing rates are subject to change, there is no
basis for comparing them with the rates of non-tariffed carriers or for
determining the lowest overall cost to the Government under any of the
four pricing plans to be evaluated by SSA. (These include purchase,
lease with option to purchase, rental, and rental with payments to be
applied to the purchase price. AT&T, obviously, would only be able to
offer a rental rate based on its existing tariff.)
Moreover, except for maintenance costs after the first year, the
price of the successful contractor will not be subject to escalation
under the Consumer Price Index (CPI) or any other formula. According to
the solicitation, maintenance costs during option years will be adjusted
according to the CPI; for evaluation purposes, a 10 percent compound
increase per year was projected. Whatever increases the CPI ultimately
permits for maintenance-- a relatively minor portion of the contract--
the percent of increase will be the same for all offerors and thus may
be evaluated.
A price increase due to filing of a revised tariff by AT&T, on the other
hand, would not be limited to maintenance and is totally unpredictable
for evaluation purposes.
The protest is denied.
B-177610, August 17, 1981, 60 Comp.Gen. 653
Federal Credit Unions - Services Furnished by Government - Telephones
Not Included
Federal agency may not provide telephone services, on a reimbursable
basis, to Federal employees' credit union which has been allocated space
by the agency pursuant to 12 U.S.C. 1770. Such use, absent authority
similar to that provided by 12 U.S.C. 1770, would violate 31 U.S.C. 628,
which makes appropriations available solely for the objects for which
they are made. 58 Comp.Gen. 610, modified in part.
Matter of: Federal Services to Employee's Credit Union Service
Center, 58 Comp.Gen. 610 (1979) - Further Issues, August 17, 1981:
This is in response to a request for further discussion of issues in
our decision, Federal Services to Employees' Credit Union Service
Centers, 58 Comp.Gen. 610 (1979). In that decision, rendered at the
request of the Director, Fiscal and Accounting Management, United States
Forest Service, Department of Agriculture, we held that the cost of
telephone services provided by the Government to a Federal employee
credit union should be billed to the credit union. The Forest Service
now questions whether a Federal agency can provide credit unions with
the telephone equipment and services even though these services are
reimbursed by the credit union.
The Forest Service contends that since we have ruled that telephone
services for credit unions are special services the cost of which should
be borne by the credit union, an agency's initial expenditure of
appropriated funds for the service would be in violation of 31 U.S.C.
628, which requires appropriated funds to be used solely for the
purposes for which they were appropriated. The Forest Service states
further that, since reimbursement must be deposited in the miscellaneous
receipts account of the U.S. Treasury, the net effect is that the
agency's appropriation is used to fund the credit union's telephone
services.
Upon reconsideration, we conclude that absent authority similar to
that in 12 U.S.C. 1770, for providing space and related services to
Federal Employee Credit Unions at no cost, provision of telephone
services to credit unions, which are private organizations, would
violate 31 U.S.C. 628 whether or not the cost of providing the services
were reimbursed. In the first place, it is clear, as stated in our 1979
decision, that provision of telephone service to credit unions would
result in extra expense to the Government agency providing the service.
Such expense would be reflected in direct charges for installation of
telephones to be used by the credit union and for monthly use rates for
such telephones (which would in all probability be dedicated to the
exclusive use of the credit union).
Also, credit union use of FTS lines would ultimately be reflected in the
cost to the agency for use of FTS lines. Furthermore, it would not
appear impractical for credit unions to procure telephone service
directly even where the service is to be installed in federally
controlled space.
Accordingly, we conclude that Government agencies may not provide
telephone services to Federal employee credit unions on a reimbursable
basis but that, instead, credit unions should procure such services
directly. 58 Comp.Gen. 610 (1979) is modified accordingly.
B-201899, August 12, 1981, 60 Comp.Gen. 650
Officers and Employees - Transfers - Relocation Expenses - Loan
Processing - Second Mortgage on Old Residence - Proceeds Applied to
House Purchase
Transferred employee obtained money from second mortgage on old
residence to make downpayment on purchase of new residence. Second
mortgage was on employee's old residence which he was unable to sell due
to high interest rates, low availability of mortgage money, and high
real estate prices. Transaction to obtain funds to make downpayment was
not an "interim personal financing loan" but a loan upon employee's
equity in old residence. Such transaction was thus essential to enable
employee to make downpayment on residence at new duty station incident
to transfer. Hence, expenses of second mortgage are reimbursable, if
otherwise proper. 5 U.S.C. 5724a(a)(4) and FTR para. 2-6.2d.
Matter of: Arthur J. Kerns, Jr. - Real Estate Expenses - Second
Mortgage, August 12, 1981:
This decision is in response to a request by Mr. D. E. Cox,
Authorized Certifying Officer, Federal Bureau of Investigation (FBI),
United States Department of Justice, as to whether he may certify for
payment a reclaim travel voucher in the amount of $596.35.
The reclaim was submitted by Mr. Arthur J. Kerns, Jr., an employee of
the agency, for reimbursement of costs incurred in obtaining a second
trust on his old residence in order to purchase a new residence at his
new official duty station.
The record discloses that by letter dated August 22, 1979, Mr. Kerns
was officially transferred from Washington, D.C., to Phoenix, Arizona.
His transfer was effected on October 8, 1979. Mr. Kerns reports that
upon receipt of his official transfer letter, he immediately contacted a
realtor and placed his Falls Church, Virginia residence on the market.
He states that at that time, there was no buyer interest in the
property. He reports that in October 1979, he leased the house to an
individual who expressed an interest in purchasing it. Due to the slow
real estate market, Mr. Kerns requested and was granted a 1-year
extension to sell his residence in Virginia. During this period, the
employee was attempting to arrange for the necessary financing to
purchase his new residence in the Phoenix area. In order to qualify for
a loan, Mr. Kerns was required to take a second trust on his Virginia
residence which allowed him to use the equity therein for the
downpayment on his new house in Scottsdale, Arizona. He reports that he
has been unable to sell his Falls Church residence due to high interest
rates, low availability of mortgage money, and high real estate prices.
In September 1980, Mr. Kerns submitted a travel voucher for
reimbursement of real estate expenses which he had incurred including
the costs incurred in obtaining the second trust on his Falls Church
residence. The expenses claimed included legal and related costs,
lender's appraisal fee, mortgage title policy, and transmittal charges
for sending and returning closing documents for the second trust on the
Virginia residence. The FBI administratively disallowed those expenses
which were shown to be associated with obtaining the second mortgage.
The certifying officer states that the financial transaction involved
in the claim by Mr. Kerns may be considered as normal real estate
expenses in today's real estate market, but he is unable to find any
authority within the Federal Travel Regulations to allow reimbursement
for the expenses directly associated with obtaining money by taking a
second trust on the employee's Virginia residence.
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 section 5724a(a)(4), title 5, United
States Code, 1976, and paragraph 2-6.2d of the Federal Travel
Regulations (FPMR 101-7, May 1973). It is to be noted that
reimbursement of expenses connected with a second mortgage transaction
is not specifically precluded by either the cited statute or regulation.
In this regard, this Office has held that expenses incurred in
connection with the negotiation of a second mortgage, if otherwise
proper, are reimbursable to the same extent as expenses incurred in
connection with first mortgages, provided such charges do not exceed the
customary costs therefor in the locality involved, are reasonable, and
do not compensate the lender for the high risk involved. James J.
Beirs, B-184703, April 30, 1976; Charles L. Putnam and Billie L.
Verble, B-183251, May 29, 1975; B-167605, August 21, 1969; B-166698,
May 27, 1969.
While we are cognizant that here, the second mortgage was not
obtained on the residence which Mr. Kerns was purchasing and was made on
the employee's old residence which he had been unable to sell, we do not
regard this transaction by Mr. Kerns to obtain funds to make the
downpayment on the residence at his new duty station as being
extraordinary or unusual in light of today's real estate climate, i.e.,
high interest rates, low availability of mortgage money, and high real
estate prices, so as to preclude reimbursement under the Federal Travel
Regulations; cf., Willard L. Steenhout, B-199304, March 31, 1981, and
B-165686, December 20, 1968. Rather, we view the second mortgage
transaction on the old residence as a part of the "total financial
package," as being essential in the purchase of the new residence in
Scottsdale, Arizona. As such, the second mortgage was not an "interim
personal financing loan" disassociated from the purchase of the new
residence, but was a loan made by the employee on his equity in his old
residence to enable him to make the downpayment on the residence being
purchased at his new post of duty, incident to his transfer of official
station. Compare 55 Comp.Gen. 679 (1976), and James J. Beirs, B-184703,
April 30, 1976.
We would also point out that the Application for Reimbursement of
Expenses Incurred Upon Sale or Purchase (or both) of Residence Upon
Change of Official Station submitted with the travel voucher shows that
the expenses of the purchase of the Scottsdale, Arizona, residence have
been administratively approved as being reasonable in amount and
customarily paid by buyers in the Scottsdale area. Further, the
evidence of record does not indicate that Mr. Kerns obtained the money
from the second mortgage on his Virginia residence to compensate the
lender for any high risk involved in purchasing the Scottsdale
residence.
Accordingly, in light of the rule enunciated in our cited decisions
and the particular facts herein involved, the claimed real estate
expenses associated with the second mortgage on Mr. Kern's Falls Church,
Virginia, residence may be certified for payment, if otherwise proper.
B-201716, August 12, 1981, 60 Comp.Gen. 648
Travel Expenses - Military Personnel - Leaves of Absence - Officially
Interrupted - Application of 24-Hour Rule
Current regulations, which limit a service member's entitlement to
return travel and transportation expenses upon recall from authorized
leave of 5 days or more due to urgent unforeseen circumstances only if
recall is within 24 hours of departure from the duty station, may be
amended to authorize entitlement for recalls after 24 hours. Such
amendment should set forth definite criteria to be followed if
authorization of expenses is to be allowed after 24 hours. Modifies in
part 46 Comp.Gen. 210.
Matter of: Travel Allowances Upon Recall from Extended Leave.
August 12, 1981:
This case concerns whether a military member on an authorized leave
of absence for over 5 days who is recalled to duty due to urgent
unforeseen circumstances may receive return travel and transportation
expenses if the recall is more than 24 hours after his departure. As
will be explained, the Joint Travel Regulations, which presently
preclude reimbursement for recalls more than 24 hours after the member's
departure, may be amended to allow return travel and transportation
expenses for recalls after 24 hours, under certain circumstances.
The case was submitted for an advance decision by the Assistant
Secretary of the Navy (Manpower, Reserve Affairs & Logistics) and was
assigned Control No. 80-34 by the Per Diem, Travel and Transportation
Allowance Committee.
Volume 1 of the Joint Travel Regulations (1 JTR) paragraph M6601-1
states in pertinent part:
* * * when a member departs from a permanent station for the purpose
of taking an authorized leave of absence of 5 days or more and, because
of an urgent unforeseen circumstance, it is necessary to cancel the
member's authorized leave status and recall the member to duty at the
permanent station within 24 hours after departure therefrom, travel and
transportation allowances will be authorized as provided in subpar. 2.
* * *
Paragraph M6602-1 is essentially identical to the above except that
it applies to recall from leave to duty at a temporary duty station
rather than permanent station. Neither paragraph M6601-1 nor paragraph
M6602-2 makes provision for a member to be authorized return travel and
transportation expenses for recall to the duty station after 24 hours
due to urgent unforeseen circumstances. Additionally, 1 JTR, paragraph
M6600 states the general rule that a member on leave who departs from a
duty station does so at his own risk, and that if a member, while at or
en route to a leave point, is directed to return to the duty station
after having been on leave in excess of 24 hours, the member will bear
the cost in returning.
We are specifically asked if the words "within 24 hours after
departure therefrom" may be deleted from paragraphs M6601-1 and M6602-2
as well as whether the language in paragraph M6600 regarding the 24-hour
rule may be deleted. These deletions would enable a member on an
authorized leave of absence of 5 days or more to be authorized travel
and transportation expenses upon recall to duty whenever he was
recalled.
In 46 Comp.Gen. 210 (1966), we approved an amendment to Volume 1 of
the Joint Travel Regulations to include the portion of paragraph M66011
now under discussion. As noted in the decision, the proposed regulation
was submitted so as to afford military members a benefit already
afforded to civilian employees of the military services under a
provision in the regulations applicable to them, Volume 2 of the Joint
Travel Regulations. Indeed, the proposed regulation was essentially the
same as the one in effect for civilian employees. See 46 Comp.Gen.at
211. Thus, our approval of the regulation recognized that similar
benefits for military members and civilian employees of the military
could be afforded in this type of situation.
With this recognition that there is no factual or legal impediment to
affording military members and civilian employees equality of treatment
in entitlement to return travel expenses upon recall to duty after going
on extended leave, the problem may be resolved by using cases involving
civilian employees as precedent.
In 39 Comp.Gen. 611 (1960) the reason for the 24-hour recall
limitation is explained. In that case, we were presented with a
proposed regulation which the Department of the Air Force wished to
apply to its civilian employees.
The proposed regulation set forth the requirement that the civilian
employee of the Air Force on an authorized leave of 5 days of more would
receive return travel and transportation expenses if recalled "very
shortly after arrival at the place of beginning leave." Because of the
possibility of various interpretations of the quoted portion, we
suggested language which limited the entitlement to employees recalled
within 24 hours after departure from the duty station. See 39
Comp.Gen.at 612-613. Thus, the 24-hour requirement was a suggestion to
avoid interpretive difficulties.
In more recent decisions, we have had occasion to discuss
specifically the matter of recalls from intended leave. We indicated
that where an agency has no specific regulation covering the situation
of recall, the criteria suggested in 39 Comp.Gen. 611 (1960) (i.e.,
reimbursement of travel expenses if recalled within 24 hours) should be
followed. B-190755, June 15, 1978. We have indicated, however, that an
agency may adopt a regulation which is not so restrictive, B-190646,
January 25, 1978, discussing B-186129, November 17, 1976 (56 Comp.Gen.
96 (1976)). As indicated in 56 Comp.Gen. 96 (1976), such factors as how
much leave was remaining and if the purpose of a trip had been
accomplished are factors which could be considered by an agency in
promulgating an appropriate regulation.
Accordingly, we do not object to expanding the authority to reimburse
members recalled to duty from extended leave. We would suggest,
however, that the 24-hour provision not be eliminated, but rather that
an alternate provision be added to take into account situations where
the recall is after 24 hours but the purpose of the member's trip on
leave has been defeated or a substantial portion of the scheduled leave
period has been eliminated by the recall.
B-200753.2, August 12, 1981, 60 Comp.Gen. 642
General Accounting Office - Recommendations - Contracts - Prior
Recommendation - Withdrawn - Cancellation of Solicitation Justified
Prior decision, 60 Comp.Gen. 316, that refuse collection services
invitation improperly was canceled because contracting officer
erroneously calculated inflation factor in finding low bid price
unreasonable is reversed, since on reconsideration agency has shown that
in view of procurement history regarding services low bid was
unreasonably high. Bonds - Bid - Requirement - Administrative
Determination
Contracting officer has discretion to determine whether it is
necessary that solicitation require firms to furnish bid bonds with
their bids. Contracts - Awards - Small Business Concerns - Set-Asides -
Administrative Determination - Repetitive Military Procurements
Defense Acquisition Regulation provides that once service has been
successfully acquired through small business set-aside, all future
requirements of contracting activity for that service must be set aside
unless contracting officer, in exercise of judgment, determines that
there is not reasonable expectation that offers from two responsible
small businesses will be received and award will be at reasonable price.
Bids - Competitive System - Equal Bidding Basis For All Bidders -
Government Equalizing Differences
Contracting agency is not required to equalize competition on
particular procurement by considering competitive advantage accruing to
offeror by virtue of its incumbency.
Matter of: Honolulu Disposal Service, Inc. - Reconsideration, August
12, 1981:
The Department of the Army requests that we reconsider our decision
Honolulu Disposal Service, Inc., 60 Comp.Gen. 316 (1981), 81-1 CPD 193,
in which we sustained Honolulu Disposal Service, Inc.'s protest against
the cancellation of Lot II of invitation for bids (IFB) DAHC77-80-B-0280
for a contract for refuse collection services at Fort Shafter, Hawaii,
for fiscal years 1981-1983. The IFB was canceled because the
contracting officer found Honolulu's low bid of $206,974.41 for each
fiscal year unreasonable. The basis for the contracting officer's
finding was that the bid was 25.36 percent higher than the yearly price
in the previous 2-year (fiscal years 1978 and 1979) contract for the
services, whereas the average annual inflation rate was only 9.2
percent. We found that the contracting officer, in working from the
previous contract price to calculate what the Army should expect to pay
for the 3 fiscal years involved in the instant IFB, improperly failed to
compound that 9.2 percent rate for the second and third years of
performance. We held that if the previous contract price was increased
by 9.2 percent per year compounded for each of 3 years, the $620,923.23
3-year cost to the Government under a contract with Honolulu would have
been considered reasonable. We therefore sustained the protest.
The record disclosed that between the cancellation of the
solicitation and our decision, the Army resolicited the requirement and
awarded a new contract. We recommended that the Army determine whether
it was practical and otherwise legally appropriate to terminate that
contract. We pointed out that in considering the weight to be attached
to termination costs, if any, "the Army should keep in mind the
importance of taking corrective action to protect the integrity of the
competitive procurement system."
For the reasons set forth below, we reverse the decision.
In the request that we reconsider the decision, the Army admits that
the contracting officer failed to compound the annual inflation rate
when judging the reasonableness of Honolulu's bid price. However, the
Army advances two new factors to show that the Honolulu's price
nonetheless was unreasonable. See 4 CFR 20.9 (1980), providing for our
reconsideration of a decision if the requester presents information not
previously considered.
First, the Army states that the fiscal year 1977 contract price for
the refuse collection service was $147,577.56, the fiscal year 1978
price was $158,302.20, and the yearly price for fiscal years 1979 and
1980 was $165,103.54. The Army points out that the yearly contract
prices increased only approximately seven percent ($10,724.64 from 1977
to 1978) and four percent ($6,801.34 from 1978 to 1979) over that 4-year
period. In view of this procurement history, the Army suggests that the
yearly contract price for fiscal years 1981-1983 could reasonably have
been expected to increase similarly from the fiscal year 1980 price of
$165,103.54; in the Army's view the increase thus should have been to
not more than $181,614 per year for 3 years, or $544,842 total (a ten
percent increase). Accordingly, the Army argues that Honolulu's price
of $206,974.41 per year for fiscal years 1981-1983, totalling
$620,923.23, in fact was unreasonable notwithstanding consideration of
the effect of inflation on the cost of the services.
Second, the Army advises that the contract that resulted from the
resolicitation, which in our March 13 decision we recommended be
terminated if practical and otherwise legally appropriate, was awarded
at a bid price of $172,963.20 per year. The Army suggests that this
fact confirms that Honolulu's price of $206,974.41 per year under the
initial solicitation actually was unreasonable, or at least indicates
that termination of the resolicitation contract and reinstatement of and
award to Honolulu under the canceled solicitation would not be in the
Government's interest.
A determination of price reasonableness properly may be based on a
comparison with procurement history, as well as other relevant factors.
Coil Company Inc., B-193185, March 16, 1979, 79-1 CPD 185. As we
pointed out in our initial decision, because the determination is a
matter of administrative discretion often involving the exercise of
business judgment by the contracting officer, we will not question it
unless it is unreasonable or there is a showing of bad faith or fraud.
Espey Manufacturing and Electronics Corporation, B-194435, July 9, 1979,
79-2 CPD 19. While we believe our original decision was proper, the
facts now presented lead us to a different conclusion.
The contracting agency's experience in the procurement of these
services in the four fiscal years preceding the procurement in issue is
that the Army's cost increased less than 12 percent total from fiscal
year 1977 to fiscal year 1980, an average of three percent each year
even though substantial inflation was prevalent in the economy. We
believe that it was reasonable for the contracting officer to expect a
similar increase in the contract price for the fiscal year 1981-1983
period, i.e., to award a contract at a yearly price averaging a three
percent increase per year over the 3-year period of the contract.
However, Honolulu's bid totaling $620,923.23 for 3 years ($206,974.41
per year) is $76,081.23 more-- or fourteen percent-- than what the
procurement history indicated to the Army that it should expect to pay
over that period. While our initial decision noted that the total cost
of accepting Honolulu's bid for fiscal years 1981-1983 appeared
reasonable when applying and compounding a 9.2 percent yearly inflation
rate to the previous contract price, it nonetheless appears excessive
when other factors are considered.
In addition, while the determination to reject a bid and readvertise
must be based on the facts available at the time, we have held that it
is not improper to consider the results of a resolicitation as evidence
in support of that determination. Coil Company Inc., supra. The low
bid of $172,963.20 per year through fiscal year 1983 under the Army's
resolicitation is not only substantially lower than Honolulu's bid of
$206,974.41 under the canceled IFB, but in fact is lower than what the
Army expected to pay each year based on its experience in procuring
these services.
Under the circumstances, we believe that the contracting officer
reasonably could conclude that Honolulu's bid under the initial
invitation was too high and thus the solicitation properly was canceled.
We therefore withdraw our March 13 recommendation that the contract
awarded under the resolicitation be terminated and the canceled IFB
reinstated with award to Honolulu.
In doing so, we are mindful of our recent decision where we held that
we would not consider evidence on reconsideration that an agency could
have but did not furnish during our initial consideration of a protest.
See Interscience Systems, Inc.; Cencom Systems, Inc.-- Reconsideration,
59 Comp.Gen. 658 (1980), 80-2 CPD 106. That holding arose out of a
situation in which the agency had made a general conclusionary statement
concerning the availability of competition but neither it nor the
interested party concerned offered any support whatsoever for that
position until the agency requested reconsideration of our decision
which was adverse to the agency on that point. Our holding was not
meant to encompass the very different situation here, where the agency
did indeed provide evidence in support of its position and the record
contained some indication (from both the agency and the protestor) that
the resolicitation had produced a substantially lower bid than was
obtained initially.
Because we initially sustained Honolulu's protest against the
cancellation, it was not necessary in that decision to consider certain
issues raised by the firm regarding the resolicitation of the Fort
Schafter refuse collection contract. In view of the above, we will now
discuss those matters.
Honolulu complained that the Army departed from prior practice by
deleting the bid bond requirement from the resolicitation and by
refusing to limit participation to small business firms.
In a report on Honolulu's protest against the cancellation of the
original invitation, the contracting officer stated:
We have 13 companies listed as refuse collection services firms, with
one of them determined to be other than small. However, Contracting
Division has been asking for both a Bid Bond and 100 percent Performance
Bond, which makes it very difficult for small business firms to comply.
As a result one big business firm and one small business was able to
post cashier checks in lieu of a bid bond. * * *
The new solicitation therefore, has the bid bond requirement deleted
and the performance bond reduced to 50 percent of the contract price. *
* * A solicitation restricted to small business firms with requirement
that Bid and Performance Bonds be obtained will mean that only one firm,
Honolulu Disposal Service, Inc. will be able to bid. (Honolulu was the
only bidder on Lot II under the initial invitation.) To issue the
solicitation on a non-restricted basis will mean competitive prices for
all lots. Under the circumstances, SBA is in agreement with the
Contracting officer in his determination to submit procurement on a
non-restricted basis.
There is no legal requirement that bid guarantees be furnished in
every case. Rather, the contracting officer has the discretion to
decide whether a bid bond is necessary in a particular situation to
insure that the successful bidder execute further contractual documents
and bonds. See Defense Acquisition Regulation (DAR) Sec. 10-102 (1976
ed.); cf. Willard Company, Inc., B-187628, February 18, 1977, 77-1 CPD
121 (concerning performance bonds). We have no basis to conclude that
the discretion was abused in this case.
Regarding the decision not to set the procurement aside for small
business, DAR Sec. 1-706.1(f) (DAC No. 76-19, July 27, 1979) provides
that once a service has been successfully acquired through a small
business set-aside, all future requirements of the contracting activity
for that service must be set aside unless the contracting officer
determines that there is not a reasonable expectation that offers from
two responsible small businesses will be received and the award will be
at a reasonable price. These are the same considerations that enter
into a decision whether to set aside a procurement in the first instance
under DAR Sec. 1-706.5(a)(1) (1976 ed.), and we therefore have stated
that the repetitive set-aside provision appears to be consistent with
the general DAR set-aside policy. Fermont Division, Dynamics
Corporation of America; Onan Corporation, 59 Comp.Gen. 533, 542-543
(1980), 80-1 CPD 438.
Thus, while it is within a contracting officer's discretion to
determine whether to set a procurement aside initially, see Technical
Services Corporation; Artech Corporation, and Sachs/Freeman Associates,
Inc., B-190970, B-190992, August 25, 1978, 78-2 CPD 145 at page 14, once
that discretion has been exercised and the decision to set aside made,
the next procurement of the service must be set aside unless there is no
reasonable expectation of the receipt of offers from two responsible
firms and a reasonable contract price.
See Otis Elevator Company, B-195831, November 8, 1979, 79-2 CPD 341.
However, the determination of the extent of the competition expected
and whether the price will be reasonable essentially are business
judgments for the contracting officer to make, although we note that DAR
Sec. 1706.3(d) (1976 ed.) provides that where a contracting officer
decides not to set aside a procurement the matter should be referred to
the Small Business Administration (SBA) representative (if one is
assigned and available) for review and his concurrence or appeal. In
view of the quoted discussion from the Army's report, we have no basis
to question the contracting officer's judgment here, with which the SBA
concurred, that a set-aside pursuant to DAR Sec. 1-706.1(f) should not
be effected on resolicitation.
Honolulu also complains about the Army's award of an interim contract
for the period October 1, 1980, when performance under the canceled IFB
was to begin, until December 31, 1980, by which date it was anticipated
that the full requirement (less the first 3 months) could be resolicited
and a new contract awarded. That contract was awarded to the incumbent
(fiscal year 1980) contractor after the contracting officer solicited
oral offers from a number of firms, including Honolulu and the
incumbent. Honolulu asserts that the interim procurement was biased in
favor of the incumbent because only that firm had not start-up costs to
consider in calculating an offer, and had the personnel to begin
performance on short notice.
Honolulu's complaint is without merit. The initial solicitation was
canceled on September 24, 1980. The oral solicitation was conducted
immediately thereafter to avoid the sanitation problems that would
result from a lapse in refuse collection services after the fiscal year
1980 contract expired one week later. In this respect, DAR Sec.
3-501(d)(ii) authorizes an oral solicitation where the processing of a
written solicitation would, to the Government's detriment, delay the
furnishing of supplies or services.
Further, we often have recognized that a firm may enjoy a competitive
advantage because of its incumbency. See ENSEC Service Corp., 55
Comp.Gen. 656 (1976), 76-1 CPD 34. The Government is not required to
equalize the competition unless the competitive advantage enjoyed is the
result of preference or of unfair action by the Government. Oshkosh
Truck Corporation, B-198521, July 24, 1980, 80-2 CPD 161. In view of
the circumstances of the instant interim procurement as described above,
the incumbent's competitive advantage here is irrelevant to the legality
of the contract award, notwithstanding that it may have caused the firm
to be successful in the competition.
As we stated in Tenavision, Inc., B-199485, July 28, 1980, 80-2 CPD 76:
* * * The purpose of competitive procurement is not to insure that
all bidders face the same odds in competing for Government contracts.
Rather, the purpose is to insure that the Government obtains its minimum
requirements at the most favorable price. * * *
Since our March 13 decision contained a recommendation for corrective
action, we had furnished copies to the House Committee on Government
Operations, the Senate Committee on Governmental Affairs, and the House
and Senate Committees on Appropriations in accordance with section 236
of the Legislative Reorganization Act of 1970, 31 U.S.C. 1176 (1976),
which requires the submission of written statements by the agency to the
Committees concerning the action taken with respect to our
recommendation. We are advising those committees of this action on
reconsideration.
Our initial decision is reversed and the protest is denied. Our
recommendation for corrective action therefore is withdrawn.
B-198459, August 11, 1981, 60 Comp.Gen. 637
States - Fire-Fighting Services - Local Governments, etc. - Legal
Obligation To Provide Services Without Reimbursement - Services to
Federal Government - Contracting Authority
Absent specific statutory authority contracts for fire services are
not authorized where a non-Federal governmental entity such as Rural
Fire District is legally obligated under state or local law to provide
fire service without compensation. Where no antecedent legal obligation
exists, however, contracts may be executed. Property - Public -
Fire-Fighting Services - Mutual Aid Agreements
Mutual aid agreements are statutorily authorized in all jurisdictions
as are actual cost reimbursements for losses incurred in fire
suppression activities on Federal lands.
Matter of: Bureau of Land Management: Contracts for Fire
Protection, August 11, 1981:
The Director of the Bureau of Land Management (BLM) has asked for our
opinion on whether the BLM may legally contract with individual Rural
Fire Districts in Oregon and Washington to secure fire protection and
firefighting services for Federal lands situated within the district's
boundaries.
The lands in question are extensive tracts of timber, and the Rural Fire
Districts affected are legally required to protect these large, sparsely
populated areas. BLM strongly urges that the contracts are authorized.
The Department of the Interior Regional Solicitor's Office in Portland,
Oregon, analyzed state laws, court decisions and previous Comptroller
General's decisions and concluded that contracts with Rural Fire
Departments in those states are improper. We agree with the Regional
Solicitor's conclusion.
In a long line of cases, the Comptroller General has held that there
is no authority to charge appropriations with the cost of providing fire
services where a non-Federal governmental unit is required by state or
local law to provide the services without compensation to all property
owners within its jurisdiction. 24 Comp.Gen. 599 (1945); B-153911,
December 6, 1968. Additionally, we have held that if the governmental
unit's provision of fire services is supported in whole or in part by
property taxes or other levies from which the Federal Government is
constitutionally exempt, any additional payment specifically for fire
protection amounts to an unconstitutional tax. 49 Comp.Gen. 284 (1969).
Both of these obstacles could be overcome by statute. However, the
statute relied upon would have to explicitly authorize contracts with or
payments to local governments legally obligated to provide fire
protection to property owners without charge. We have held that
statutory authority to enter into agreements to pay state agencies for
"services" is insufficient to support a contract for legally required
fire protection. B-105602, December 17, 1951. This is consistent with
the interpretation of "specific statutory authority" applied in
appropriations law generally. Compare, for example, 38 Comp.Gen. 33
(1958) (statutory authority to train operating personnel for nuclear
ship does not extend to training Maritime Administration personnel) and
41 Comp.Gen. 529 (1962) (authority to engage in printing does not
include authority to print business cards, which the Comptroller General
has held is personal expense).
BLM argues that it has statutory authority for fire service contracts
and cites several statutes as support for that proposition.
Particularly mentioned are 43 U.S.C. 1469 and 1738 (1976). Section 1469
provides that:
(n)ot withstanding any other provision of law, persons may be
employed or otherwise contracted with by the Secretary of the Interior
to perform work occasioned by emergencies such as fire, flood, storm, or
any other unavoidable cause and may be compensated at regular rates of
pay without regard to Sundays, Federal holidays, and the regular
workweek.
Section 1738 deals with resource protection operations and it
provides in pertinent part as follows:
The Secretary is authorized to enter into contracts for the use of
aircraft, and for supplies and services, prior to the passage of an
appropriation therefor, for airborne cadastral survey and resource
protection operations of the Bureau. He may renew such contracts
annually, not more than twice, without additional competition. Such
contracts shall obligate funds for the fiscal years in which the costs
are incurred.
These statutes grant specific authority for BLM to engage in several
activities which would otherwise be prohibited by law: employing
firefighters without regard to overtime and premium pay requirements;
procuring the use of aircraft; making contractual arrangements for
supplies and services for the resource protection operations of BLM in
advance of appropriations; and renewing contracts without competition.
Although these statutes generally are applicable to contracting and
other activities in support of fire services, they do not specifically
mention entering into contracts with state or local government entities
which are required by law to provide fire services without charge, and
hence do not provide the needed authority. The kinds of contracts which
are authorized by the statute would be for seasonal personnel,
procurement of their equipment, chemical fire suppressants, etc., and
contracts for complete fire services with providers who are not legally
obligated to offer that service without charge.
BLM urges that the legislative history of section 1738 implies a
broader authority on the part of the Secretary of the Interior to
contract generally for fire services. However, to say that all
contracts for fire services are authorized by the legislative history
would be to take the crucial words of the Senate Report out of context.
The legislative history speaks of "renewable contracts for protection of
public lands from fire in advance of appropriations * * * . " S. Rept.
No. 94-583, 57 (1975). The fact that the specific exemptions from other
restrictions are reiterated in the legislative history supports the
foregoing analysis that contracts with governmental units, which must be
specifically approved, are not intended to be authorized by the statute.
Additionally, the revision of this statute which was accomplished in
1975 did not revise the provision concerning fire services. Rather, it
expanded the renewable advance contract authority to other resource
protection operations and surveys.
Further support is derived from the fact that the statute and
legislative history both address renewing the contracts without
competition. Contracts with local governments for fire services would
not usually lend themselves to competitive procurements. In fact, such
contracts would almost always be sole source procurements, because in
states where local governments are obligated to provide fire service,
there ordinarily are no privately operated competing fire companies.
Thus, the contracting authority is not implicitly extended to contracts
with state and local governments which are required to provide such
services without charge. In all, we do not think that the legislative
history supports the contention that an otherwise prohibited act is
authorized.
Because the authority to contract with a legally obligated
governmental unit must be specific, and because the requirement is
Federal in origin, the Supremacy Clause analysis put forward by BLM is
not a consideration in our decision. The other statutory arguments
advanced-- analogizing the provision of fire services to the statutorily
authorized conduct of state and local law enforcement activities on
Federal lands, and to the authority to reimburse localities for
extraordinary fire-related losses under the Federal Fire Prevention and
Control Act, 15 U.S.C. 2210 (1976)-- are similarly unpersuasive.
It is clear from the above discussion that no specific statutory
authority exists to enable the BLM to voluntarily contract with
governmental units for fire services, but even if states insisted on
compensation, there would still remain the question of an
unconstitutional tax. Again, the Congress can waive the Federal
Government's immunity from state and local taxation, but only by an
express, affirmative act. Mayo v. United States, 319 U.S. 441 (1943).
BLM conceded in its submission that but for the argued statutory
authority to contract, the proposed payments would amount to an
impermissible tax. As we have found no authority to contract, that
conclusion must also prevent payments to Rural Fire Districts.
Further, local Fire Districts are not lacking for Federal financial
participation in their activities. We must assume that some of the
districts in question receive payments in lieu of taxes under 31 U.S.C.
1601 et seq. That law provides payments up to $1,000,000 annually based
on a formula related to population. These payments are intended to
compensate a local government for the loss of revenue occasioned by
large tax-exempt Federal land holdings and to underwrite the locally
provided services which the Federal lands receive, B-149803, May 15,
1972.
Additionally the Fire Districts may make claims for any extraordinary
losses incurred in fighting a fire on Federal property under the Federal
Fire Prevention and Control Act. That Act, codified at 15 U.S.C. 2210
et seq., provides that only expenses "over and above (the District's)
normal operating costs * * * " may be reimbursed on a claim. This most
recent legislative pronouncement on the financial treatment of fire
services for Federal property clearly indicates that Congress did not
intend to underwrite the overhead costs of local fire districts.
Existing compensation methods alone are applicable to general operating
expenses. These methods would include payments in lieu of taxes, tax
exemptions affirmatively waived by Congress, payments under permissible
contracts for fire protection, e.g., contracts with private fire
companies and with governmental units not required by law to provide
fire services, and other payments specifically authorized by law.
Finally, there is the suggestion that our traditional test in fire
service cases of antecedent legal obligation on the part of a
governmental unit is inappropriate, and that instead, the test should be
whether the investment is for the primary benefit of the Government.
This theory rests on the assumption that the contract proceeds are used
to improve equipment and services of local Fire Districts across the
board and the Government, as a large landowner in the district, would be
the principal beneficiary of those improvements if a fire should occur.
This primary benefit analysis was first employed in 55 Comp.Gen. 1437
(1976). That case allowed the purchase and installation of a traffic
light on Government property. The signal regulated traffic on a state
highway, allowing improved access to a Government installation. We
found that regulation of traffic is universally a function of local
governments. However, the local government was unwilling to put a
traffic light at the intersection of the state highway and the Federal
property's access road, presumably because it would not benefit from the
light. The light was installed by the Government on its own property,
and, although it made the whole intersection safer for both Government
and private travelers, it had the primary effect of allowing gaster and
safer ingress and egress at the Government installation.
The "primary benefit" analysis may be appropriate for a capital item
like a traffic light, but it is less applicable to the purchase of a
municipal service because it is impossible to determine how much, if
any, of the upgraded services provided to the general public by the
Federal contract payments would ever inure to the Government's benefit.
We note in this regard that, under optimum circumstances in the present
case, no fires would occur, and the Government would receive no tangible
benefit for its investment. Further, we question whether the affected
Rural Fire Districts would ever be able to fully assume responsibility
for extinguishing major forest fires without additional Federal
assistance. The Department of the Interior would still need to maintain
its tanker aircraft and heavy equipment, to employ smoke jumpers and the
like for deployment to major fires. Therefore, the benefit to the
Government could never result in savings of all fire-related
expenditures.
We do not question that BLM has authority under 43 U.S.C. 1738 to
contract for some kinds of fire services. It is authorized to contract
for services in jurisdictions where no governmental unit is obligated to
provide free fire protection. In neighboring Idaho, for example, where
fire protection of timber and range lands was the obligation of
individual property owners, we found contractual arrangements to be
entirely proper. See, B-163089, October 19, 1970, and B-163089,
February 8, 1968; compare 34 Comp.Gen. 195 (1954). It is also free to
contract for fire protection with entities not otherwise legally
obligated to provide such service if such entities exist. Also, a
different result would probably obtain in the case of a Federal enclave
under the rationale expressed in 45 Comp.Gen. 1 (1965) which permitted a
contract with local Fire District for protection of a tract of Federal
land which was part proprietary and part dedicated to the sole use of
the Government-- a Federal enclave. The theory was that the fire
district was not legally required to provide fire protection services
for the Federal enclave and it would not be possible to segregate costs
for services provided as between the proprietary and sole use Federal
land.
Finally, although we hold that contracts with Rural Fire Districts
are improper in the states of Washington and Oregon, we agree with the
Regional Solicitor that mutual aid agreements, pursuant to 42 U.S.C.
1856 (1976) could be executed at those installations having a federally
maintained firefighting capability.
B-202044, August 6, 1981, 60 Comp.Gen. 633
Property - Private - Damage, Loss, etc. - Government Liability -
Commuting to Work by Auto - Transit Strike
Government employees who were involved in accidents while commuting
to and from work during New York transit strike did not damage their
vehicles "incident to service" and cannot make a claim cognizable under
the Military Personnel and Civilian Employees' Act of 1964. Commuting
is a personal expense which in the absence of extremely unusual
circumstances may not be borne from appropriated funds. Property -
Private - Damages, Loss, etc. - Government Liability - Vehicle Operated
on Government Business
Section 5704 of title 5, which reimburses a Government employee who
uses his own vehicle for official Government business on a mileage
basis, includes in that basis the cost of insurance, if any. See 5
U.S.C. 5707. Therefore, reimbursement under 5 U.S.C. 5704 for damage to
a vehicle of an employee officially authorized to use it is precluded.
However, a claim for damage can be made under the Military Personnel and
Civilian Employees' Claims Act of 1964, even if the employee is
reimbursed on a mileage basis.
Matter of: New York Transit Strike - Claims for Motor Vehicle
Damages, August 6, 1981:
The Director of the Division of Accounting, Fiscal and Budgeting
Services of Region II of the Department of Health and Human Services
(HHS), has requested our decision as to the payment of claims for
automobile damages incurred by Government employees during the New York
City Transit Strike in April 1980. There are three claims involved.
Mr. Constantino Conte is a lender examiner for the Office of Eduction
(now Department of Eduction) who is authorized to regularly use his
automobile on official Government business. Returning from a bank where
he had been conducting a program review, he found that the front
windshield of his automobile had been damaged. All but the $50
deductible of the replacement cost has been paid for by his insurance
company. He now requests reimbursement of the $50.
Mr. Michael Hurley is an employee of the Northeastern Program Service
Center. During the transit strike, he was authorized to join a carpool
and to use his own automobile.
While driving home from work he was involved in an accident. All but
$200 of the cost of repair has been paid by Mr. Hurley's insurance
company. He now seeks the $200 deductible as well as $450 in
anticipated additional insurance premiums over the next 3 years.
Mr. Joseph Gillespie is a collection agent for the Office of
Education (now Department of Education). He was authorized to use his
own automobile to drive himself and others to work during the strike.
One morning, after discovering that his previous parking arrangements
had fallen through, he attempted to park partially on the sidewalk. As
a result, the exhaust pipe, muffler, and tailpipe of his vehicle were
torn off. He seeks reimbursement of the cost of repairs, $95.96.
We have a copy of the memo the Office of General Counsel for Region
II of HHS sent to the three employees' divisions, outlining the
different opinions for handling their claims. That office correctly
points out that the applicable statute is the Military Personnel and
Civilian Employees' Claims Act of 1964, 31 U.S.C. 240-243 (1976 and
Supp. III, 1979) and not the Federal Tort Claims Act, 28 U.S.C. 1346(b),
2671-2680 (1976), or the Federal Employees' Compensation Act 5 U.S.C.
8101 et seq. (1976 and Supp. III 1979). Apparently, at least two the
claimants were under the erroneous impression that they could recover
under one of the latter two statutes. The Federal Employees'
Compensation Act deals with compensation for Government employees who
have job-related injuries. The Federal Tort Claims Act is concerned
with suits filed by third parties against the United States Government
for the negligent or wrongful acts of its employees. A claim by an
employee against the United States for injuries or damages incurred in
the course of his or her employment is not within the purview of the
Federal Torts Claim Act. B-185513, March 24, 1976.
The Military Personnel and Civilian Employees' Claims Act of 1964
authorizes the head of each agency or his designee to pay claims up to
$15,000 for damages to, or loss of, personal property incident to an
employee's service. 31 U.S.C. 241(b)(1). Under section 241(c)(3), a
claim is allowable only if the damage was not caused in whole or part by
the negligent or wrongful act of the claimant.
In addition, 31 U.S.C. 242 states:
Notwithstanding any other provision of law, the settlement of a claim
under this Act is final and conclusive.
Accordingly, if a claim is cognizable under this Act, we have no role
in settling it. In the context of the three specific claims presented
we will turn our attention to whether the Act covers them.
With respect to whether the claimed losses were incurred incident to
service, we note that the legislative history of the Act does not
contain a discussion of the type of claim intended to be covered.
B-169236, April 21, 1970. However, except in extremely rare situations,
it is clear that commuting to or from work is not a covered activity. We
stated in 60 Comp.Gen. 420 (1981), about commuting costs in general
that:
The settled rule is that employees must bear the cost of
transportation between their residences and official duty locations. 11
Comp.Gen. 417 (1932); 15 id. 342 (1935); B-189114, February 14, 1978.
The fact that emergency conditions necessitate additional trips or
otherwise increase commuting costs does not alter the employee's
responsibility. 36 Comp.Gen. 450 (1956); B-189061, March 15, 1978.
Similarly, the unavailability of public transportation alone does not
shift this personal obligation to the Government. 19 Comp.Gen. 836
(1940); 27 id. 1 (1947); B-171969.42, January 9, 1976. These general
rules clearly assign the responsibility for home-to-work transportation
to the individual employee in nearly every circumstance. We have made
exceptions to the general rule only in emergency situations where even
alternate transportation was unavailable or scarce and Government
operations were closed down except for a few essential personnel who
were ordered to report to work. However, none of those circumstances
are applicable to the 1980 transit strike or the UMTA employees claiming
reimbursement.
Since the claims of Messrs. Hurley and Gillespie involve property
damage to their respective cars while commuting, we have concluded that
their claims are not compensable under this Act.
Their employer, the Northeastern Program Service Center, issued a
"Transit Strike Plan" memorandum which stated that each employee had the
responsibility "to make every effort to reach the office during a
transit strike." As distinguished from the situation in B-158931, May
26, 1966, involving an earlier New York transit strike, employees not
making it into work would be charged annual leave. The memorandum
continued in part:
We are attempting to clarify whether or not employees who are using
their cars to drive fellow employees to and from work will be eligible
for reimbursement for travel expenses. However, you will be covered
under the Employee Compensation Act and the Federal Tort Claims Act. We
still need drivers, * * *
The Center's Director sent Mr. Hurley (and other employees) a
memorandum dated March 31, 1980, which stated in part:
In the event of a transit strike beginning April 1, 1980 you are
hereby directed to form a carpool to transport the people mentioned
below to the Northeastern Program Service Center for the duration of the
strike.
For this purpose, you will be protected by the Federal Employees
Compensation Act, the Federal Tort Claims Act, which will cover any
injury and damage claims for which you may become liable.
(The record does not state, but we presume Mr. Gillespie received
similar memoranda.)
We first not that the HHS General Counsel memorandum indicated that
while the above quoted memoranda may have been somewhat ambiguously
worded, they were not intended to indicate that the two Acts mentioned
would provide compensation for damages to the drivers' own property. We
agree that the memorandum only purport to indemnify the drivers for
liability to other persons. Therefore, these employees are not entitled
to rely on the memoranda for purposes of seeking reimbursement for
damage to their vehicles.
Second, even if there was some confusion as a result of the
memoranda, we have substantial doubt that in the absence of unusual
circumstances more calamitous than this transit strike, an agency can
direct its employees to drive their cars and to transport fellow
employees to work, or pay them for it, or that it can determine that
employees doing so may be covered under the Federal Tort Claims Act, the
Federal Employees Compensation Act, or the Military Personnel and
Civilian Employees Claims Act. Getting to work is the employee's
personal responsibility, although the agency is authorized to assist by
providing carpool information and the like. An employee's
responsibilities do not and cannot normally include driving to work (as
distinguished from using any other mode of transportation available) or
providing transportation to his fellow employees, even during and
because of a transit strike. In this case the agency apparently did not
even distinguish between critical and noncritical personnel.
Accordingly, we do not see any legal basis for the Northeastern Program
Service Center to extend the protections of the Military Personnel and
Civilian Employees Claims Act to its employees while they commuted to
work.
Therefore, these employees are in the same situation as other Federal
employees who commute to work: they do so at their own risk. Thus,
reimbursement of the damage sustained to the employees' cars is not
authorized.
Finally, we turn to the claim of Mr. Conte. While the damage to his
car occurred during the transit strike, it is unrelated to the previous
two claims. Mr. Conte was using his vehicle for official business and
was within the scope of his employment when the damage occurred. The
front windshield of his car was damaged when he was on official business
conducting a program review. Therefore, his loss may properly be
considered a loss incident to service under the coverage of the Military
Personnel and Civilian Employees Claims Act. B-185513, March 24, 1976.
In view of the provisions of the Military Personnel and Civilian
Employees Claims Act, it is not within the jurisdiction of his Office to
consider Mr. Conte's claim for damage to his automobile. B-187913,
February 9, 1977; B-180994, June 12, 1974. The reasonableness of the
possession of the property in question and negligence on the part of the
owner are questions for determination by the Secretary of HHS or his
designee. B-195295, November 14, 1979; 31 U.S.C. 241(a) and (c). (Mr.
Conte now works for the Department of Eduction as a result of the
splitting of the Department of Health, Education and Welfare into the
Department of Health and Human Services and the Department of Education.
However, we assume that the Secretary of HHS or his designee will handle
his claim since it, along with the two others, have been submitted to us
through HHS.) Settlement of the claims, if made in accordance with the
Act, applicable regulations, and any overall policies prescribed by the
President pursuant to 31 U.S.C. 241(b)(1), would be final and
conclusive. B-185513, supra; B-187913, supra; B-180994, supra; 31
U.S.C. 242.
In connection with Mr. Conte's claim, HHS' Office of General Counsel
has expressed reservations about the applicability of the Act if the
individual involved was reimbursed a mileage rate from the Government
for the use of his automobile. Apparently, Mr. Conte was, at the time
his vehicle was damaged, being reimbursed seventeen cents per mile.
Under the provisions of 5 U.S.C. 5704 (1976), a mileage rate authorized
for the use of a privately owned automobile is in lieu of actual
expenses. The mileage rate includes reimbursement of the cost of
insurance, if any. See 5 U.S.C. 5707 (1976). The only actual expenses
authorized for reimbursement in addition to the mileage rate are parking
fees, ferry fare, and bridge, road and tunnel tolls. We have
specifically held that a claim for damage to a private automobile
sustained while engaged on official Government travel is precluded under
that statute where reimbursement was made on a mileage basis. B-185513,
March 24, 1976; 15 Comp.Gen. 735 (1936). However, we have also held
that while a claim for damages to a private vehicle cannot be reimbursed
under the provisions of 5 U.S.C. 5704, settlement of the claim can still
be made under the Military Personnel and Civilian Employees Claims Act.
B-185513, supra; B-174669, February 8, 1972.
B-196851, August 6, 1981, 60 Comp.Gen. 630
Subsistence - Per Diem - Temporary Duty - Dual Lodgings
An individual (employed as a pilot) through no fault of his own and
in circumstances beyond his control spent the night away from the
temporary duty location to which he expected to return. Lodging
expenses both at and away from that temporary duty station may be paid.
Also, lodging costs may be paid if the pilot unexpectedly remains
overnight at his permanent station. Payments in these cases must be
based on a determination by the appropriate agency official that the
employee acted reasonably in retaining the lodgings at his temporary
duty station. 55 Comp.Gen. 690, B-164228, June 17, 1968, and similar
cases are overruled; 59 Comp.Gen. 609, 59 id. 612, and 51 id. 12 are
modified (extended).
Matter of: Milton J. Olsen, August 6, 1981:
The issue in this case is whether Mr. Milton J. Olsen, an employee of
the United States Forest Service, is entitled to be reimbursed the
lodging costs he incurred at his temporary duty station when as a result
of unforeseen circumstances he was forced to spend the night at his
permanent duty station. In connection with the stay at his permanent
station we are asked whether he would be entitled to reimbursement for
any meals taken at or in the vicinity of his permanent station. We are
also asked whether Mr. Olsen is entitled to be reimbursed for dual
lodging costs he incurred, on a different occasion when he unexpectedly
spent the night in a city other than his original temporary duty station
having retained his accommodations at that station. Mr. Olsen is
entitled to be reimbursed on an actual cost basis for the lodgings which
he did not occupy at his temporary duty station on both occasions since
it appears that he acted reasonably in retaining the lodging at the
original temporary duty station.
These questions were presented by Mr. H. Larry Jordan, an authorized
certifying officer, National Finance Center, United States Department of
Agriculture.
Mr. Olsen is employed as a pilot by the Forest Service. During the
fire seasons he is generally detailed from his permanent duty station,
Ogden, Utah, to a temporary duty station to enable him to be available
to transport personnel during emergency situations. In this case, Mr.
Olsen was detailed to Boise, Idaho, and while there he claimed and was
reimbursed actual subsistence expenses not to exceed $41 per day. On
those occasions when Mr. Olsen had to leave Boise and there was a
possibility he would not return that night, he would check out of his
motel. In two instances, however, he anticipated returning to Boise,
but due to conditions beyond his control, he was forced to remain away
from Boise for the night. As a result he incurred expenses for the
lodgings he did not use.
The first instance involved a flight where, due to engine trouble, he
had to remain in Ogden, his permanent station, overnight and he stayed
at his own home, although he retained the motel room in Boise.
The second instance involved a flight where due to rerouting he was
compelled to stay in Salt Lake City, Utah, since he had exhausted his
crew limitation time and could not fly any more that day. Both Boise
and Salt Lake City are high rate geographical areas having limitations
of $41 and $49 respectively, at the time the travel in question was
performed. The certifying officer asks if Mr. Olsen is entitled to any
reimbursement for the costs he incurred at his temporary duty station
while he was away from it through circumstances beyond his control.
In connection with the first instance when Mr. Olsen spent the night
at his permanent station, the general rule in such cases is that the
Government may not pay subsistence expenses or per diem to civilian
employees at their headquarters or official duty station, regardless of
any unusual working conditions. See 53 Comp.Gen. 457 (1974); B-185885,
November 8, 1976; and B-185932, May 27, 1976.
Thus, he would not be entitled to reimbursement for the costs of any
meals taken at his official station. However, in certain instances an
employee may be reimbursed on an actual expense basis for costs (e.g.,
deposits on lodgings) incurred in anticipation of temporary duty, or
when temporary duty has been shortened by official orders. Lodging
costs incurred in anticipation of the originally ordered temporary duty
may be paid even through the employee is not in a travel status. See 59
Comp.Gen. 609 (1980) and 59 Comp.Gen. 621 (1980). In those cases we
held that when an employee has acted reasonably in incurring otherwise
allowable lodging expenses pursuant to temporary duty travel orders but
the orders are later canceled for the benefit of the Government and the
employee is unable to obtain a refund, reimbursement of the expenses
should be allowed to him as a travel expense to the same extent that
they would have been if the orders had not been canceled.
It is our view that this rule should be applied to Mr. Olsen's
situation, even though it does not involve the cancellation or amendment
of orders by the Government. That is, in situations where the employee
acts reasonably, as determined by the agency, in incurring costs for
lodging but is unable to occupy such lodging because of conditions
beyond his control and the costs are incurred incident to his temporary
duty, he may be reimbursed on an actual expense basis for the lodging
costs to the extent that they would have been paid had the temporary
duty been performed.
Thus, in the first instance Mr. Olsen may be reimbursed for the
lodging costs incurred in Boise even though he spent the night at his
official duty station, since he acted in a reasonable manner in
incurring the costs.
With regard to the dual lodging costs incurred in Boise and Salt Lake
City, we have held in the past that if it is determined by an
appropriate agency official that an employee had no alternative but to
retain his lodgings elsewhere, he could be reimbursed up to the monetary
maximum on an actual subsistence expense basis to at least partially
defray the expenses of maintaining two lodgings. See 55 Comp.Gen. 690
(1976) and B-164228, June 17, 1968.
However, in 51 Comp.Gen. 12, as well as in 59 id. 609 and 59 id. 612,
lodging costs incurred by employees for lodgings they could not use as a
result of a change in the Government requirements have been paid without
regard to the fact that per diem could not be paid. In this case the
employee remains in a temporary duty status and is entitled to per diem
or actual subsistence expense reimbursement. But he has in a similar
manner incurred expenses for lodging which he could not use. In the
cited cases otherwise allowable lodging costs have been paid, not as a
per diem or subsistence allowance, but as an allowable travel expense.
Similarly, in this situation by analogy to the rule in those cases we
believe that the lodging costs may be paid to the extent that they would
have been payable had the temporary duty not been changed. Payment need
not be limited under the previously applied dual lodgings rule but may
be in addition to per diem or actual subsistence expenses payable for
the travel as actually performed.
Accordingly, those decisions involving dual lodgings, which restrict
the employee to the daily allowance authorized to pay for both lodgings,
need no longer be followed. In the future the employee may be
reimbursed in accordance with either the per diem or actual subsistence
expense allowance authorized in his orders based upon the lodgings
actually occupied and may also be reimbursed the additional cost
incurred for the lodging he does not occupy to the extent such costs
would have been allowed had travel plans not been changed; if an
appropriate determination is made by the agency.
The vouchers submitted are returned and may be certified for payment
if otherwise correct.
B-201083, August 5, 1981, 60 Comp.Gen. 629
Leaves of Absence - Annual - Cancellation of Approved Annual Leave -
Resulting Loss Claims - Airline Discounts
Employee who purchased "super-saver" airline ticket and arranged to
take annual leave in anticipation of a personal trip may not be
reimbursed for additional air travel expense incurred when employee's
official duties caused him to make alternate flight reservations which
disqualified him from receiving the "super-saver" fare since there is no
legal basis for the claim.
Matter of: John W. Keys III, August 5, 1981:
This action is in response to a request from the Authorized
Certifying Officer for the Water and Power Resources Service, United
States Department of the Interior, as to whether the claim of John W.
Keys, III may be paid. The request concerns the liability of the
Government for $98.62 in additional personal air travel costs incurred
by Mr. Keys when his official duties caused him to change his flight
reservations. We find that reimbursement may not be authorized.
Mr. Keys, an Assistant Regional Director for the Water and Power
Resources Service, indicates that he had planned to take a personal trip
from Boise, Idaho, to Denver Colorado, on October 17-19, 1980. On
September 15, 1980, Mr. Keys purchased a "super-saver" (discounted)
airline ticket and at the same time, he arranged to take annual leave on
the afternoon of October 17, 1980. Prior to entering annual leave
status, circumstances developed in connection with Mr. Keys' official
duties which caused him to remain at the office that afternoon and also
to return on an earlier flight on Sunday, October 19. As a result, Mr.
Keys found it necessary to change his flight reservations and he was
charged an additional $98.62 since the change disqualified him from
receiving the "super-saver" fare. Mr. Keys claims that the additional
charges were directly connected with the performance of official
business and has requested that the Government reimburse him for the
additional personal expense.
As supportive of Mr. Keys' claim, several decisions were cited that
allowed reimbursement where additional travel costs were incurred as a
result of the cancellation of annual leave. See, e.g., Gregg Marshall,
58 Comp.Gen. 797 (1979); 52 Comp.Gen. 841 (1973). However, these
decisions involve official travel intermingled with personal business,
while Mr. Keys' claim involves only personal travel.
More apposite to the present situation are those cases which have denied
claims for purely personal expenses such as hotel room deposits and
dependents' travel costs, which resulted from the cancellation of annual
leave. See, e.g., Delbert C. Nahm, B-191588, January 2, 1979; Karl G.
Sessler, B-190755, June 15, 1978; and B-176721, November 9, 1972.
The certifying officer could not find any authority under which
payment could be made. Our own research also has not revealed any law
or regulation under which we may authorize payment to Mr. Keys for the
additional personal travel expense incurred. While it is unfortunate
that Mr. Keys found it necessary to change his travel plans and incurred
additional costs as a result of the change, there is no authority under
which we may authorize reimbursement for the additional expense.
Accordingly, payment of the claim may not be made.
B-203450, August 4, 1981, 60 Comp.Gen. 627
Occupational Safety and Health Review Commission - Authority of
Commissioners - Delegation to Chairman - Administrative Functions -
Vacancy in Chairmanship Effect
The Chairman of the Occupational Safety and Health Review Commission
is responsible for the administrative functions of the Commission. In
the absence of a chairman such responsibilities rest with the remaining
two commissioners. Therefore, if remaining two commissioners agree on
administrative action, such action is valid. Accordingly, remaining two
commissioners may execute lease for purpose of housing computer.
Matter of: Occupational Safety and Health Review Commission -
Commissioner's Authority:
The General Counsel of the Occupational Safety and Health Review
Commission (Commission) requests a decision on whether, in the absence
of a chairman, the remaining two commissioners may execute a valid
lease.
As the submission indicates, the Commission has recently acquired a
new computer system which is presently in storage due to inadequate
facilities to house it. Since immediate use of the computer is desired,
an adequate physical plant must be secured as it is not feasible to use
the Commission's current location. Therefore, the Commission proposes
to locate the computer in leased quarters in Maryland. The General
Counsel states in his letter that under the Occupational Safety and
Health Act of 1970 (Act) the Chairman is authorized to enter into a
lease agreement of this sort. Presently, however, there is a vacancy on
the Commission and the President has not designated an interim chairman
from the remaining two commissioners. Thus, the question presented is
whether the remaining commissioners can validly execute a lease for the
purpose of housing the Commission's recently acquired computer.
Section 12(e) of the Act, Pub. L. No. 91-596, 84 Stat. 1604, codified
at 29 U.S.C. 661(d) (1976), states as follows: "The Chairman shall be
responsible on behalf of the Commission for the administrative
operations of the Commission * * * ." The above provision which
delegates to the Chairman administrative functions is not unique to the
Commission. For example, under the 1950 Reorganization Plan No. 8, 64
Stat. 1264 (1950), executive and administrative functions of the Federal
Trade Commission were transferred to its Chairman. Evidently, the
administrative functions of agencies organized as commissions were
transferred to their respective chairmen to ensure that these agencies
would operate efficiently and expediently. Without this delegation of
power, an affirmative vote of a majority of commissioners would be
required on administrative actions requiring the commissioners to expend
a great deal of time and effort on internal operating matters rather
than on substantive functions.
Although the administrative functions of agencies organized as
commissions have often been delegated to their respective chairmen for
efficiency purposes, in our view when there is a vacancy in the chairman
position, the remaining commissioners must retain a residual power to
perform administrative functions. Absent this power, the operations of
commissions could possibly cease. In the instant case, the authority of
the remaining two commissioners of the Occupational Safety and Health
Review Commission to perform administrative functions in the absence of
a chairman is found in section 12(f) of the Act. This section of the
Act states as follows: "For the purpose of carrying out its functions
under the Act, two members of the Commission shall constitute a quorum
and official action can be taken only on the affirmative vote of at
least two members."
Pub. L. 91-596, 84 Stat. 1604, 29 U.S.C. 661(e). Thus under this
statutory scheme, in the absence of a chairman, the two remaining
commissioners, upon their affirmative vote, possess the authority to
perform the administrative functions of the Commission such as the
execution of a lease.
Accordingly, the two remaining commissioners have the authority to
execute the subject lease agreement.
B-201848, August 3, 1981, 60 Comp.Gen. 625
Contracts - Awards - Advantage to Government - Single v. Multiple Awards
- Fund Reallocation After Bid Opening - Defense Procurement
Invitation for bids permitted separate awards on three schedules
where low aggregate bid exceeded available funds. Cognizant agencies,
after receipt of low aggregate bid in excess of available funds,
increased amount after bid opening. Award to low aggregate bidder was
unjustified where a significantly lower bid on one schedule was
rejected. Portion of contract pertaining to that schedule should be
terminated for convenience, if feasible, and awarded to low bidder on
that schedule.
Matter of: Norcoast-BECK Aleutian, August 3, 1981:
Norcoast-BECK Aleutian (Norcoast) protests the award of schedule "A"
to Hoffman Construction Company (Hoffman) under Army Corps of Engineers
invi ation for bids (IFB) No. DACA85-81-B-0001.
The IFB established three schedules and a combined schedule for three
separate construction projects at Shemya Air Force Base, Alaska. The
bid evaluation clause of the IFB stated in part:
1. AWARD: Award will be made to the low responsive, responsible
bidder on Combined Schedules A, B, & C if sufficient funds are available
for each of the three projects. * * * If the amount offered, by the low
bidder on the combined schedule, for any of the projects exceeds the
funds available for that project, the combined schedule will not be
awarded and only then will bids on individual schedules be evaluated.
If individual bids are evaluated, then award will be made on Schedules
A, B, and C separately or together in any combination that is in the
best interest of the Government.
To determine whether funds were available, the IFB set forth a
formula prorating certain bid prices among the three schedules.
The amount programmed for schedule "A" from the 1981 military
construction appropriation for Shemya Air Force Base was $1,550,000.
Hoffman's bid on schedule "A" was $1,751,000 and its evaluated bid on
that schedule was $1,817,753.33. Norcoast's bid on schedule "A" was
$1,354,850, approximately $400,000 less than Hoffman's. Hoffman was the
low bidder on the other two schedules.
After bid opening, the Corps contracting officer, in conjunction with
the Alaska Air Command, revised upward the funds available for schedule
"A" under the provisions of Air Force Regulation (AFR) 89-1 (June 20,
1978) which provides as follows:
(4) Before award:
(a) For bases having more than one MCP (military construction
project) in a particular fiscal year, AFRCE (Air Force Regional Civil
Engineers) can authorize award of a project whose CWE (current working
estimate) does not exceed 125 percent of the PA (programmed amount) if
the station authorization limitation * * * is not exceeded.
The revised programmed amount for schedule "A" was $1,937,500, which
was in excess of Hoffman's evaluated bid. The Corps thereafter
determined that Hoffman's bid on schedule "A" was within the funds
available and awarded it the contract for schedules "A," "B," and "C" as
the low aggregate bidder.
Norcoast alleges that the Corps and the Air Force improperly
manipulated the funding for schedule "A" subsequent to bid opening so as
to bring Hoffman's bid within the funds available for that schedule,
thus avoiding evaluation of individual schedule bids and award to
Norcoast of schedule "A".
The Corps responds that, under previous GAO decisions and under
statute, there is authority to reallocate funds during the course of a
procurement. Once the reprogramming took place, the Corps argues, funds
were available, and the bid evaluation clause required a single award on
the combined schedule, notwithstanding the award of schedule "A" at a
significantly higher price. Finally, the Corps intends to avoid using
this bid evaluation clause in the future to prevent a similar situation
from arising.
For the reasons stated below, the protest is sustained.
Our Office has consistently held that the language of 10 U.S.C.
2305(c) (1976), requiring award to the responsible bidder whose bid,
conforming to the invitation for bids, will be most advantageous to the
Government, mandates award on the basis of the most favorable cost to
the Government, assuming responsiveness of the bid and responsibility of
the bidder. Tennessee Valley Service Company, B-188771, July 20, 1977,
77-2 CPD 40; Mark A. Carroll and Sons, Inc., B-194419, November 5,
1979, 59-2 CPD 319. The award of schedule "A" to Hoffman was not at the
most favorable cost to the Government.
Furthermore, the bid evaluation clause specifically permitted multiple
awards in the best interest of the Government, where, as here, the low
aggregate bid exceeded available funds on an individual schedule.
As mentioned above, funds became available for schedule "A" only
because of the reprogramming under the above AFR. However, the
reprogramming was authorized under the AFR (89-1(4)(b)), in our view to
take advantage of rather than reject a reasonably priced low bid.
In support of its action, the Corps cites H. M. Byars Construction
Co., 54 Comp.Gen. 320 (1974), 74-2 CPD 233; Rock, Inc., B-186961,
November 9, 1976, 76-2 CPD 394; and Praxis, Ltd., B-186157, August 10,
1976, 76-2 CPD 146. In those cases, the bid schedule consisted of a
base bid and certain alternatives that increased the scope of work.
Funding was increased after bid opening, enlarging the scope of work to
be awarded, which resulted in a different low bidder since separate
awards were not permitted. We held in each case that the agency was
entitled to rely upon the additional funds in making an award to the
responsible bidder with the lowest responsive bid on the increased work.
In contrast, here, the Corps and the Air Force exercised the discretion
to make funds available not to award increased work to a low bidder, but
rather to award the same work to other than the low bidder. Therefore,
these cases do not support the Corps' position. The agencies' actions
did not result in an award on the basis of the most favorable cost to
the Government.
We conclude that Norcoast should have been awarded the schedule "A"
contract. However, the Corps advises us that approximately 25 percent
of the work on schedule "A" has been completed. Thus, we recommend that
the Corps consider the feasibility of immediately terminating the
schedule "A" portion of the contract and awarding the remainder of the
work to Norcoast.
Protest sustained.
B-201031, August 3, 1981, 60 Comp.Gen. 623
Compensation - Aggregate Limitation - Applicability to Credit Hours -
Flexi-time Experiment
A grade GS-16, step 4 employee of the National Security Agency, being
paid $50,112.50 per annum, the maximum salary payable under 5 U.S.C.
5308, was transferred from an office participating in a flexi-time
experiment under title I of the Federal Employees Flexible and
Compressed Work Schedules Act of 1978, to an office not participating.
He may be paid for his accumulated credit hours under the authority of
section 106 of that Act. The limitations on maximum allowable pay in 5
U.S.C. 5547 and 5308, and section 304 of the Legislative Branch
Appropriation Act of 1979, do not apply to payments for credit hours.
Matter of: Paul E. Peters - Flexible Work Schedules - Application of
Pay Ceiling to Credit Hour Payment, August 3, 1981:
This decision is at the request of Mr. W. Smallets, Finance and
Accounting Officer, National Security Agency, who asks whether the
maximum pay limitation imposed by 5 U.S.C. 5308 (1976) applies to
payments for accrued credit hours authorized by section 106(b) of the
Federal Employees Flexible and Compressed Work Schedules Act of 1978,
Public Law 95-390, September 29, 1978, 92 Stat. 755, 758, 5 U.S.C. 6101
note.
Mr. Smallets states that Mr. Paul E. Peters, a grade GS-16, step 4
employee of the National Security Agency, earning the maximum $50,112.50
per annum allowed by 5 U.S.C. 5308, was transferred from an office which
participated in an alternative work schedules experiment under Title I
of Public Law 95-390, to an office which was not participating in such
an experiment. Mr. Peters was paid $138.52 in compensation for 5 3/4
credit hours earned during the pay period of June 22 to July 5, 1980.
Mr. Peters subsequently paid back $138.52 to the National Security
Agency pending receipt of a decision from the Comptroller General as to
the application of 5 U.S.C. 5308 to the payment for credit hours.
The Federal Employees Flexible and Compressed Work Schedules Act of
1978, Public Law 95-390, provides in section 106(a) that full-time
employees may accumulate not more than 10 credit hours which can be
carried over into succeeding pay periods. Upon termination of an
employee's participation in an experiment under title I of the Act,
section 106(b) authorizes payment for accumulated credit hours as
follows:
(b) Any employee who is on a flexible schedule experiment under this
title and who is no longer subject to such an experiment shall be paid
at such employee's then current rate of basic pay for--
(1) in the case of a full time employee, not more than 10
credit hours accumulated by such employee * * * .
Section 5308 of title 5, United States Code, however, limits the pay
of employees as follows:
Pay may not be paid, by reason of any provision of this subchapter,
at a rate in excess of the rate of basic pay for level V of the
Executive Schedule.
The question, therefore, is whether section 5308 operates to prevent
payment for credit hours accumulated under Title I of the Federal
Employees Flexible and Compressed Work Schedules Act of 1978 to those
individuals already being paid at the level V ceiling.
We conclude that section 5308 does not prevent payment for credit
hours as that section applies only to "pay" under "any provision of this
subchapter" (Pay Comparability System) and not to payments authorized
elsewhere. 55 Comp.Gen. 196 (1975). Since payments for accumulated
credit hours are not authorized in the Pay Comparability System
subchapter, but are authorized by Public Law 95-390, 5 U.S.C. 6101 note,
those payments are not limited by the restrictions in 5 U.S.C. 5308.
There are two other statutory pay limitations, however, which must
also be considered in this matter. The first is 5 U.S.C. 5547 which
states:
An employee may be paid premium pay under sections 5542, 5545(a)-(c),
and 5546(a), (b) of this title only to the extent that the payment does
not cause his aggregate rate of pay for any pay period to exceed the
maximum rate for GS-15.
Since payment for credit hours is not a form of premium pay under
either 5 U.S.C. 5542, 5545(a)-(c), or 5546(a) or (b), the limitation in
5 U.S.C. 5547 has no application to the accumulation of credit hours or
to payment for credit hours.
The second pay limitation applicable at the time of the payment to
Mr. Peters is found in section 101(c) of Public Law 96-86, October 12,
1979, 93 Stat. 656 (H.J. Res. 412) which refers to and applies the pay
limitation in section 304 of the Legislative Branch Appropriation Act of
1979, Pub. L. 95-391, September 30, 1978, 92 Stat. 763, 788, which
states as follows:
Sec. 304. (a) No part of the funds appropriated for the fiscal year
ending September 30, 1979, by this Act or any other Act may be used to
pay the salary or pay of any individual in any office or position in the
legislative, executive, or judicial branch, or in the government of the
District of Columbia, at a rate which exceeds the rate (or maximum rate,
if higher) of salary or basic pay payable for such office or position
for September 30, 1978, if the rate of salary or basic pay for such
office or position is--
(2) limited to a maximum rate which is equal to or greater than
the rate of basic pay for such level V (or to a percentage of such
a maximum rate) by reason of section 5308 of title 5, United
States Code, or any other provision of law or
congressional
resolution.
(c) For purposes of administering any provision of law, rule, or
regulation which provides retirement, life insurance, or other employee
benefit, which requires any deduction or contribution, or which imposes
any requirement or limitation, on the basis of a rate of salary or basic
pay, the rate of salary or basic pay payable after the application of
this section shall be treated as the rate of salary or basic pay.
We do not view credit hours as salary or pay in the sense
contemplated by section 304 of the Legislative Branch Appropriation Act
of 1979.
The payment for accumulated credit hours is not a payment of salary or
basic pay, but instead is to be viewed as similar in nature to the
lump-sum payment for the accrued annual leave made under 5 U.S.C.
5551(a) when an employee leaves Federal service. Just as the lump-sum
leave payment is, under the terms of section 5551(a), pay for tax
purposes only, a lump-sum payment for accrued credit hours is neither
basic pay nor salary for any general purpose and is not pay for purposes
of any of the pay caps discussed above. Compare bodine 60 Comp.Gen. 198
(1981).
Therefore, since neither 5 U.S.C. 5547, 5308, nor section 304 of the
Legislative Branch Appropriation Act applies to limit payment for credit
hours, Mr. Peters is entitled to be paid at his regular hourly rate for
the 5 3/4 credit hours he accumulated during the period of his
participation in the experiment under title I of Public Law 95-390.
B-203306, B-203306.2, July 31, 1981, 60 Comp.Gen. 618
Washington Metropolitan Area Transit Authority - Grant-Funded
Procurements - Competition Requirements - Subway Project -
Lease/Purchase Agreement - Merits of Complaint
Where each offeror's proposal deviated from mandatory, material,
additional-rent requirement of grantee's prospectus, grantee should not
have considered any proposal as acceptable. Since grantee is willing to
accept proposals with such conditions, grantee should so revise
prospectus and permit offerors to compete on common basis. In view of
this conclusion, other bases of complaint need not be decided; however,
several matters to be considered by grantee prior to reopening
competition are pointed out.
Matter of: Messrs. Albert Abramson and Theodore N. Lerner, trading
as White Flint Place; Travenca Development Corporation, July 31, 1981:
Messrs. Albert Abramson and Theodore N. Lerner, trading as White
Flint Place (White Flint), and Travenca Development Corporation
(Travenca) complain against the proposed award to Paramount Development
Corporation (Paramount) under a joint development prospectus for the
White Flint Metro Station (parcel MA-364) issued by the Washington
Metropolitan Area Transit Authority (WMATA).
WMATA acquired the real property involved in this matter pursuant to
80-percent funding from a grant under the Urban Mass Transportation Act
of 1964, as amended. White Flint and Travenca request that we review
WMATA's proposed award to Paramount in accord with our announcement,
"Review of Complaints Concerning Contracts Under Federal Grants," 40
Federal Register 42406 (September 12, 1975). In addition, WMATA
requests that our Office consider the matter and provide our views on
the merits of the complaint. This decision is rendered in response to
WMATA's request.
We understand that WMATA has agreed to abide by our decision on
whether WMATA's selection of Paramount was reasonable and consistent
with competitive principles. We conclude that WMATA's actions were not
reasonable and not consistent with competitive principles.
White Flint and Travenca principally complain that since WMATA's
prospectus contemplated a long-term leasehold arrangement with the
selected contractor for the whole site, WMATA could not accept
Paramount's proposal based on the purchase of the residential portion of
the site without inviting similar proposals from White Flint and
Travenca. Further, White Flint and Travenca contend that WMATA would be
violating the conditions of the Federal grant if it sold a portion of
the real property without prior approval from the grantor, the Urban
Mass Transportation Agency (UMTA).
White Flint also complains that WMATA's evaluation of its proposal
was improper because it was not on a basis comparable to the evaluation
of Paramount's proposal, and WMATA's selection of Paramount will not
result in the best economic return to WMATA.
Travenca also complains that Paramount and White Flint took material
exceptions to the mandatory requirements of the prospectus. In that
regard, WMATA reports that Travenca also took exception to a mandatory,
material requirement of the prospectus. Travenca further complains that
WMATA did not realistically evaluate the financial aspects of the
proposals.
We find that each one of the proposals was unacceptable because each
one took exception to a material requirement of the prospectus.
Consequently, we recommend reopening the competition based on a revised
statement of WMATA's current requirements as related to the exceptions
taken and other factors calling for corrective action outlined in this
decision.
Pursuant to WMATA policy, WMATA formulated and issued the prospectus
soliciting proposals for the lease and joint development of real
property excess to transit facility requirements at the White Flint
Metro Station site. The mixed-use development potential of the site is
set forth in the approved Montgomery County, Maryland, sector plan. It
depicts 300 hotel units, 650,000 square feet of commercial office space,
73,000 square feet of retail space, and 650 residential units. The
project is expected to yield improved ridership, revenue equal to the
property's acquisition cost, greater accessibility to and enhanced
esthetics of the station, and other benefits. This negotiated-type
competition was the method that WMATA used to select the joint
development contractor.
The prospectus stated in section IV, Requirements of Lease, that as
one of the major lease provisions,
(a)ll lease proposals will contain a complete rental offer as
follows:
a. Minimum guaranteed rent to be paid during the initial four (4)
year development period of the lease. * * *
b. Minimum guaranteed rent to be paid during the fifth (5th) through
the fiftieth (50th) year of the lease.
c. Additional rent payable to WMATA during the sixth (6th) through
the fiftieth (50th) year of the lease. This additional rental, above
the minimum guaranteed rent to be paid, shall be expressed as a fixed
percentage of all gross income from the project.
Section VII, Selection Procedure, stated that the first of the
selection factors to be considered in the selection process is "(f)ull
conformity to all requirements set forth in the (p)rospectus."
In response to the additional rent requirement for a fixed percentage
of all gross income, Paramount proposed 10 percent of gross income
exceeding $55 million per year, White Flint proposed 8 percent of gross
income exceeding $30 million per year, and Travenca proposed 1.2 percent
of all gross income "subordinate to debt service."
From past dealings with WMATA, White Flint explains that the
exclusion of some gross income from the additional rent computation
would be acceptable to WMATA. It appears that Paramount's past
association with WMATA resulted in a similar understanding. Only
Travenca was unaware of WMATA's relaxed interpretation of the
unambiguous requirements of the additional rent provision. Travenca
explains that the "subordinate to debt service" qualification in its
proposal did not affect the magnitude of Travenca's rent payments, but
established a priority in the event of default; the debtor would be
paid before WMATA. WMATA did not reject any of the additional-rent
proposals as unacceptable.
A fundamental competitive principle is that all competitors must be
given the opportunity to submit offers on a common basis. Cohu, Inc.,
57 Comp.Gen. 759(1978), 78-2 CPD 175; International Business Machines
Corp., B-194365, July 7, 1980, 80-2 CPD 12; Burroughs Corporation,
B-194168, November 28, 1979, 79-2 CPD 376.
While we need not decide, we note that this principle would be
applicable even if it was determined that WMATA's procurement
regulations governed this matter since those regulations provide that
contracts shall be made on a competitive basis to the maximum
practicable extent.
WMATA contends that its conduct in selecting contractors, like
Paramount, for revenue-producing contracts, like this joint development
project, is not restricted by the laws that established WMATA or WMATA's
procurement regulations. WMATA contends, citing various court decisions
and decisions of our Office, that its actions are not subject to
objection because they were reasonable. Specifically regarding the
prospectus, WMATA argues that the prospectus did not mandate precise
conformance to the detail specified at the risk of rejection for
nonconformance. WMATA concludes that, in view of the substantial
advantage of the Paramount proposal, it cannot be said that the failure
to advise Travenca of the permissibility of sheltering some revenue from
the application of the additional rent provision constitutes an abuse of
discretion requiring that the selection be invalidated.
Where, as here, negotiated-type procedures are used and there is a
change in the stated needs or requirements, or the agency decides that
it is willing to accept a proposal that deviates from those stated
requirements. Corbetta Construction Company of Illinois, Inc., 55
Comp.Gen. 201(1975), 75-2 CPD 144; Union Carbide Corporation, 55
Comp.Gen. 802(1976), 76-1 CPD 134; Cohu, Inc., Supra.
We conclude that the additional rent provision of section IV of the
prospectus was a requirement of the prospectus and that, as such,
section IV of the prospectus mandated full conformity with it.
In our view, each offeror's proposal deviated from the
additional-rent requirement of the prospectus, the requirement was
mandatory, and the additional-rent provision was material. Each offeror
took an advantage that, under the prospectus, was not permissible. None
of the proposals satisfied the terms of the prospectus; therefore,
based on WMATA's statement of requirements, none should have been
considered acceptable by WMATA. We believe that WMATA's failure to
notify the offerors of its willingness to accept such proposals falls
short of the standard that all offerors must be given an opportunity to
submit a proposal based on the revised requirement. Further, we believe
that WMATA established a mandatory requirement and then ignored its
application to all three proposals.
We may not speculate on how offerors may have revised the nonfinancial
aspects of their proposals had WMATA enforced the requirement as WMATA
wrote it. Since WMATA is willing to accept proposals with conditions
like those imposed by the offerors, we recommend that WMATA so revise
the prospectus and permit the offerors to compete on a common basis.
Accordingly, the competition should be reopened based on a current
statement of WMATA's additional-rent requirements. Our conclusion on
this point makes it unnecessary for our Office to consider the merits of
the other bases of complaint. However, since we have recommended
reopening the competition, we point out certain matters which WMATA
should consider prior to implementing our recommendation.
WMATA's revised statement of requirements should clearly provide the
parameters on the acceptability of lease/purchase proposals. If the
sale of a portion of the site is contemplated in the revised prospectus,
then we suggest that WMATA obtain UMTA's concurrence prior to award of
the contract.
We also suggest that, rather than merely accepting the proposers'
financial information, WMATA should evaluate the revenue projections of
each proposal from the standpoint of realism and the common elements of
each proposal.
The record indicates that all offerors exceeded the limitations of
the applicable sector plan distorting the actual financial return to
WMATA. To cure this and to provide a common basis for evaluation, WMATA
should include in the prospectus the salient aspects of the sector plan
which offerors may not exceed for purposes of evaluation. For example,
all of the development plans produced peak hour trips exceeding the
sector plan guidelines.
Finally, we also suggest that the revised statement of requirements
indicate the relative importance of evaluation criteria (such as,
economic return, responsiveness with the sector plan, utilization of
minority business enterprise, financial qualifications and experience of
the offeror, etc.) so that offerors can better tailor proposals to
WMATA's requirements.
Since we recommend reopening the competition, claims for proposal
preparation costs by Travenca and White Flint need not be considered.
G3660A0A 60-A Comp.Gen. (C.D.P. - 4/2/82)
B-195921, July 31, 1981, 60 Comp.Gen. 611
Compensation - Hours of Work - Fair Labor Standards Act - Red Meat
Inspectors - Clothes-Changing, etc. Time
Office of Personnel Management is correct in holding that certain
Department of Agriculture red meat inspectors, who are required to wear
protective clothing and equipment and to keep them clean, are involved
in an integral and indispensable part of their principal activity under
the Fair Labor Standards Act, 20 U.S.C. 201 et seq. when they are
engaged in clothes-changing and cleanup activities at their worksites.
GAO will not disturb OPM's factual findings unless clearly erroneous.
Paul Spurr, 60 Comp.Gen. 354. Compensation - Hours of Work - Fair Labor
Standards Act - Effect of Practice or Custom - Red Meat Inspectors
Section 3(o) of the Fair Labor Standards Act (FLSA), 29 U.S.C. 201 et
seq., does not exclude red meat inspectors, U.S.C. 201 et seq. when they
are engaged in clothes-changing and cleanup activities from being
compensable hours worked under FLSA. There was no custom or practice to
exclude such activities from being compensable as meat inspectors' union
had always challenged Department of Agriculture's determination to
exclude such activities from being compensable from the time FLSA was
made applicable to Federal employees. Moreover, Agriculture had paid
for a certain amount of clothes-changing and cleanup time in the past.
Matter of: Department of Agriculture Meat Inspectors - Fair Labor
Standards Act, July 31, 1981:
The Honorable Bob Bergland, while he was Secretary of Agriculture,
requested our decision as to whether time spent by food inspectors of
the Department of Agriculture's Food Safety and Quality Service (FSQS)
in clothes-changing and cleanup activities, is hours of work under the
Fair Labor Standards Act (FLSA), 29 U.S.C. 201 et seq. (1976). Comments
on the Secretary of Agriculture's request were solicited and received
from the Office of Personnel Management, the Department of Labor, and
the American Federation of Government Employees (AFGE), which represents
the food inspectors who are the subject of this decision.
For the reasons stated below, we affirm the Office of Personnel
Management's determination that time spent by FSQS meat inspectors in
clothes-changing and cleanup activities is compensable hours of work
under FLSA.
The Department of Agriculture states the facts giving rise to this
case as follows:
At issue is a difference of opinion between FSQS management and Local
2722 over pay for time spent in clothes-changing and cleanup activities.
The union considers such time to be an integral part of the principal
duties of slaughter inspection and, therefore, hours of work.
Management maintains that such activities are considered as preliminary
and postliminary to principal duties rather than an integral part.
All parties are in agreement that other activities such as knife
sharpening, drawing and securing keys, badges, and tags, cleaning
necessary equipment, and completing administrative paperwork are hours
of work under FLSA.
The Department of Agriculture reports that it employs some 7,500 food
inspectors who inspect meat and poultry but the Position Classification
standards do not formally recognize any distinction between those
inspectors engaged in red meat inspection and those engaged in poultry
inspection. The Department of Agriculture report continues:
Although the OPM decision concerns only those food inspectors
employed in red meat slaughter establishments within the Green Bay area,
it is an inescapable conclusion that if the decision is implemented in
that area, it will have nationwide impact in that FSQS will have to
initiate action to insure consistent and equitable treatment of all red
meat slaughter inspectors. The impact of this decision on the food
inspectors engaged in poultry slaughter inspection or processed product
inspection is unknown at this time. In addition, FSQS employs
agricultural commodity grades who also work in red meat activities.
Here, too, the impact of this decision is unknown.
In 1976, USDA requested clarification of pay entitlements of meat and
poultry inspectors from the Civil Service Commission. Bureau of
Policies and Standards. A number of questions were asked, including a
question regarding preparation and cleanup time as hours of work under
FLSA. Mr. Frank S. Mellor, Acting Chief, Pay Policy Division, responded
on July 28, 1976. * * * The policy set forth in Mr. Mellor's letter has
been applied by FSQS and USDA since that date with regard to pay
entitlements for food inspectors who engage in cleanup and
clothes-changing activities prior to and after the workday. However,
the guidance provided in 1976 appears to conflict with the * * * (recent
OPM decision made on this matter) and contributes to the uncertainty
USDA and FSQS officials are experiencing in regard to proper
interpretation of the FLSA.
The recent OPM decision referred to in the above was made as a result
of an FLSA complaint against FSQS filed by the President and members of
Local 2722, National Joint Council of Food Inspection Locals, AFGE, on
behalf of food inspectors involved in red meat slaughter inspection
operations in Green Bay, Wisconsin. In it, Mr. Keith Roelofs, Regional
Director for the Chicago Region (now the Great Lakes Region) of the
Office of Personnel Management, ruled that time spent by meat inspectors
in clothes-changing and cleanup activities is compensable hours of work.
The Secretary of Agriculture disputes OPM's decision and contends
that the time spent in performing clothes-changing and cleanup
activities is primarily for the employees' benefit. He states that the
inspectors are not required to wear a uniform, and the agency does not
furnish any work clothes, and the only requirement is that their clothes
be clean and washable. Laundry service or disposable work garments are
provided by the establishments where the inspections are performed. In
addition he states that not all red meat slaughter inspectors get soiled
on the job to the degree indicated in the OPM decision.
In view of the above conditions and in view of its interpretation of
the guidance given it in 1976 by the Civil Service Commission,
Agriculture believes that the time spent in clothes-changing and cleanup
activities is not hours of work. Moreover, Agriculture argues that even
if the above activities are determined to be hours of work then section
3(o) of FLSA excludes them from the provisions of FLSA.
As indicated above we received comments on the Secretary of
Agriculture's submission from OPM, the Department of Labor, and from Mr.
Kenneth T. Blaylock, President, American Federation of Government
Employees. Although the Department of Labor is the Administrator of
FLSA for the non-Federal sector, OPM administers FLSA as to most Federal
employees, including those of the Department of Agriculture. 29 U.S.C.
204(f)(1976). In his report to us on the Secretary of Agriculture's
submission, Mr. Alan K. Campbell, former director of the Office of
Personnel Management, states that the decision of OPM's Great Lakes
Region was correct and urges us to uphold that decision. The Department
of Labor also states that the meat inspectors clothes-changing and
cleanup activities are a part of their principal activity or activities.
Mr. Blaylock likewise urges us to find OPM's determination that the
clothes-changing and cleanup time is compensable working time.
Three issues are raised by the Secretary of Agriculture's submission.
1. Is the time spent by food inspectors in clothes-changing and
cleanup activities hours of work under FLSA?
2. Did OPM give Agriculture contradictory advice and, if so, does
that have an impact on the answer to the first issue?
3. Does FLSA section 3(o) exclude the clothes-changing and cleanup
activities from the FLSA's hours of work definition?
We shall discuss such issues in order below.
Section 4 of the Portal-to-Portal Act, 29 U.S.C. 254(a), provides in
pertinent part that:
* * * no employer shall be subject to any liability or punishment
under the Fair Labor Standards Act of 1938, as amended * * * on account
of the failure of such employer to pay an employee * * * overtime
compensation, for or on account of any of the following activities * * *
--
(2) activities which are preliminary to or postliminary to said
principal activity or activities, which occur either prior to the time
on any particular workday at which such employee commences, or
subsequent to the time on any particular workday at which he ceases,
such principal activity or activities.
Both the Department of Agriculture and the Office of Personnel
Management rely on the holding in Steiner v. Mitchell, 350 U.S.
247(1956), which interprets the Portal-to-Portal Act, to arrive at their
opposing conclusions on whether the clothes-changing and cleanup time is
hours of work. The issue before the court in Steiner was:
* * * whether workers in a battery plant must be paid as a part of
their "principal" activities for the time incident to changing clothes
at the beginning of the shift and showering at the end, where they must
make extensive use of dangerously caustic and toxic materials, and are
compelled by circumstances, including vital considerations of health and
hygiene, to change clothes and to shower in facilities which state law
requires their employer to provide, or whether these activities are
"preliminary" or "postliminary" within the meaning of the
Portal-to-Portal Act, and, therefore, not to be included in measuring
the work time for which compensation is required under the Fair Labor
Standards Act.
350 U.S.at 248.
The Supreme Court found that the legislative history showed that the
Senate intended the activities of clothes-changing and showering to be
hours worked under FLSA "if they are an integral part of and are
essential to the principal activities of the employees." 350 U.S.at 254.
The court then held that the clothes-changing and showering activities
of the battery plant workers were clearly an integral and indispensable
part of the battery plant workers' principal activity of employment.
350 U.S.at 256.
The Department of Agriculture argues that the food inspectors
clothes-changing and cleanup activities are not "integral" or
"essential" to their principal activity of inspecting meat. Agriculture
states that there is no reason to believe food inspectors could not
perform inspection activities without putting on certain clothes.
The Office of Personnel Management's Great Lakes Region, however,
applied the basic clothes-changing and cleanup test in Steiner to the
facts in this case after making an on-site inspection and investigation
and issued the following findings and determination:
Our finding is that the inspectors involved in red meat slaughter
inspection operations in Green Bay circuits are, for reasons other than
mere convenience, required to spend time in work preparation, clothes
changing and clean up which we conclude to be an integral part of their
principal activity. Although no specific uniform is required for such
work and inspectors furnish their own work clothing, it is clear that
certain garments (coats, frocks) head coverings, and safety devices such
as aprons, wrist guards, scabbards, etc., are necessary to perform the
work. Visits to all three "kill floor" operations provided direct
visual evidence to confirm that inspectors become soiled with blood and
ingesta during the normal work day. It is not a convenience that such
protective clothing must be worn and changed, or that such employees
clean up at the end of the day. It would be unreasonable to expect that
bloody, bacteria-ridden garments be worn home or to a public place such
as a restaurant or grocery store. We maintain that it is the principal
activity, red meat slaughter inspection, that makes the clothing
unpresentable and which also makes the wearing of such clothing
indispensable to its performance. Analogous to and consistent with the
chemical plant and battery plant employee examples, such a principal
activity cannot reasonably be expected to be performed without the
wearing of certain clothes and equipment. The time spent on the
changing of such clothing at the beginning and end of the workday is
hours of work and is thus compensable.
As OPM points out, although no specific uniform is required, the Food
Safety and Quality Service's Meat and Poultry Inspector's Manual of
Procedures, Personal Hygiene, Subpart 8-C, which is attached to this
decision as an Appendix, does require the use of certain garments, head
coverings and safety devices and requires that soiled or contaminated
clothing be changed as often as necessary throughout the workday.
Both the Department of Agriculture's regulations and the job
description for meat inspectors place a great stress on sanitation
procedures and the necessity that inspectors ensure the cleanliness of
the meat slaughtering plant as well as their own persons. Moreover, as
noted in Mr. Bergland's submission, and specifically pointed out in
AFGE's comments, there is a requirement that meat slaughtering
establishments provide commercial laundry service for inspectors' outer
work clothing or disposable garments.
The Department of Labor, which administers FLSA for the non-Federal
sector, supports OPM's decision:
We agree with this result. As applied to the facts in this case, it
is in accord with Steiner v. Mitchell, 350 U.S. 247(1956) and many other
similar cases. The Department of Agriculture asserts that the food
inspectors could perform their duties without wearing special clothes,
and that therefore the clothes changing and washup activity is not
really an integral or essential part of their job. However, the OPM
on-site investigation expressly found that the food inspectors "become
soiled with blood and ingesta during the normal workday." Here, as in
Steiner and subsequent cases, where an employee's job necessarily
results in his clothes becoming soiled and unpresentable, clothes
changing and cleanup activity is plainly part of the "principal activity
or activities" within the meaning of Section 4 of the Portal-to-Portal
Act.
It is evident that, given the fact that these meat inspectors get
extensively soiled or contaminated and given the rigorous sanitation
procedures imposed on the meat inspectors, the clothes-changing and
cleanup activities are not merely for the convenience of the meat
inspectors. We have held that given OPM's procedures for processing
FLSA complaints, which procedures include an opportunity for on-site
investigations and a review of all pertinent evidence, we would not
disturb OPM's factual findings unless clearly erroneous and the burden
of proof lies with the party challenging those findings. Paul Spurr, 60
Comp.Gen. 354(1981). Therefore, we believe it was reasonable for OPM to
find that clothes-changing and cleanup activities which occur before and
after the regular work shifts are necessary extensions of the red meat
inspectors' work and are required of the employees as an integral and
indispensable part of the sanitation measures required of red meat
inspectors.
Nor do we find that OPM gave the Department of Agriculture
conflicting advice as to whether clothes-changing and cleanup activities
are compensable work hours under FLSA. In 1976, OPM supplied the
following information to the Department of Agriculture in response to
Agriculture's question as to whether preparation and cleanup time of
meat inspectors was hours worked under FLSA.
Other activities which may be performed outside the workday and,
under normal conditions, would be considered "preliminary" or
"postliminary" activities include checking in and out and waiting in
line to do so, changing clothes, washing up or showering, and waiting in
line to receive pay checks.
However OPM also stated in the same letter:
However, if an activity is performed merely for the convenience of an
employee and is not directly related to the employee's principal
activity or activities, it should be considered a "preliminary" or
"postliminary" activity rather than a principal part of the activity.
For example, if an employee cannot perform his principal activity
without putting on certain clothes, the changing of clothes would be
compensable. On the other hand, if changing clothes is merely a
convenience to the employee and not directly related to his principal
activity, it should be considered a "preliminary" or "postliminary"
activity under the Portal Act.
In light of the facts presented, OPM's determination that red meat
inspectors' clothes-changing and cleanup activities are hours worked
reasonably applies the guidance given Agriculture in 1976.
The Department of Agriculture finally argues that even if we find the
clothes-changing and cleanup activities to be an integral part of food
inspection jobs, FLSA section 3(o) exempts such activities from being
deemed compensable hours of work. Section 3(o) reads:
Hours Worked.-- In determining for the purposes of sections 6
(minimum wage) and 7 (overtime) the hours for which an employee is
employed, there shall be excluded any time spent in changing clothes or
washing at the beginning or end of each workday which was excluded from
measured working time during the week involved by the express terms of
or by custom or practice under a bona fide collective-bargaining
agreement applicable to the particular employee.
Agriculture contends that, since it has never paid red meat
inspectors for clothes-changing and cleanup activities and payment for
such activities has been in dispute ever since the effective date of
Federal employees' coverage under FLSA, such nonpayment is a " . . .
custom or practice under a bona fide collective-bargaining agreement" as
contemplated by section 3(o).
In determining whether the clothes-changing and cleanup activities
are excluded because of custom or practice, OPM was guided by the
Department of Labor's instructions in section 31b 01 of its Field
Operations Handbook which states as follows:
There are certain instances in which clothes changing and washup
activities by employees on the premise of the employer are integral
parts of the principal activities of the employees because the nature of
the work makes the clothes changing and washing indispensable to the
performance of productive work by the employees, but the collective
bargaining agreement in effect in the establishment is silent as to
whether this time should be included in, or excluded from hours worked.
Where such clothes changing and washup activities are the only preshift
and postshift activities performed by the employees in the premises of
the employer (and) the time spent in these activities has never been
paid for or counted as hours worked by the employer, and the employees
have never opposed or resisted this policy in any manner although they
have apparently been fully aware of it, there is a custom or practice
under the collective bargaining agreement to exclude this time from the
measured working time, and FLSA Sec. 3(o) applies to the time.
The Office of Personnel Management found that the food inspectors
union had indeed opposed or resisted the determination that
clothes-changing and cleanup activities from being considered as
compensable under FLSA. Moreover, OPM found that in several plants
inspectors were in fact receiving compensation for these activities
during the 8-hour day. In light of this and the Department of
Agriculture's admission that compensation for such activities has been a
matter of discussion " * * * since the effective date of the FLSA
amendment * * * ," we find that no custom or practice excluded the
clothes-changing and cleanup activities from being considered as
compensable hours of work.
Secretary of Labor, United States Department of Labor v. E. R. Field,
Inc., 495 F.2d (1st Cir. 1974).
As noted above, the Department of Agriculture has also expressed
concern that the determination of OPM's Great Lakes Region that red meat
slaughter inspectors are performing hours of work when they perform
clothes-changing and cleanup activities may have an impact on all other
food inspectors engaged in poultry slaughter inspection or processed
product inspection. We would point out, however, that merely because
one type of FSQS inspector has been found to be engaged in hours worked
when performing such activities does not mean that all inspectors must
also be found to be engaged in hours worked when performing
clothes-changing and cleanup activities. A determination of whether an
employee has performed hours worked under FLSA depends not on the
position classification standards, which are similar for various types
of food inspectors, as the Department of Agriculture suggests, but on
the actual conditions of employment. It may be that other inspectors
change clothes and clean up in circumstances different from those here
and they may do so for their own convenience, and not because such
activities are an integral and indispensable part of their duties. The
application of this decision is, thus, limited to the FSQS inspectors
engaged in red meat inspection in circumstances described herein and to
those inspectors who are similarly situated.
In this decision, therefore, we uphold OPM's determination that red
meat slaughter food inspectors of the FSQS within the Green Bay area
perform work under FLSA when they are engaged in clothes-changing and
cleanup activities. Moreover, we find that no excess agreement or
custom or practice excluded the clothes-changing and cleanup activities
from being considered as compensable hours of work.
Personnel with clean hands, clothing, and good hygienic practices are
essential to the production of clean and wholesome products.
8.16 WEARING APPAREL
(a) Garments
All garments (coats, frocks, etc.) shall be clean, in good repair,
and of readily washable material. Street clothes shall be covered while
handling exposed edible product. Clothing that becomes soiled or
contaminated during the workday shall be changed as often as necessary.
White or light-colored garments are desirable.
(b) Head Covering
All persons working where exposed product is handled must wear
suitable head coverings to prevent hair from falling into the product.
(c) Aprons, Wrist Guards
Safety devices, such as aprons, wrist guards, etc., shall be of
impervious material, clean and in good repair. Persons handling edible
products shall not wear leather aprons, wrist guards, or similar devices
unless clean, washable coverings are used over them.
(d) Gloves
When during post-mortem inspection it becomes necessary for the
inspector to wear gloves, such gloves should be of the surgical type.
Cotton gloves worn by persons handling edible product should not have
dyed cuffs that may contaminate product and should be replaced when
contaminated.
Mesh gloves or guards must be cleaned and sanitized when contaminated
and at the end of daily operations. If such gloves are worn by
eviscerators and head or bung droppers, they shall be covered with
gloves of impervious material. Mesh gloves must be promptly replaced if
the links are broken or missing.
Light-colored rubber or plastic gloves may be worn by product
handlers, provided they are clean and in good repair.
(h) Footwear
Shoes and boots should be appropriate for operations and, in most
cases, of impervious material.
Eviscerators boots. Persons working on moving top tables shall wear
white or otherwise identifiable impervious boots, worn only on the table
and adjacent boot cleaning compartment. They must use other footwear
when walking to and from working area. To prevent contamination splash
to viscera, carcasses, and table, such person must clean and sanitize
contaminated aprons, knives, or footwear in boot cleaning compartment.
(i) Personal Equipment
Cloth or twine wrappings on implement handles and web belts are not
permitted.
B-198195.2, July 29, 1981, 60 Comp.Gen. 609
Contracts - Default - Reprocurement - Defaulted Contractor Low Bidder -
Price Higher Than on Defaulted Contract - Subsequent Change to
Termination for Convenience
Where agency rejects bid from defaulted contractor on reprocurement
contract because bid price exceeds defaulted contract price, subsequent
alteration of default termination to termination for convenience
pursuant to decisions and orders of board of contract appeals does not
render improper rejection of reprocurement bid since at time of
rejection agency had reasonable basis for its action.
Matter of: Mark A. Carroll & Son, Inc. - Reconsideration, July 29,
1981:
Mark A. Carroll & Son, Inc. (Carroll), requests reconsideration of
our decision in the matter of Mark A. Carroll & Son, Inc., B-198295,
August 13, 1980, 80-2 CPD 114. In that decision, we denied Carroll's
protest against the rejection of its bid submitted in response to a
reprocurement solicitation issued by the Veterans Administration Medical
Center for projects 78-003 and 78-004. We also denied Carroll's claim
for bid preparation costs. Projects 78-003 and 78-004 were originally
awarded to Carroll in October 1978. Carroll's contract was terminated
for default on September 21, 1979.
This Office denied Carroll's protest in our earlier decision on
several grounds. First, we declined to consider Carroll's contentions
that the termination of its contract was improper because that was a
matter for resolution of the contracting parties.
Similarly, we dismissed Carroll's argument relating to the similarity of
work under the reprocurement and the defaulted contract, because those
matters were then pending before the Veterans Administration Board of
Contract Appeals.
We agreed with the Veterans Administration's assertion that our
decision in PRB Uniforms, Inc., 56 Comp.Gen. 976(1977), 77-2 CPD 213,
barred the award of the contract to Carroll based upon its low bid. In
that case, we held, as we had in earlier cases, that a reprocurement
contract may not be awarded to the defaulted contractor at a price
higher than the defaulted contract price because to do so would be
tantamount to modifying the defaulted contract without consideration.
Aerospace America, Inc., 54 Comp.Gen. 161(1974), 74-2 CPD 130.
Finally, we denied Carroll's claim for bid preparation costs on the
grounds that rejection of Carroll's claim for bid preparation costs on
the grounds that rejection of Carroll's bid was not arbitrary or
capricious.
Since our earlier decision, the Veterans Administration Board of
Contract Appeals has issued several opinions and orders relating to the
default and has awarded compensation to Carroll, converting the
termination for default to a termination for convenience of the
Government. Carroll has requested our reconsideration based upon the
decision of the Board of Contract Appeals.
The central issue presented by Carroll's reconsideration request is
whether a contractor whose default termination has been converted to a
termination for convenience of the Government is subject to the rule set
forth in PRB Uniforms, Inc., supra.
In this regard, we have stated that there is no authority to permit
the award of a reprocurement contract at a higher bid price to a
defaulted contractor until such time as that contractor seeks and
receives a termination for convenience of the original contract in the
appropriate forum. Until such a ruling is made, the prior contract is
legally in default. Down East, Inc., B-196654, December 19, 1979, 79-2
CPD 422.
In this instance, the Veterans Administration Board of Contract
Appeals did not issue its decisions and orders regarding the termination
for default until several months after the reprocurement contract was
awarded, the Veterans Administration had a reasonable basis to consider
Carroll's bid ineligible for award solely under the rule set forth in
PRB Uniforms, Inc. supra, and MKB Manufacturing Corporation, 59
Comp.Gen. 195(1980), 80-1 CPD 34. Accordingly, we find no basis to
object to the rejection of Carroll's bid.
The request for reconsideration is denied.
B-199145.2, July 17, 1981, 60 Comp.Gen. 606
Bidders - Responsibility v. Bid Responsiveness - Minority Subcontracting
Goal - Subcontractor Listing - Solicitation Requirement
General Accounting Office (GAO) affirms decision in Paul N. Howard
Company, B-199145, Nov. 28, 1980, 80-2 CPD 399, in which GAO concluded
that grantees cannot require bidders to submit with bids names of firms
planned to be utilized in performing work as a condition of
responsiveness. Therefore, grantor's current regulation requiring only
certification with bid is consistent with that decision. This decision
was extended by 61 Comp.Gen. . . . (B-204923, Dec. 14, 1981). Bids -
Responsiveness - Responsiveness v. Bidder Responsibility - Minority
Subcontracting Goal - Certification of Compliance in Bid - Grant-Fund
Procurement
Bid is responsive where bidder certifies in its bid intention to
perform work by utilizing percentage goal of minority subcontractors.
Substitution of one subcontractor for another (whether or not listed in
bid), before award, concerns bidder's ability to comply with terms of
bid or bidder's responsibility; substitution after award concerns
contract administration. Therefore, GAO's decision in Paul N. Howard
Company, B-199145, Nov. 28, 1980, 80-2 CPD 399, correctly concluded that
after bid opening grantee should permit reasonable substitution of one
minority subcontractor for one listed in responsive low bid.
Matter of: Paul N. Howard Company - Reconsideration, July 17, 1981:
The Department of Transportation, Urban Mass Transportation
Administration (UMTA), requests reconsideration of our decision in the
matter of Paul N. Howard Company, B-199145, November 28, 1980, 80-2 CPD
399. That decision concluded that the low bidder on a grantee
solicitation should have been allowed to substitute a new minority
subcontractor after bid opening. In the Howard decision, we reasoned
that documentation bearing on a bidder's compliance with the
solicitation's minority business specifications concerned the bidder's
responsibility and could be provided after bid opening even through the
solicitation stated that it could not.
UMTA believes that the decision is too sweeping and would
unreasonably restrict participation of minority subcontractors. The
Paul N. Howard Company (Howard) suggests that the matter is moot because
UMTA changed its regulations to eliminate the problem.
Howard presents sound argument that the earlier decision should not
be reconsidered; however, in view of the significant impact of a
possible misunderstanding of the earlier decision, we have reconsidered
the matter. See Environmental Protection Agency-- request for
modification of GAO recommendation, 55 Comp.Gen. 1281(1976), 76-2 CPD
50. We conclude that the Howard decision was correct.
The Howard decision considered Howard's complaint that the grantee,
Metropolitan Dade County, Florida, with the concurrence of UTMA,
improperly rejected its low bid for the construction of two line
sections of stage 1 of the Metro-Dade Mass Transit System. The
grantee's solicitation established a goal that a certain percentage of
the total value of the contract be awarded to minority subcontractors.
The solicitation required each bidder "as a condition of responsiveness"
to submit information showing compliance with the goal. The grantee
concluded that one of the listed subcontractors in Howard's bid did not
qualify as a minority business-- a fact not known by Howard until after
bid opening. The grantee refused to permit Howard to submit the name of
another subcontractor to replace the non-minority business.
The Howard decision concluded, in essence, that the Howard bid
unequivocally bound Howard to perform the contract by utilizing the goal
of minority subcontractors. Whether the goal was met by using the
subcontractors named in its bid or a suitable acceptable to the grantee
was a precondition to performance, i.e., information concerning the
bidder's responsibility or ability to perform as required by its bid,
which could be furnished after bid opening.
First, UMTA is concerned that under the Howard decision, grantees
cannot treat compliance with minority business requirements as a matter
of bid responsiveness. UMTA argues that it is not improper under
Federal law to require bidders to identify qualified firms in their bids
sufficient to meet a solicitation's minority and female subcontracting
goals, as a condition of bid responsiveness. UMTA notes that current
regulations require only written assurance or certification of meeting
the goals to be submitted with the bid; after bid opening, the names of
the minority firms may be submitted. UMTA contends that the Howard
decision implies that the minority subcontracting certification
requirement may never be made a matter of responsiveness.
We believe that UMTA's concern is unwarranted. We have no legal
objection if grantee solicitations require that bidders submit with bids
a written assurance or certification of meeting the minority
subcontracting goals. Failure to submit an unambiguous certification
can properly be a basis to exclude the bidder from consideration for
award. See RGK, Inc., B-201849, May 19, 1981, 81-1 CPD 384, where the
low bidder submitted the required certification but its bid prices of
the items to be subcontracted to minority firms was less than the
required goal, we concluded that the bid was ambiguous and, thus
non-responsive, and it could not be corrected after bid opening.
Further, in Northern Virginia Chapter, Associated Builders and
Contractors, Inc., et al., B-202510, April 24, 1981, 81-1 CPD 318, we
rejected the argument that affirmative action requirements involve only
the bidder's responsibility, not the bid's responsiveness.
In our view, the Howard decision does not imply that grantees cannot
require that bidders submit with bids a written assurance or
certification of meeting the subcontracting goals. Further, we find
that UMTA's current regulation requiring certification with the bid as a
matter of responsiveness is reasonable and consistent with the Howard
decision.
In rare instances, our Office has not objected to procuring agencies
making matters of responsibility matters of responsiveness for
particular procurements. See 43 Comp.Gen. 206(1963), where procuring
agency presented clear evidence that listing proposed subcontractors was
necessary to prevent bid shopping. Here, there is no evidence that
listing proposed minority subcontractors in the bid will promote the
cause of affirmative action. Instead, the evidence seems to indicate
that well-intentioned bidders are being trapped by unnecessary
regulatory requirements. The result is higher costs for the same work.
In sum, the bidder's unconditional certification or written assurance
to comply with the solicitation's minority subcontractor requirements
makes the bid responsive on that point.
The manner in which the bidder carries out its obligation is a matter of
contract and grant administration within the purview of the grantee and
grantor, respectively.
Second, UMTA is concerned that a grantee must permit substitution of
subcontractors after bid opening as in the Howard decision. Again, we
believe that UMTA's concern is unwarranted. Where a grantee's
solicitation requires certification, the low bidder's agreement to
perform the work utilizing the goal of minority subcontractors would
satisfy the conditions of responsiveness. If after bid opening an
intended subcontractor (whether or not listed in the bid) refuses to
perform the work or is not acceptable to the grantee or the grantor
agency, there is no legal reason to prohibit the low bidder from
substituting another subcontractor acceptable to the grantee and the
grantor. The low bidder's compliance with the terms of its bid after
award is a matter of contract administration and the grantee's
determination of the low bidder's ability to comply with the terms of
its bid before award is a matter of the bidder's responsibility.
Accordingly, since there has been no showing of errors of law or fact
in the Howard decision, it is affirmed.
B-158487, July 17, 1981, 60 Comp.Gen. 602
General Services Administration - Procurement - Accelerated Payment
Procedure - Approval of Use
This Office continues to approve use of accelerated payment procedure
by General Services Administration (GSA) whereby payment is made to
vendor based upon assurance that goods have been shipped rather than
awaiting notification that goods have been received by consignee where
it is necessary to take advantage of prompt payment discounts and
adequate security has been provided to safeguard interests of United
States. While accelerated payment procedures theoretically may be more
subject to fraud and abuse than system under which goods must be
received before payment is made, there is nothing to indicate that
benefits bestowed by accelerated payment system previously used by GSA
were out-weighed by any losses incurred. Contracts - Payments - Advance
- Prior to Receipt of Supplies, etc. - Accelerated Payment Procedure -
Internal Control Adequacy
While specific internal controls necessary to protect Government's
interest will vary with nature of particular activity involved, it is
essential that agencies using accelerated payment procedures have
adequate internal controls to assure that they get what they pay for.
Agencies ordering from GSA must keep records that permit them to
determine that what is paid for is received in proper quantity and
condition. It is incumbent on agency placing order with GSA to match
order with invoice, payment and receiving report on a timely basis. If
discrepancies exist, the ordering agency should contact GSA for followup
action to assure these discrepancies are adjusted. General Services
Administration - Services for Other Agencies - Procurement - Supplies,
etc. - Accelerated Payment Procedure - Internal Control Adequacy
Once an order is placed with GSA and GSA pays on certification by
vendor that goods have been shipped, ordering agency's internal control
system should automatically on a regular basis require followup by
ordering agency to determine that all goods have been received. If,
after a reasonable period of time, goods have not been received, GSA
should then be notified to initiate adjustment with vendor. Contracts -
Payments - Advance - Prior to Receipt of Supplies, etc. - Accelerated
Payment Procedure - Internal Control Reliability - Testing
Ordering agencies should consider use of statistical sampling in
order to test reliability of operation of system of internal controls
established to protect Government's interest under accelerated payment
procedures with aim of identifying problems and instituting corrective
changes. Furthermore, where statistical samples indicate possible
problems, sample should be expanded in order to achieve better
understanding of magnitude of problems.
Matter of: Payment for Goods in Advance of Notification of Receipt,
July 17, 1981:
This decision to the Administrator of General Services is in response
to an inquiry from Raymond A.Fontaine, Assistant Administrator, Office
of Plans, Programs, and Financial Management, Office of the
Administrator, General Services Administration (GSA), concerning GSA's
practice of paying direct delivery invoices from vendors prior to
receiving a notification of receipt of goods from the consignee
(ordering agency). While we have previously sanctioned this practice
under certain conditions in order to assure prompt payment to vendors,
see B-158487, April 4, 1966, recent events have raised doubts within GSA
that this is still an acceptable practice and caused GSA to question
whether additional safeguards are required to protect the Government
against fraud. As discussed below, we affirm our position that GSA's
accelerated payment procedure should continue to be used in appropriate
circumstances.
The Assistant Administrator indicates that:
In accord with your 1966 decision, it has been the practice of GSA to
pay direct delivery invoices without any requirement for the submission
of a receiving report from the recipient agencies. There was total
reliance on the assumption of notification on non-receipt by the
consignee as noted in the first paragraph of this letter. Recent
reviews of internal procedures occasioned by publicized charges of
scandal within the agency have resulted in our Office of Finance and
Office of Audits taking exception to this policy. They believe it
circumvents acceptable internal controls and makes it easier for the
perpetration of frauds.
As a result of the views of our Finance and Internal Audits Offices,
GSA published a change to the FPMR's as Temporary Regulation A-14 on May
1, 1980, transferring the responsibility for payment of nonstock direct
deliveries to the ordering agency or activity. This has created severe
problems for timely payments by many of these activities (particularly
the Department of Defense). As a result of the November 1980
implementation of these direct billing and paying procedures,
contractors are experiencing serious delays in making collections from
these activities * * *
Although GSA has decided to review its determination to transfer
responsibility for payment of nonstock direct deliveries to the ordering
agencies or activity, there is some concern on GSA's part that we may no
longer approve of the use of procurement practices whereby payment is
made for goods before receiving notification of receipt from the
consignee. The Assistant Administrator points to a recent GAO draft
guideline as evidence of a possible change in our position regarding the
acceptability of this practice. The draft document, entitled "Internal
Control Assessment Guide" was recently circulated for comment by this
Office to various Federal agencies (including GSA). After our Office
has analyzed the comments received and made necessary changes, we plan
to issue the document as a general guide for agencies to use in
assessing their internal control systems.
The Assistant Administrator made reference to a statement in our
guide that "Payments must be supported by proper documentation which
includes the authorization for purchase, receipt, acceptance, and
validity of the vendor invoice data." He also points out that check-list
questions 51 and 52, included in the draft guide, refer to the
comparison of receipts, quantities, nature and condition to the orders,
and that Question 53 asks "Are certifications that services have been
rendered or goods have been received in accordance with the terms and
conditions of the contract submitted to an authorized official for
approval before payment is made?" Absent anything else, this could be
viewed as a shift in this Office's position away from the one taken in
our 1966 decision authorizing payment for goods in advance of receiving
a notification of receipt from the consignee. On the other hand, the
Assistant Administrator mentions GAO's letter of August 17, 1979, to the
Heads of all Departments and Agencies, B-160725, which endorsed the
payment of bills prior to receipt of receiving reports.
Consequently, we have been asked whether payment in advance of
notification of receipt of goods is still an acceptable practice when
necessary to assure prompt payment; and if so, what internal controls
are considered by this Office to be adequate in order to protect the
Government's interest.
In B-158487, April 4, 1966, we held that by virtue of authority set
forth in section 305 of the Federal Property and Administrative Services
Act of 1949, as amended, 41 U.S.C. 255, GSA (and any other executive
agency) could pay direct delivery vouchers prior to receipt of receiving
reports from consignees, provided the agency determined that the
provisions included in each specific contract or in the general
provisions of the standard form for supply contracts provided "adequate
security" to safeguard the interests of the United States, and that the
advance payment procedure for direct deliveries was in the public
interest.
In that case, the fact that GSA was doing business with reputable and
financially responsible vendors on a recurring basis, coupled with the
fact that ordering agencies would promptly notify GSA of non-receipt of
goods, were deemed adequate security to protect the interest of the
United States. Thus, if goods were not received by the ordering agency,
the agency would notify GSA, which in turn could seek adjustments in its
next procurement from the vendor. Furthermore, the decision recognized
that it is in the public's interest to pay vendors quickly in order to
take advantage of prompt payment discounts.
Since that decision, we have authorized use of similar procedures by
other agencies, B-155253, August 20, 1969, and B-155253, October 26,
1967, and have been critical of agencies of the Government for not
taking full advantage of the savings offered through accelerated payment
procedures.
See our report to the Congress entitled "The Federal Government's Bill
Payment Performance is Good but Should be Better" (Report), FGMSD 78-16,
pp. 20-21, February 24, 1978. We based our criticisms on the belief
that agency failure to use these accelerated payment procedures in some
circumstances was costing the Government money through lost prompt
payment discounts offered by the vendors. Nothing we have been made
aware of since we first approved use of the accelerated payment
procedures has caused us to alter our position in this regard.
While an accelerated payment procedure theoretically may be more
subject to fraud and abuse than a system under which goods must be
received before payment is made, we have been shown nothing that would
indicate the benefits bestowed by the accelerated payment system
previously used by GSA were outweighed by any losses incurred.
Furthermore, even if problems are identified, there may exist a
reasonable solution to the identified problems which would protect the
Government's interest but preserve the benefits bestowed by accelerated
payments. At a meeting held to discuss this matter, which was attended
by representatives of GSA, the Department of Defense and this Office, no
specific examples of fraud could be cited to demonstrate how the
accelerated payment procedures had broken down in protecting the
Government's interest. However, prompt payment discount losses suffered
under the new direct billing and payment system implemented in 1980 and
discussed above, were estimated to be between $1.8 and $2 million
dollars.
As mentioned previously, the draft "Internal Control Assessment
Guide" is intended to be used as a general guide. As a general rule,
there is little question that payments should be made only following
receipt of goods. However, before issuing the guide in its final form,
we plan to revise it to recognize that exceptions exist to the general
rule requiring receipt of goods before payment as long as GSA and the
ordering agency can be assured that the Government's interest is
protected.
The specific system of internal controls necessary to protect the
Government's interest will vary with the nature of the particular
activity involved. The controls that may be adequate in a situation
where a large volume of small purchases are made on a recurring basis
from reputable vendors may be inadequate in other situations. However,
it is essential that agencies using accelerated payment procedures have
adequate internal controls to assure that they get what they pay for.
Agencies must keep records that permit them to determine that what is
paid for is received in the proper quantity and condition.
See Report p.21. To do this, it is incumbent upon the agency placing an
order with GSA to match the order with the invoice, the payment and the
receiving report and to make this determination on a timely basis. If
any discrepancies exist, the ordering agency should contact GSA in order
to initiate followup actions to assure these discrepancies are adjusted.
Additionally, the system employed by the ordering agency should not
be passive in nature. That is, once an agency places an order with GSA
and GSA pays on the certification by the vendor that the goods have been
shipped, the system should automatically on a regular basis require
followup by the ordering agency to determine that all goods in fact have
been received. If after a reasonable period of time the goods have not
been received, GSA should be notified to initiate adjustment with the
vendor.
Furthermore, ordering agencies should consider the use of statistical
sampling in order to test the reliability of the operation of the system
of internal controls established to protect the Government's interest
with the aim of identifying problems and instituting corrective changes.
Furthermore, where statistical samples indicate possible problems, we
recommend expansion of the sample in order to achieve a better
understanding of the magnitude of the problems.
Should problems develop with the accelerated payment procedure to
such an extent that it can no longer be assured that the Government's
interest is protected, then at that point abandonment of this procedure
may be in order.
B-201093, July 15, 1981, 60 Comp.Gen. 598
Leave of Absence - Forfeiture - Restoration - Exigency of the Public
Business - Jury Duty
Employee of Department of Navy scheduled 40 hours annual leave in
writing for December 1979, but he forfeited 16 hours of such leave at
end of 1979 leave year because he performed jury duty. He is entitled
to have such annual leave restored since performance of jury duty
constitutes an exigency of the public business under 5 U.S.C.
6304(d)(1)(B). See 5 U.S.C. 6322, which prohibits loss of or reduction
in annual leave where employee is summoned to perform jury service.
Matter of: George J. DiGiulio - Restoration of Forfeited Annual
Leave, July 15, 1981:
The issue for determination is whether jury duty performed by an
employee constitutes an "exigency of the public business" so to allow
restoration of forfeited scheduled annual leave. For the reasons stated
below, we conclude that annual leave which is forfeited by an employee
on those days when he performs jury service may be restored and credited
to a separate leave account for his use.
Mr. Daniel K. Silverton, Business Manager, Local No. 2145,
International Brotherhood of Electrical Workers (IBEW), appeals, on
behalf of Mr. George J. DiGiulio, a civilian employee of the Mare Island
Naval Shipyard, Department of the Navy, from the settlement action
issued by our Claims Group, (Z-2822798), dated May 14, 1980. The
settlement action denied the employee's claim for restoration of 16
hours of annual leave which he forfeited at the end of the 1979 leave
year.
In March 1979, Mr. DiGiulio scheduled 40 hours of annual leave to be
used between December 24 and 31, 1979, since he would accumulate 40
hours of annual leave in excess of the 240-hour ceiling which a Federal
employee may carry forward into a new leave year. The leave was
approved, in writing, by the employee's supervisor. However, Mr.
DiGiulio was summoned to perform jury duty from December 11, 1979,
through January 10, 1980. As a result, he was able to use only 24 hours
of his 40 hours of excess leave prior to the end of the leave year.
Thus, he forfeited 16 hours of annual leave.
During the period he served as a juror, Mr. DiGiulio was excused from
performing his official duties and was granted paid court leave by the
Department of the Navy under 5 U.S.C. 6322(1976). On February 1, 1980,
Mr. DiGiulio made an application for restoration of his 16 hours of
forfeited leave, supported by a statement from his supervisor that the
leave had been cancelled because the employee was performing jury duty.
The supervisor requested that the 16 hours of annual leave be restored
and carried forward into the 1980 leave year.
In the administrative report dated April 14, 1980, the Commander,
Mare Island Naval Shipyard, through his designated representative,
stated that there is no authority under the law to restore Mr.
DiGiulio's forfeited excess annual leave as there was no exigency or
operational demand that would have prevented him from being excused from
duty.
The IBEW, on behalf of Mr. DiGiulio, contends that the forfeited
annual leave should be restored under the public exigency provision of
the act of December 14, 1973, Public Law 93-181, Sec. 3, 87 Stat. 705, 5
U.S.C. 6304(d), since jury duty constitutes an "exigency of the public
business." The union argues that a criminal trial is public business and
that an exigency exists since a trail cannot be deplayed to allow a
juror to use annual leave.
Under 5 U.S.C. 6304(a) or (b), an employee is limited to a maximum
accumulation of either 30 or 45 days of annual leave and any excess
leave at the beginning of the first full biweekly pay period occurring
in a year will be forfeited. Prior to the enactment of Public Law
93-181, December 14, 1973, 87 Stat. 705, leave which was forfeited by
operation of 5 U.S.C. 6304(a) or (b) could not be restored to the
employee even if such forfeiture was the result of administrative error
or was beyond the employee's control. However, this law added a new
provision (5 U.S.C. 6304(d)(1)) which permits forfeited leave to be
restored if forfeiture resulted from; (a) an administrative error, or
(b) exigencies of the public business when the annual leave was
scheduled in advance, or (c) sickness of the employee when the annual
leave was scheduled in advance.
With respect to employees summoned for jury service, 5 U.S.C.
6322(a)(1) provides that a Federal employee is entitled to leave,
without loss of, or reduction in, pay or leave to which he otherwise is
entitled, 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 as a
juror. Further, the original statutory provision governing jury service
by employees of the United States, the act of June 29, 1940, ch. 446,
Sec. 1, 54 Stat. 689, provided that the time involved in such jury
service shall not "be deducted from the time allowed for any leave of
absence authorized by law." We have stated that the purpose or intent of
the statute, in its entirety, is that an "employee of the United States
shall receive his regular compensation or pay during the time he is
absent on account of jury service, if otherwise in a pay status, and
that the period of such service shall not in any event be charged as
annual leave." 20 Comp.Gen. 276(1940).
Subsequent to the enactment of Public Law 93-181 on December 14,
1973, this Office has not formally addressed the issue presented here,
i.e., restoration of annual leave in the "use it or lose it" category
which has been forfeited in circumstances where the employee has been
summoned to perform jury duty. Clearly, prior to December 14, 1973, 5
U.S.C. 6304(a) required the forfeiture of all annual leave credited to
an employee at the close of a leave year which was in excess of the
ceiling established, regardless of the reason for the employee's failure
to use such excess annual leave.
B-171947, April 7, 1972.
In two recent decisions involving the issue of exigency of the public
business, this Office has allowed the restoration of annual leave in
situations where there was a pressing need for the employee's services
by his employing agency. Norbert A. Shepanek, 58 Comp.Gen. 684(1979);
William D. Norsworthy, 57 Comp.Gen. 325(1978). In examining the
legislative history of 5 U.S.C. 6304(d) and the implementing guidelines
contained in Federal Personnel Manual Letter No. 630-22, January 11,
1974, however, exigency of the public business is explained in terms of
work requirements and situations where employees cannot be spared. See
B-197957, July 24, 1980.
Thus, while it appears that exigency of the public business usually
refers to the situation where an employee forfeits his annual leave
because of a pressing need for him to perform work for his employing
agency, there is no guidance in the legislative history of Public Law
93-181, in the regulations promulgated by the Office of Personnel
Management, or in the decisions of this Office, as to whether jury
service performed by a Federal employee constitutes an exigency of the
public business.
However, turning our attention to the provisions of 5 U.S.C.
6322(a)(1), we find a clear statutory pronouncement that prohibits the
loss of, or reduction in, the annual leave of an employee during a
period of absence where he is summoned to perform jury service. In the
situation confronting Mr. DiGiulio, where the employee has properly
scheduled the use of his annual leave in advance, but is unable to use
such leave in the "use it or lose it" category because he is summoned to
perform jury service, forfeiture thereof causes a loss of leave of
absence authorized by law which is specifically prohibited by 5 U.S.C.
6322(a)(1).
The provisions of 5 U.S.C. 6322 clearly recognize the performance of
jury service by a Federal employee as being a matter of public necessity
and of official concern to the Government. Further, it is the Office of
Personnel Management's recommended agency policy that Federal agencies
not ask that their employees be excused from jury duty except in cases
of real necessity because of the well-recognized importance of trial by
jury in the administration of justice in the United States. See Federal
Personnel Manual, chapter 630, subchapter 10. We, therefore, conclude
that jury service performed by a Federal employee under the previously
discussed circumstances does, in fact, constitute an exigency of the
public business. Accordingly, annual leave that is forfeited because of
jury service may be restored under the "exigency of the public business"
exception contained in 5 U.S.C. 6304(d)(1)(B).
We note that this result is in keeping with the intent of Congress when
it enacted Public Law 93-181 to correct certain inequities where leave
is lost through no fault of the employee. See H.R. Rep. No. 93-456,
93rd Cong.,1st Sess. 50 (1973).
Accordingly, the 16 hours of annual leave which were forfeited on
those days when Mr. DiGiulio performed jury duty may be restored and
credited to a separate leave account for his use. The settlement action
of May 14, 1980, by our Claims Group, is overruled.
B-199758, July 15, 1981, 60 Comp.Gen. 596
Quarters Allowance - Basic Allowance for Quarters (BAQ) - Termination -
Members Without Dependents - Sea or Field Duty for 3 Months or More -
Sea Duty Interrupted by Shore Duty - Effect
A member forfeits basic allowance for quarters (BAQ) for any period
of sea duty for 3 months or more. 37 U.S.C. 403(c). A member assigned
to such sea duty is not entitled to receive BAQ when he begins temporary
duty ashore, which interrupts his sea duty, unless the orders to perform
shore duty effectively terminate the member's sea duty. When the shore
duty is merely an adjunct to the sea duty and does not alter the nature
of the temporary duty from sea duty to shore duty, then the entire
period is considered sea duty. 59 Comp.Gen. 192, amplified.
Matter of: BAQ for Members on Temporary Duty, a Portion of Which
Constitutes Sea Duty, July 15, 1981:
The Principal Deputy Assistant Secretary of Defense (Comptroller) has
requested our decision on a member's entitlement to basic allowance for
quarters (BAQ) during a period of temporary additional duty, a portion
of which constitutes sea duty. The request has been assigned Committee
Action Number 551 by the Department of Defense Military Pay and
Allowance Committee.
The questions arise because of the provision in 37 U.S.C. 403(c)
which requires that BAQ be terminated for members without dependents
while they are on sea duty for a period of 3 months or more. The
Committee is unsure of the application of our decision at 59 Comp.Gen.
192(1980) which held that a coast Guard member who was on sea duty for
more than 3 months, with intermittent periods of a few days on shore,
was not entitled to BAQ.
The Committee states that it is not uncommon for aviation squadrons
and embarked troops assigned to temporary additional duty aboard a naval
vessel to be ordered ashore to permit use of the vessel for other
operational commitments. While these members are ashore they may be
assigned duties that are not considered to be sea duty or field duty as
defined by Executive order pursuant to 37 U.S.C. 403(j).
The Committee perceives an injustice to these members to be denied BAQ
while performing temporary additional duty under conditions that are not
considered to be sea or field duty.
Temporary additional duty is a form of temporary duty performed away
from the member's permanent station. We have held that 37 U.S.C. 403(c)
requires termination of BAQ whether the sea duty is temporary or
permanent. 59 Comp.Gen. 486, 488(1980).
In view of the above, the Committee presents the following set of
facts for our consideration: A member, otherwise entitled to BAQ
without dependents at the permanent station, was temporarily assigned to
a vessel for 6 months to perform duties defined as sea duty. During the
deployment, he was periodically ordered ashore to perform duties that
are not considered to be sea duty and upon completion of such temporary
additional duty he was directed to return to the vessel. During the
period of deployment on board the vessel and during periods of duty
ashore he was provided Government quarters. Under those facts the
Committee asks the following questions:
1. If the period of duty defined as "sea duty" was four months and
the period of duty ashore not so defined was two months, would the
member lose entitlement to BAQ for the entire period of TAD?
2. If the period of duty defined as "sea duty" was two months and
the period ashore was four months, would the member lose entitlement to
BAQ for the entire period of TAD?
3. If the deployment was extended to nine months while the vessel
was at sea and the period of duty defined as "sea duty" was three months
and one day and the period ashore was five months and 29 days, would the
member lose entitlement to BAQ for the entire period of TAD?
4. If the period of duty defined as "sea duty" was three months and
one day and the period ashore was two months, would the member be
entitled to BAQ for the two month period ashore?
5. If the answer to four above is no, may the DODPM (Department of
Defense Military Pay and Allowances Entitlements Manual) be amended to
provide that the loss of entitlement is only for the period of duty
defined as "sea duty?"
Pursuant to 37 U.S.C. 403(c) the member will lose entitlement to BAQ
as of the date he is to begin duty on board the vessel. In view of the
fact that his orders are to perform duties defined as sea duty for 6
months, this statute necessitates forfeiture of BAQ commencing with his
temporary duty assignment.
In 59 Comp.Gen. 192(1980) the member was held to have performed more
than 3 months of sea duty, and we denied entitlement to BAQ, although in
the course of his duties on board the vessel he received further
temporary duty orders to perform duties ashore. While these orders
interrupted the member's duty on board the vessel for 3 short periods
from 2 to 4 days each, the member was deployed on temporary duty to the
vessel and that deployment did not change. There is no indication that
the member's sea duty was terminated when he was ordered to perform
temporary duty ashore. The member's time ashore was merely supplemental
to his sea duty and was not considered to have changed the nature of his
temporary duty assignment.
We recognize that once the deployment begins, circumstances may arise
which would require that the member perform temporary duty ashore. In
our view, if the member receives orders to perform duties ashore and
such orders effectively terminate the member's sea duty, so that the
duties ashore cannot be considered a mere adjunct to the sea duty, the
member may begin receiving BAQ as of the date the temporary shore duty
commences. Such shore duty must amount to a change in the character of
the member's temporary duty and not be supplemental to the original
temporary sea duty orders as in 59 Comp.Gen. 192.
A member continues to receive BAQ while on temporary duty if he is
receiving BAQ at his permanent station as long as the temporary duty is
not sea or field duty. See DODPM Table 3-2-3, Rule 14. Whether the
member is entitled to BAQ during the period he was performing sea duty,
prior to the time he was ordered ashore, depends on the length of time
he was performing sea duty. In accordance with 37 U.S.C. 403(c), if
that period of time was less than 3 months the member is entitled to BAQ
for that period. However, if that time was 3 months or more, he is not
entitled to BAQ. If the member's sea duty is terminated by duty ashore,
as explained above, and he is later returned to sea duty, the 3-month
period prescribed in section 403(c) begins again.
The situations presented are hypothetical and the facts given do not
answer the question of whether the sea duty was performed continuously
or whether it was broken by intermittent periods of temporary duty
ashore. Furthermore, it is not stated whether the orders to perform
duty ashore terminated the sea duty and thus changed the member's
temporary duty to shore duty, or whether the periods ashore were similar
to those in 59 Comp.Gen. 192 which did not break the member's sea duty.
As explained above, these facts are essential to a determination of the
member's entitlement to BAQ in each situation presented.
With the explanation of the principles provided here and a full
knowledge of the facts of each actual situation which may arise, the
individual's entitlement to BAQ should be ascertainable. However,
doubtful cases may, of course, be submitted to our Office for
determination.
B-198074, July 15, 1981, 60 Comp.Gen. 591
Appropriations - Fiscal Year - Availability Beyond - Contracts -
Replacement Contracts - Default v. Convenience Termination
An agency's original obligation of funds for a contract remains
available for a replacement contract awarded in a subsequent fiscal year
where: (1) existing contract was terminated for default and that
termination has not been overturned by a Board of Contract Appeals or a
Court; or (2) replacement contract has already been awarded by the time
a competent administrative or judicial authority converts the default
termination to a termination for convenience of the Government.
Appropriations - Obligation - Deobligation - Availability of Deobligated
Funds - Replacement Contracts - Default v. Convenience Termination
An agency's original obligation of funds for a contract is
extinguished and thus not available for a replacement contract where:
(1) existing contract was terminated for convenience of the Government
on agency's own initiative or upon recommendation of GAO; or (2)
existing contract was terminated for default and agency has not executed
a replacement contract prior to order by competent administrative or
judicial authority converting default termination to a termination for
convenience of the Government. Appropriations - Fiscal Year -
Availability Beyond - Contracts - Replacement Contracts - Default
Termination
A replacement contract awarded after original contractor has
defaulted may be supported by the original obligation of funds even if
awarded in a subsequent year if it satisfies the following criteria:
(1) it must be awarded without undue delay after original contract is
terminated; (2) its purpose must be to fulfill a bona fide need that
has continued from the original contract; and (3) it must be awarded on
the same basis and be substantially similar in scope and size as the
original contract.
Matter of: Funding of Replacement Contracts, July 15, 1981:
The Environmental Protection Agency (EPA) requested a decision on the
source of funding for replacement contracts. The EPA's questions arose
in connection with EPA contract Number 68-03-6064 with Yale Industrial
Trucks, Baltimore/Washington, Inc. However, some of the questions apply
to hypothetical situations that are different from the contract
situation. The answers given below reflect the different rules
applicable to different sets of facts.
EPA awarded a contract on February 22, 1979, for an electric fork
lift truck in the amount of $18,258. On June 26, 1979, in accordance
with the terms and conditions of the contract, the Agency terminated the
contract for default for failure of the contractor to furnish the
required equipment by the revised delivery date of June 25, 1979. On
July 19, 1979, Yale filed a Notice of Appeal with the Agency, pursuant
to the contract's disputes clause. On June 27, 1979, one day after it
terminated the Yale contract, EPA awarded a replacement contract in the
amount of $20,923 to Clarklift of Detroit, Inc. The contract was funded
from the same appropriation as the earlier contract and Yale was billed
for the excess costs.
In order to clarify what funds are available in this and similar
situations, EPA has requested us to respond to the following questions:
Question #1: "Should the funds originally obligated for the
defaulted contract be deobligated in situations where actions of the
Contracting Officer are being appealed by a defaulted contractor?"
Answer: No, certainly not prior to the time that a decision on the
propriety of the default termination has been rendered. (See also our
answer to question 2.)
When a contract is terminated for default, the funds obligated for
the contract generally remain available for a replacement contract
whether awarded in the same or the following fiscal year. 34 Comp.Gen.
239(1954), 55 id. 1351(1976). The obligation established for the
original contract is not extinguished because the replacement contract
is considered to represent a continuation of the original obligation
rather than a new contract. 34 Comp.Gen. 239(1955). This rule was
founded on policy considerations as early as 1902 (9 Comp.Dec. 10) and
with a few special exceptions, has been maintained by this Office ever
since.
See, for example, 55 Comp.Gen. 1351(1976). The primary reason for the
rule was to facilitate contract administration. Under a termination for
default clause, the Government can terminate the contract when the
contractor's performance fails to satisfy critical requirements of the
contract. The default clause provisions allow the Government to
repurchase the terminated performance and charge the defaulted
contractor for any excess costs. This reprocurement arrangement became
known as a replacement contract. If all replacement contracts were
treated as new contracts, an agency whose contractor defaults would be
required to deobligate prior year's funds which support the defaulted
contract, and reprogram and obligate current year funds, even though the
particular expenditure was budgeted for the prior year. Because
contractor defaults can neither be anticipated nor controlled, a great
deal of uncertainty would be introduced into the budgetary process. In
some cases agencies would have to request supplemental appropriations to
cover these unplanned and unprogramed deficits which could result in
costly program overruns. The rule, therefore, avoids many
administrative problems that cause procurement delays.
We said earlier that generally funds obligated for the original
contract may remain available to fund a replacement contract in default
situations. There are a few caveats. The replacement contract must be
made without undue delay after the default and there must still be a
bona fide need for the goods or services. Also, the replacement
contract must be awarded on the same basis as was the original contract,
except for the total cost. A procurement which differs markedly in
scope, nature and size will be regarded as a new contract rather than a
continuation of the old one.
Returning to the circumstances of the Yale contract presented by EPA,
we observe that the source of funding for the replacement contract will
be unaffected by the eventual outcome of the contractor's appeal of the
default determination. The replacement contract was awarded one day
after the termination, in the middle of the fiscal year. Therefore,
even if the termination was later held to be for convenience rather than
default, and the replacement contract was considered to be a new
obligation, the same year's funds could be used. 35 COMP.GEN 692(1956),
44 ID. 399(1965).
Question #2: "If * * * the contractor wins his appeal in the next
fiscal year, are the costs to be funded from the original funding
appropriation or from funds current at the time of settlement?"
Answer: When a contractor, whose contract is terminated for default,
appeals that action to the agency's Board of Contract Appeals and is
successful in overturning that determination in a subsequent fiscal
year, the Board normally converts the default to a termination for
convenience of the Government.
See Federal Procurement Regulations (FPR) 1-8.707(e) (FPR Amendment 182
August 1977) and Defense Acquisition Regulation (DAR) 7-103.11 (DPC
76-6, January 31, 1977), B-193001.2, September 29, 1980.
If the replacement contract already has been awarded by the time the
agency's Board converts the default termination to a convenience
termination, no deobligation of the prior year's funds will be required.
The original obligation may continue to support the replacement
contract.
Because the charge to the original obligation was proper at the time
the replacement contract was awarded, we do not think the charge should
be retroactively declared improper, thereby creating an Anti-deficiency
Act violation casting doubt on the validity of the contract, and placing
a burden on the agency to retroactively adjust its accounting records.
This is an additional reason why we advised that there is no reason to
deobligate the funds charged to the original obligation for the
replacement contract pending the outcome of the appeal by Yale.
On the other hand, if, in a subsequent fiscal year, the Board of
Contract Appeals ordered conversion of the default termination to a
termination for convenience, and, hypothetically, the replacement
contract had not yet been awarded, the original obligation would no
longer be available for a replacement contract. This is true whenever a
contract is terminated for the convenience of the Government, whether
the action is taken at the agency's initiative, pursuant to a
recommendation from the General Accounting Office, or as a result of a
Board-ordered conversion. Any subsequent contract, even if labeled
"replacement" and closely resembling the old contract must be regarded
as a new contract and must be charged to the fiscal year funds current
at the time the new contract is awarded.
Question #3: "The general rule stated by your office is that
'replacement contracts may be charged to the same appropriation
obligated with the defaulted contract, etc.' Based on a similar
situation as the Yale transaction described above (and assuming the
replacement contract is awarded within a reasonable time), if a
replacement contract was not awarded until the next fiscal year, should
the additional cost be funded from the original appropriation or the
appropriation current at the time of the replacement award?"
Answer: As indicated above, funds obligated under the original
contract would be available for the purpose of engaging another
contractor to complete the unfinished work. 34 Comp.Gen. 239, above.
Since the "bona fide" need is viewed as continuing, the entire cost of
the replacement contract must be charged to the appropriation current at
the time the need arose. See 42 Comp.Gen. 272, 275(1962). Legally, the
defaulting contractor is liable to the Government for the additional
cost of the replacement contract. However, recovery of such funds by
the Government may be subject to a great deal of uncertainty and delay
if the defaulting contractor is insolvent or for other reasons. Hence,
the agency may utilize unobligated funds, if any, from its prior years'
appropriations to increase the amount of obligations chargeable in that
year for the original contract in order to pay the replacement
contractor the full amount owed, (while continuing to attempt collection
from the defaulting contractor, of course). 59 Comp.Gen. 518(1980).
The rules governing the source of funding for replacement contracts
are as follows.
A. The original funds remain obligated and available for funding a
replacement contract, regardless of the year in which the replacement
contract is award:
(1) Where the contracting officer terminates an existing contract for
default on the part of the contractor, and the determination that the
contractor defaulted has not been overturned by a Board of Contract
Appeals or a Court; or
(2) Where a replacement contract has already been awarded, after an
agency terminates for default, by the time a competent administrative or
judicial authority converts the default termination to a termination for
convenience of the Government.
In both situation, the replacement contract must satisfy certain
general criteria to be considered a replacement, as opposed to a new,
contract. First, it must be made without undue delay after the original
contract is terminated. Second, its purpose must be to fulfill a bona
fide need that has continued from the original contract. Finally, it
must be awarded on the same basis and be substantially similar in scope
and size as the original contract.
B. The original funding obligation is extinguished upon termination
of the contract and the funds will not remain available to fund a
replacement contract:
(1) Where the contracting officer terminates an existing contract for
the convenience of the Government, either on his own initiative or upon
the recommendation of the General Accounting Office; or
(2) Where the contracting officer has terminated an existing contract
for default and has not executed a replacement contract on the date that
a competent administrative or judicial authority orders the conversion
of the original termination for default to a termination for convenience
of the Government.
In these situations, the original obligation must be deobligated to
the extent it exceeds termination costs. Any subsequent contract
awarded must be regarded as a new contract chargeable to appropriations
current at the time of the new award.
C. With reference to the specific facts of the Yale contract
situation, FY 1979 appropriation may be charged with the costs of the
Clark lift replacement contract regardless of the eventual outcome of
Yale's appeal.
B-194709, July 14, 1981, 60 Comp.Gen. 584
Equipment - Automatic Data Processing Systems - Acquisition, etc. -
Master Terms and Conditions - Evaluation - Lease-Purchase Agreements
"Installment purchase plan," which provides for monthly payments over
39-month term, to be renewed at Government's option at end of each
fiscal year, submitted in response to solicitation for automatic data
processing equipment (ADPE) containing Master Terms and Conditions (MTC)
was improperly evaluated, classified and accepted under solicitation as
a purchase as it did not conform with the terms of the solicitation and
solicitation was not amended so that all offerors were given opportunity
to submit such plans. Equipment - Automatic Data Processing Systems -
Lease-Purchase Agreements - Ownership of Equipment Status - Risk of Loss
Purpose
Although ADPE under "installment purchase plan" does not clearly fall
into either category of Government-owned property or contractor-owned
property, since terms of "installment purchase plan" obligate agency to
pay contractor full price of equipment upon loss, for purpose of risk of
loss this ADPE should be considered contractor-owned property.
Equipment - Automatic Data Processing Systems - Lease-Purchase
Agreements - Appropriation Availability - Loss, Damage, etc. -
Indemnification of Contractor
Since risk of loss provision in "installment purchase plant" and
incorporated into contract imposes on agency risk of loss for
contractor-owned equipment, agency should have either obligated money to
cover possible liability under risk of loss provision or specified in
contract that such losses may not exceed appropriation at time of losses
and nothing in contract is to be considered as implying Congress will
appropriate sufficient funds to meet deficiencies.
Matter of: Federal Data Corporation, July 14, 1981:
Federal Data Corporation (FDC) protests the award of a contract for
automatic data processing equipment (ADPE) to International Business
Machines Corporation (IBM) under solicitation No. GSA-CDPR-T-00007N
issued by the General Services Administration (GSA). The solicitation,
which was issued to satisfy the requirements of the Defense Logistics
Agency (DLA), Columbus, Ohio, requested offerors to propose plans for
purchase, lease and lease with option to purchase. It also indicated
that alternative proposals meeting all mandatory provisions would be
accepted. Award was to be made to that offeror proposing the lowest
overall cost to the Government.
FDC contends that an IBM alternative purchase plan (APP) accepted by
GSA was, in fact, a lease with option to purchase (LWOP) and was not a
purchase, although it was evaluated as such. In addition, FDC argues
that the IBM plan did not meet the mandatory solicitation requirements
applicable to either a purchase or a lease and that the risk of loss
clause is improper. The protest is sustained as we do not believe that
the APP conforms with the terms of the solicitation. We also believe
there is merit in FDC's objection to the risk of loss provision.
The solicitation was issued under the GSA Master Terms and Conditions
(MTC) program. Generally, the MTCs establish requirements such as bid
bonds, performance bonds, acceptance testing, maintenance requirements
and acceptable price plans. These requirements are attached to every
solicitation issued under the program and the solicitation specifies the
particular ADPE requirements and other technical requirements of the
user agency for which GSA is conducting the procurement.
The solicitation and the MTCs contained provisions common to both
rental and purchase plans and separate provisions applicable to only
rental or purchase plans.
In general, the IBM APP provided that, after acceptance of the
equipment, most of the rights and obligations of ownership vest in GSA
(GSA, however, cannot sell, transfer or encumber equipment except in
accordance with the plan) and the agency shall make monthly payments for
39 months until the entire purchase price is paid, at which time GSA
acquires unencumbered ownership of the equipment. GSA's obligation for
payment is conditioned on that agency exercising an option at the end of
each fiscal year to continue payments for the subsequent year.
Ownership reverts to IBM and the equipment is to be returned to the
company if the option is not exercised. The APP provides that in the
event a machine is lost, destroyed or damaged beyond repair during the
term of the APP, the agency must pay IBM the sum it would have paid had
it prepaid the total amount due at the time the loss occurred. In
short, the APP requires that agency to pay IBM the full price for all
equipment lost or destroyed during its term even if the agency had the
equipment only a short period under the APP.
FDC asserts that the APP was improperly classified as a purchase plan
by GSA and evaluated under the solicitation terms applicable to
purchases when, in fact, the APP was a LWOP which should have been
considered and rejected pursuant to the solicitation terms applicable to
rental plans. Thus, the protester contends the APP conflicts with the
following two solicitation provisions which apply to rental but not to
purchase plans:
(1) Article XVI which provides that the Government shall have the
right of discontinuance (right to cancel) without incurring a financial
penalty and the contractor shall remove the equipment at its expense.
(a) Under the APP the Government is obligated for all payments for
each one-year term and must pay the transportation costs for equipment
which is returned.
(2) Article XVIII (a) and (b), as amended, provide for payment on a
monthly basis with invoices to be submitted for the month following use.
(a) The APP provides that at the beginning of each one-year option
period the Government is obligated for all payments for that term and
monthly invoices are to be paid in advance.
It is FDC's position, citing 48 Comp.Gen. 494(1969), that in order to
qualify as a purchase, a plan must require that current fiscal year
funds be committed to fully pay the price for the equipment. Since
there is no such commitment here, FDC concludes that the transaction is
no different than a LWOP and must be evaluated as such.
It is GSA's view that the APP is a purchase plan and was properly
accepted and evaluated as such under the subject solicitation. In this
regard, GSA argues that 48 Comp.Gen. 494, supra, has been superseded by
our decision B-164908, July 6, 1970. In 48 Comp.Gen. 494, supra, our
Office objected to an installment purchase plan which continued from
year to year beyond the initial fiscal year, unless the Government took
affirmative action to terminate the agreement, on the basis that the
plan was inconsistent with the Anti-Deficiency Act, 31 U.S.C. 665, and
with 31 U.S.C.712(A). GSA contends that in B-164908, supra, we approved
a type of purchase plan similar to the subject APP which involved the
purchase of equipment through installment payments where the obligation
of the Government terminated at the end of each fiscal year and was
renewed only by the exercise of an option by the Government.
Although we disapproved the plan submitted in B-164908, supra, we
agree with GSA that our decision indicated that plans such as IBM's APP
do not violate the Anti-Deficiency Act, as long as they provide that the
Government's obligation terminates at the end of each fiscal year and is
renewed only by the exercise of the option by the Government. We do not
agree, however, that B-164908, supra, indicates that plans such as IBM's
APP are acceptable under the MTCs or should be classified as a purchase
under those provisions. Further, we do not believe that B-164908,
supra, sheds any light on the propriety of those portions of the APP
which were not common to the plan reviewed in that decision.
Both parties cite General Telephone Company of California, 57
Comp.Gen. 89(1977), 77-2 CPD 376, in support of their respective
positions. In that case, the protester submitted a lease plan calling
for the payment of a basic charge during the first year in addition to
the installation charge and the rental payments. In concluding that the
basic charge represented an illegal advance payment, we reviewed 20
Comp.Gen. 917(1941), where we approved a partial payment prior to
delivery where title to the material paid for was in the Government, and
28 Comp.Gen. 468(1948), where payment of earnest money with respect to
the Government's purchase of real estate was approved on the theory that
under the proposed agreement, equitable title would vest in the
Government prior to the vesting of legal title. We then stated that
under the plan submitted by General Telephone Company, the Government
would never acquire legal or equitable interest to the equipment. In
this connection we pointed out at page 93:
* * * For example, the Government has no right to maintain the
equipment independent of the lessor, nor can it demand that the
equipment be relocated to another site * * * . In addition, the
Government has no interest in the residual value of the equipment * * *
.
It is FDC's position that the incidents of ownership set forth in
General Telephone, supra-- the right to independently maintain the
equipment, the right to relocate the equipment and an interest in the
residual value of the equipment-- which GSA also cites as indicating
that it has purchased the equipment under the APP, all exist under a
LWOP submitted under the MTCs.
The classification of a plan such as IBM's APP is, or course,
primarily the function of the agency which drafted the MTCs and set
forth the criteria under which any such plan must be classified.
However, the APP does not appear to fit within the MTC requirements for
either a lease or a purchase and its proper designation is at best
ambiguous.
The rights and obligations in the equipment conveyed under the APP
differ in scope from those on LWOP under the MTC provisions would
normally convey. For example, it conflicts with the MTC Article XVI
dealing with discontinuance and the cost of returning equipment to the
contractor and with MTC Article XVIII (a) and (b) regarding payment of
invoices in advance of use.
It further differs from a LWOP as it provides that, once it is
executed, the agency has "purchased" the equipment and states that the
agency shall have all rights and obligations of ownership, except that
during the term of the APP it may not sell, transfer (it may relocate
the equipment), assign or encumber the equipment. The APP also states
that the agency must pay all costs of ownership, including insurance,
maintenance and taxes and provides that in the event the equipment is
lost or destroyed it must pay IBM the full purchase price. Of course,
all these elements expire and ownership reverts to IBM if the Government
fails to exercise its option to continue the plan at the end of each
fiscal year. Although the value to the Government of such ownership
obligations as the obligations to pay taxes and to assume the risk of
loss is open to question, there is no doubt that such elements of
ownership do not pass under the MTC provisions which apply to a LWOP.
These provide the MTCs the "costs of ownership" in a LWOP remain with
the contractor.
Even if we were to agree with GSA and classify the APP as a purchase
there is little substance to the "benefits" conveyed by the APP over
what GSA would have received under a LWOP. Also the rights and
obligations conveyed under the APP would still differ in some aspects
from those contemplated by the solicitation.
In this regard the APP states that "this APP shall terminate only at
the end of each fiscal year within this period" and "upon execution of
this APP, and upon each renewal * * * the Government shall be obligated
for all payments for the initial and each renewal term respectively"
while the "Termination for Convenience of the Government" (T for C)
clause referenced in the solicitation in essence, gives the agency the
right at any time to terminate the agreement in the Government best
interest, in which case the contractor recovers his cost and profit up
to the point of termination.
Since both GSA and IBM agree that the termination portion of the APP was
intended to be secondary to the T for C clause, it is our view that if
the Government were to exercise its termination right in accordance with
the T for C clause that most fundamental provision which was included in
both the solicitation and contract would govern. This does not,
however, change the fact that the agency accepted the APP which on its
face was not consistent with the terms of the T for C clause. Thus, we
are unconvinced by GSA's view that since it appears that the agency
would prevail in a dispute with its contractor over termination it was
proper for it to accept a plan which contained terms inconsistent with
the standard T for C clause.
It appears, therefore, that the APP is not completely consistent with
the terms of the solicitation no matter whether it is designated a lease
or a purchase. While, given the parties' intentions regarding the
ultimate nature of the transaction, it may be appropriate for GSA to
view the APP as it did, under the MTCs and the solicitation we believe
it was inappropriate for GSA to accept the APP under one of the MTC
categories without first amending the solicitation to place offerors on
notice of the acceptability of such an arrangement. In this regard, it
is a fundamental principle of competitive procurement that offerors must
be treated equally and given a common basis for the submission of their
proposals. Host International, Inc., B-187529, May 17, 1977, 7-1 CPD
346. In negotiated procurements such as this, any proposal which fails
to conform with the material terms and conditions in the solicitation
should be considered unacceptable and should not form the basis of an
award. See Computer Machinery Corporation, 55 Comp.Gen. 1151(1976) 76-1
CPD 358. Thus, to be acceptable under this solicitation the APP must
have met the material terms and conditions applying to either a LWOP or
a purchase; it met neither. Therefore, when GSA decided that the APP
could be considered, we believe it owed a duty to other offerors, who
could not reasonably have been expected to interpret the ground rules
set forth in the solicitation as permitting the hybrid approach
reflected by the APP, to place them on notice through the issuance of an
amendment setting forth clear guidelines indicating the acceptability of
such plans and providing an opportunity for all offerors to submit such
plans. See Baird Corporation, B-193261, June 19, 1979, 79-1 CPD 435;
Union Carbide Corporation, 55 Comp.Gen. 802(1976), 76-1 CPD 134.
Further, we agree with FDC that the risk of loss provision in the APP
may be inappropriate as it could impose an obligation on the Government
inconsistent with 31 U.S.C. 665 and 41 U.S.C. 11.
The Government has a long established policy of self-insuring its own
property on the theory that the size of the Government's resources
permits it to do so. See General Telephone Company of California,
B-190142, February 22, 1978, 78-1 CPD 148. We have also held that under
certain conditions the Government may assume the risk for
contractor-owned property. 54 Comp.Gen. 824(1975).
Although the equipment under the APP does not neatly fit within
either the category of Government-owned equipment or contractor-owned
equipment, for the purpose of risk assumption, it is our view that it
should not be treated as Government-owned property. In this regard, we
believe it is most significant that the APP places the obligation on the
agency, in the event of loss, to promptly pay the full price of the
equipment to IBM even though the agency may have possessed the equipment
only a few days and paid only one of the 39 payments. Further, we note
that the agency never holds unemcumbered title to the equipment under
the APP and is not obligated to complete payment and obtain "clear"
title to the equipment. Since under the terms of the APP the agency is
obligated to pay to IBM the full price of any lost or destroyed
equipment that obligation is more in the nature of reimbursing a
contractor for a loss than self-insuring Government property.
Agreements to assume the risk of loss for contractor-owned equipment
have often been disapproved by our Office on the basis of 31 U.S.C. 665
and 41 U.S.C. 11(1976), for the reason that such agreements could
subject the United States to a contingent liability in an indeterminate
amount which could exceed the available appropriation. See 54 Comp.Gen.
824, supra. Here, the agency only obligates a sum sufficient to meet
the monthly payments required by the APP for the current fiscal year.
Any loss which might occur during the first 2 years of the APP would
exceed that amount and therefore unobligated funds must be available in
the appropriation to cover such a contingency. While in this case the
agency's maximum liability is determinable, the amount of a loss could
be such as to exceed the unobligated portion of the appropriation.
Thus, we stated in 54 Comp.Gen. 824, supra, at 827 that:
* * * any contracts providing for assumption of risk by the
Government for contractor-owned property must clearly provide that: (1)
in the event that the Government has to pay for losses, such payments
will not entail expenditures which exceed appropriations available at
the time of the losses; and (2) nothing in the contract may be
considered as implying that the Congress will, at a later date,
appropriate funds sufficient to meet deficiencies. Absent inclusion of
provisions along these lines, the Department will have to obtain
legislative exemption from the application of the statutory prohibitions
against obligations exceeding appropriations. * * *
Although the contract with IBM does not contain such precautions, we
do not believe its absence would itself be improper if the agency at the
time of contract award had obligated money to cover its possible
liability under the risk of loss provision. However, the record
indicates and the agency confirms that it did not obligate the funds.
Thus, the assumption of risk clause in the APP could create an
obligation inconsistent with 31 U.S.C. 665 which prohibits obligations
in excess of or in advance of appropriations made for such purpose
unless authorized by law and is therefore improper.
For the reasons set out above, we believe the award to IBM under the
APP was improper. We do find it feasible to recommend any corrective
action with respect to this contract since award was made nearly 2 1/2
years ago. We are recommending to GSA, however, that it consider
whether such APP-type "installment purchases" constitute a real
advantage over LWOPs so as to justify another category in the MTC
provisions in addition to those relating to leases and purchases. If
such plans are considered advantageous, we are further recommending that
GSA draft solicitation provisions which clearly set forth the acceptable
characteristics and boundaries of such plans. Such action should avert
many of the problems raised in connection with the current procurement.
The protest is sustained.
B-166943, July 14, 1981, 60 Comp.Gen. 582
President's Executive Interchange Program - Government Participants -
Entitlements - Travel or Relocation Expenses - Travel Expenses - Per
Diem or Commuting Expenses
Federal Government employees assigned to the business sector under
the Executive Exchange Program may be authorized relocation expenses or
travel expenses not to exceed such relocation expense, whichever is
determined more appropriate by the employing Federal agency. 54
Comp.Gen. 87, amplified. This decision was later clarified by B-201704,
B-202015, Nov. 4, 1981.
Matter of: Executive Exchange Program Participants - Travel and
Relocation Expenses, July 14, 1981:
The question in this case is whether an employing agency has the
authority to grant-- in lieu of moving expenses-- per diem or
reimbursement of commuting expenses, to an employee participating in the
Executive Interchange Program, when payment of such expenses would be
less than or equal to moving expenses. In accordance with the
discussion below, we would not object to such payments.
The question was submitted for an advance decision by Mr. Lee M.
Cassidy, Executive Director of the President's Commission on Executive
Exchange, The White House.
The Executive Interchange Program was established under Executive
Order No.11451 of January 19, 1969. This order designated a commission
to develop a program under which executives from the Government and
private industry would be placed in positions in each other's sector so
as to allow for an interchange of ideas and methods. A program has been
developed which places the executives from the Government and private
industry in such positions for approximately 1 year. During this time,
the executives are assigned positions of significant responsibility and
also engage in periodic training and conferences to further enhance the
learning experience.
On May 15, 1979, Executive Order No. 11451 was superseded by
Executive Order No. 12136. Subsequently, the new order makes no
relevant changes and the above description of the program is still
correct.
Mr. Cassidy recognizes that in our decision, B-166943, August 5,
1974, 54 Comp.Gen. 87, we ruled that Federal employees participating in
the program are entitled to travel and relocation expenses authorized
generally to employees transferred in the interest of the Government.
In reaching this result, we concluded that the nature and purpose of the
Executive Exchange Program resulted in the employee being on a work
assignment rather than a training assignment. Therefore, we held that
the employees were entitled to the travel and relocation entitlements
incident to a transfer. 54 Comp.Gen.at 88-89.
Mr. Cassidy requests that we further consider our ruling in 54
Comp.Gen. 87 to allow agencies to authorize travel and transportation
entitlements for the program participants in a flexible manner which
would alleviate certain problems which have arisen. Mr. Cassidy
indicates that the authority to grant a per diem or commuting expenses
is sought where this would not only accommodate the employee but result
in considerable savings to the Government when compared with relocation
costs.
The submission contains several examples of specific problems
including the following. A current Department of the Navy employee has
been assigned to a private employer approximately 70 miles from his
home. The employee may be authorized relocation expenses but not
commuting expenses though the employee would prefer the latter and it
would cost the Government about one-third as much as relocation
expenses. In the other situation, an employee from Washington is
assigned to Connecticut for approximately 11 months. For family
reasons, he is unable to relocate his family and must bear all the
expenses of maintaining a residence in Connecticut and a resident in
Washington. If he were authorized a per diem, the cost to the
Government would be about one-half of the cost of relocation expenses
which he could have received.
In 54 Comp.Gen. 87, we did not consider the question involved in the
instant case. We concluded the employees serving under the program were
on a working assignment and entitled to the travel and relocation
allowances; however, having answered the question raised, we did not
discuss whether the nature of the work assignment required that travel
and relocation allowances incident to permanent change of station were
the exclusive entitlements available to the employee.
We recognize that the Executive Exchange Program has characteristics
that are different than those normally involved in Federal employment.
The employees while so assigned-- normally for 1 year-- are placed in a
leave-without-pay status. Thus, they preserve fringe benefits,
entitlements such as life and health insurance as authorized by law.
Compensation for the work assignment is paid by the private sector host.
We cannot, therefore, equate, on an absolute basis, employees' rights
while on such assignments with other Federal employees. We recognize,
though, that they are still employees of the Federal Government. As
such, it would not seem to us to be unreasonable to permit them, in
appropriate cases, to be authorized a per diem for these limited
duration assignments. Accordingly, we hold that Federal employees
assigned to the private sector under the program may be authorized per
diem (or commuting expenses in lieu of and not to exceed per diem) so
long as reimbursement for such costs is an amount less than or equal to
relocation expenses. The conclusion we reach is in general accord with
the travel expense principles set forth in both the Training Act, 5
U.S.C. 4109, and the Intergovernmental Personnel Assignments Act, under
5 U.S.C. 3375, though the measure of reimbursement in each situation is
somewhat different.
B-202057, July 8, 1981, 60 Comp.Gen. 580
Funds - Imprest - Availability - Plants, Art Objects, etc. Purchases
Regulation restricting purchase of personal convenience items does
not prohibit purchase of decorative plants, etc., for general office
use, when a need for such items is determined by agency official and
decorations are permanent additions to office decor and result in
improved productivity and morale. Determination of necessity and
appropriateness is for agency official and fact that offices in question
occupy leased space in privately owned building is irrelevant to
determination whether decorating expenses were proper. Compatibility
with agency mission is standard to be used.
Matter of: Purchase of Decorative Items with Imprest Funds, July 8,
1981:
This is an advance decision to Josephine Montoya, Authorized
Certifying Officer of the Bureau of Indian Affairs (BIA), concerning the
propriety of certifying a reconstructed replenishment voucher in favor
of Vernon Tsoodle. Mr. Tsoodle is the cashier at the Andarko Area
Office of the BIA, and in September 1977, he made $194.51 in imprest
cash disbursements for plants, vases and handicraft items which were
used to decorate the Andarko Area Office. Relying on 41 C.F.R.
101-26.103-2(1980), quoted in full below, the Certifying Officer has
denied certification. We disagree with the more restrictive
interpretation of the regulations, and the voucher to reimburse the
imprest fund may be certified for payment.
The regulation governing purchases of art objects, plants, etc., for
Government offices is found at 41 C.F.R. 101-26.103-2. It reads as
follows:
Government funds may be expended for pictures, objects of art,
plants, or flowers (both artificial and real), or any other 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 of Federal buildings approved by the agency responsible for
the design and construction. Determinations as to the need for
purchasing such items for use in space assigned to any agency are
judgments reserved to the agency. Determination with respect to public
space such as corridors and lobbies are reserved to the agency
responsible for oeration of the building. Except as otherwise
authorized by law, Government funds shall not be expended for pictures,
objects of art, plants, flowers (both artificial and real), or any other
similar type items intended solely for the personal convenience or to
satisfy the personal desire of an official or employee. These items
fall into the category of "luxury items" since they do not contribute to
the fulfillments of missions normally assigned to Federal agencies.
According to its submission, BIA is satisfied that there was a need
for the items, especially in windowless offices as described by the Area
Director, and that the purchases were not for the personal convenience
of individual employees. However, the letter implies that the other
requirements of the regulation were not met. The Andarko Area Office
occupies leased space in a privately owned building and, therefore, no
plan could have existed for the decoration of the entire building, but
only for space occupied by BIA. Secondly, the agency responsible for
design and construction of the building could not have approved the
purchases, since the building was privately owned.
We have never before construed this regulation, but it seems obvious
to us that the first sentence in the quoted section applies to new
Federal construction and to major renovations of existing Federal
buildings. The second sentence, however, leaves determinations as to
the need to purchase such items in "space assigned to any agency" to the
discretion of the occupying agency. It seems clear that this sentence
contrasts existing space, including leased space, with newly constructed
or renovated space and does not require reference to an agency
responsible for design and construction.
We have traditionally allowed such improvements where they would
contribute to a pleasant working atmosphere, thus improving morale and
efficiency. 51 Comp.Gen. 797(1972); B-178225, April 11, 1973;
B-148562, June 12, 1962. The regulation is in accord with our view,
providing that personal convenience items are categorically inconsistent
with agency missions, but that other decorations may, in appropriate
circumstances, be compatible with work related objectives. Such
expenditures have been disallowed by this Office only where they were
personal in nature (B-187246, June 15, 1977) or where the decorations
were seasonal and not for permanent use (52 Comp.Gen. 504(1972)).
Thus, expenditures for decorative items are authorized when their
purchase is consistent with work related objectives and the agency
mission, and the decision as to necessity rests within the agency's
discretion pursuant to the regulation's terms.
Since this kind of expenditure could be subject to abuse, we suggest
that some uniform guidance on costs and types of approved decorations be
offered to BIA cashiers who may be asked to make disbursements for
office decorations in the future. Nevertheless, we have no basis to
object to these disbursements on the basis of the information provided,
and the voucher, if otherwise correct, may be certified for payment to
reimburse the imprest fund.
B-202105, July 7, 1981, 60 Comp.Gen. 578
General Accounting Office - Jurisdiction - Labor-Management Relations -
Civil Service Reform Act Effect
Employee, whose claim for higher exposure environmental pay was
denied by our Claims Group, requests reconsideration on basis of
Arbitrator's award under labor-management agreement. In accordance with
4 C.F.R. 21.7(a) payments made pursuant to an arbitration award which is
final and binding under 5 U.S.C. 7122(a) or (b) are conclusive on GAO
and this Office will not review or comment on the merits of the award.
To the extent that the employee's request places in issue the finality
or propriety of implementation of Arbitrator's decision, GAO, under 4
C.F.R. 21.8, will not issue a decision. Those issues are more properly
within the jurisdiction of the Federal Labor Relations Authority,
pursuant to Chapter 71 of title 5, United States Code.
Matter of: Gerald M. Hegarty - Arbitration Award - GAO Jurisdiction,
July 7, 1981:
Mr. Gerald M. Hegarty, an employee at the Veterans Administration
Hospital, Lincoln, Nebraska, requests reconsideration of his claim for
environmental differential pay (EDP) for exposure to micro-organisms
with a high degree of hazard. Mr. Hegarty's claim was denied by our
Claims Group's settlement Z-2707054 of May 16, 1979, which determined in
part as follows:
The Veterans Administration has determined that you are entitled to
differential pay for low degree hazard only. The General Accounting
Office will not substitute its judgment for that of agency officials who
are in a better position to investigate and determine the rights and
obligation of the parties, in the absence of clear and convincing
evidence which indicates that the agency determination was arbitrary and
capricious.
Mr. Hegarty's request for reconsideration is premised on an
Arbitrator's final decision dated November 13, 1980, which concludes
that maintenance personnel at the hospital in question do work in close
proximity to micro-organisms under both the high and low degree risk
circumstances. The Arbitrator's decision, a copy of which Mr. Hegarty
has enclosed with his request, discusses the issues which formed the
basis of Mr. Hegarty's original claim. The Arbitrator decided that the
maintenance workers at the hospital are entitled to some allowance for
environmental differential pay. However, under the applicable
collective bargaining agreement, he limited the award of EDP to the
period beginning 15 days before the grievance was filed.
In view of the decision of the Arbitrator in his case, Mr. Hegarty
now asks this Office to review our Claims Group's settlement of his
claim for EDP back to November 1, 1970, and to grant his claim for the
entire period on the basis that the Arbitrator's decision proves that
the VA's action was arbitrary and capricious.
In accordance with our "Procedures for Decisions on Appropriated Fund
Expenditures Which Are of Mutual Concern to Agencies and Labor
Organizations," 45 Federal Register 55689, August 21, 1980, set out at
Part 21 of title 4, Code of Federal Regulations, we will neither review
nor comment on the decision of the Arbitrator and we will not review Mr.
Hegarty's claim on the basis of the Arbitrator's decision.
We issued these procedures in order to inform both labor and
management in the Federal sector of our present policies in light of the
enactment of the Civil Service Reform Act of 1978, Public Law 95-454 (5
U.S.Code 1101 notes). The procedures govern requests for GAO decisions
concerning the legality of appropriated fund expenditures on matters of
mutual concern to Federal agencies and labor organizations participating
in the labor-management program established pursuant to Chapter 71 of
title 5, United States Code, and other Federal sector labor-management
programs. They give labor organizations and Federal agencies equal
access to GAO on any matter of mutual concern involving the expenditure
of appropriated funds, and extend the right to request an advisory
opinion on such matters to arbitrators and other neutral parties. They
also provide guidance as to when GAO will defer to procedures
established pursuant to Chapter 71 of title 5, United States Code.
In accordance with 4 C.F.R. 21.7(a), an arbitration award which is
final and binding under 5 U.S.C. 7122(a) or (b) will be considered
conclusive on GAO in its settlement of accounts and we will not review
or comment on the merits of such an award. However, such an award does
not constitute precedent for payment in other instances not covered by
the award. Moreover, under 4 C.F.R. 21.8, we retain the discretion not
to issue a decision on any matter which we find is more properly within
the jurisdiction of the Federal Labor Relations Authority or other
administrative body or court of competent jurisdiction.
In accordance with the jurisdictional policies set out above which we
believe recognize the intent of Congress in enacting Chapter 71 of title
5, United States Code, as part of the Civil Service Reform Act of 1978,
and in recognition of the important role of labor organizations and
collective bargaining in the civil service, we will not review or
comment on the merits of this arbitration decision and award which were
rendered under chapter 71 of title 5, United States Code. Similarly, to
the extent that Mr. Hegarty's request for our decision calls into
question the finality of the Arbitrator's decision or the propriety of
its implementation, such issues are more properly within the
jurisdiction of the Federal Labor Relations Authority.
B-201931, July 7, 1981, 60 Comp.Gen. 576
Contracts - Clauses - "Equitable Adjustments: Waiver and Release of
Claims" - Interpretation - Armed Services Board of Contract Appeals
Protest that contract clause regarding waiver and release of claims
for equitable adjustments is unfair to contractors by requiring that all
claims be presented at one time is denied as clause follows policy of
Defense Acquisition Regulation 26-204 (1976 ed.) and does not constitute
deviation from regulations or standard changes clause. Moreover, Board
of Contract Appeals has allowed reservation of claim under protested
clause and held that waiver only bars foreseeable, not unforeseeable,
costs.
Matter of: Castle Construction Company, Inc., July 7, 1981:
Castle Construction Company, Inc. (Castle), has protested the
inclusion of the "Equitable Adjustments: Waiver and Release of Claims"
clause in invitation for bids No. N62470-78-B-8135 issued by the Naval
Facilities Engineering Command, Norfolk, Virginia.
The IFB, for the construction of a building at the Naval Station in
Norfolk, contained the following clause:
100. EQUITABLE ADJUSTMENTS: WAIVER AND RELEASE OF CLAIMS (7-76)
(a) Whenever the contractor submits a claim for equitable adjustment
under any clause of this contract which provides for equitable
adjustment of the contract, such claim shall include all types of
adjustments in the total amounts to which the clause entitles the
contractor, including but not limited to adjustments arising out of
delays or disruptions or both caused by such change. Except as the
parties may otherwise expressly agree, the contractor shall be deemed to
have waived (i) any adjustments to which it otherwise might be entitled
under the clause where such claims fail to request such adjustments, and
(ii) any increase in the amount of equitable adjustments additional to
those requested in its claim.
(b) Further, the contractor agrees that, if required by the
Contracting Officer, he will execute a release, in form and substance
satisfactory to the Contracting Officer, as part of the supplemental
agreement setting forth the aforesaid equitable adjustment, and that
such release shall discharge the Government, its officers, agents and
employees, from any further claims, including but not limited to further
claims arising out of delays or disruptions or both, caused by the
aforesaid change.
Castle argues that the above clause constitutes an alteration to the
standard changes clause contained in the contract and requires the
contractor to use a "crystal ball" to foresee all possible costs
associated with a change order when subsequent change orders may
compound the cost ramifications. The clause requires a contractor to
place too many contingencies in his bid price to remain competitive.
Through the use of the clause, Castle alleges the Navy is attempting to
shield itself from the normal obligations of the Government under the
changes clause.
The Navy contends that this clause places no greater burden on
contractors than when the contractor is preparing his bid on a
fixed-price construction contract and must use the same future cost
estimating methods as in projecting the cost impact of a change order.
Moreover, the clause has been the subject of several decisions of the
Armed Services Board of Contract Appeals (ASBCA), which found that
waiver of unsubmitted costs occurred.
We agree with the Navy that the clause is not unreasonable and find
nothing improper in its use. Moreover, we view Castle's contention that
it must use a "crystal ball" to formulate its claims to be unrealistic
considering the manner in which the ASBCA has interpreted the clause.
The Navy contends that this clause places no greater burden on
contractors than when the contractor is preparing his bid on a
fixed-price construction contract and must use the same future cost
estimating methods as in projecting the cost impact of a change order.
Moreover, the clause has been the subject of several decisions of the
Armed Services Board of Contract Appeals (ASBCA), which found that
waiver of unsubmitted costs occurred.
We agree with the Navy that the clause is not unreasonable and find
nothing improper in its use. Moreover, we view Castle's contention that
it must use a "crystal ball" to formulate its claims to be unrealistic
considering the manner in which the ASBCA has interpreted the clause.
As noted by the Navy, the ASBCA has held certain claims waived by the
clause. CCC Construction Company, ASBCA 20530, 76-1 BCA 11805(1976).
However, the applicability of the clause to certain costs has been
softened in other decisions. See Hedreen Co., ASBCA 20599, 77-1 BCA
12328(1977), wherein rights may be protected by a written or oral
reservation by the contractor. Also, in Molony & Rubien Construction
Co., ASBCA 20652, 76-2 BCA 11977(1976), the Board noted that the clause
did not cover costs which were not reasonably foreseeable.
The protester has advanced the argument that this clause is no
different than one considered in Morrison-Knudsen Company, Inc. v.
United States, 397 F.2d 826 (Ct.Cl. 1968). Castle argues both clauses
attempted to limit the normal coverage of the changes clause.
In Morrison-Knudsen, the contract included a clause which limited
equitable adjustments the contractor could receive to only those which
exceeded the estimated quantities by 25 percent or more. Therefore, on
changes involving less than 25 percent, the contractor received nothing.
The Court of Claims found that the clause was improper as it modified
the changes clause to prevent the contractor from obtaining costs to
which he would have otherwise been entitled.
We find this case not to be controlling here. The court found
objectionable the denial of costs to which a contractor would have been
entitled absent the clause. Here, no costs are denied but are required
to be presented at one time.
Finally, Castle contends that this clause constitutes a deviation
from the Defense Acquisition Regulation (DAR) standard changes clause
which has never been adopted in accordance with the procedures under DAR
Sec. 1-109, Defense Acquisition Circular No. 76-17, September 1, 1978.
The Navy has responded that this clause follows the policy set forth in
DAR Sec. 26-204 (1976 ed.) and, therefore, does not constitute a
deviation. DAR Sec. 26-204 (1976 ed.) reads as follows:
26-204 Complete and Final Equitable Adjustments.
(a) Controversies sometimes arise in interpreting what the parties to
a contract intended to include within the scope and terms of the
supplemental agreement equitably adjusting changes. To assure that
equitable adjustments are complete, contractors should make every
reasonable effort to present to the Government all elements of
adjustment arising out of the change order to which the equitable
adjustment pertains. Supplemental agreements containing a release of
claims should be made only after all such elements of adjustment have
been presented and considered.
(b) The following is a sample release for use in supplemental
agreements:
Release of Claims
In consideration of the modification(s) agreed to herein as complete
equitable adjustments for the Contractor's . . . (describe) . . .
claims, the Contractor hereby releases the Government from any and all
liability under this contract for further equitable adjustments
attributable to such facts or circumstances giving rise to the aforesaid
claims (except for: . . . )
Castle argues that while the sample clause contains a space for
listing items not agreed upon and the Navy clause states "except as the
parties may otherwise agree" and, therefore, in principle, the clauses
are similar, in practice, the Navy's contracting officials refuse to
allow any items to remain open.
What Navy personnel do in practice does not affect the validity of
the clause or the fact that it does not appear to be a deviation from
DAR. If a contractor is not satisfied with the equitable adjustment
offered by the Government, the contractor should request a final
decision from the contracting officer and follow the disputes clause
procedures.
While Castle contends this places too great a financial burden on the
contractor, this is a business judgment all contractors must make in
negotiating claims with the Government.
The protest is denied.
B-199470, July 7, 1981, 60 Comp.Gen. 573
Contracts - Disputes - Contract Appeals Board Decision - Partial Awards
- Payment - Indefinite Appropriation Availability
Armed Services Board of Contract Appeals awarded a
contractor-plaintiff in a contract dispute a principal amount of
$12,226.43 and interest to which he may be entitled by law. Attorney
General requested GAO to certify payment of principal from permanent
indefinite appropriation contained in 31 U.S.C. 724a, which requires
award to be final while interest award was appealed to Court of Claims.
Attorney General asked GAO to consider uncontested principal award as
final and certified that no appeal had been or would be taken from the
award of principal. Risk is extremely remote that Court of Claims would
consider sua sponte and change uncontested principal award and, since
Board could have made "partial award" or principal, it may be certified
for payment. Letter dated Oct. 30, 1980, B-199470, to
contractor-plaintiff's attorney, which declined to certify principal
amount for payment, is modified accordingly.
Matter of: Inland Services Corporation, July 7, 1981:
The Acting Assistant Attorney General Civil Division, Department of
Justice, has asked us to certify payment under 31 U.S.C. 724a (the
permanent indefinite appropriation for the payment of judgments) of the
principal amount of an award by the Armed Services Board of Contract
Appeals to the contractor in the Appeal of Inland Services Corporation
and Weldon Smith, a Joint Venture, ASBCA No. 24043. Although, under the
Department's internal regulations (Department of Justice Order No.
2110.29A, August 25, 1978), the Acting Assistant Attorney General's
letter is not a request for a decision, we have elected to respond in
this form since the question presented involves a relatively new statute
(Contract Disputes Act of 1978) and may be of recurring significance.
For the reasons that follow, we concur with the request.
In December 1979, the Board awarded the contractor $12,226.43 on a
contract dispute together with interest to which he may be entitled by
law.
The Department of the Army, the contracting agency, caused the Justice
Department to file an appeal in the Court of Claims on the award of
interest insofar as it covered periods prior to the enactment of the
Contract Disputes Act of 1978, and at the same time requested our Office
to certify payment of the award principal. We denied the request on the
basis that the award was not final as required by 31 U.S.C. 724a,
inasmuch as the matter was still the subject of continued litigation as
evidenced by the appeal. Section 824a provides in part as follows:
There are appropriated, out of any money in the Treasury not
otherwise appropriated, such sums as may be necessary for the payment,
not otherwise provided for, as certified by the Comptroller General, of
final judgments, awards, and compromise settlements, which are payable
in accordance with the terms of section 2414, 2517, 2672, or 2677 of
Title 28 and decisions of boards of contract appeals * * * .
The Acting Assistant Attorney General has now certified "on behalf of
the Attorney General that no appeal has been or will be taken from the
Board award of $12,226.43 to plaintiff" in this matter. In support of
his request, the Acting Assistant Attorney General points out that, if
the Court of Claims considers the Board's entire award as having been
referred to it under 28 U.S.C. 2510(b)(1) (Supp. III 1979), the section
authorizing agencies to appeal Board decisions to the Court of Claims,
the Court could enter a partial judgment on the uncontested principal
portion of the award. On the other hand, if it is considered that the
uncontested portion of the award was not appealed, the plaintiff could
simply file a new petition seeking enforcement of the unappealed portion
of the Board award. The Government could then stipulate for the entry
of a partial judgment which could be paid under 31 U.S.C. 724a, without
awaiting a final decision on the Government's appeal on the interest
issue.
Upon reconsideration of the matter, we are now convinced that there
is no legal impediment to payment of the principal portion of the
Board's award even while the award of interest is still on appeal. This
result follows from an analysis of several provisions of the Contract
Disputes Act of 1978.
While we cannot normally make partial or interim payments under 31
U.S.C. 724a, the Contract Disputes Act expressly authorizes the Court of
Claims to enter "partial judgments." Section 10(e) of the Act, 41 U.S.C.
609(e) (Supp. III 1979), provides as follows:
In any suit filed pursuant to this Act involving two or more claims,
counterclaims, cross-claims, or third-party claims, and where a portion
of one such claim can be divided for purposes of decision or judgment,
and in any such suit where multiple parties are involved, the court,
whenever such action is appropriate, may enter a judgment as to one or
more but fewer than all of the claims, portions thereof, or parties.
The joint report of the Senate Committees on Governmental Affairs and
the Judiciary explained that the quoted provision--
* * * permits partial judgments where various claims, counterclaims,
and cross-claims can be segmented, so that parties do not have to await
the final disposition of all of the litigation before receiving
judgment. It is the intent of S. 3178 (the bill which became the
Contract Disputes Act) to expedite decisions on claims or portions
thereof at the earliest time possible in the appeals process and not to
allow unresolved issues on nonrelated claims to hold up the payment on
claims that have been decided.
S. Rep. No. 95-1118, 95th Cong., 2d Sess. 31 (1978). This authority
is also reflected in the amendment to 28 U.S.C. 2517(b) made by section
14(f) of the Contract Disputes Act to provide that payment of a partial
judgment shall discharge "only the matters described therein."
Section 8(d) of the Act, 41 U.S.C. 607(d) (Supp. III 1979),
authorizes boards of contract appeals to decide appeals from decisions
of contracting officers and provides further:
In exercising this jurisdiction, the agency board is authorized to
grant any relief that would be available to a litigant asserting a
contract claim in the Court of Claims.
Thus, section 8(d) authorizes an agency board to make "partial
awards" to the same extent the Court of Claims can under section 10(f).
This was the recent conclusion of the General Services Administration
Board of Contract Appeals in Appeal of Capital Electric Company, GSBCA
Nos. 5316 and 5317, March 17, 1981, and we have no reason to disagree.
It follows that, had a payment problem been anticipated in this case,
the ASBCA could have made a partial award to cover the principal and a
separate award to cover the controversial interest. As the Justice
Department points out, there are various procedural devices that could
arguably be employed now to achieve the same result.
In view of the foregoing, and since the Department of Justice has
certified that it will seek no further review of the principal portion
of the award, we see no purpose to be served by forcing the contractor
now to engage in procedural devices that would clearly have been
unnecessary had the Board awarded the principal separately. Also
important is the additional cost to the Government of interest that must
be paid on the award which would continue to accrue throughout the
appeal process under section 12 of the Act, 41 U.S.C. 611. That section
provides in part as follows:
Interest on amounts found due contractors on claims shall be paid to
the contractor from the date the contracting officer receives the claim
* * * from the contractor until payment thereof. * * *
The Government's liability for interest on an award terminates when
the principal is paid, and should be mitigated by the earliest possible
payment that is legally permissible and that can be made without
substantial risk to the Government.
One of the reasons for our traditional position that a judgment or
award is not final for payment purposes until all elements of the
litigation have been completed in the remote risk that an appellate
court may sua sponte review otherwise uncontested issues that were not
raised in the appeal.
See e.g., B-172574, May 19, 1971. Technically, that risk is still
present in this situation. In this context, however, we believe that
the authority of the boards and the Court of Claims to render partial
awards and judgments, together with the policy considerations that
prompted this authority, must be viewed as overriding that admittedly
remote risk. Those policy considerations and the Justice Department's
certification justify payment here even though the ASBCA strictly
speaking did not make a partial award. Therefore we are advising our
Claims Group that the principal portion of the award ($12,226.43) may be
certified for payment immediately.
B-203104, July 2, 1981, 60 Comp.Gen. 569
Travel Expenses - First Duty Station - Training Duty Prior to Reporting
- Designation as Permanent Station - Propriety
Director of FBI requests reconsideration of ruling in Cecil M.
Halcomb, 58 Comp.Gen. 744, that new appointees assigned to training in
Washington, D.C., may not have Washington designated as first permanent
duty station so as to entitle them to travel and relocation expenses
from Washington, D.C., when assigned to permanent duty station after
training. No basis exists to alter this ruling since assignment for
training is not a permanent assignment, and employee must bear expense
of reporting to his first permanent duty station. 58 Comp.Gen. 744,
amplified. Travel Expenses - First Duty Station - What Constitutes -
Brief Assignment to Home Office Following Training - Permanent v.
Temporary Duty Status
New appointees initially assigned to training in Washington, D.C.,
are responsible for bearing expense of reporting to their first
permanent duty assignments following training. FBI may not lessen that
responsibility by assigning them to 1 month of so-called "permanent
duty" at convenient location following completion of training and prior
to intended permanent duty assignment. One month assignment following
training should be treated as temporary duty en route to first duty
station.
Matter of: Travel and Relocation Expenses for New Appointees to the
Federal Bureau of Investigation July 2, 1981:
The Director of the Federal Bureau of Investigation (FBI) has asked
us to reconsider the ruling in Cecil M. Halcomb, 58 Comp.Gen. 744(1979).
Specifically, he asks whether the Halcomb ruling, that a new appointee
assigned to training in Washington, D.C., may not have Washington
designated as his first permanent duty station, must be applied to FBI
appointees.
If this ruling necessarily applies, he asks whether new FBI appointees
may be assigned to permanent duty at their place of appointment for as
little as 1 month following initial training and, upon transfer to a new
permanent duty station, be granted relocation expenses payable to an
individual transferred for the benefit of the Government. We find no
basis to alter the Halcomb ruling inasmuch as it reflects the
long-standing proposition that a training site may not be designated as
an employee's permanent duty station unless actual and substantial
duties are to be performed at that location. Moreover, we would not
consider a 1-month assignment to a different location following training
as constituting an agent's first permanent duty assignment for purposes
of satisfying the requirement that a new appointee bear the expense of
reporting to his first duty station. Such an assignment must be
regarded as temporary duty enroute to the appointee's first duty
station.
The Halcomb case involved new appointees to positions not designated
as manpower shortage category positions who were not entitled to the
travel and transportation benefits authorized by 5 U.S.C. 5723. In
Halcomb, we considered whether new appointees of the Fish and Wildlife
Service, U.S. Department of the Interior, could have Washington, D.C.,
designated as their permanent duty station during an initial 4-month
period of training. The appointees spent no more than 2 weeks in
Washington and the balance of their time at Glynco, Georgia. The time
in Washington was for matters such as processing of employment papers
and taking the Oath of Office. At Glynco, the appointees engaged in
training at the Department of the Treasury Law Enforcement Training
Center. At the end of the 4-month period, the appointees were assigned
to permanent duty elsewhere, at locations determined prior to or upon
the completion of training.
Based on the Department of the Interior's action designating
Washington as their permanent duty station, the appointees were paid
travel and relocation expenses upon assignment to a permanent duty
station following training. At the request of a certifying officer, we
reviewed the situation and determined that it was inappropriate to
designate Washington, D.C., as a permanent duty station. Our reasoning
was stated as follows:
The location of an employee's permanent duty station presents a
question of fact and is not limited by the administrative designation.
57 Comp.Gen. 147(1977). Such duty station must be where the major part
of the employee's duties are performed and where he is expected to spend
the greater part of his time. 32 Comp.Gen. 87(1952); Bertil Peterson,
B-191039, June 16, 1978. There must be some duties beyond taking the
oath, physical examination, or job training. 22 Comp.Gen. 869(1943).
Also, see 41 Comp.Gen. 371(1967). In the instant case the certifying
officer says that at the mid-point in training at the FLETC, the
trainees are brought to the Washington office for 1 week. That time,
together with the time spent when the trainee first reports for swearing
in, is normally the total time spent in the Washington office.
Thus, the facts indicate that the agency designation of Washington as
the first official duty station is erroneous.
Based on our determination that Washington, D.C., was not their first
permanent duty station, we held that the new appointees were not
entitled to relocation expenses upon permanent assignment following
training, but were required to bear the expense of reporting to that
first permanent duty station. We did indicate in Halcomb that the new
appointees were entitled to be authorized subsistence at the temporary
duty site (i.e., the training or processing site) and any travel
expenses incurred in traveling to the temporary duty site which were in
excess of those which would have been incurred in traveling directly
from their home to the first duty station.
In his submission, the Director indicates that in following the above
ruling the FBI has encountered serious problems in staffing as well as
in recruitment. Prior to the Halcomb decision, the FBI had assigned
newly recruited agents to 16 weeks of training in Washington, D.C., and
had designated Washington as their first official duty station.
Following Halcomb, the FBI changed its procedure and now designates the
"home office" (defined by the FBI as the place where the new appointee
is recruited) as the first official duty station. After training the
new agents return to the "home office" for 6 months of actual duty.
Upon subsequent assignment to a new duty station they are paid transfer
related expenses. The fact that new agents are counted against the home
office's personnel ceiling has created a number of administrative
problems. Offices which recruit successfully become heavily staffed
with new personnel. In the case of larger offices, this has sometime
created an imbalance between experienced and inexperienced agents with
an insufficiency of experienced personnel necessary to handle more
complex investigations. In the case of smaller offices, there may be a
lack of space, equipment and insufficient investigative work for new
agents. In short, the assignment of new agents to a home office for 6
months following training is less than an optimum allocation of manpower
and resources.
The FBI feels that its needs would best be served by a return to the
procedure of designating Washington, D.C., as the first permanent duty
station of new agents. As a less satisfactory alternative to the
current practice, the FBI asks whether a 30-day assignment to the new
agent's "home office" following training could constitute the agent's
first permanent duty assignment.
We are unable to find that the administrative difficulties the FBI
has encountered in complying with the Halcomb decision provide a basis
to reverse or modify that holding. The decision primarily relied on in
Halcomb, 22 Comp.Gen. 869(1943), is not an isolated case but one of
several which indicate that where an employee performs only training or
the administrative matters necessary for entry on the rolls, the place
where these duties are performed is a temporary duty station for
determining travel entitlements.
Joanne E. Johnson, B-193401, May 17, 1979, and B-166030, February 19,
1969. In fact, the Halcomb decision is consistent with 10 Comp.Gen.
184(1930) in which we held that Bureau of Investigation appointees
assigned to permanent duty in the field were not relieved of their
obligation to bear the expense of reporting to their designated posts of
duty by reason of being first assigned to a period of training in
Washington, D.C.
As explained in 22 Comp.Gen. 869(1943), the newly appointed employee
who performs actual and substantial duty at his place of appointment--
as distinguished from job training or completing administrative matters
for entry on the rolls-- may have this place designated as his permanent
duty station. However, in the absence of such actual and substantial
duty, the place of appointment or place of training is only a temporary
duty station even if the new appointee's permanent duty station is not
ascertained until after his appointment or training. If such is the
case, the training site may be regarded as the appointee's designated
duty station for administrative purposes but not for the purpose of
establishing his entitlement to travel and relocation expenses upon
subsequent assignment to a permanent duty station. See Hughie L.
Rattiff, B-192614, March 7, 1979, and Donald C. Cardelli, B-195976,
February 8, 1980.
The assignment of agents to a different location-- the "home
office"-- for 1 month following training would not establish that
location as their first permanent duty station. An employee's official
or permanent duty station is a matter of fact and not merely one of
administrative designation. It is the place at which he actually is
stationed, the place where he expects and is expected to spend the
greater part of his time. 32 Comp.Gen. 87(1952). We have long held that
an employee may not be assigned to a duty station at which he is not
expected to remain for an extended period of time for the purpose of
increasing his entitlement to travel and relocation expenses. See
Samuel K. Allen, B-194536, January 9, 1980, and Linderman and Hester,
B-191121, August 29, 1978.
Neither our decisions nor the applicable regulations establish a
minimum amount of time that an employee must remain at a particular post
of duty in order to establish that location as his permanent duty
station. However, the intended duration of an employee's assignment is
certainly a relevant consideration in determining whether a particular
assignment is permanent in nature. An assignment expected to last only
1 month would not be considered a permanent assignment for travel and
relocation expense purposes.
Further, an employee may not be assigned to a duty station without
regard for the needs of the agency but primarily to entitle him to
travel and relocation expenses. In the case of a new appointee, the
1-month assignment following training would be considered a temporary
duty assignment en route to the employee's first duty station.
Accordingly, newly appointed FBI agents assigned to 16 weeks'
training in Washington, D.C., may not have Washington designated as
their permanent duty station for purposes of satisfying the requirement
that they bear the expense of reporting to their first duty station.
The FBI may not lessen that personal obligation by giving the new
appointees brief assignments to convenient locations before requiring
them to report to permanent duty following training.
B-200285, B-200857, July 1, 1981, 60 Comp.Gen. 564
Travel Expenses - Military Personnel - Temporary Duty - Transfer Pending
- Return to Old Station - Moving Arrangements, etc. Purpose
A member of the uniformed service is detached from his permanent duty
station upon being assigned to temporary duty and the new permanent duty
station is not designated until the end of temporary duty assignment.
Member may be authorized travel at Government expense from the temporary
duty station to the old duty station for the purpose of arranging for
relocation of dependents and personal effects resulting from the
permanent change of station and then travel to the new permanent duty
station. The date of the detachment from the old permanent duty station
does not affect this entitlement. 57 Comp.Gen. 198, amplified.
Regulations - Travel - Joint - Military Personnel - Amendment -
Temporary Duty Pending Transfer
A member of the uniformed services may be paid for travel from his
temporary duty station to his old permanent duty station when permanent
change of station follows a period of duty at a temporary duty station,
but such payments may be made only if the Joint Travel Regulations are
amended to authorize travel in such circumstances and only if
authorization of return to old permanent station is based on the need to
arrange transportation of dependents, household or personal effects or a
privately owned conveyance and may not be authorized for purely personal
reasons such as a visit or vacation.
Matter of: Staff Sergeant William H. Fedderman, USMC, and Ensign
Rita V. Espiritu, USNR, July 1, 1981:
These cases involve a military member's entitlement to permanent
change of station allowances under paragraph M4156, Case 3, Volume 1,
Joint Travel Regulations (1 JTR). The question is whether travel may be
allowed to the old duty station from a temporary duty location where the
member is when he is advised of the location of his new permanent
station and thence to the new duty station. Members may be authorized
travel allowances prescribed in M4156, Case 3, 1 JTR, in such
circumstances if return to the former duty station is required for
moving the member's dependents and effects to the new permanent duty
station.
The case of Staff Sergeant William H. Fedderman, USMC, was submitted
by the Disbursing Officer, Marine Corps Finance Center, Kansas City,
Missouri, requesting an advance decision. The matter was forwarded here
through the Per Diem, Travel and Transportation Allowance Committee and
assigned PDTATAC Control No. 80-30. The case of Ensign Rita V.
Espiritu, USNR, was submitted by the Chief of Naval Operations to the
Per Diem, Travel and Transportation Allowance Committee with the request
that it be considered with Sergeant Fedderman's case. Accordingly,
Ensign Espiritu's case was also forwarded here by the Per Diem, Travel
and Transportation Allowance Committee.
Staff Sergeant William A. Fedderman, while stationed at Camp Lejeune,
North Carolina, was detached from that station without designation of a
new permanent duty station and assigned to temporary duty for
instruction at the Recruiters School, Marine Corps Recruit Depot, San
Diego, California. He reported for temporary duty in San Diego on April
16, 1980. On May 20, 1980, the Headquarters Marine Corps sent a letter
to Marine Corps Recruit Depot, San Diego, in which it was asserted that
certain Marine Corps members detailed to that command for temporary duty
without ultimate duty station assignment were not being afforded their
complete travel entitlements in accordance with paragraph M4156, 1 JTR,
upon permanent duty station assignments at graduation.
That is, they were not being afforded allowances for travel from the
temporary duty station to the old permanent duty station and then to the
new permanent duty station. Based upon the May 20, 1980 letter the
Commander of the Marine Corps Recruit Depot modified Sergeant
Fedderman's orders authorizing him to return from his temporary duty
point in San Diego to his old permanent duty station at Camp Lejeune,
North Carolina, and then on to his permanent duty station in Mt.
Clemens, Michigan.
The Marine Corps Finance Center questioned the interpretation given
to paragraph M4156, Case 3, by Marine Corps Headquarters. It is the
contention of that office that paragraph M4156, Case 3, applies only to
situations in which the member is not detached from his old permanent
duty station and, at the time temporary duty orders were issued, it was
fully intended that the member would return to his old duty station upon
completion of temporary duty.
Ensign Rita V. Espiritu was apparently enlisted in the Navy for
purposes of attending Officer Candidate School. Her permanent station
was designated as Pearl Harbor, Hawaii, and she was ordered to travel
from Hawaii to Newport, Rhode Island, for 16 weeks' temporary duty for
instruction at the Officer Candidate School, and for further assignment.
Her next permanent duty station was not assigned at the time the order
was issued. Upon completion of training Ensign Espiritu was directed to
report to the Chief of Naval Operations, Washington, D.C., for duty. By
orders dated June 18, 1980, her original orders were endorsed to permit
her to travel from Newport, Rhode Island, to Washington, D.C., via the
old permanent duty station in Hawaii under the provisions of paragraph
M4156, Case 3, 1 JTR. It was later determined by the Navy that
paragraph M4156, Case 3, was not applicable in connection with her
orders, inasmuch as she was not notified that her permanent duty station
would be changed while she was on temporary duty. As a result Ensign
Espiritu was charged for excess transportation furnished resulting in an
amount due the United States of $537.42. Leave and traveling
adjustments were also made.
Paragraph M4156, Case 3 of 1 JTR, provides in pertinent part that:
A member who receives orders while on temporary duty directing a
permanent change of station may be authorized permanent
change-of-station allowances from the temporary duty station to the old
permanent duty station and then to the new permanent duty station via
any temporary duty station(s).
Travel allowances prescribed by this case may be authorized or
approved by the permanent change-of-station order-issuing authority or
other official designated by the Service concerned only when the member
must travel to the old permanent duty station to arrange for movement of
dependents, to arrange for shipment of household goods, to pick up
personal possessions, or to bring his privately owned conveyance to the
new permanent duty station.
This regulation, effective August 22, 1978, resulted from our
decision 57 Comp.Gen. 198(1977).
We stated in 57 Comp.Gen. 198 that the Government has an obligation
to defray the cost of travel and transportation for members of the
uniformed services where the travel is performed as a direct result of a
change of a member's permanent duty station. Where a member is ordered
on temporary duty away from his permanent station, or is assigned to a
vessel deployed away from the home port, such assignment is for the
purpose of carrying out the Government's business and the member
generally has no choice about the assignment or deployment of the
vessel. Therefore, if the member should receive orders for permanent
duty at the temporary duty station or the vessel is assigned to a new
home port while so assigned or deployed, the member may be reimbursed
round-trip travel to the old permanent station or old home port for the
purpose of arranging for relocation of his family and effects to the new
permanent duty station. The rationale for the travel and transportation
entitlements is that the member should not be required to expend
personal funds for travel and transportation which results from a
permanent change of station.
It is considered that the same rule may be applied in cases such as
the present cases. The fact that the members knew when they left their
permanent station on temporary assignments that they would not return
but would be assigned to other permanent duty stations immediately after
completing the temporary duty would not necessarily alleviate the
problem involved. A new permanent duty station is not designated when
the member leaves on temporary duty and the dependents are not permitted
to travel at Government expense on the member's temporary duty orders;
therefore, they must wait to move from the old duty station until after
the member has departed on temporary duty. In such circumstances orders
may be issued authorizing travel, which would be reimbursable under
paragraph M4156, Case 3, from the temporary duty station to the old
permanent duty station for the purpose of arranging for relocation of
the family and effects resulting from the permanent change of station
and then to the new permanent station. The rationale for the travel in
this instance is the same as stated in 57 Comp.Gen. 198, supra.
There should be no legal distinction made with regard to permanent
change-of-station entitlements where the member is advised that he will
not return to the old duty station while on temporary duty and where the
member is so advised prior to departing the old duty station for a
temporary duty assignment.
If the order issuing authority determines that the member must return to
his permanent duty station to ship household effects, arrange for
dependent travel, pick up personal possessions or pick up a privately
owned conveyance, such travel is authorized at Government expense under
paragraph M4156, Case 3. However, such travel at Government expense is
only authorized for the specified purposes and not merely for a return
visit or vacation at the previous duty station. Determinations as to
the necessity for such travel are primarily a matter for the appropriate
service authorities.
Accordingly, the travel entitlement of Sergeant Fedderman and Ensign
Espiritu in the circumstances described may be covered by paragraph
M4156, Case 3, 1 JTR, provided the return travel was performed for the
purposes set out in that provision. If that is the case, Sergeant
Fedderman is entitled to return transportation to the old duty station
at Camp LeJeune upon completion of the temporary duty in San Diego and
then is entitled to transportation at Government expense for himself and
his family from the old duty station to the new duty station in Mt.
Clemens, Michigan. Per diem may also be authorized for the period of
this travel to the old permanent station and then to the new permanent
station.
If Ensign Espiritu is determined to have returned for the reasons set
out above she is entitled to return transportation from the temporary
duty station, Newport, Rhode Island, to her old duty station at Pearl
Harbor, Hawaii, and from the old duty station to Washington, D.C.
Ensign Espiritu may also be authorized per diem for the period of her
travel to the old duty station and then to the new permanent station.
In order to consider fully the questions raised by the submission, we
must consider the case of a member who is ordered on temporary duty en
route to a new permanent duty station which has been designated prior to
the member's departure on temporary duty. Even in that situation it may
be that a member would have difficulty getting his dependents and
effects to the new permanent duty station if he or she was not allowed
to return to the old permanent station to assist. This situation could
certainly arise with respect to single members. We have held that a
member should not be required to pay the cost of returning from a
temporary duty location to his or her former permanent duty station when
the return is necessary to assist in the transportation of dependents
and property. If, because of the facts involved, the member must return
from the temporary duty station to the old duty station for such
reasons, the cost should be paid by the Government even though the
location of the new permanent duty station was known at the time of
departure from temporary duty.
Therefore, regulations may be issued under which a member may be
permitted to return to his old permanent duty station at Government
expense if such travel is necessary for the shipment of household
effects, for arranging dependents' transportation, to pick up personal
effects or a privately owned conveyance, in any case when a transfer of
permanent station follows immediately after duty at a temporary duty
station. As in the situations where such travel is now authorized by
paragraph M4156, Case 3, and this decision, care should be taken to
permit such travel only when required for the stated reasons and not
when the purpose is purely personal such as for a visit or vacation.
However, since such travel is not authorized under current
regulations, payments for travel back to the old permanent station in
those circumstances may be made only if authorized in an amendment to
the Joint Travel Regulations.
B-199354, July 1, 1981, 60 Comp.Gen. 562
Travel Expenses - Military Personnel - Restricted Station Assignments -
Travel to "Designated Place" Between Military Assignments - Moving
Arrangements, etc. Purpose - Regulation Authority
Dependents of a military member are located at a designated place
away from his duty station because of the member's isolated duty,
unusually arduous duty, or unaccompanied overseas tour. Travel by the
member to the designated place upon assignment to the permanent duty
station to which he is not authorized to take his dependents and upon
his next permanent change of station at Government expense may be
authorized by an amendment to the Joint Travel Regulations, but the
authorization of travel to the designated place must be based on the
member's need to assist in arranging for transportation of dependents,
household or personal effect, or privately owned conveyance.
Matter of: Travel by member to designated place between military
assignments, July 1, 1981:
This decision is in response to a request for an advance decision
from the Assistant Secretary of the Air Force (Manpower, Reserve Affairs
and Installations) concerning whether the Joint Travel Regulations may
be amended to authorize members of the uniformed services, upon return
from certain types of duty, to travel to the place where their
dependents are located and then on to their new duty station rather than
directly to the new station.
The matter has been assigned control number 80-16 by the Per Diem,
Travel and Transportation Allowance Committee.
For the reasons explained below the answer to the question is yes.
The Assistant Secretary notes that members of the uniformed services
are authorized to move their dependents at Government expense to a
designated place under paragraph M7005, Volume 1, Joint Travel
Regulations (1 JTR), in the following circumstances:
a. Assignment of a member to unusually arduous duty with projected
absences of the unit from its assigned home port for more than 50
percent of the time;
b. Assignment of a member to a vessel or afloat staff specified as
operating overseas for periods of 1 year or more; and
c. Assignment to a restricted station (to a place where dependents
are not permitted).
When dependents move to a designated place, however, the member is
only entitled to travel at Government expense from his old duty station
to the new duty station. When the member is ordered on his next
permanent change of station, his dependents are authorized to travel
from the designated place to the new duty station at Government expense.
Travel for the member at Government expense, however, is again only
authorized from the old to the new permanent station except in those
instances where he is serving consecutive overseas tours. It has been
pointed out by the Assistant Secretary that the member is often required
to travel via the designated place to assist his dependents with their
move. To the extent such travel exceeds the cost of direct travel from
the old to the new station, it currently must be performed at the
member's personal expense. It has been proposed to amend the Joint
Travel Regulations to authorize travel for the member at Government
expense via the designated place where his dependents are located in
such situations.
The Assistant Secretary has cited our decision in 57 Comp.Gen.
198(1977) as the rationale for authorizing the travel to a designated
place for the member to assist his dependents in making the move. In
that decision we determined that where a member is assigned to temporary
duty and the temporary duty station becomes his permanent duty station,
or where a member is assigned to a vessel and while the is deployed from
the home port the home port of the vessel is changed, the member's
round-trip travel to the old permanent station or old home port may be
considered travel incident to the permanent change of station.
Therefore, it was held that round-trip travel of the member to the
former permanent station or home port may be performed at Government
expense.
Our decision in 57 Comp.Gen. 198 was predicated on a determination
that travel back to the permanent duty station from the temporary duty
station or new home port could be considered as travel on Government
business if it was performed for the purpose of arranging for the travel
of dependents and transportation of household or personal effects or a
privately owned conveyance. Here the permanent duty station is not
involved but the location to which travel would be authorized is the
last location to which the dependents traveled at Government expense.
We have today issued a decision in Fedderman and Espiritu, 60
Comp.Gen. 564 (B-200285, B-200857), in which the rule of 57 Comp.Gen.
198 was interpreted to permit travel from a temporary duty station to
the old permanent duty station when a transfer of station occurred after
a period of temporary duty even though the new permanent duty station
was designated prior to the member's departure on temporary duty.
Travel at Government expense in these circumstances is authorized only
if the Joint Travel Regulations are amended to provide for it and only
to the extent that travel by the member is performed to assist in
relocating dependents and property.
Since dependents and household effects are moved to the designated
location at Government expense, we believe that the reasoning in 57
Comp.Gen.at 198 as amplified in Fedderman and Espiritu is equally
applicable in this situation. That is, the member should not be
required to travel at his own expense to the place where his dependents
and household goods were transported at Government expense if travel to
that place is necessary to assist in transportation of dependents,
household goods and personal effects or a privately owned conveyance.
Accordingly, Volume 1 of the Joint Travel Regulations may be amended
to authorize a member to travel at Government expense to the designated
location to which his dependents and household effects are transported.
Such travel may be authorized in connection with travel to the permanent
duty station to which dependents may not accompany the member and again
upon return from that station in connection with travel to the next
permanent duty station.
B-199035, July 1, 1981, 60 Comp.Gen. 561
Travel Expenses - Military Personnel - Transfers - To Ship or Other
Mobile Unit - After Home Port Change Announcement - Travel Entitlements
When the home port of a ship or other mobile unit to which a Navy
member is being transferred is in the process of being changed the
member may accompany his dependents or otherwise travel to the newly
designated home port prior to reporting to the ship or other mobile unit
if that travel is authorized by amendment to the Joint Travel
Regulations, provided the travel is necessary to assist in the
transportation of the member's dependents or property.
Matter of: Travel Incident to Change in Home Port, July 1, 1981:
This action is in response to a request from the Acting Assistant
Secretary of the Air Force (Manpower, Reserve Affairs and Installations)
as to whether Volume 1 of the Joint Travel Regulations (1 JTR) may be
amended to cover a particular situation involving Navy members assigned
to ships staffs and other mobile units which have home ports. When such
members are ordered on a permanent change of station to a ship, staff or
mobile unit after a home port change for that unit is announced, the
proposal is to permit the member to travel to the new home port to
assist his dependents to relocate there and then report for duty at the
location of the unit, all at Government expense. This matter has been
assigned Control No. 80-23 by the Per Diem, Travel and Transportation
Allowance Committee.
The question in the present case is whether 1 JTR may be amended to
authorize a member to travel at Government expense to a newly designated
home port to assist in dependents' relocation and continue at Government
expense to travel to the location of the ship or mobile unit at the old
home port. The answer to the question is yes.
In 57 Comp.Gen. 198, the question was whether 1 JTR could be amended
to permit a member, who is on temporary duty away from his permanent
station and who has received permanent change of station orders, making
that station his permanent station, to travel at Government expense to
his old duty station for purposes of assisting his dependents to
relocate. In authorizing the amendment, we stated generally that since
changes of duty assignments are for the purpose of carrying out the
Government's business, it is a matter over which the member has no
control. We concluded by saying that the rationale for travel and
transportation entitlements was that members should not be required to
expend personal funds for travel and transportation which results from
permanent change of station.
We have today issued a decision in Fedderman and Espiritu, 60
Comp.Gen. . . . (B-200285, B-200857), in which the rule in 57 Comp.Gen.
198 was interpreted to permit travel from a temporary duty station to
the old permanent duty station when a transfer of station occurred after
a period of temporary duty even though the new permanent duty station
was designated prior to the member's departure on temporary duty.
Travel at Government expense in those circumstances may be allowed only
if the JTRs are amended to provide for it, and only to the extent that
travel by the member is performed to assist in relocating dependents and
property.
Since dependents and household effects are moved to the new home port
at Government expense, we believe that the reasoning in 57 Comp.Gen. 198
as amplified in Fedderman and Espiritu is equally applicable to this
situation. That is, the member should not be required to travel at his
own expense to the place to which his dependents and household effects
are being transported at Government expense if travel to that place is
necessary to assist in transportation of dependents, household goods of
personal effects or a privately owned conveyance.
Accordingly, 1 JTR may be amended to authorize the member to travel
at Government expense to the newly designated home port of his ship or
other mobile unit and thence to the location of that ship or unit. Such
travel must be for the purpose of assisting in the relocation
dependents, household or personal effects or a privately owned
conveyance. Further, travel to the home port may be authorized when the
ship or mobile unit is away from the home port or at the old home port
during a period of transition.
We trust that this determination will permit appropriate amendments
to the regulations in all the circumstances presented.
B-201530, June 30, 1981, 60 Comp.Gen. 559
Compensation - Premium Pay - Sunday Work Regularly Scheduled - Any
Period of Work Performance on Sunday - Effect on Entitlement
Midnight shift employees at US Army Communications Command, Detroit,
whose tour of duty is from 2345 Sunday to 0745 Monday are entitled to
Sunday premium pay for entire 8-hour period since there is no
requirement in 5 U.S.C. 5546(a)(1976) for performance of minimum period
of Sunday work as condition entitlement to premium pay benefits.
Matter of: Sunday premium pay - Employees at US Army Communications
Command, Detroit, June 30, 1981:
The Chief, Accounting and Finance Division, US Army Tank-Automotive
Command, Warren, Michigan, has requested an advance decision whether
seven general schedule civilian employees at the US Army Communications
Command, Detroit, whose regularly scheduled tours of duty include duty
from 2345 Sunday to 0745 Monday, are entitled to Sunday premium pay for
that entire 8-hour period. The answer is yes.
The facts are as follows. The tour of duty of the midnight shift at
the US Army Communications Command, Detroit, is from 2400 to 0800 6 days
a week, and 2345 Sunday to 0745 Monday.
The Sunday schedule was adjusted to ensure continuity of operations
between the afternoon and midnight shifts. The midnight shift employees
now are claiming entitlement to premium pay for the entire 8-hour period
of duty beginning at 2345 Sunday. No Sunday premium pay has been paid
to any of the employees.
Entitlement to Sunday premium pay is based on 5 U.S.C. 5546(a)(1976),
which provides:
An employee who performs work during a regularly scheduled 8-hour
period of service which is not overtime work as defined by section
5542(a) of this title a part of which is performed on Sunday is entitled
to pay for the entire period of service at the rate of his basic pay,
plus premium pay at a rate equal to 25 percent of his rate of basic pay.
The position of the Command has been that the regulation implementing
the statute, 5 CFR 550.171(1980), and the Standard Army Civilian Payroll
System, Chapter 3, paragraph 3-6(f), authorize premium pay only for each
complete hour of Sunday work. Section 550.171 of title 5 of the Code of
Federal Regulations provides:
An employee is entitled to pay at his rate of basic pay plus premium
pay at a rate equal to 25 percent of his rate of basic pay for each hour
of Sunday work which is not overtime work and which is not in excess of
eight hours for each regularly scheduled tour of duty which begins or
ends on Sunday.
In 46 Comp.Gen. 158(1966), we considered the entitlement to Sunday
premium pay of wage board employees who began their weekly tour of duty
with an 8-hour shift from 11:30 p.m. Sunday through Monday morning, and
ended it with a shift beginning at 11:30 p.m. Saturday through Sunday
morning. In concluding that they were entitled to Sunday premium pay
for both 8-hour periods under the similar authority for wage board
employees now contained at 5 U.S.C. 5544(a)(1980) we stated that there
was no requirement for performance of a minimum period of Sunday work as
a condition of entitlement to the premium pay benefits provided by that
section. See 46 Comp.Gen.at 161 supra.
The regulation, 5 CFR 550.171, does not conflict with this
interpretation of the statute. "Sunday work" is defined in 5 CFR
550.103(o)(1980) as:
* * * all work during a regularly scheduled tour of duty within a
basic workweek when any part of that work is performed on Sunday.
Thus, by using the phrase, "for each hour of Sunday work," 5 CFR
550.171, in accordance with the statute, authorizes payment for the
entire tour of duty if any part occurs on Sunday.
Accordingly, the seven employees on the midnight shift at the US Army
Communications Command, Detroit, are entitled to Sunday premium pay for
their entire 8-hour tour of duty from 2345 Sunday to 0745 Monday.
B-196722, June 26, 1981, 60 Comp.Gen. 548
Contracts - Negotiation - Late Proposals and Quotations - Modifications
of Proposal - Expanded Best and Final Offer - Acceptability
Agency could consider all-or-none best and final offer
notwithstanding that three of five line items were not included in
offeror's initial proposal since initial proposal was included in
competitive range, offerors may alter their proposals in best and final
offer and agency found that proposal with respect to additional items
was technically acceptable. Contracts - Negotiation - Requests for
Proposals - "All or None" Proposals - Acceptance on Alternative Basis -
Effect on Competition
Protest that request for proposals (RFP) for automatic data
processing peripheral equipment was deficient because agency permitted
all-or-none proposals knowing there was little prospect of competition
for several line items is denied. Offeror would not have been
prejudiced by submitting proposal to furnish only some line items since
agency limited all-or-none pricing to alternate proposal and included
RFP requirement for cost and pricing data to insure that firm which
offered to furnish items in question did not unbalance all-or-none bid.
Equipment - Automatic Data Processing Systems - Benchmarking -
Postclosing - Propriety
Request for proposals provision allowing benchmark of tentatively
selected equipment after closing date for best and final proposals is
not in itself objectionable.
Matter of: Control Data Corporation and KET, Incorporated, June 26,
1981:
This decision responds to two protests concerning a procurement
conducted by the Internal Revenue Service (IRS) under request for
proposals (RFP) 79-57 for peripheral equipment to support the IRS
Integrated Data Retrieval System (IDRS). The procurement was for
various quantities of disk, tape, and card reader, card punch and line
printer equipment to replace leased Control Data Corporation peripheral
equipment presently supporting IDRS Control Data 3500 series computers.
A contract has been awarded to Centennial Systems, Inc. (CSI) for all
items.
KET, Incorporated, which did not submit a proposal, complains that
the RFP was unduly restrictive of competition in that except for the
disk equipment the RFP specified essentially outmoded Control Data or
equal equipment preventing consideration of equipment of current
manufacture.
KET says it was not possible to locate sufficient quantities of some of
the equipment even on the used market. Thus, KET expected Control Data,
which as the incumbent could offer to continue to furnish equipment
(other than disk equipment) then in place, to enjoy a significant
competitive advantage. Because the RFP permitted Control Data to submit
an all-or-none price if it also priced all items individually, KET
complains that a firm in a position such as Control Data enjoys could
prevent meaningful competition on individual line items by submitting
unbalanced prices, i.e., by setting arbitrarily high prices for scarce
items, by submitting below cost prices for items likely to be offered by
firms such as KET, and by offering a somewhat lower aggregate price,
thus assuring that its aggregate price would be lower than the total
cost of any combination of multiple awards.
On the other hand, Control Data protests that it should have received
award on an all-or-none basis but did not because CSI was improperly
permitted to propose an all-or-none price in its best and final offer by
adding prices for three line items which it had not included in its
initial proposal. Moreover, Control Data says the IRS permitted CSI to
offer equipment which was not "formally announced" as required by the
RFP, and relaxed its delivery schedule for CSI shortly after award,
thereby materially changing the basis on which proposals had been
submitted. Further, Control Data says the IRS in evaluating cost should
have considered the cost of continuing to use existing equipment while
new equipment was being installed.
KET also complains that the RFP benchmark requirement was improper in
several respects and that the IRS improperly refused to make its Control
Data 3500 equipment available to support such a test.
KET's protest is dismissed in part and denied as to the remainder;
Control Data's protest is denied.
1. Timeliness
At the outset, the IRS and Control Data join in insisting that KET's
protest should be dismissed as untimely. KET's protest, which involves
alleged improprieties apparent from the solicitation, was filed in our
Office before the closing date set for proposal receipt, as required in
section 20.2(b)(1) of our Bid Protest Procedures, 4 CFR part
20(b)(1)(1980). However, the IRS and Control Data point out that the
contracting officer did not receive notice of the protest until after
the closing date for receipt of proposals had passed. This, they say,
was contrary to the purpose of Sec. 20.1(c) of our Bid Protest
Procedures, which states that a copy of a protest to the General
Accounting Office shall be filed with the contracting officer.
KET's protest is timely. The filing of a protest for purposes of
Sec. 20.2(b) is defined in Sec. 20.2(b)(3) to mean filing in the General
Accounting Office or contracting activity "as the case may be," which
means that timely delivery of a protest must occur at the place where
the protest is lodged. See National Designers, Inc., B-195353,
B-195354, August 6, 1979, 79-2 CPD 86. Since KET's protest was directed
to our Office and was received here before proposals were due, it was
timely filed in accordance with our Bid Protest Procedures.
Control Data argues, however, that it was prejudiced by KET's failure
to advise the IRS of the protest at the time it was filed with our
Office, because Control Data had made special arrangements with the
contracting officer to return Control Data's proposal unopened if a
protest were filed before the time and date for closing passed.
We see no basis for Control Data's concern. Control Data could at
any time before award have withdrawn its proposal if it did not wish to
have it considered. United Electric Motor Company, Inc., B-191996,
September 18, 1978, 78-2 CPD 206.
Therefore, we will decide both protests on their merits.
2. Sufficiency of RFP
We consider first KET's complaint that by specifying equipment as the
IRS did-- on a brand name (Control Data) or equal basis-- the IRS
imposed an undue restriction on competition. According to KET, only
Control Data 3500 compatible disk equipment remains in current
production. The remainder of the IRS's equipment needs (tape, card
reader, card punch and line printer equipment), KET says, could be met
only by furnishing obsolete and outmoded equipment which was readily
available only to Control Data which as the incumbent, could continue to
furnish existing leased equipment (other than disk equipment).
KET questions IRS' insistence on the continued use of card reader and
card punch equipment as its primary means of entering data. It sees no
reason why a 4000 card tray is specified for card readers, or a 1200
card hopper and 1500 card stacker for card punches, and says the IRS
should have permitted offerors to propose 1200 card trays and 1000 card
hoppers and stackers typical of other comparable equipment. KET also
challenges IRS's continued reliance on 200/556/800 bpi (the density with
which data is packed) for seven track tape drives, arguing that 1600 bpi
is now the established industry baseline, and questions why all three
densities (200, 556, and 800 bpi) must be available in each unit.
Further, in KET's view the IRS's need for equipment capable of handling
large numbers of cards to support headquarters programming operations
does not justify including large card tray requirements for equipment to
be used at IRS regional facilities.
Nor, allegedly, has the IRS shown that all tape densities and other
required specific capabilities will be used at each of its
installations.
This portion of KET's complaint is without merit. The IRS explains
that it is not seeking to upgrade IDRS or to alter in any way how
equipment would be used; rather, it is acquiring equipment which it
needs to continue operating IDRS until that system can be replaced. We
believe it is sufficient that in defining its interim requirements the
IRS has attempted simply to acquire equipment based on the types of
equipment it has in place. Determination of an agency's needs is a
matter falling within the sound discretion of the contracting activity
which will not be disturbed unless shown to have no rational basis.
Science Spectrum, B-189886, January 9, 1978, 78-1 CPD 15. Because the
IRS is attempting to meet only a short term need, we believe it may
reasonably base its requirements on equipment which is in place. In
this respect, in our decision in Information International, Inc., 59
Comp.Gen. 640(1980), 80-2 CPD 100, aff'd. B-191013, October 7, 1980,
80-2 CPD 246, we stated that the Government is under no obligation to
acquire technologically advanced equipment if less sophisticated
equipment will meet its actual needs at lower cost or risk.
KET further contends that by allowing offerors to submit proposals
for all five types of equipment on an all-or-none basis the IRS
permitted a firm which was able to offer all items to prevent others
able to offer only some of them from being considered. KET anticipated
that this would favor Control Data because the IRS permitted Control
Data to offer equipment (other than disk equipment) which was already in
place. Control Data did not receive the award. However, KET was unable
to locate sufficient quantities of the required equipment (other than
disk equipment) notwithstanding diligent effort and believes that the
disk equipment (which is still manufactured) is distinctly different
from the IRS's other needs and should have been the subject of a second
procurement. (It is the IRS' position that any economy which the
Government might gain through a multi-item award can be achieved only if
offerors are permitted to offer lower prices on a combination of items.)
In this connection, KET argues that in requesting a Delegation of
Procurement Authority (DPA) from GSA the IRS indicated that it would not
permit all-or-none bids, and thus implicitly admitted that to allow an
all-or-none bid which included the disk equipment would limit
competition.
We do not believe the IRS acted improperly in this regard. The IRS
included the following language in the RFP:
* * * All offerors must propose each subsystem as an individual
pricing proposal. Only an alternate proposal may be qualified as "all
or none;" vendors who submit a single or primary proposal which is
qualified as "all or none" will be considered (unacceptable).
Additionally, the IRS required offers to furnish certifications of
cost and pricing data pursuant to Federal Procurement Regulations (FPR)
Sec. 1-3.807-4 (1964 ed.).
We do not see how KET was injured. The IRS, by allowing proposals to
furnish any of the five required systems, assumed no duty to prevent a
disk equipment buy-in. Had IRS adopted KET's view and procured the disk
system separately, Control Data would not have been precluded from
offering disk equipment at less than cost. The most that the IRS could
have done would have been to prevent an offeror from making up losses by
overpricing other items, which the IRS did by requiring that items be
separately priced and supported, thus placing the Government in a
position to determine that it was paying a fair and reasonable price.
Breaking out some items or prohibiting an offeror from submitting an
alternate all-or-none proposal would not have further enchanced
competition, but only would have prevented the Government from obtaining
a better total price if it could do so on a package basis.
On a related point, KET complains that Control Data was permitted to
offer currently-installed disk equipment by warranting that the
equipment was remanufactured. KET insists that this violates a prior
understanding resulting from a controversy which extended from 1976
through 1978 regarding a past IRS attempt to acquire disk equipment on a
sole-source basis from Control Data. See KET, Inc., B-189482, February
10, 1978, 78-1 CPD 115. At that time, KET says, the General Services
Administration granted the IRS authority to procure disk subsystems for
the IDRS on an interim basis on condition that the IRS would
competitively replace all peripheral subsystems, including the disk
subsystem, and that Control Data Corporation was not to be permitted to
propose installed equipment. Even though the RFP stated that
"currently-installed" disk equipment could not be offered, however, IRS
explained in response to a pre-proposal inquiry that this did not
prevent Control Data from offering such equipment if it were first
removed, remanufactured and warranted as the same as new.
Since the apparent purpose of the understanding KET refers to was to
prevent Control Data from gaining a competitive advantage as a result of
the sole-source procurement mentioned, and since KET was permitted to
offer remanufactured equipment also, if it wished, we cannot see how KET
suffered any legal prejudice by the procedure which the IRS adopted.
KET's complaint in this regard is therefore rejected.
3. Propriety of Award
We consider next Control Data's protest against the award made to
CSI.
Control Data argues that CSI was permitted to submit a late proposal
in that award was based on an all-or-none best and final offer in which
CSI for the first time added prices for three of the five types of
equipment covered in separate line items. In its initial proposal CSI
only offered to furnish the tape and disk equipment. Prices to furnish
used card punch, card reader and card printer equipment (all originally
manufactured by Control Data) were added in CSI's best and final offer.
If the expanded CSI best and final offer, and alternate all-or-none
price, is considered to be a distinct proposal, Control Data's argument
continues, it is clearly not for consideration under any of the
exceptions to the rule against making award on a late proposal.
In this regard, Control Data insists that the IRS, by evaluating and
making award based on the CSI best and final offer, essentially allowed
CSI to avoid a technical evaluation of its entire proposal because the
best and final proposal offered to furnish three types of equipment
which were never included in a competitive range determination. Control
Data further asserts in this regard that the CSI best and final offer
did not include adequate information and did not indicate how CSI would
maintain the additional equipment. As a result, Control Data charges,
the IRS was forced to continue discussions with CSI after making award
to it in order to deal with problems which were ultimately resolved only
when Control Data agreed to service any CSI-furnished Control Data
equipment.
The IRS argues that the CSI proposal was not late. Regarding the
relationship between the late proposal rule and modifications to
proposals after discussions, the IRS points out that FPR Sec.
1-3.802-1(d) states:
The normal revisions of proposals by offerors selected for discussion
during the usual conduct of negotiations with such offerors are not to
be considered as late proposals or later modifications to proposals but
shall be handled in accordance with Sec. 1-3.805.
(FPR Sec. 1-3.805 deals generally with the selection of an awardee in
a negotiated procurement.) In the IRS's view, CSI simply expanded its
original proposal to include card reader, card punch and line printer
equipment thus enabling it to submit an all-or-none proposal. The IRS
says it had no choice but to make award to CSI since SCI agreed to meet
all of the RFP requirements and explained in pricing the additional
items that it would provide Control Data on-call maintenance on a
24-hour per day, seven day per week basis. The IRS says a technical
evaluation of the proposed equipment was not necessary because the
equipment added was identical to that being replaced.
Further, the IRS cites our decision in Jones & Guerrero Co.,
Incorporated, B-192328, October 23, 1978, 78-2 CPD 296, as supporting
its view that offerors are permitted to amend their proposals as CSI
did. There, we considered a complaint that the Air Force improperly
amended a solicitation to require award based on the lowest aggregate
proposal to furnish all items listed on the schedule. We noted that the
protester was not prejudiced by the amendment because although its
initial proposal did not price all line items, it had revised its
proposal and priced all items in its best and final offer. Thus, the
IRS argues, our decision approved what CSI did in adding prices for the
line items it chose initially to omit.
Finally, the IRS says that its view that an offeror's general right
to submit an amended best and final proposal in circumstances similar to
this case is supported by our decision in Northrop Services, Inc.,
B-184560, January 28, 1977, 77-1 CPD 71, where we approved award based
on an alternate proposal which differed from the awardee's original
proposal in regard to the use of in-house rather than subcontracted
labor.
We find Control Data's argument that the IRS's consideration of the
CSI best and final offer must be limited to two line items unconvincing.
The existence of the late proposal clause in the RFP establishes a
cut-off date for the receipt of initial proposals, defining the field of
competitors who may participate further in the procurement. E-Systems,
Inc., B-188084, March 22, 1977, 77-1 CPD 201. Thus, in LaBarge, Inc.,
B-190051, January 5, 1978, 78-1 CPD 7, we concurred with the Army's
rejection of LaBarge's entire proposal as late because LaBarge failed to
respond timely to a solicitation amendment which added a line item to
the schedule when only one aggregate award was to be made. We viewed
LaBarge as having failed to submit a timely offer for the minimum of
what could be awarded. CSI's initial proposal, however, did respond to
what was minimally acceptable and its proposal was considered by the IRS
to be within the competitive range; CSI survived the initial round and
was free in our view to make or to submit an alternate best and final
offer which it believed would enhance its competitive position. We are
aware of nothing which precluded CSI from doing so, provided it was
willing to take the risk that the changes might result in rejection of
its proposal. See Northrop Services, Inc., supra; Electronics
Communications, Inc., 55 Comp.Gen. 636(1976), 76-1 CPD 15, where the
changes made rendered a theretofore acceptable proposal unacceptable.
Moreover, Control Data has not shown that it suffered any legal
prejudice as a result of CSI's action. Control Data should not have
known before the closing date for receipt of best and final offers, and
presumably did not know, who its competition was, or whether its
competitors had offered all five or only some of the RFP line items.
Control Data was afforded an opportunity to submit a best and final
offer and could have made any changes to its proposal which it believed
necessary.
Thus, it was placed at no disadvantage.
Finally, Control Data believes that IRS's review of the CSI best and
final offer, which proposed to furnish Control Data equipment with
Control Data maintenance, was inadequate. By accepting at face value
CSI's agreement in its best and final offer to meet the IRS's
requirements, Control Data says the IRS accepted proposals for the three
additional systems which did not include, as required in the words of
the RFP:
A detailed statement of the offeror's ability to meet each of the
mandatory support requirements (covering maintenance) and reference(s)
to the technical documentation which substantiate the claim must be
provided * * * .
Moreover, Control Data believes that the IRS's failure to require CSI
to explain its maintenance proposal led to discussions after award since
it was only then that the IRS learned that CSI had no maintenance
agreement with Control Data. Evidently, CSI assumed that the IRS could
order maintenance from Control Data under its Federal Supply Schedule
(FSS) Contract, although there was no guarantee that Control Data would
continue to service the types of equipment involved under the FSS for
the duration of CSI's contract. (Control Data has since agreed to
provide maintenance.)
CSI offered the same type of printers, card punches, and card
printers which Control Data offered, and indeed, had been furnishing for
a number of years. CSI bound itself to furnish Control Data
maintenance. There is no apparent reason why the IRS should have
questioned CSI's proposal in this regard. While the RFP required
technical documentation to substantiate CSI's proposal, it is well
settled that an agency may not reject a proposal which fails to furnish
required information if that information is not actually needed to
evaluate its offer. In the circumstances, we view Control Data's
complaint as principally questioning CSI's ability to meet its agreement
to furnish Control Data maintenance, thus disputing the IRS's
affirmative determination of CSI's responsibility. However, it is well
settled that this Office will not review such determinations except in
circumstances which are not present in this case. Central Metal
Products, Inc., 54 Comp.Gen. 66(1974), 74-2 CPD 64.
4. Acceptability of CSI Disk and Tape Equipment
Further, Control Data asserts that the CSI disk and tape equipment
(offered in CSI's initial proposal) did not meet an RFP requirement for
"formally announced" equipment which was "fully proved and tested."
The requirement for "formally announced" equipment is contained in
paragraph E.10 of the RFP, which provided:
The equipment proposed in response to this solicitation * * * must
have been formally announced for marketing purposes on or before the
closing date (for receipt of proposals) and be capable of a
demonstration * * * .
Paragraph E.10 addresses the prospect that the IRS otherwise might
receive offers proposing to furnish equipment which was not yet fully
developed. That the IRS would not accept such an offer is confirmed by
its answer to a written question submitted before the closing date for
receipt of initial proposals. Offerors were advised that:
Formally announced means announced by the offeror to the "market
place" or public with notice that equipment is in production, has been
fully tested and that orders are being accepted. Proposals submitted to
other Government Agencies do not necessarily constitute "formally
announced."
Control Data complains that the CSI-proposed disk and tape systems
were not formally announced. In fact, Control Data indicates that it
(a) had never heard of a CSI disk system compatible with the Control
Data 3500, which is to be supported, before this procurement, and (b)
has been unable to find any formal announcement of the CSI-proposed
Telex 6803-1 tape controller for use with 3500 series computers. As
Control Data points out, there is no evidence in the record that the IRS
considered whether the CSI equipment was formally announced until after
Control Data had filed its protest. As further support for its
assertion, Control Data says in effect that the systems could not have
been formally announced because the delivery requirements were relaxed
after award, evidencing in Control Data's view that the systems had not
yet been fully tested.
However, the IRS insists that in fact the CSI equipment was
announced. Regarding the two items of equipment in question, the IRS
says the CSI 5000 Disk Controller (which CSI offered with its disk
system) was announced as available for use with Control Data 3000 series
equipment in a press release dated one day before the closing date for
receipt of proposals. The IRS treats the other item-- the CSI tape
controller-- as similar to a related "formally announced" Telex
controller. Moreover, the IRS argues, the disk and tape controllers
were only components of the disk and tape systems, and it was not the
IRS's intention that paragraph E7.1.1 should require that a vendor have
announced each piece of equipment which made up a system.
In our decision in Intermem Corporation, B-188910, December 15, 1977,
77-2 CPD 464, we considered the meaning of the phrase "announced,
commercially available" in a similar context and concluded such language
did not require a published announcement (e.g., through trade journals)
if in fact the equipment was available and was being offered for sale.
The IRS could have but did not use that phrase in this RFP. Instead, it
required "formally announced" equipment capable of demonstration, a
choice of language which in contrast with the phrase "announced,
commercially available" required some kind of specific, i.e., "formal,"
announcement.
The IRS has produced a copy of the CSI press release which is on a
CSI letterhead, and which purports to announce the availability of both
systems for use with Control Data 3000 series equipment. As stated, the
document is dated one day before the closing date for receipt of initial
proposals. We cannot conclude, therefore, that this equipment was not
formally announced as required by the RFP.
5. Benchmark-Related Issues
KET complains that the IRS improperly reserved to itself the right
after best and final offers to benchmark equipment without defining the
nature of the benchmark in advance and without allowing IRS Control Data
3500 series equipment to be used to support the test. In KET's view,
any such test should be conducted before best and final offers so that
offerors may take the results of their tests into consideration in their
final proposals and correct deficiencies if there are any.
The provision complained of was set out as paragraph E.7.1.1 of the
RFP, which states:
At the Government's option, those responsive and responsible vendors
may be required to demonstrate in a pre-contract award operational test
that any equipment offered is indeed plug-to-plug compatible with the
(Control Data) equipment and operates so as to meet the requirements
called for in Section F of this document. The test will be conducted at
other than an IRS site. After contract award and upon installation, the
thirty day acceptance test defined in E.7.2 below shall be conducted.
We do not share KET's view that post-closing benchmarking should be
forbidden altogether. Benchmarking may impose a significant cost burden
on offerors, as noted in our decision in ADP Network Services Inc., 59
Comp.Gen. 444(1980), 80-1 CPD 339. To the extent that agencies by
limiting testing to firms tentatively selected for award, can reduce the
cost other vendors would otherwise incur, we see no basis for objection
to such a procedure. Cf. CompuServe Data Systems, Inc., B-195982.2, May
14, 1981, 60 Comp.Gen. 468, 81-1 CPD 374, indicating that postclosing
benchmarking is likely to prove inappropriate in the majority of cases.
In this regard, we view RFP paragraph E.7.1.1 as limited in scope-- as
permitting testing to determine whether the equipment offered by a
tentatively selected awardee would function when connected to a Control
Data 3500 computer and whether while connected it would perform the
specific functions described in the specification. Also, we do not find
objectionable the fact that there may have been some difficulty
encountered during the test in connecting CSI's equipment to the 3500
computer since CSI was able to satisfactorily connect the equipment,
which was the purpose of the test.
Regarding KET's view that the benchmark requirement was not
adequately defined, we know of no legal basis for requiring that the
specific content of a benchmark be published in advance for the benefit
of offerors who may not participate in it.
Further, and contrary to KET's fears, we do not believe the IRS could
have rejected equipment because it did not successfully accomplish a
task requested during the benchmark, unless the ability to do that task
was identified as a salient characteristic in the RFP or unless the IRS
first reopened negotiations with all offerors and amended the RFP to
require the capability to perform that task. Likewise, contrary to
KET's belief, the IRS could not reject an offeror's equipment if it
failed to perform a test because of some peculiarity of the 3500
computer used to support the test since the IRS permitted offerors to
select any Control Data 3500 to support the test.
Finally, KET argues that the IRS unreasonably refused to permit the
acceptability of proposed equipment to be shown through simulation, or
alternatively, to make IRS Control Data 3500 equipment available to
support such a test. Instead, the IRS required in the solicitation that
vendors make their own arrangements.
In a prior decision involving these parties, we sustained similar
complaints by KET regarding an IRS-required benchmark. KET,
Incorporated, 58 Comp.Gen. 38(1978), 78-2 CPD 305. Although the IRS
professes to see no reason why it should accede to KET's view and make
its equipment available, we concluded in our prior decision that the
IRS's insistence that KET furnish CDC 3500 equipment to support the test
was inconsistent with the Government's statutory duty to seek maximum
competition. We note, in this regard, that KET is only saying that the
IRS is requiring that a test be performed using specific supporting test
apparatus (i.e., a Control Data 3500 system) which due to limited
availability is readily available only at the IRS.
We do not believe, however, that KET can complain without showing
that it was in fact unable to perform the benchmark as provided in the
solicitation. CSI apparently used facilities at Walter Reed Medical
Center to run its benchmark. KET has not shown that it could not have
made similar arrangements, as it eventually did in connection with the
cited earlier case.
6. Other Issues
Control Data complains that the delivery schedule was relaxed for
CSI's benefit and that the IRS improperly failed to take into account
overlapping equipment rental in computing expected costs for CSI's
all-or-none alternative proposal.
Regarding overlapping costs, we have indicated generally that costs
relating to conversion from an incumbent contractor's system to a new
contractor's system must be identified in the RFP evaluation criteria if
they are to be considered. Informatics, Inc., B-194734, August 22,
1979, 79-2 CPD 144; Computer Data Systems, Inc., B-187892, June 2,
1977, 77-1 CPD 384.
Since such costs were not identified here, this portion of Control
Data's protest is denied.
With respect to the relaxed delivery scheduled, Control Data says
that had it known that the schedule would be relaxed, it could have
offered significantly lower pricing.
The IRS responds by stating that apart from an inadvertent error in
preparing the original CSI contract documents-- which the IRS says would
have been corrected had it not been overtaken by events after award--
the changes made arose as matters of contract administration which
should not be considered by our Office. The IRS attributes slippage in
the delivery schedule to the need for site preparation (such as
installation of electrical wiring) and to a need to accommodate
post-award changes by CSI in the physical (including electrical)
configuration of its equipment.
Our examination of the record indicates that the problem of schedule
slippage concerns primarily the disk and tape equipment. In this
respect, however, the record fails to support Control Data's contention
that the IRS actually knew or should have known before making award to
CSI that the schedule for installation of the tape and disk equipment
would slip. It has not been shown, therefore, that the IRS relaxed its
schedule requirement in making award to CSI or made award with the
intention of altering the schedule. A & J Manufacturing Company, 53
Comp.Gen.838(1974), 74-1 CPD 40.
As stated earlier, the protests are denied in part and dismissed in
part.
B-200277.2, June 24, 1981, 60 Comp.Gen. 543
Bids - Competitive System - Oral Advice Erroneous - Invitation for Bids
- Interpretation
Contracting officer erroneously advised potential bidders that they
were limited to offering individual prices for six items of laundry
equipment, and could not submit alternative bids based on award of more
than one item, unless specifically requested to do so by invitation for
bids, and unless alternative bid was based on award of no less than all
six items. However, bidder relied on erroneous oral advice at its own
risk. Bids - Responsiveness - Responsiveness v. Bidder Responsibility -
Commercial Usage of Equipment Requirement
Invitation for bids' "Successful Commercial Operation" clause
providing that no item of equipment would be acceptable unless equipment
of approximately same type and class had operated successfully for at
least one year appears to involve bid responsiveness and should have
been satisfied by material submitted with bid. Even if clause is
construed as relating to bidder's responsibility, it was not satisfied
when preaward inquiry of equipment users disclosed that item would not
be in use for one year until 2 months after award was made.
Matter of: Jensen Corporation, June 24, 1981:
Jensen Corporation protests the award to G. A. Braun, Inc. of a
contract for two items of laundry machinery for the Veterans
Administration Medical Center in Huntington, West Virginia, under
invitation for bids (IFB) M2-43-80, issued by the Veterans
Administration Marketing Center (VA). Jensen protests on the grounds
that it was deprived of the opportunity to bid competitively due to oral
advice it received from the contracting officer and that one item
offered by G. A. Braun was not in successful commercial operation for
one year as required by the IFB.
The IFB was issued on August 15, 1980, and bids were due September
15. On September 8, the contracting officer telephoned Jensen, among
other potential bidders, and "informed them that in my interpretation of
the Regulations and guidelines that I felt if a summary bid was called
for then they had to bid on all items to be considered for the summary.
I closed the conversation by adding that the bottom line was that the
solicitation had to be bid as it was issued, unless amended."
We understand that in some procurements of laundry equipment the VA
requires bidders not only to submit a price for each line item but a
"summary bid" for all items. This "summary bid" may total the amount of
the individual item prices or it may reflect a discount offered by the
bidder if considered for award of all items. The VA then awards the
contract, or contracts, on an individual item or "summary bid" basis
depending upon which results in the lowest cost to the Government.
The instant IFB called for bids on six different items of laundry
equipment and did not specifically request "summary" bids. Six bidders
competed: one bid on all six items, one bid on one item, three bid on
two items, and one bid on four items. Braun bid only on items 2 and 3,
upon which it bid $27,320 and $11,600, respectively, for a total of
$38,920. Alternatively, Braun offered a price of $32,000 if awarded both
items. Jensen bid on items 2 through 5 and was subsequently awarded a
contract for items 4 and 5, for which it was the low bidder.
For item 2, it bid $21,393 and for item 3 it bid $11,413, a total of
$32,806. Braun was awarded the contract for items 2 and 3 based upon
its alternative bid of $32,000. Jensen protested, stating that it would
have offered a price reduction based upon an award of items 2 and 3 but
for the contracting officer's oral advice.
The contracting officer apparently was under the impression that
bidders were limited to offering a price for each line item only, and
prohibited from offering alternative bids based upon the award of a
combination of items unless such alternative bids were (1) specifically
requested by the IFB and (2) were based on the award of no less than all
six items sought by the IFB.
The VA now concedes that the contracting officer's pre-bid oral
advice was in error, and that bidders such as Jensen were free to offer
alternate bids extending discounts based upon the award of any
combination of items.
The present IFB included Standard Form 33A, paragraph 3 of which
warns bidders that oral explanations or instructions given before the
award of a contract are not binding. The general rule in these
situations is that the bidder must suffer the consequences of its
reliance upon such advice. See e.g., Mor-Flo Industries, Inc.,
B-192687, June 5, 1979, 79-1 CPD 390. We will sustain a protest,
however, if it can be shown that as a result of the erroneous oral
advice effective competition was not achieved. Here, there were three
bids on Items 2 and 3: only Braun offered a discount if it was awarded
both items. Jensen asserts that it would have offered such a discount
but for the oral advice of the contracting officer. In this regard, the
contracting officer has provided us with a copy of a prior bid by Jensen
for three items of laundry equipment in which both individual item
prices and a price "summary" were solicited. Jensen's "summary" price
was simply the total of its individual item prices: no discount was
offered. Jensen, on the other hand, has referred to other past
procurements where it did offer a reduced price on a "summary" basis.
We can only speculate, at this point, as to whether Jensen would have
offered a discount in excess of $806, which would have made it the low
bidder, but for the advice of the contracting officer. Under these
circumstances we do not believe it has been shown that effective
competition was precluded to such an extent as to warrant sustaining the
protest.
Jensen further argues that Braun should not have been awarded item 3
because the firm's Model SPF small piece folder offered under that item
did not meet the "Successful Commercial Operation" clause of the
solicitation, which provides in part:
No item of equipment will be acceptable unless the manufacturer has
had equipment of approximately the same type, and class as that offered
which shall have operated successfully in a commercial or institutional
laundry in the United States for at least one year. * * *
Offeror to indicate Model Numbers and 3 sites where models are in
operation for each item bid: (TABLE OMITTED)
The record shows that two days prior to award, a VA employee called
three users of Braun's SPF folder and asked how long it had been in
operation and whether any problems had been experienced with it. All
those called responded that no problems had been encountered. However,
the one-year period would not be met until November 1980, approximately
two months after the expected date of award. Nevertheless, the
contracting officer determined that the one-year requirement would be
satisfied since it would have elapsed by the time the equipment was
scheduled to be delivered in late January or early February 1981. The
contract was awarded on September 25, 1980 and we understand the
equipment was in fact delivered in November 1980.
We have long recognized a distinction between solicitation
requirements related to a bidder's capability and experience and those
which are concerned with the history of a product's performance and its
reliability. See 52 Comp.Gen. 647, 649(1973). The experience of a
bidder has been treated as a matter of responsibility and, consonant
with the general rules governing responsibility determinations,
information bearing on that subject may be furnished after bid opening
and prior to award. On the other hand, information bearing on the
performance history of a product to be furnished involves a matter or
responsiveness and that information therefore must be submitted with the
bid. See 48 Comp.Gen. 291(1968), where we regarded as a matter of
responsiveness a requirement in an IFB for diesel engine generator sets
that the bidder show that the engines it proposed to furnish "shall have
performed satisfactorily in an installation independent of the
contractor's facilities for a minimum of 8,000 hours of actual
operation." That requirement, we stated, was directed to the past
operating experience and reliability of the engines offered rather than
to the experience and capability of the manufacturer.
The wording of experience clauses in solicitations varies enormously
and may include elements which pertain both to the bidder's
responsibility and to the responsiveness of its bid. See, e.g.,
B-175493(1), April 20, 1972, in which the IFB required that
"manufacturers bidding on the equipment must have at least five (5)
years experience" and "must have a quantity of the type offered in this
bid in satisfactory general public use for at least one year."
In our decision, we accepted the procuring agency's position that the
5-year requirement addressed itself to the responsibility of the
manufacturer and the 1-year requirement was addressed to the reliability
of the item.
Turning to the experience requirement in the present IFB, we note
that it pertains to "equipment of approximately the same type, and class
as that offered." When an experience requirement does not pertain
exclusively to the item being procured, but includes generally similar
equipment previously produced by the bidder, we have tended to regard it
as bearing on the bidder's responsibility. See, e.g., Carco
Electronics, B-186747, March 9, 1977, 77-1 CPD 172, where we so
interpreted a provision which read:
Bids will be accepted only from bidders who have built similar
simulators. Information submitted with bids must include a list of
simulators delivered, with organizations, addresses and the names of
individuals that may be contacted. * * *
See also United Power & Control Systems, Inc., B-184662, May 25,
1976, 76-1 CPD 340, at p. 6. Therefore, the use of the word
"approximately" lends at least arguable support for the conclusion that
the VA's experience clause concerned the bidder's responsibility.
In other respects, however, the provision appears to be concerned
with the reliability of the specific equipment to be supplied under the
contract-- a matter of responsiveness. We note the title of the clause,
"Successful Commercial Operation", refers to the equipment, not the
bidder. The clause then says that "No item of equipment shall be
acceptable * * * " unless the experience requirement has been met and
requires bidders to supply model numbers and three sites "where models
are in operation for each item bid." We realize the wording of the
latter provision does not necessarily require the bidder to list the
identical model as that offered in the bid: otherwise, it would read
"where models are in operation of each item bid." Nevertheless, it seems
to us that through this experience provision the VA was seeking to
assure itself that the equipment offered by the bidder had been proven
reliable through a year's successful operation in a commercial or
institutional environment, either in the identical configuration offered
by the bidder or one so similar that the reliability of the basic
components would be established.
Thus, it appears that the Braun model SPF folder should have had one
year's successful commercial operation as of the date of bid opening,
and as it did not, Braun's bid was nonresponsive as to that item and
should not have been accepted. Even if one regards the experience
clause as going to Braun's responsibility, however, and therefore could
be satisfied by information furnished after bid opening, we believe the
required experience would have to be accumulated prior to award.
That was not the case here: the contracting officer awarded the
contract based upon a projection that the equipment would continue to
operate successfully for the balance of the one-year period.
Although Jensen's protest is sustained as to this issue, corrective
action with regard to this procurement is not practicable since the
contract has been performed. We are bringing the deficiencies which we
have observed to the attention of the Administrator of Veterans Affairs.
B-200778, June 19, 1981, 60 Comp.Gen. 540
Appropriations - Interior Department - Availability - Grants - Surface
Mining Control - Program Authority
Under section 502(e)(4) of Surface Mining Control Act of 1977, 30
U.S.C. 1252(e)(4), Secretary of the Interior is authorized to reimburse
States for interim enforcement program costs not covered in prior grant
award so long as payments are from currently available appropriations.
Budget change to allow grant costs questioned solely because they exceed
condition on budget flexibility may be allowed under existing obligation
where change does not affect purpose or scope of grant award.
Matter of: Department of Interior - Office of Surface Mining -
Authority to Pay for Costs Not Part of Original Award, June 19, 1981:
A certifying officer for the Office of Surface Mining (OSM),
Department of the Interior, has requested our decision concerning
payment of certain costs incurred by the Ohio Department of Natural
Resources (the State) in carrying out provisions of the Surface Mining
Control and Reclamation Act of 1977, Pub. L. No. 95-87, 91 Stat. 4,
approved August 3, 1977, 30 U.S.C. 1201 et seq. (Supp. III, 1979) (the
Act). As explained below, we conclude that the Secretary of the
Interior has authority to reimburse the State for costs incurred in
conducting inspections enforcing the Act under an interim enforcement
program.
He may do so out of current appropriations and is not limited to the
amounts previously obligated or budgeted under grant documents covering
the period in which the costs were incurred.
According to the certifying officer, in July 26, 1978, the Office of
Surface Mining issued the State, under section 502(e)(4) of the Act, 30
U.S.C. 1252(e)(4), an interim regulatory grant of $370,541.75 for a
budget period, as subsequently amended, of August 3, 1977 to February
28, 1979. In June 1979, after the grant period had ended, an audit
disclosed that the State had incurred $490,640 in grant costs. The
auditors found that all of these costs were eligible for reimbursement
under the program, but questioned costs in excess of the award
($120,098) and costs ($62,404) where the grantee had exceeded its
approved budget flexibility without prior OSM approval. The State has
since submitted an amended application covering the original budget
period with an enlarged budget request of $487,317 or $116,775 in excess
of the original grant amounts. (We do not know why the State did not
request the total $490,640.) In November 1979, OSM approved the budget
changes that exceeded the budget flexibility previously given the State.
The certifying officer has asked the following specific questions:
1. Was it proper to approve the amended grant budget and is payment
to the State of Ohio proper for the additional $116,775?
2. If not, would it be proper for the State of Ohio to apply for a
new grant for $116,775 of additional costs incurred during the period
August 3, 1977, through February 28, 1979?
3. If the after-fact approval of Ohio's grant budget is not
allowable, should OSM pursue collection of $62,404 from the State of
Ohio for the difference between the audit report's eligible costs of
$308,138 and the grant payments of $370,542?
The certifying officer summarizes the issue in this case as--
* * * whether or not a State can be reimbursed for incurred interim
program allowable costs which are in excess of the total funds specified
in the grant agreement.
He goes on to note that his concern about payments in excess of the
original grant award stems from several of our decisions including 39
Comp.Gen. 296, 298(1959).
The Addition of $116,775 to the Grant
Normally grant programs are designed to provide grantees with advance
funding rather than reimbursements. The award under such grants creates
a fixed obligation against which the grantee is able to keep from the
advanced funds the allowable costs it incurs under the grant. When the
grantee's costs exceed the amount of the grant award, the grantee may
only be paid for such costs if there is a supplemental or new award that
creates an obligation sufficient to cover the excess costs. If such a
supplemental award is made from an appropriation that became available
only after the original grant appropriation had ceased to be available,
the supplemental award must meet the needs of the appropriation
available for obligation at the time the supplemental award is made.
The guiding principle in deciding whether an obligation is proper in
such situations is the extent to which Congress gave the Government
authority to pay costs incurred during the period in question. See 56
Comp.Gen. 31(1976); B-197699, June 3, 1979.
In the instant case, the grant to the State was made under Section
502(e)(4) of the Act, 30 U.S.C. 1252(e)(4) which provides:
(e) Within six months after the date of enactment of this Act, the
Secretary shall implement a Federal enforcement program which shall
remain in effect in each State as surface coal mining operations are
required to comply with the provisions of this Act, until the State
program has been approved pursuant to this Act or until a Federal
program has been implemented pursuant to this Act. The enforcement
program shall--
(4) provide that moneys authorized by section 712 shall be available
to the Secretary prior to the approval of a State program pursuant to
this Act to reimburse the State for conducting those inspections in
which the standards of this Act are enforced and for the administration
of this section.
This section clearly authorizes the Secretary to reimburse States
even for interim program costs not covered by a grant agreement when
they were incurred. While it may be administratively sound for OSM and
financially prudent for the State to agree upon the program before the
project is implemented, section 502(e)(4) permits the Secretary to look
back at the project and determine what costs he will allow even without
a prior commitment. Accordingly, in the case presented, OSM may
reimburse the State for any allowable costs attributable to the interim
enforcement program since the language of section 502(e)(4) provides a
clear statutory basis for such payments. On the other hand, since
section 502(e)(4) only makes money available to the Secretary to
reimburse the States, this section does not create a right in the States
to reimbursement. Accordingly, the Secretary also has discretion under
section 502(e)(4) not to reimburse the State for those costs that exceed
the existing project award.
The issue that remains concerning the funds to be added to the
program is not whether the Government is authorized to take the
contemplated action, but which appropriation will be charged with the
additional obligation resulting from the new award of funds to the
State. The appropriation under which the original grant award in this
case was made is no longer available for obligation. The fiscal year
1979 appropriation to carry out programs under the Act, 92 Stat. 1286,
expired on September 30, 1979. Section 308, Pub. L. 95-465, 92 Stat.
1303, October 17, 1978. Any additional obligations for the State's
interim program will have to come from currently available
appropriations.
The decisions that cause the certifying officer concern, such as 39
Comp.Gen. 296, supra, involve cases where changes in grants occurred
after the appropriation under which they were made had ceased to be
available for obligation. See also, 58 Comp.Gen. 676(1979); 57 id.
459(1978); 57 id. 205(1978). As we said at 57 id. 460 supra;
It is well established that agencies have no authority to amend
grants so as to change their scope after the appropriations under which
they have been made have ceased to be available for obligation.
By extension, agencies with program authority can change the scope of
grants if current appropriations are used.
The Changes in the Grant Budget
These decisions also have relevance to the certifying officer's
question concerning the post-audit approval of changes in grant budgets
that do not involve the addition of funds after the period in which the
original obligation was made, and which the Government could have
approved if prior approval had been sought. However, under normal
circumstances this is not the kind of change that affects the scope or
purpose of a grant so that the cited decisions would not preclude its
approval. On the basis of the facts in this case we see no reason to
conclude that the changed budget affects the scope or purpose of the
original award. Consequently, the original obligation can be applied to
the $62,404 of questioned costs that were approved in the amended grant
budget.
Conclusion
We conclude with respect to the two aspects of the certifying
officer's first question that (1) the $62,404 budget change approved
after the grant budget period had ended may be allowed under the
existing obligation and (2) payments to the State of the additional
$116,775 of allowable costs requested and not already the subject of an
award are within the discretion of the Secretary of Interior or those to
whom he has given his authority to act so long as they are made from
currently available appropriations. Such payments may be made under
amendments to the original grant documents or under a new application so
long as the payments conform to the regulations adopted by the
Department of Interior for this program.
B-201634, June 18, 1981, 60 Comp.Gen. 537
Pay - Service Credits - Reserves - Inactive Time - Service Points Earned
in Year of Active Duty - Proration Status
Navy officer retired under 10 U.S.C. 6323 may receive credit in the
multiplier used in computing his retired pay for the full 57 inactive
service points he earned in a year in which he also served on active
DUTY. WHILE ON ACTIVE DUTY HE WAS IN AN ACTIVE STATUS, NOT AN INACTIVE
STATUS, AND REGULATIONS governing the maximum number of points which may
be earned require prorating of maximum allowable only on the basis of
excluding periods of inactive status. Military Personnel - Record
Correction - Service Credits
Discrepancies in a Navy officer's service records which make it
unclear as to whether he is entitled to retirement credit for 11 days'
additional active service is a matter for consideration by the Chief of
Naval Personnel or the Board for the Correction of Naval Records.
Matter of: Captain James A. Zimmerman, USNR, Retired, June 18, 1981:
Captain James A. Zimmerman, USNR, Retired, requests review of our
Claims Group's settlement, dated September 23, 1980, which disallowed
his claim for additional retired pay.
By memorandum of May 20, 1975, Captain Zimmerman was informed by the
Office of the Chief of Naval Personnel that on November 1, 1976, he
would have completed 27 years and 7 months (28 years) of service
creditable for retired pay multiplier purposes. On the basis of this
statement, he concluded that he would complete 28 years and 6 months (29
years) of creditable service on October 1, 1977. Therefore, he selected
September 30, 1977, as his retirement date and was retired on October 1,
1977, pursuant to the provisions of 10 U.S.C. 6323(1976).
After receiving his first retirement check, the amount of which was
less than he anticipated, Captain Zimmerman consulted the Navy Finance
Center. He was informed that his service creditable for retirement
multiplier purposes, computed in accordance with 10 U.S.C. 1405,
pursuant to 10 U.S.C. 6323, totaled 28 years, 4 months, and 14 days,
which under section 1405 is counted as only 28 years' service since it
did not equal at least 28 years and 6 months.
Captain Zimmerman claims that his total creditable service is 28
years, 6 months, and 9 days, which under 10 U.S.C. 1405 would be counted
as 29 years. In reaching this result, he initially points out the
following discrepancies in the computation of the Navy Finance Center:
(1) the exclusion of credit for active service on January 4, 1960,
and
(2) the exclusion of credit for active service from January 7 through
January 17, 1981.
With regard to these claims of error, we note that the service
records, specifically the computation of Retirement Eligibility and
Credit and the NAVPERS Computation of Service for Retirement (Worksheet)
are in conflict with respect to these dates. However, even if Captain
Zimmerman is given credit for those additional 11 days' service, that
alone would not be enough additional credit to increase his service to
28 years and 6 months or more which could be counted as 29 years. If he
wishes to have the record clarified in that regard, he should submit the
matter to the Chief of Naval Personnel. If he is not satisfied with
that officer's determination he may request a correction of his records
by the Board for the Correction of Naval Records which, pursuant to 10
U.S.C. 1552, has the authority to correct errors in service records.
Captain Zimmerman also claims, on the basis of our decision in 34
Comp.Gen. 520(1955), that he was not given sufficient credit for
inactive service as a member of the Naval Reserve during his anniversary
year ending June 30, 1961. During this year the record shows that he
earned 57 inactive duty points each one of which is to be counted as a
day's service credit. Captain Zimmerman claims credit for the full 57
points credit for this year; however, on the basis that he was in an
active duty status for about 8 months during this year, the Navy has
prorated the point credit for this year giving him credit for only 17
points. If he is given credit for the other 40 points and the
conflicting statements of active service in his service records
mentioned above are resolved in his favor, he will have over 28 years
and 6 months of service credit which will be counted as 29 years.
Captain Zimmerman was retired pursuant to 10 U.S.C. 6323 under which
retired pay is based on 2 1/2 percent of his basic pay multiplied by the
number of years of service that may be credited to him under 10 U.S.C.
1405. As is relevant here, section 1405 provides that the member's
years of service are computed by adding--
(1) his years of active service;
(4) the years of service, not included in clause (1), (2), or (3),
with which he would be entitled to be credited under section 1333 of
this title, if he were entitled to retired pay under section 1331 of
this title.
Except for the two disputed periods mentioned earlier, Captain
Zimmerman has been given credit for his active service. As to inactive
service credit, under the provisions of 10 U.S.C. 1333(3), a member of
the Reserve is entitled to 1 day for each point credited to him under
clause (B) or (C) of 10 U.S.C. 1332(a)(2). Clause (B) of 10 U.S.C.
1332(a)(2) provides for crediting one point for each attendance at a
drill or period of equivalent training during a year, and clause (C)
provides for the inclusion of 15 points per year for membership in a
Reserve component of an Armed Forces. As is indicated above, in Captain
Zimmerman's June 30, 1961 anniversary year he earned a total of 57 such
points which the Navy credited only on a partial (prorated) basis.
The Navy is apparently applying the regulations found in article
3860520 of the Bureau of Naval Personnel Manual (BUPERSMAN) to require
prorating of the service concerned. Under paragraph 4a of that article
officers transferred to the Inactive Status List during an anniversary
year are to have their retirement points computed on a prorated basis.
This regulation appears to be based on 10 U.S.C. 1334(a) which provides
that service in an inactive status may not be counted in the
computations under 10 U.S.C. 1332 and 1333.
While "inactive status" is not specifically defined in the law,
"active status" is defined in 10 U.S.C. 101(25) as:
* * * the status of a reserve commissioned officer, other than a
commissioned warrant officer, who is not in the inactive Army National
Guard or inactive Air National Guard, on an inactive status list, or in
the Retired Reserve.
See also 10 U.S.C. 1335 which describes the inactive status list.
Rather than being in an inactive status during the period excluded by
the prorating, Captain Zimmerman was a Reserve officer on active duty
and, thus, was clearly in an active status. See BUPERSMAN, article
1880140-2 and 5, which indicates that members of the Naval Reserve on
active duty are members of the Ready Reserve which is an active status.
Therefore, Captain Zimmerman should be given full credit (without
prorating) for the 57 points he earned in the anniversary year ending
June 30, 1961. See 34 Comp.Gen. 520, 521(1955) (answer to question 2c)
and 36 Comp.Gen. 498(1957).
If Captain Zimmerman's service records are corrected to give him
credit for the additional active service he claims in 1960 and 1961, his
retired pay may then be computed based on 29 years of service rather
than 28 years. However, without a determination in his favor on that
matter, he still would not have sufficient service to entitle him to
additional retired pay.
B-203098, June 16, 1981, 60 Comp.Gen. 535
Contracts - Protests - Timeliness - Solicitation Improprieties - Grant
Procurements
Contention that grantee's solicitation provisions are improper will
not be considered on merits since basis of complaint was not filed
within reasonable time. To be considered by General Accounting Office,
complaint should have been filed prior to bid opening. Contracts -
Awards - Federal Aid, Grants, etc. - By or For Grantee - Minority
Business Utilization - Price Reasonableness
Solicitation provided that, if any bidder offered reasonable price
and met female-owned business utilization goal of one-tenth of 1
percent, grantee would presume conclusively that any bidder requesting
waiver of goal would be ineligible for waiver and award. Grantee, with
concurrence of grantor, arbitrarily rejected low bid ($243,000) and
accepted second low bid ($343,875) solely on reasonableness of second
low bid without any consideration of reasonableness of low bid and
insignificant impact that goal had on overall cost of work.
Matter of: ABC Demolition Corporation, June 16, 1981:
ABC Demolition Corporation (ABC) complains against the rejection of
its low bid in response to invitation for bids (IFB) No. CA-428 issued
by the Port Authority of Allegheny County, Pennsylvania (Port
Authority), for demolition of a parking garage. The project is 80
percent funded by the Urban Mass Transportation Administration,
Department of Transportation (UMTA).
UMTA concurred in the Port Authority's determination to reject ABC's
bid on the grounds that ABC failed to exert sufficient reasonable
efforts to meet minority business goals. ABC contends that the minority
business goals are unconstitutional and unenforceable and that the Port
Authority should have permitted ABC to change its bid after bid opening
to comply with the goals.
We find that the grantee's rejection of the low bid was arbitrary.
The IFB established a one-tenth of 1 percent goal for female-owned
business utilization and provided that, if after diligent and
conscientious effort the bidder could not reach the goal, the bidder
must submit a request for waiver with its bid. The IFB provided that if
any bidder offering a reasonable price met the goals, the Port Authority
would presume conclusively that all bidders failing to meet the goals
did not exert sufficient reasonable efforts and, consequently, would be
ineligible both for a waiver and for award of the contract.
ABC submitted the low bid at $243,000, but ABC requested a waiver
from the female-owned business utilization goal. The second low bid was
submitted by Crown Wrecking Company, Inc. (Crown), at $343,875, and the
Port Authority determined that Crown's bid was responsive and that the
price was reasonable. UMTA concurred with the Port Authority's
determination that Crown's price is reasonable. An estimate for the
work in the amount of $325,000, which is within 6 percent of Crown's bid
price was prepared by consulting engineers prior to bid opening. The
record also shows that two other bids were received in the amounts of
$385,000 and $363,700, which are within 13 percent of Crown's bid price
and the other two bids. The Port Authority determined that, under the
IFB's provisions, ABC's bid was not eligible for consideration. After
bid opening, ABC advised the Port Authority that its request for waiver
was no longer necessary since ABC was now able to meet the goal. The
Port Authority determined that ABC's effort to withdraw its waiver
request was too late to be considered. Subsequently, with UMTA's
concurrence, award was made to Crown.
ABC initially contends that the IFB's provisions regarding goals,
waivers, and conclusive presumptions are improper for several reasons.
However, ABC's complaint concerns alleged improprieties in the grantee's
solicitation which was not, but should have been, filed prior to the bid
opening. Accordingly, we conclude that this complaint was not filed
within a reasonable time and it will not be considered on the merits.
Caravelle Industries, Inc., 60 Comp.Gen. 414(1981), 81-1 CPD 317.
ABC contends that the conclusive presumption provision was
arbitrarily and capriciously applied by the Port Authority because
Crown's bid was not reasonably priced, since Crown's bid was 41.5
percent higher than ABC. We agree.
Both UMTA and the Port Authority apparently applied the conclusive
presumption and rejected ABC's bid solely on the reasonableness of
Crown's bid based on the close proximity of the Crown bid with the
Government estimate and the other two bids without any consideration to
ABC's bid price and the insignificant impact that the goal had on the
overall cost of the work.
The goal was one-tenth of 1 percent, whereas the difference between
ABC's $243,000 bid and Crown's $343,875 bid was just over $100,000.
This means that Crown's commitment to a goal of only $343 in terms of
its bid price resulted in an award in excess of $100,000 over the low
bid. We fail to see any rationale for UMTA's and the Port Authority's
determination that Crown's bid was reasonable as required by the terms
of the IFB. Further, neither UMTA nor the Port Authority present any
evidence to show that ABC's bid price was unreasonable. In contrast,
ABC states that its price is correct and contains a reasonable profit
for performing the work. Therefore, we find that UMTA and the Port
Authority arbitrarily rejected ABC's bid under the conclusive
presumption provision.
When this complaint was filed with our Office on April 29, 1981, the
complaint represented that if a decision were issued by the middle of
June any corrective action we found necessary would be possible. Based
upon this representation, we required expedited filings of arguments by
all parties. The record was closed after the last filing on May 26,
1981. We have now learned that as of June 12, 1981, approximately 50
percent of the work is completed. Therefore, we are unable to recommend
any corrective action, since it would not be in the Government's best
interest to do so.
However, by letter of today, we are bringing this matter to the
attention of the Secretary of Transportation so that appropriate
corrective action may be taken to prevent this impropriety in the
future.
B-201061, June 16, 1981, 60 Comp.Gen. 531
Officers and Employees - Transfers - Relocation Expenses - Real Estate
Expenses - Lump-Sum Payments - Third-Party Lending Institution
Employee may not be reimbursed for lump-sum payment to third-party
lending institution which prepared financial documents ultimately used
by loan originating institution for conditioned purpose of extending
credit to finance employee's purchase of home. Since fee paid to
third-party lending institution was stated as lump-sum payment for
expenses and overhead and is finance charge within the meaning of
Regulation Z (12 C.F.R.Part 226), reimbursement is precluded absent
itemization to show items excluded by 12 C.F.R. 226.4(e) from the
definition of finance charge.
Matter of: Ronald S. Taylor - Real Estate Expenses - Finance
Charges, June 16, 1981:
This action is in response to a request from Mr. John Gregg, an
authorized certifying officer with the General Services Administration
(GSA), regarding the propriety of certifying for payment an item on a
travel voucher for real estate expenses in the amount of $926.50 in
favor of Mr. Ronald S. Taylor, a GSA employee who was officially
transferred from Atlanta, Georgia, to Washington, D.C., effective
October 21, 1979. Pursuant to the analysis which follows, we conclude
that the $926.50 amount in question may not be certified for payment
since it is a finance charge, and does not qualify as a incidental
expense as contended by Mr. Taylor.
Briefly, the agency reports that Mr. Taylor sought mortgage financing
from the Metropolitan Mortgage Fund on or about March 12, 1980, in
connection with the purchase of his residence at the new official duty
station. Around April 21, 1980, he was notified that this loan had been
approved. During the interval, the VA mortgage rate ceiling was raised
to 12% and then 14%. Due to the high interest rate, Mr. Taylor
contacted Guild Mortgage Company which offered him a VA loan with a
guaranteed 13% interest rate.
Guild Mortgage Company pointed out that they could not meet the agreed
upon closing date of April 28, 1980, unless Metropolitan Mortgage would
release the documents they had acquired to Guild Mortgage. Metropolitan
Mortgage agreed to release the documents to Guild only if Mr. Taylor
paid them for their expenses and overhead for assembling the documents,
in an amount equivalent to the loan origination fee which would have
been charged had the loan been made by Metropolitan Mortgage. In this
regard the record contains a photostated copy of Mr. Taylor's personal
check in the amount of $926.50 payable to the Metropolitan Mortgage
Fund, and showing the memo notation "1% origination fee" on the face of
the check.
Mr. Taylor's voucher for real estate expenses totaled $2,239.87, of
which amount, $1,013.20 was reimbursed by the agency. The charge for
$926.50-- representing the payment to Metropolitan Mortgage Fund-- is
apparently the only unresolved issue and is the subject of our decision
here.
The agency's doubt concerning the $926.50 payment is expressed in the
record before us as follows:
Existing regulations (paragraph 2-6.2d, Part 6, FPMR 101-7) do not
allow for reimbursement of charges or expenses determined to be a part
of a finance charge under the Truth and Lending Act or Regulation Z
issued thereunder. The loan origination fee of $926.50 shown as a part
of Item 6, GSA Form 2494 covers the lender's overhead expenses in
preparation of documents and considered part of the finance charge.
Although, Metropolitan Mortgage Fund, Inc. prepared the documents and
received the $926.50 for that service the documents were transferred to
the ultimate lender, Guild Mortgage Company in order to grant the
mortgage. The origination fee of $926.50 may not be reimbursed since
the lender's overhead expenses are costs incident to the extension of
credit and are part of the finance charges under Regulation Z.
In support of his claim Mr. Taylor counters the agency's reasoning
contending as follows:
At no time during these proceedings was there ever a direct
connection between Guild Mortgage Company and Metropolitan Mortgage
Fund. Since no loan was obtained from Metropolitan Mortgage Fund, the
amount paid to them cannot be considered a finance charge or any form of
interest by any legal or other definition of the term. While it is true
that Guild Mortgage Company found the file prepared by Metropolitan to
be adequate to approve the loan and therefore did not charge me a loan
origination fee, that fact cannot have any bearing on the
characterization of the payment made to Metropolitan Mortgage Fund.
Furthermore, if the payment could be considered a finance charge it
would have to be itemized on the truth-in-lending statement provided at
closing. An examination of that statement shows no such charge.
Paragraph 2-6.2d of the Federal Travel Regulations (FPMR 101-7, May
1973) (FTR), defining which miscellaneous expenses are reimbursable in
connection with the purchase and sale of residences provides, in
pertinent part, that:
* * * no fee, cost, charge, or expense is reimbursable which is
determined to be a part of the finance charge under the Truth in Lending
Act, Title I, Public Law 90-321, and Regulation Z issued pursuant
thereto by the Board of Governors of the Federal Reserve System. * * *
The pertinent part of Regulation Z, 12 CFR Part 226, states:
226.4 Determination of finance charge.
(a) General rule. Except as otherwise provided in this section, the
amount of the finance charge in connection with any transaction shall be
determined as the sum of all charges, payable directly or indirectly by
the customer as an incident to or as a condition of the extension of
credit, whether paid or payable by the customer, the seller, or any
other person on behalf of the customer to the creditor or to a third
party, including any of the following types of charges:
(2) Service, transaction, activity, or carrying charge.
(3) Loan fee, points, finder's fee, or similar charge.
As a result, in determining whether or not a particular payment is a
finance charge, the statements of creditor-lending institutions just
like those of borrower-home buyers cannot simply be accepted as a final
legal characterization of the payment. Rather, agency reviewing
officials must examine the item in light of Regulation Z, 12 CFR
226.4(1980), and decisions of this Office. See Kenneth De Fazio,
B-191038, November 28, 1978.
Regulation Z makes it clear that payments to third-parties-- such as
Metropolitan Mortgage Fund in this case-- for services and charges
incident to the extension of credit for a specific real estate
transaction are to be included in determining the total of all finance
charges for that transaction. We believe it is correspondingly clear in
the present case that Guild Mortgage would not have extended credit--
within the meaning of Regulation Z-- without the documents compiled in
Mr. Taylor's case by Metropolitan Mortgage Fund. This follows from the
fact that the documents assembled and prepared by Metropolitan Mortgage
Fund were ultimately delivered to and used by Guild Mortgage as a
condition of and incident to extending credit to Mr. Taylor. Thus, in
the circumstances presented and in view of the fact that Guild Mortgage
did not charge for a loan origination fee because they were able to
utilize Metropolitan Mortgage Funds documents, we conclude that Mr.
Taylor's payment in the amount of $926.50 to Metropolitan Mortgage Fund
represents a finance charge within the meaning of Regulation Z and
therefore may not be reimbursed.
One additional observation attaches to this part of the analysis of
Mr. Taylor's claim. We have stated that a finance charge-- within the
meaning of Regulation Z-- is defined so as to distinguish between
charges imposed as part of the cost of obtaining credit and charges
imposed for services rendered in connection with a purchase or sale
regardless of whether credit is sought or obtained.
Only the latter may be reimbursed under the governing law, 5 U.S.C.
5724a(a)(4), and the aforementioned implementing regulation, FTR 2-6.2d.
Accordingly, we have held that there may be no reimbursement of a
lump-sum loan origination fee. However, if the lump sum fee includes
specific charges which would otherwise be reimbursable there must be a
specific list of the services and an allocation of the charges that
comprise the lump sum amount, and only those items that are specifically
excluded from the definition of a finance charge by 12 CFR
226.4(a)(1980), may be reimbursed. Anthony J. Vrana, B-189639, March
24, 1978.
In the instant case, the record does not contain any listings or
other explanation of the services or charges that comprise the lump-sum
amount of $926.50. Although Metropolitan Mortgage Fund stated that the
charge is to cover various expenses and overhead, those costs are not
listed and it cannot be determined whether or not they are excluded from
the definition of a finance charge. In that connection it is noted that
many of the items listed in subsection 226.4(e), as not comprising
finance charges, were paid by Mr. Taylor in addition to the lump-sum
payment to Metropolitan Mortgage Fund and where appropriate have been
reimbursed to him.
Thus we believe that it is clear that the lump-sum payment to
Metropolitan Mortgage fund represents a finance charge within the
meaning of Regulation Z (12 CFR 226.4(a), no part of which is
reimbursable absent itemization to show items excluded by 12 CFR
226.4(e) from the definition of finance charge.
Finally, although we believe that Mr. Taylor's claim has been
dispositively precluded by our analysis in regard to paragraph 2-6.2d of
the Federal Travel Regulations, in order to completely address Mr.
Taylor's contentions we would also point out that the $926.50 payment in
question does not qualify as an "incidental expense" reimbursable under
the following provision of paragraph 2-6.2 of the Federal Travel
Regulations:
f. Other expenses of sale and purchase of residences. Incidental
charges made for required services in selling and purchasing residences
may be reimbursable if they are customarily paid by * * * the purchaser
of a residence at the new official station, to the extent they do not
exceed amounts customarily charged in the locality of the residence.
As distinguished from finance charges imposed as part of the cost of
obtaining credit, incidental residence transaction expenses are
generally charges imposed for services rendered in connection with a
purchase or sale. Thus for example, we have held that where a termite
inspection or a roof inspection was required as a condition for
obtaining financing on the purchase of a residence, such inspection fees
are reimbursable as a required service customarily paid by the purchaser
as contemplated by paragraph 2-6.2f of the Federal Travel Regulations.
See Robert E. Grant, B-194887, August 17, 1979. However, in the present
case Mr. Taylor seeks reimbursement for unitemized expenses incurred by
a third-party lending institution in preparing documents which we find
were clearly related to and which all available evidence tends to show
were instrumental in his obtaining financing for his new home. As a
result, we are unable to conclude that the $926.50 payment to
Metropolitan Mortgage Fund was for a "required service" which was
"customary" in the locality of the new residence. Therefore, the
payment in question is not reimbursable as an "incidental expense" under
paragraph 2-6.2f of the Federal Travel Regulations.
In accordance with our decision here, Mr. Taylor's reclaim voucher in
the amount of $926.50 may not be certified for payment.
B-201598, June 15, 1981, 60 Comp.Gen. 528
Officers and Employees - Transfers - Relocation Expenses - Leases -
Unexpired Lease Expense - Nonreimbursable if Avoidable
Employee who enters into 1-year lease when on notice that he will be
transferred in 4 to 6 months may not be reimbursed lease termination
expenses payable under penalty clause of lease. Authority to reimburse
lease termination expenses is intended to compensate costs employee did
not intend to incur at time he executed lease and which he would not
have incurred but for his transfer, not costs employee could have
avoided or costs incurred knowingly after being advised that transfer
would occur.
Matter of: John M. Taylor-- Leases settlement costs, June 15, 1981:
The Chief Finance and Budget Officer of the Federal Highway
Administration, U.S. Department of Transportation, has asked us to
determine whether Mr. John M. Taylor may be reimbursed lease settlement
costs at his old duty station which arose incident to a permanent change
of duty station.
Although Mr. Taylor initially provided no documentation showing that the
lease settlement costs had actually been incurred, the documentation has
now been provided so that the only issue remaining is whether Mr.Taylor
may be reimbursed expenses associated with breaking a 1-year lease which
was entered into at a time when he had knowledge that he would be
reassigned in 4 to 6 months. The Finance and Budget Officer suggests
that, in order to avoid unnecessary expenses, Mr. Taylor should have
entered into a short-term occupancy agreement with no penalty for
departure. We find that the penalty expenses associated with early
departure in this case may not be reimbursed.
Mr. Taylor began his first permanent duty assignment under Federal
Highway Administration's Highway Engineer Training Program in the spring
of 1980 in St. Paul, Minnesota. From the outset he was advised that the
first phase of the training under the career development program would
last only about 4 months and that he would thereafter be transferred to
a different location to begin the second phase of training and
development. Even though Mr. Taylor knew he would be reassigned from
St. Paul well before 1981, he entered into a lease of a townhouse for a
year beginning in April 1980 and running through March 1981. The lease
contained provisions that a deposit of $175 would be forfeited upon any
non-performance of the lease (such as early departure) and that early
departure would, at the lessor's option, obligate Mr. Taylor for any
difference between the rent that would have been payable under the lease
and the net rent recovered by lessor by MEANS OF RE-RENTING THE
PREMISES. MR.TAYLOR WAS TRANSFERRED EARLY IN August 1980, and the lease
settlement costs questioned consist of the forfeited $175 security
deposit and an additional $583 representing rent for one and two thirds
months the townhouse was vacant before being rerented.
The authority for payment of residence transaction expenses incurred
in connection with relocations is contained in Chapter 2, Part 6 of the
Federal Travel Regulations (FTR) (FPMR 101-7) (May 1973). Paragraphs
2-6.1 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 * * * for
the settlement of an unexpired lease involving his residence * * * .
The conditions under which lease settlement costs are reimbursed are
further defined in paragraph 2-6.2h, which states:
h. Settlement of an unexpired lease. Expenses incurred for settling
an unexpired lease (including month-to-month rental) on residence
quarters occupied by the employee at the old official station may
include broker's fees for obtaining a sublease or charges for
advertising an unexpired lease. Such expenses are reimbursable when (1)
applicable laws or the terms of the lease provide for payment of
settlement expenses, (2) such expenses cannot be avoided by sublease or
other arrangement, (3) the employee has not contributed to the expense
by failing to give appropriate lease termination notice promptly after
he has definite knowledge of the transfer, and (4) the broker's fees or
advertising charges are not in excess of those customarily charged for
comparable services in that locality. * * *
In early July of 1980, Mr. Taylor gave the lessor notice of his
August departure. The Finance and Budget Officer states that this
notice was given promptly after Mr. Taylor had definite knowledge of the
date of his transfer and there is no indication that his best efforts
were not extended to mitigate damages. In fact the Federal Highway
Administration has indicated that Mr. Taylor complied with all the
provisions of paragraph 2-6.2h. Nevertheless, they question whether Mr.
Taylor may be reimbursed termination expenses under the provisions of a
1-year lease that he executed with the knowledge that he would be
transferred within a few months and, thus, with the certainty that he
would incur the lease termination costs claimed.
Under the particular circumstances, we agree with the agency's view
that the lease termination costs claimed should have been avoided in the
first instance and may not be reimbursed even though Mr. Taylor may have
complied, in a technical sense, with the obligation to minimize those
costs once incurred. The authority of 5 U.S.C. 5724a(a)(4) to reimburse
expenses of settling an unexpired lease is intended to compensate the
employee for costs he did not intend to incur at the time he executed
the lease and he would not have incurred had he not been transferred
within the period of his intended occupancy. Thus, an employee may not
be reimbursed for expenses chargeable at the expiration of a lease. 48
Comp.Gen. 469(1960). Where an employee executes a 1-year lease with the
knowledge that his occupancy will terminate within a few months and that
he will be subject by the terms of that lease to a penalty for early
termination, those anticipated termination expenses are not the type
that are intended to be reimbursed under FTR paragraph 2-6.2. Because
they are costs he knew would be incurred they are akin to expenses
chargeable at the expiration of a lease and may not be reimbursed.
This case is not to be regarded as a departure from our holding in
Juan R. Rodriques, B-190677, July 6, 1978. In that case we held that an
agency may not adopt a policy restricting its employees' right to
recover lease termination costs by requiring them to obtain leases that
provide no penalty when the employees have given 30 days notice of
departure. The Rodriquez case involved an agency-wide policy that
affected all transferred employees. It did not involve an employee who
entered into a lease for a term after having received definite notice
that he would be transferred before the expiration of that lease. To
the extent that the costs claimed by Mr. Taylor could and should have
been avoided in view of the facts known to him at the time he executed
the lease, they are similar to the real estate expenses for which
reimbursement was denied in Warren L. Shipp, 59 Comp.Gen. 502 (B-196908,
May 28, 1980).
In Shipp we held that an employee who had not contracted to sell his
former residence at the time he received notice of retransfer to the
former duty station where that residence was located was under an
obligation to avoid unnecessary expenses and could not be reimbursed for
real estate sale expenses subsequently incurred.
For the reasons stated above, the lease termination costs claimed by
Mr. Taylor may not be reimbursed.
B-199673, June 15, 1981, 60 Comp.Gen. 523
Compensation - Overtime - Early Reporting and Delayed Departure - De
Minimis Rule
Guards at Rocky Mountain Arsenal claim overtime compensation for time
spent in drawing out weapons and equipment. Where record does not
establish that duties required more than 10 minutes to perform, the
claim may not be allowed under 5 U.S.C. 5542. Preshift duties that take
10 minutes or less to perform may be disregarded as being de minimis.
Compensation - Overtime - Fair Labor Standards Act - Fractional Hours -
De Minimis Doctrine - Not Applicable
Guards claim they daily performed 15 minutes of preshift duties
incident to drawing out weapons and equipment. Where agency has failed
to record overtime hours as required by Fair Labor Standards Act, part
of claim may be allowed on basis that the record creates a just and
reasonable inference that security guards reported to work an average of
7 1/2 minutes prior to guard mount.
Matter of: Guards at Rocky Mountain Arsenal-- Overtime, June 15,
1981:
This matter is in response to a request for an advance decision by
Mr. S. Brink, Finance and Accounting Officer of the Department of the
Army, Rocky Mountain Arsenal (Arsenal), as to whether 74 former and
present security guards at the Arsenal, are entitled to overtime
compensation for their preshift activities.
The guards in question claim entitlement to overtime compensation
incident to their alleged performance of 15 minutes of preshift duties
for which they have not been compensated.
The claims of 65 guards were first received by our Claims Division on
April 16, 1979, the claims of 7 others on June 20, 1979, and the claims
of 2 others on November 14, 1979, and February 12, 1980. Section 71a of
title 31, United States Code, provides that every claim or demand
cognizable by the General Accounting Office shall be forever barred
unless received in this Office within 6 years after the date the claim
accrued. We have held that the date of accrual of a claim for the
purpose of the above-cited statute is to be regarded as the date the
services were rendered and that the claim accrues on a daily basis. 29
Comp.Gen. 517(1950). Thus, those portions of the individual claims
which accrued prior to 6 years from the date the claims were first
received in this Office are barred from consideration.
The administrative report states that work shifts for guards
commenced at 2400, 0800, and 1600 hours each day and that the guards
were required to assemble for "guard mount" 15 minutes prior to the
beginning of their workshift at which time roll call was taken and daily
orders and assignments were published. The guards were paid overtime
compensation for the 15-minute period spent at guard mount as well as
for the 15-minute period at the end of the workshift during which they
were required to turn in their weapons and equipment. The guards claim
compensation for an additional 15 minutes overtime based upon their
allegations that they were required to report to work 15 minutes prior
to guard mount in order to check out weapons, ammunition, and equipment
from the arms room. The agency report states that the arms room was
open for weapons issuance at least 15 minutes prior to guard mount.
The Army advises that prior to August 7, 1977, there was no
regulation, special order, or other written instruction which set forth
any required reporting time for guards prior to guard mount. However,
section 2-3 of the Security Police Handbook for the Rocky Mountain
Arsenal provided in pertinent part that each guard would be in formation
and ready for duty at the beginning of guard mount and that at that time
each guard would have in his possession his weapon, ammunition and all
other prescribed items of equipment. Effective August 7, 1977, the
Chief, Security Office, established a new policy where guard personnel
would report for duty 15 minutes prior to the beginning of each
workshift to draw weapons and equipment and stand guard mount. This new
written policy stated that no one would be required to report prior to
this 15-minute period for which they continued to receive overtime
compensation. Thus, the claims for overtime pay end on August 7, 1977.
Section 4 of the Security Police Handbook at the Arsenal provided in
part that side arms were to be drawn from and returned to the arms room
and that at no time would the weapon be removed from the arsenal when a
guard was not on official duty.
An agency investigating officer found that for the period prior to
August 7, 1977, some of the guard personnel arrived at the arms room 15
minutes prior to the beginning of guard mount but that the majority of
guards arrived within the 10-minute period immediately prior to guard
mount. This officer found that the guards were not issued equipment in
any established order and that the Arsenal did not keep any log or
record as to when each guard reported to the arms room. Based on its
investigation the agency reports that it took up to 2 minutes for each
guard to be issued his arms and equipment and that it took 10 to 15
minutes for the entire shift of 15 to 20 guards to be issued weapons and
equipment.
Overtime for Federal employees is authorized by title 5, United
States Code, and also by the Fair Labor Standards Act (FLSA), 29 U.S.C.
201 et seq. for employees who are not exempt from the FLSA. An
employee's entitlement to overtime compensation may be based on title 5,
the FLSA, or both.
Section 5542 of title 5, United States Code (1976) provides in
pertinent part as follows:
(a) * * * hours of work officially ordered or approved in excess of
40 hours in an administrative workweek, or * * * in excess of 8 hours in
a day, performed by an employee are overtime work and shall be paid for
* * * .
Only that overtime which is ordered or approved in writing or
affirmatively induced by an official having authority to order or
approve overtime is compensable overtime. See Winton Lee Slade B-186013,
September 13, 1976, and Baylor v. United States, 198 Ct.Cl. 331 at 359,
360(1972).
The controlling definition of what constitutes "officially ordered or
approved" overtime is found in Baylor v. United States, supra, where the
court states at 359:
* * * This case is important in that it illustrates the two extremes;
that is, if there is a regulation specifically requiring overtime
promulgated by a responsible official, then this constitutes "officially
ordered or approved" but, at the other extreme, if there is only a
"tacit expectation" that overtime is to be performed, this does not
constitute official order or approval.
In between "tacit expectation" and a specific regulation requiring a
certain number of minutes of overtime there exists a broad range of
actual possibilities, which is best characterized as "more than a tacit
expectation." Where the facts show that there is more than only a "tacit
expectation" that overtime be performed, such overtime has been found to
be compensable as having been "officially ordered or approved," even in
the absence of a regulation specifically requiring a certain number of
minutes of overtime. Where employees have been "induced" by their
superiors to perform overtime in order to effectively complete their
assignments and due to the nature of their employment, this overtime has
been held to have been "officially ordered or approved," and therefore
compensable. * * *
The agency report states that the preliminary duties performed by the
guards occurred with the knowledge, if not the inducement, of either or
both the Provost Marshall and the Chief of Security, who were the agency
officials with the authority to order or approve overtime. In view of
the administrative finding regarding the extent of the knowledge of
agency officials who were authorized to order or approve overtime and
since the Security Police Handbook expressly provided that each guard
would be in formation and ready for duty with his weapons and equipment
at the beginning of guard mount, we find that the guards' performance of
the preshift duties was induced by proper authority and thus "ordered or
approved" within the meaning of 5 U.S.C. 5542. We note that the agency
did not find that the guards were induced to report 15 minutes prior to
guard mount, or otherwise in accordance with any particular schedule.
Pursuant to the provisions of 4 CFR 31.7 we decide claims on the
basis of the written record and the claimant must bear the burden of
establishing the liability of the Government. Although the claimants
state thay they daily reported for duty 15 minutes prior to guard mount
in order to receive their weapons and equipment, the record does not
establish that they regularly reported or were required to report 15
minutes early or that the duties they were expected to perform prior to
guard mount took more than a few minutes per day. In view of the
agency's finding that it took at most 2 minutes for each guard to draw
his arms and equipment and in the absence of evidence showing the daily
reporting time for each guard, we can only conclude that it has been
established that each guard spent 2 minutes per day performing his
preshift duties. The fact that it took 10 to 15 minutes to issue
weapons and equipment for each shift does not establish the reporting
time of each guard. The mere assertion that particular amounts of
overtime were worked is not sufficient evidence to support a claim for
compensation under title 5, United States Code. See Lawrence J.
McCarren, B-181632, February 12, 1975.
The Court in Baylor held that preshift "hours of work" had to exceed
10 minutes per day or such work could be disregarded as being de
minimis, Baylor at 365. This de minimis rule has been uniformly applied
in decisions of this Office. See 53 Comp.Gen. 489(1974). Accordingly,
the claim for overtime compensation may not be allowed pursuant to 5
U.S.C. 5542 as the claimants have not established that they performed
more than 10 minutes of uncompensated preshift duties per day.
The Fair Labor Standards Amendments of 1974, Public Law 93-259,
approved April 8, 1974, extended FLSA coverage to certain Federal
employees effective May 1, 1974. Under 29 U.S.C. 204(f) the Office of
Personnel Management (OPM) is authorized to administer the provisions of
the FLSA.
Under the FLSA a nonexempt employee becomes entitled to overtime
compensation for hours worked in excess of 40 hours a week which
management "suffers or permits" to be performed. See para. 3c of
Federal Personnel Manual (FPM) Letter No. 551-1, May 15, 1974.
In view of OPM's authority to administer the FLSA with respect to
Federal employees we requested and received OPM's views on these claims.
In its report dated February 10, 1981, the Rocky Mountain Region of
the OPM advised that from the record it appears that the Arsenal guards
were required to at least be on the Arsenal's premises prior to guard
mount in order to check out weapons and equipment and that such time is
considered "hours worked" under the FLSA. In support of this
determination the OPM cites para. B of Attachment 4 to FPM letter 551-1,
supra, which provides in pertinent part that in general "hours worked"
includes all time that an employee is required to be on duty or on the
agency's premises or at a prescribed workplace.
The OPM has also advised that under the FLSA it is the employer's
responsibility to keep accurate records as to the hours worked by an
employee. The OPM states that since the Arsenal did not keep records of
the time spent by the guards in performing preshift duties, the BURDEN
OF PROOF IS ON THE AGENCY TO SHOW WHY THE CLAIMS ARE NOT warranted.
With the following qualification, we concur with this determination.
The FLSA requires employers to "make, keep and preserve such records
of persons employed by him and of the wages, hours, and other conditions
and practices of employment maintained by him." See 29 U.S.C. 211(c).
The courts have consistently applied a special standard of proof for
FLSA cases in which the employer has failed to meet his statutory duty
to keep accurate records. Under such circumstances, it is sufficient for
the employee to prove that he has in fact performed overtime work for
which he was not compensated and to produce sufficient evidence to show
the amount and extent of that work as a matter of just and reasonable
inference. The burden then shifts to the employer to come forward with
evidence of the precise amount of work performed or with evidence to
negate the reasonableness of the inference to be drawn from the
employee's evidence. If the employer fails to produce such evidence,
the court may then award damages to the employee, even though the result
be only approximate. Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680,
687-688(1946), and Hodgson v. Humphries, 454 F.2d 1279, 1283(1972).
We are unable to find that the plaintiffs have supported their claims
for overtime for preshift work in the amount of 15 minutes.
There has been no showing made that any or all of the claimants reported
15 minutes early or otherwise in accordance with any consistent
schedule. The record does not otherwise establish a just and reasonable
inference that any or all guards reported for duty 15 minutes prior to
guard mount on a daily basis. However, the agency found that it took up
to 15 minutes for each entire shift of guards to be issued their weapons
and equipment. Based on this and the agency's additional finding that
most guards reported within the 10-minute period immediately prior to
guard mount we believe that the record creates a just and reasonable
inference that the average reporting time of each guard was 7 1/2
minutes prior to the beginning of guard mount. This inference has not
been negated by the agency.
Unlike overtime entitlement under title 5, United States Code, the de
minimis doctrine is not applicable to compensation under the FLSA for
regularly scheduled overtime work. See paragraph A.2, Attachment 2, to
FPM Letter 551-6, June 12, 1975. Accordingly, those guards who occupied
positions designated as nonexempt under the FLSA are entitled to
additional compensation based on preshift work of an additional 7 1/2
minutes from May 1, 1974, to August 6, 1977. As stated above, under
FLSA, only those hours in excess of a 40-hour workweek, rather than an
8-hour workday, are compensable as overtime. 45 Fed.Reg. 85,665(1980)
(to be codified in 5 CFR 551.501(a)). Additionally, for FLSA purposes,
paid absences, such as leave or holiday, are not considered hours worked
in determining whether the employee has worked more than 40 hours in a
workweek. 45 Fed.Reg. 85,664(1980) (to be codified in 5 CFR
551.401(b)).
The employees may be allowed payment for overtime compensation for 37
1/2 minutes for each workweek they actually worked a full 5 days to the
extent set forth above.
B-199921, June 10, 1981, 60 Comp.Gen. 520
Appropriations - Deficiencies - Anti Deficiency Act - Violations -
General Services Administration - General Supply Fund
The inventory in the General Services Administration's (GSA) General
Supply Fund does not constitute a budgetary resource against which
obligations may be incurred. The Antideficiency Act, 31 U.S.C. 665, is
violated when obligations are incurred in excess of budgetary resources.
General Services Administration - Services for Other Agencies, etc. -
Procurement - Supplies, etc. - Requisitioning Agency Liability - Order
Cancellations
General Services Administration is authorized to pass on to
requisitioning agencies the costs of terminating contracts for the
convenience of the Government which the General Supply Fund might incur
as a result of order cancellations by those agencies.
Matter of: The General Services Administration's General Supply
Fund, June 10, 1981:
The General Counsel of the General Services Administration (GSA) has
requested our opinion on two questions concerning GSA's General Supply
Fund.
First, how should the provision of the Antideficiency Act contained in
31 U.S.C. 665(a) be applied to the General Supply Fund? Second, is it
proper for GSA to pass on the costs of terminating contracts for the
purchase of furniture to the agencies which cancelled their furniture
orders with the General Supply Fund?
GSA has a statutory duty to procure personal property and
non-personal services for the use of Federal agencies, 40 U.S.C.
481(1976). Congress established the General Supply Fund to assist GSA
in carrying out this duty, 40 U.S.C. 756(1976). Through the Fund, GSA
makes consolidated and bulk purchases of goods and services that are
commonly used by the agencies.
Apparently, GSA's normal procurement procedure is as follows: First,
GSA accepts orders, sometimes accompanied by advances, from its customer
agencies. Second, it makes contract with suppliers to fill those
orders. Third, it receives the goods from the supplier and makes
payment for them. Fourth, it delivers the goods to the customer agencies
and seeks reimbursement from them to the extent that previously received
advances are not sufficient to pay for them.
Because GSA maintains substantial inventories and because suppliers
are paid before customers make reimbursement, the General Supply Fund
frequently has cash flow problems. GSA reports that these problems have
recently become acute for a number of reasons. First, an extraordinary
demand was placed on the General Supply Fund to provide funds for
disaster and refugee relief in advance of reimbursement. Second, there
has been a general decrease in customer orders for items already in
inventory. Third, Congress rescinded $220 million which had been
available for the purchase of furniture by Federal agencies in fiscal
year 1980. This appropriation rescission means that agencies that
ordered furniture through the General Supply Fund will be unable to pay
for their orders or will be required to seek the return of the advances
they made to the Fund.
In the context of the General Supply Fund's current cash flow
problems, GSA asks our opinion on the applicability of the
Antideficiency Act to the Fund. The relevant provision of the
Antideficiency Act reads as follows:
No officer or employee of the United States shall make or authorize
an expenditure from or create or authorize an obligation under any
appropriation or fund in excess of the amount available therein; nor
shall any such officer or employee involve the Government in any
contract or other obligation, for the payment of money for any purpose,
in advance of appropriations made for such purpose, unless such contract
or obligation is authorized by law. 31 U.S.C. 665(a)(1976).
GSA wants to know if a violation of this provision occurs at the
moment when the cash assets, including advances, of the General Supply
Fund are exceeded by the amount of obligations which the Fund has to its
suppliers. It is GSA's position that no violation would occur at this
time because the General Supply Fund would not have been obligated "in
excess of the amount available therein."
GSA believes that the amount available for obligation in the Fund
includes inventory as well as cash, accounts receivable, and unfilled
agency orders. GSA states that when the value of the inventory is
treated as an asset, the total value of the Fund's assets easily exceeds
the obligations at any given time.
We cannot agree with GSA that it can obligate against the value of
inventory in the General Supply Fund. Office of Management and Budget
Circular No. A-34 specifically states that the inventory of a revolving
fund is not an asset which is available for obligation. The relevant
provision of that circular reads as follows:
66.3 Distinction between types of assets.
For purposes of budgetary accounting, a distinction is made between
those assets that constitute a budgetary resource (i.e., are available
for obligation) and those that do not. Budgetary resources include
cash, balances on deposit with the Treasury, accounts receivable, and
unfilled customers' orders, including advances received from others (to
the extent described elsewhere in this Circular). Other assets, whether
of a working capital nature such as inventories of stock or of a fixed
asset nature, are not considered a budgetary resource. Such assets,
therefore, do not enter into the determination of the unobligated
balances. * * *
In addition, this Office has held that obligations cannot be charged
against anticipated proceeds from the sale of property. 35 Comp.Gen.
356(1955).
Therefore, it seems clear that a violation of 31 U.S.C. 665 occurs at
the moment that obligations are incurred which exceed available
budgetary resources as defined by the OMB Circular. Of course, if
ordering agencies cancel existing orders, no violation for previously
recorded obligations occurs. GSA in that case may terminate contracts
entered on the strength of ordering agency orders. As discussed below,
such termination costs may be passed on to the ordering agency.
GSA's second question concerns the consequences of congressional
rescission of funds for the purchase of furniture. GSA believes that
the appropriation rescision may cause agencies to cancel furniture
orders placed with GSA but not yet filled. GSA states that in this
event it would have to terminate contracts for the convenience of the
Government. If this happens, GSA plans to apportion the termination
costs among the agencies that cancelled orders.
GSA cites as its authority for passing on termination costs the
following provision of the Federal Property and Administrative Services
Act.
Payment by requisitioning agencies shall be at prices fixed by the
Administrator. Such prices shall be fixed at levels so as to recover so
far as practicable the applicable purchase price, the transportation
cost, inventory losses, the cost of personal services employed directly
in the repair, rehabilitation, and conversion of personal property, and
the cost of amortization and repair of equipment utilized for lease or
rent to executive agencies. * * * 40 U.S.C. 756(b)(1976).
For the reasons that follow, we believe that GSA is authorized to
pass on its termination costs.
The General Supply Fund is intended, for the most part, to be a
self-sustaining revolving fund for the purchase of items for the
Government. Further, unfilled customer orders are classified by
Circular No. A-34 as "budgetary resources" which may be relied upon to
support General Supply Fund obligations and presumably such orders have
been recorded as obligations by the requisitioning agency. We believe
therefore, that the requisitioning agency, and not the Fund, should bear
the loss (i.e., the termination costs) when it cancels an order for
items for which the Fund has entered into a procurement contract or has
placed an order under an existing contract on behalf of the
requisitioning agency. On the other hand, the Fund should bear the
termination costs when it cancels orders entered into in anticipation of
agency needs, such as to build up the Fund's furniture inventory. In
other words, when an agency causes the contract termination costs by
placing a specific order and then cancelling it, that agency's
appropriations should bear the expense. This procedure maintains the
integrity of the General Supply Fund.
B-196853, June 10, 1981, 60 Comp.Gen. 517
Transportation - Household Effects - Overseas Employees - Transfers -
Advance Shipments - Incident to Completion of Service Agreement
An employee of Dept. of the Army serving in Korea returned 5,189
pounds of his household goods to his place of actual residence in New
York prior to his transfer from Korea. Upon a subsequent permanent
change of station he shipped 350 pounds of unaccompanied baggage from
Korea to new duty station in Virginia and requested reimbursement for
shipment of 10,860 pounds from New York to new duty station. His prior
shipment of household goods from Korea to place of actual residence is
authorized under 5 U.S.C. 5729(a) and Federal Travel Regs. but was in
lien of not in addition to, his later entitlement upon his transfer to
Virginia. Shipment of unaccompanied baggage from Korea and household
goods from New York to new duty station on subsequent change of station
is authorized by 5 U.S.C. 5724 and Federal Travel Regs. but may not
exceed cost of direct shipment from Korea to new duty station less the
amount previously paid for prior shipment from Korea to actual residence
in New York State under 5 U.S.C. 5729.
Matter of: Bohdan P. Gregolynskyi, June 10, 1981:
The issue presented in this case is to what extent an employee may be
reimbursed for shipment of household goods upon a permanent change of
station from Korea to Virginia where there had been a prior shipment of
the household goods from Korea to the employee's place of actual
residence in New York State almost 2 years before the change of station.
At the time of the change of station, unaccompanied baggage of 350
pounds was shipped from Korea to Virginia on a Government Bill of Lading
and the employee seeks reimbursement for 10,860 pounds of household
goods shipped at his own expense from the place of actual residence in
New York State to the new duty station in Virginia. The shipment upon
the change of station may not exceed the cost of direct shipment from
the old duty station to the new duty station less any amount previously
paid for shipment from the old overseas duty station to the actual place
of residence as a prior shipment under 5 U.S.C. 5729.
The matter was submitted by the Finance and Accounting Officer, Fort
Eustis, Virginia, for an advance decision on a voucher payable to Mr.
Bohdan P. Gregolynskyi. It has been assigned Control Number 79-36 by
the Per Diem, Travel and Transportation Allowance Committee.
Mr. Gregolynskyi, an employee of the Department of the Army with a
permanent duty station in Korea, received orders dated June 7, 1976, for
renewal agreement travel for himself and five dependents, and shipment
of household goods not in excess of 1,000 pounds from Seoul, Korea, to
Rochester, New York, and return. The travel orders, among other things,
indicated that Mr. Gregolynskyi would complete the minimum period of
service for the command in Korea on August 28, 1976, and that he had
signed a new transportation eligibility agreement on April 5, 1976, for
24 months. The orders of June 7, 1976, were amended by orders dated
August 23, 1976. The amended travel orders authorized the shipment of
household goods not in excess of 4,000 pounds. Mr. Gregolynskyi made a
shipment of 2,256 pounds of household goods in June 1976 and 2,933
pounds of household goods in October 1976 from Seoul, Korea, to
Rochester, New York. It also appears that the dependents did not return
to Korea after the renewal agreement travel but remained in the area of
Rochester, New York.
By orders dated May 4, 1978, Mr. Gregolynskyi was ordered transferred
from Seoul, Korea, to Fort Eustis, Virginia. Those orders authorized
the travel of dependents from Rochester, New York, to Fort Eustis and
shipment of household goods not in excess of 11,000 pounds from Seoul,
Korea, and Rochester, New York, to Fort Eustis. Mr. Gregolynskyi
shipped 350 pounds of unaccompanied baggage from Seoul to Fort Eustis.
He shipped 10,860 pounds of household goods from Rochester to Fort
Eustis at personal expense and has submitted a claim for reimbursement
based on the commuted rate in the amount of $2,195.36, which included in
addition to the 10,860 pounds of household goods at $20.10 per hundred
pounds, an appliance service charge at origin of $7.50 and at
destination of $5.
Transportation of household goods on renewal agreement travel is
specifically excluded in 5 U.S.C. 5728(a).
Therefore, to the extent that the orders of June 7 and August 23, 1976,
authorized shipment of household goods, such orders were in error.
However, Mr. Gregolynskyi's shipments from Seoul, Korea, to Rochester,
New York, in June and October 1976, were possible under the authority of
5 U.S.C. 5729(a) and FTR para. 2-1.5g(5)(a). Under that authority
shipment of the maximum authorized weight of 11,000 pounds is permitted.
There is no indication that the two shipments from Korea in 1976
exceeded the cost of shipping the total weight allowable in one lot.
See FTR para. 2-8.2d.
In view of the prior 5,189-pound shipment from Korea to the place of
actual residence almost 2 years before the change-of-station orders were
issued and the shipment of 350 pounds of unaccompanied baggage from
Seoul to Fort Eustis, a question arises as to what entitlement, if any,
the employee has for reimbursement of the shipment of 10,860 pounds of
household goods from Rochester, New York, to Fort Eustis, Virginia, upon
the change of station from Seoul to Fort Eustis.
The act of August 31, 1954, 68 Stat. 1008, which amended Section 7 of
the Administrative Expenses Act, presently codified in 5 U.S.C.
5729(1976), provides that the expenses of transportation of the
immediate family and shipment of household effects from the post of duty
of such employee outside the United States to place of actual residence
shall be allowed prior to the return of such employee to the United
States when the employee has acquired eligibility for such
transportation. Implementing regulations are contained in Federal
Travel Regulations (FPMR 101-7) para. 2-1.5g(5)(a) (May 1973). Such
transportation of both dependents and household goods is authorized even
though the employee does not return himself. See 36 Comp.Gen. 10 at
13(1956).
Further, as was pointed out in 36 Comp.Gen. 10, the 1954 amendment
was not intended to increase the allowances or benefits of employees
stationed overseas. It was merely to provide authority for the
Government to pay for transportation of the immediate family and
household effects of the employee in humanitarian or other compelling
personal circumstances even though the employee had not yet qualified
for such transportation. The act also provided Government financed
transportation when the employee was qualified for transportation by
virtue of his length of service overseas, but was not eligible for
issuance of return travel orders because he was not being separated or
reassigned at that time.
Thus, the return of dependents and household effects under the
authority of 5 U.S.C. 5729 is not in addition to, but in lieu of,
transportation which would otherwise be authorized upon the employee's
transfer or separation.
The shipment by Mr. Gregolynskyi of his goods from Seoul, Korea, to
Rochester, New York, in June and October 1976, even though it apparently
coincided with renewal agreement home leave, was authorized under the
provisions of 5 U.S.C. 5729(a) and FTR para. 2-1.5g(5)(a). Although the
transportation of household goods from Korea to New York State was in
two shipments, the amount which may be paid by the Government cannot
exceed the cost of transporting the property in one lot by the most
economical route. FTR para. 2-8.2d; B-187904, November 29, 1977;
B-187736, May 31, 1977; and B-173557, August 30, 1971. There is no
indication that the two shipments exceeded either the total authorized
weight limitations or the cost of shipping in one lot. When Mr.
Gregolynskyi received change-of-station orders from Korea to Fort
Eustis, entitlement under 5 U.S.C. 5724 and FTR para. 2-8.1 was to move
household goods to Fort Eustis, to the extent that his entitlement had
not previously been used by the transportation of those goods to
Rochester. Since he shipped 350 pounds of unaccompanied baggage from
Korea and Fort Eustis, he would only be entitled to ship 10,650 pounds
of household goods from Rochester to Fort Eustis. However, the total
cost of the two shipments could not exceed the cost of transporting the
property in one lot by the most economical route from Korea to Fort
Eustis less the amount previously paid for the prior return shipment to
the actual residence.
The voucher submitted is being returned for payment, if any, in
accordance with the above.
B-201164, June 8, 1981, 60 Comp.Gen. 510
Claims - Assignments - Contracts - Notice of Assignment - To Other Than
Federal Agencies, etc. Involved
Assignment of claim to proceeds under Federal Government contract
must be recognized by contracting agency and all other Federal
Government components including Internal Revenue Service (IRS), if
assignee complied with filing and other requirements of Assignment of
Claims Act, 31 U.S.C. 203, even though assignee failed to perfect
assignment under Uniform Commercial Code and similar State provisions.
56 Comp.Gen. 499, 37 id. 318, 20 id. 458, B-170454, Aug. 12, 1970, and
similar cases are overruled in part. Set-Off - Contract Payments -
Assignments - Claim Accruing But Not Matured Prior to Assignment - Right
to and Time for Set-Off
Where IRS (or other Federal entity) has claim against
contractor-assignor which arose before assignment was completed under
Assignment of Claims Act, amount of Federal claim may be set off against
amounts otherwise due to assignee, assuming absence of no set-off clause
in the contract. Assignee stands in shoes of assignor, Government's
right to set off tax debts of assignor that were in existence, even if
not yet mature, prior to date on which assignment became effective are
not extinguished by assignment, although actual set-off cannot be made
until tax debt matures. Set-Off - Contract Payments - Assignments - "No
Set-Off" Provision - Tax Debts - Set-Off Precluded
If Government contract contains a "no set-off" clause, Government
cannot set off tax debt of assignor under any circumstances.
Matter of: Priority between a Federal Tax Lien and an Assignment
under a Government Contract, June 8, 1981:
The former Administrator of General Services requested a decision on
whether a Federal tax lien or an assignment of a Government contract
pursuant to the Assignment of Claims Act (31 U.S.C. 203(1976)) has
greater priority.
The Administrator's request arose as a result of a disagreement
between the Administration (GSA) and the Internal Revenue Service (IRS)
over the relative priority of a Federal tax lien against a Government
contractor and the claim of the bank to which the contractor had
assigned his rights under the contract. Specifically, on December 8,
1977, the contractor, PAL Industries Inc., assigned all of the proceeds
due under a contract with GSA to the First Pennsylvania Bank. The bank
notified GSA of the assignment on February 3, 1978, and otherwise
complied with the requirements of 31 U.S.C. 203, the Assignment of
Claims Act of 1940, as amended. However, the bank did not file a
financing statement with the appropriate State office in Pennsylvania.
Pennsylvania law, modeled on the Uniform Commercial Code, requires that
such a statement must be filed in order to protect an assignee's
interest in accounts or contract rights. Pa. Stat. Ann. Tit. 12A, Sec.
9-302(1) (Purdon 1970).
On January 10 and February 14, 1979 (after tax assessments were made
against the contractor), IRS filed notices of tax lien for taxes owed by
the contractor for three tax periods ending in 1978 and one tax period
ending in December 1976. Although IRS sent GSA a notification of levy
on the unpaid contract proceeds in February 1979, GSA paid the balance
of the monies due on the contract to the assignor on October 2, 1979.
GSA based its decision that the assignment took precedence over the levy
on the fact that the assignment had been completed prior to the date of
the first tax assessment.
It is the view of IRS that its tax lien had priority over the
assignment and that GSA acted improperly in making any further payments
to the assignee after being notified of the tax lien against the
contractor-assignor. Although IRS is no longer asserting a claim
against GSA in this specific situation, it anticipates that this issue
will arise again. Both GSA and IRS are interested in having this issue
resolved. Accordingly, in addition to addressing the specific facts of
this case, our decision will also consider the priority of liens
question under several different factual situations.
The IRS position may be summarized as follows. An assignment which
is not perfected under local law at the time the IRS files a notice of
Federal tax lien does not have priority over the Federal tax lien. The
assignment falls within the definition of a security interest under
Internal Revenue Code (I.R.C.) Sec. 6323(h)(1), as an "interest in
property acquired by contract for the purpose of securing payment or
performance of an obligation * * * ." Lien priority between a security
interest and a Federal tax lien is determined by comparing the time the
security interest arose with the date that the notice of Federal tax
lien was filed. I.R.C. Sec. 6323(h)(1)(A). As previously noted, under
Pennsylvania law. modeled on the Uniform Commercial Code, a financing
statement must be filed in order to protect an assignee's interest in
accounts or contract rights. The First Pennsylvania Bank did not file a
financing statement and thus its security interest was not perfected.
An unperfected security interest is subordinate to the rights of a
person who becomes a lien creditor without knowledge of a security
interest and before it is perfected. Pa. Stat. Ann. Tit. 12A Sec. 9-301
(Purdon 1970). Failure to file a financing statement thus results in a
security interest being subordinated to a Federal tax lien. Sams v.
Redevelopment Authority, 435 Pa. 524, 261 A.2d 566(1970).
The IRS states that the only question remaining which could affect
its analysis of the relative priority between a Federal tax lien and an
assignment under Government contract is whether the provisions of 31
U.S.C. 203(1976) /1/ remove assignments of claims under Federal
contracts from the application of the Uniform Commercial Code (UCC).
Implicit in the IRS position is the assumption that the contract in
question did not contain what is generally referred to as a "no set-off
clause". In this connection, 31 U.S.C. 203 reads in pertinent part as
follows:
Any contract of the Department of Defense, the General Services
Administration, the Atomic Energy Commission, or any other department or
agency of the United States designed by the President, * * * may, in
time of war or national emergency proclaimed by the President (including
the national emergency proclaimed December 16, 1950) * * * provide or be
amended without consideration to provide that payments to be made to the
assignee of any monies due or to become due under such contract shall
not be subject to reduction or set-off, and if such provision or one to
the same general effect has been at any time heretofore or is hereafter
included or inserted in any such contract, payments to be made
thereafter to an assignee of any monies due or to become due under such
contract, whether during or after such war or emergency, shall not be
subject to reduction or set-off for any liability of any nature of the
assignor to the United States or any department or agency thereof which
arises independently of such contract, or hereafter for any liability of
the assignor on account of * * * (4) taxes, social security
contributions, or the withholding or nonwithholding of taxes or social
security contributions, whether arising from or independently of such
contract.
Having obtained a copy of the PAL Industries contract with GSA, we
have determined that such a no set-off clause was included in the
contract with the proviso (mirroring the statutory language) that the
clause only applies if the contract is entered into in time of war or
national emergency as defined in 31 U.S.C. 203. Although the National
Emergencies Act (Public Law No. 94-412, approved September 14, 1976, 90
Stat. 1255, 50 U.S.C.1601 et seq.) terminated (2 years thereafter) the
national emergency then in effect, section 502 of the Act (50 U.S.C.
1651) specifically provided that it did not apply to any of the powers
and authorities conferred under 31 U.S.C. 203 and 41 U.S.C. 15.
Accordingly, it is clear that the no set-off clause was a binding
provision in the contract between PAL Industries and GSA.
It is well settled that the presence of a no set-off clause in a
contract prohibits IRS or any other Government agency from making any
claim to the monies due the assignee under the contract. For example,
in 37 Comp.Gen. 318(1957) we said that the no set-off provision of the
Assignment of Claims Act, when part of a contract, "expressly nullifies
the effect of section 6321 of the Internal Revenue Code of 1954 * * * ."
Apparently IRS was unaware of the presence of the no set-off clause
when it contested GSA's refusal to recognize the validity of the IRS tax
lien, and is willing to concede that set-off is not permissible when
such a clause is included in a contract.
Therefore, although GSA's decision in this case to pay the balance of
the contract proceeds to the assignee was correct, we must still
consider the legal merits of the IRS position whenever a no set-off
clause is not included in a contract.
As indicated above, the essence of the IRS position (assuming the
absence of a no set-off clause) is that, since the assignment of the
claim on a Government contract under 31 U.S.C. 203 gives the assignee no
more than a "security interests" in the assignor's rights under the
contract, the assignment, until recorded and perfected under State law,
will be subordinate to the claim of any other party that becomes a lien
creditor, including the IRS, once it files a notice of Federal Tax lien.
For the reasons set forth hereafter, we disagree with the IRS position.
First, we think that the provisions of the UCC with respect to the
perfecting of an assignment are preempted by the provisions of the
Assignment of Claims Act as far as recognition by the Federal Government
is concerned. The Assignment of Claims Act sets forth the filing and
notice requirements that must be complied with by the assignee in order
to complete a valid assignment. Once the assignee has satisfied these
requirements and has notified the Federal contracting agency of the
assignment, his rights, at least insofar as any other claims by the
Federal Government are concerned, become fixed. Implicit in this
statement is the recognition that the Federal Government is a unit. If
the contracting agency is bound to acknowledge the assignment, a sister
agency may not disavow it. (It is not our intention to express any
position on whether the assignment of a claim under a Government
contract should be viewed as perfected without filing in accordance with
State law when the dispute only involves competing private claims. That
is a matter for litigation between the assignee and the non-Government
creditor, and in any case, is not at issue here.)
We turn now to the characterization of the assignee's interest in
payments due on a Federal agency's contract with the assignor as a
"security interest," as opposed to a more extensive property interest.
In the numerous cases of this type that this Office has considered,
involving conflicting claims by the assignee and a Government agency
(generally the IRS), we have always treated the assignment of a claim on
a Government contract as an outright and absolute sale of all of the
assignor's rights and property interest under the contract, and not as a
more limited transfer of a security interest. For example, in 37
Comp.Gen.at 320, supra, we said:
* * * (where the contract does not contain a no set-off clause) the
assignee stands in the shoes of the assignor and the Government may set
off against the assignee any claims of the Government against the
assignor which had matured prior to the assignment.
Southside Bank and Trust Company v. United States, 221 F.2d 813.
However, under the common law applicable to assignments, debts of the
assignor which mature after an assignment is made may not be set off
against payments otherwise due the assignee. 30 Comp.Gen. 458, 459, and
cases cited there.
These principles are applicable to a Federal tax indebtedness owed by
a Government contractor, apart from any lien which may exist. Where the
contract does not contain a no set-off provision it may well be that the
lien created by section 6321 of the 1954 Internal Revenue Code would
prevent the effective assignment of monies thereafter becoming due the
taxpayer under a Government contract. If the assignment of the contract
proceeds was made before the tax became due, there would be no property
or right to property owned by the taxpayer to which the lien could
attach, at least to the extent of the assignee's entitlement to such
proceeds.
In a similar vein, see 56 Comp.Gen. 499(1977); 30 Comp.Gen.
98(1950); 29 Comp.Gen. 340(1949); 20 Comp.Gen. 458(1941); and other
cases cited in those decisions. In other words, an assignor does not
retain any property interest in the assigned contract which would be
subject to attachment by any lien creditor, including the Federal
Government. See Monroe Banking and Trust Co. v. Allen, 286 F.Supp. 201
(N.D. Miss. 1968); United States v. Lester, 235 F.Supp. 115 (S.D. N.Y.
1964); United States v. Trigg, 465 F.2d 1264 (8th Cir. 1972); Lyon v.
Ty-wood Corp., 212 Pa.Super. 69, 239 A.2d 819(1968).
In all of our decisions in this area it has been our consistent
position, whenever a conflict arises between the assignee and the
Government, that the assignment of a claim under 31 U.S.C. 203 becomes
effective on the date the contracting agency receives notification of
the assignment. See 56 Comp.Gen. 499, supra; 37 Comp.Gen. 808(1958);
20 Comp.Gen. 458, supra; B-152008, September 10, 1963). Considering
the long-standing position of our Office, we do not believe that a
convincing legal case can be made for overruling our prior decisions and
imposing a new requirement that assignees must file notice of the
assignment within their States, as well as with the contracting agency,
in order to be assured of priority over a subsequent Government claim.
Moreover, even if we accept the IRS contention that an assignment of
a claim on a Government contract should be treated as the transfer of a
security interest, a strong argument could still be made that as far as
the Government is concerned, the assignment becomes effective as soon as
the contracting agency is notified. Under the UCC provisions adopted by
Pennsylvania, "an unperfected security interest is subordinate to the
rights of * * * a person who becomes a lien creditor without knowledge
of the security interest and before it is perfected * * * ." Pa. Stat.
Ann. Tit. 12a, Sec. 9-301(1) (Purdon 1970). Once the assignee notifies
the contracting agency of the assignment, as is required by 31 U.S.C.
203 in order for the assignment to become effective, the Federal
Government (again, viewed as a unit), has actual notice of the security
interest.
Therefore, a tax lien filed thereafter would not be entitled to
priority. See United States v. Hunt, 513 F.2d 129 (10th Cir. 1975);
and United States v. Ed Luck Construction Co. Inc., 504 F.2d 129 (10th
Cir. 1974).
There is one final issue to resolve. While we have held that the
assignment of a Federal contract becomes effective when the contracting
agency receives notification of it and the assignee otherwise complies
with the Assignment of Claims Act, it is not clear from our prior
decisions precisely when the IRS tax lien "arises." This is important
because under our theory of the assignment constituting a transfer of
all the rights of the assignor at the time of the assignment, it is
clear that he cannot transfer a greater right against the Government
than he possessed at that time. If he owed taxes to IRS before he
transferred his right to Government proceeds, the debt-- and the
Government's right to set it off-- is not extinguished.
Our prior cases have been somewhat inconsistent on this question.
For example, in 37 Comp.Gen. 318, supra, we said that the Government
could set off those debts of the assignor which had "matured" prior to
the date the assignment became effective. Also see 20 Comp.Gen. 458,
supra, B-170454, August 12, 1970, and most recently 56 Comp.Gen. 499,
supra. In determining the date on which the tax claim matured, this
line of cases generally looks to the date of assessment pursuant to
sections 6321 and 6322 of the Internal Revenue Code. In other words, in
these cases the Government could set off a tax claim against the
contract proceeds due the assignee, if the tax assessment against the
contractor had been made prior to the contracting agency's receipt of
notification of the assignment.
Another line of cases takes the position that as long as the tax
claim was in existence prior to notification of the assignment to the
contracting agency, even if it was not yet "matured" (i.e., was payable
by the contractor), the Government's right of set-off was preserved,
although the actual set-off could not be made until the tax debt had
matured. For example, in 37 Comp.Gen. 808, at 809, we said the
following:
It is conceded that a judicial line of authority exists to support
the contention that only those claims arising independently of the
contract which had matured, i.e., were actionable prior to receipt of
notice of assignment by the debtor, can be set off against the assignee.
That line of authority was followed and cited in the dicta contained in
our decisions at 20 Comp.Gen. 458; 37 Comp.Gen. 318. * * *
While there is unquestionable authority with regard to * * * (the)
position as to the necessity that the claim be matured prior to receipt
of notice of assignment, there is valid and learned authority to the
opposite effect. * * * Under (this) authority * * * the taxes, penalty
and interest for the third quarter of 1953 were properly set off since
the claim existed prior to notice of assignment and had matured at the
time set-off was actually made.
Also, see B-157394, October 5, 1965; B-150865, March 20, 1963; and
B-152008, September 10, 1963.
Thus, in all of these cases, we held that if the assignor's
obligation to pay the taxes in question had already come into existence
before the assignment was made and the agency notified, the tax claim
would have priority over the assignment even though the taxes were not
yet due when the assignment became effective. The relative merits of
these two theories were thoroughly discussed in B-152008, September 10,
1963. In that decision we said the following:
The rights of the Government in the instant situation may be viewed
in two ways. Firstly, the Internal Revenue Service might attempt to
assert a lien for unpaid taxes upon the accrued rentals under the
Internal Revenue Code, 26 U.S.C. 6321, 6322. Secondly, the United States
Government may exercise the common law right of any debtor to set off
amounts due from it to a claimant toward the extinguishment of that
claimant's indebtedness to the Government.
If this matter were to be disposed of solely with reference to the
first theory of the Government's position, the Bank might well prevail,
since as between two conflicting liens upon the same property the first
in time is first in right, and the assignment was perfected on January
16, 1963, whereas the tax lien does not arise until the time at which
the assessment is made by 26 U.S.C. 6322 and the earliest assessment in
this case was not effected until February 12, 1963.
But the rights of the Government here may be determined under the
second theory, that is, by the rules regarding the Government's right of
set-off at common law.
Debts owed by the assignor to the Government which arise after
perfection of the assignment may not be set off against payments due the
assignee, 20 Comp.Gen. 458, 459. Debts owed the United States by the
assignor which existed, whether matured or not, before notice of the
assignment was given the obligor, may, at the time they mature, be set
off against mature obligations owed by the Government to the assignor,
37 Comp.Gen. 808. An employer's obligation to pay the Government
amounts withheld from his employee's salaries for tax or social security
purposes comes into existence, irrespective of its inchoate character,
at the time the employee has completed earning the salary to which the
obligation applies, i.e., in general, on pay day, even though the actual
payment to the Government need not be made until later. During the
interim between the withholding and the satisfaction of the liability to
the Government, an employer holds the amounts involved as a constructive
trustee for the Government. Thus a notice of assignment received by the
Government does not render the assignee immune from set-off of newly
arising tax or social security withholding liabilities of the assignor
until the beginning of the pay period next following the pay period of
the particular employer during which notice of assignment is received.
In this case both the withholding tax obligation for the fourth
quarter of 1962 and the Federal Unemployment Tax obligation for the year
1962 were claims existing, even though not yet mature, at the time the
Notice of Assignment was received by the Post Office Department. That
part of the withholding tax liability for the first quarter of 1963
which came into being by virtue of the beginning of pay periods prior to
January 16, 1968, is likewise available to the Government for purposes
of set-off.
It is our view that the approach we followed in B-152008 is
preferable. Accordingly, whenever this situation arises in the future
(assuming the absence of a no set-off clause), the Government's common
law right to set-off a tax debt of the assignor that was in existence,
even if not yet due (mature), prior to the date on which the contracting
agency was notified of the assignment will not be extinguished by the
assignment, although the actual set-off cannot be accomplished until the
tax debt matures.
Although we recognize that the priority issue is not moot with
respect to the PAL Industries case, we will illustrate the above holding
by reference to the facts in that case. (For purposes of the
illustration, we will assume, contrary to fact, that the contract did
not have a no set-off clause.)
The assignment to First Pennsylvania Bank became effective on
December 2, 1977, when GSA received notification of it. Although the
dates on which the tax assessments against the contractor were made, as
well as the date on which the Federal tax lien was filed (and on which
GSA received the notice of tax levy) occurred after the date of the
assignment, it appears that a portion of the taxes involved was payable
for the tax period ending December 1976. Accordingly, since the tax
debt for the period ending December 1976 came into existence prior to
the date on which GSA received notification of the assignment,
application of the priority rules set forth above would have required
GSA to setoff that amount against the contract proceeds otherwise
payable to the assignee.
To the extent that anything we have said in any of our prior
decisions is inconsistent with our conclusions herein, those decisions
are modified accordingly.
/1/ The question as posed by the IRS refers to the Anti-Assignment
Act, at 31 U.S.C. 203, and the Assignment of Claims Act at 41 U.S.C. 15.
We assume that in referring to the Anti-Assignment Act, the IRS means
the first paragraph of 31 U.S.C. 203, which prohibits assignments. The
remainder of 31 U.S.C. 203 is the Assignment of Claims Act of 1940, as
amended. The latter Act is also classified to 41 U.S.C. 15.
B-199690, June 4, 1981, 60 Comp.Gen. 504
Contracts - Specifications - Restrictive - Weight Limitation - Hazardous
Materials
Protester's contention that Air Force 0.75-pound cylinder weight
limitation is unduly restrictive of competition because Navy buys
protester's 1.25-pound cylinder for similar use is denied. Navy
determination that heavier cylinder meets its minimum needs does not
preclude Air Force from considering particular use of equipment under
operating procedures and conditions different from Navy. Transportation
Department - Regulations - Hazardous Materials - Compliance
Determination - Military Procurements
Protest that solicitation item description eliminates cylinder safety
test requirements and allows use of cylinders not designed,
manufactured, marked, or shipped in accordance with Department of
Transportation (DOT) regulations on hazardous material is denied.
Contracting activity has provided for adequate testing, and DOT
regulations provide that material consigned to Department of Defense
(DOD) must be packaged either according to DOT regulations or in
container (cylinder) of equal or greater strength and efficiency, as
required by DOD regulations. Contracting agency has determined that
cylinders meet or exceed DOT requirements and need not apply for DOT
exemption. Contracts - Protests - Award Approved - Prior to Resolution
of Protest
General Accounting Office will not question agency decisions to make
award prior to resolution of protest where decision was made in
accordance with applicable regulations.
Matter of: Sparklet Devices, Inc., June 4, 1981:
Sparklet Devices, Inc. (Sparklet), protests the contract awarded to
American Safety Flight Systems, Inc. (American), for inflation
assemblies to be used in survival kits for aircraft ejection systems,
under invitation for bids (IFB) No. DLA700-80-B-0828, issued on behalf
of the Department of the Air Force by the Defense Logistics Agency
(DLA).
Sparklet's protest concerns the carbon dioxide cylinders used in the
assemblies which inflate a life raft during pilot descent from an
airplane. The protester contends that the IFB schedule item description
of the assemblies is restrictive of competition, limits bidders to a
single design which does not reflect the Government's minimum needs, and
allows use of cylinders which are not designed, manufactured, marked, or
shipped in accordance with the Department of Transportation (DOT)
requirements on hazardous material-- all in violation of Defense
Acquisition Regulation (DAR) Secs. 1-201(a), 2-101(i) and 2-102.1(a)
(1976 ed.) and DOT regulations set forth in 40 Cfr parts 100-199(1979).
Sparklet did not bid, but filed its protests with DLA and our Office
prior to bid opening. After review by the Air Force engineering support
activity, DLA advised Sparklet that the item description would not be
changed and that its protest was denied.
DLA received bids from American and The Bendix Corporation (Bendix).
American was the low bidder at $143.32 per assembly, and DLA awarded the
contract to American during the course of the protest. Sparklet also
objects to the fact that the award was made prior to the resolution of
its protest, notwithstanding Sparklet's offer to supply DLA's urgent
requirements during the interim.
The protest is denied.
The IFB item description, as amended, requires inflation assemblies
in accordance with Military Specification Nos. MIL-I-87108(USAF), June
1, 1977 (Air Force specification), and MIL-C-7905E, December 14, 1979
(cylinder specification). Paragraph 3.9 of the Air Force specification
provides that:
The weight of the inflation assembly, with the cylinder charged with
.050 pound (plus or minus 0.01 pound) of carbon dioxide, shall not
exceed 1.61 pounds.
Sparklet argues that the amended IFB item description precludes the
furnishing of a suitable cylinder which DLA is currently buying from
Sparklet for the Department of the Navy. The protester asserts that the
cylinders differ only in weight and construction; the cylinder required
by the IFB is welded and limited to 0.75 pound in weight, while the
Sparklet cylinder is of seamless construction and has a maximum weight
of 1.25 pounds. Sparklet insists that the prescribed 1.61-pound
assembly weight limitation can only be met by using a 0.75-pound
cylinder which requires welded construction. The protester contends
that DOT regulations concerning carbon dioxide cylinders do not allow
welded construction, except on nonreusable cylinders made to DOT
Specification 39, 49 CFR 178.65(1979), unless an exemption has been
OBTAINED PURSUANT TO 49 CFR PART 107(1979).
Sparklet further contends that the combined Air Force and cylinder
specifications eliminate normal cylinder specification requirements for
safety demonstrations, including endurance, flattening, macrostructure,
fragmentation resistance, vibration and physical properties. Also the
amended item description, which eliminates the fragmentation resistance
and product qualification requirements of the cylinder specification,
obviated conformance with DOT requirements without DOT's approval.
The protester concludes that it cannot knowingly supply an item which
does not meet military specifications or standards and violates DOT
regulations because contractors are liable for violation of DOT
regulations.
Sparklet argues that the IFB item description prevented it from bidding
and that if DOT regulations can be ignored, the IFB should so state in
order to permit all bidders to bid on an equal basis without fear of
violating Federal regulations. The protester insists that if DLA and
the Air Force persist in using the item description in question, the
Government should hold the contractor harmless and assume liability.
DLA explains that prior to June 1977, the inflation assembly was
purchased on a sole-source basis from Bendix. The Air Force purchased
the data from Bendix and developed the Air Force specification for
competitive procurement.
DLA takes the position that cylinders manufactured in accordance with
the Air Force specification equal or exceed the strength and efficiency
of cylinders conforming to DOT regulations and, therefore, qualify for
shipment under the following DOT regulation:
(a) Shipments of hazardous materials offered by or consigned to the
Department of Defense (DOD) of the U.S. Government must be packaged,
including limitations of weight, in accordance with the regulations in
this subchapter or in containers of equal or greater strength and
efficiency as required by DOD regulations. Hazardous materials shipped
by DOD under this provision may be reshipped by any shipper to any
consignee provided the original packaging has not been damaged or
altered in any manner. 40 CFR 173.7(a)(1979).
Contrary to Sparklet's contentions, DLA states that the cylinder
specification requires cylinder testing for burst pressure comparable to
the DOT specifications. DLA reports that the Air Force purchased more
than 50,000 lightweight cylinders from Bendix between 1963 and 1977 and
experienced no shattering or other problems, including during combat
use. In eliminating the fragmentation resistance and product
qualification requirements of the cylinder specification from the Air
Force specification. DLA states that the Air Force determined that the
first article testing and quality conformance inspection requirements of
both specifications are sufficient to assure the quality of the
assemblies, citing DAR Sec. 1-1109(a)(2) (1976 ed.) and B-166570, June
16, 1969.
DLA notes that although the protester alleges that the 0.75-pound
cylinder weight can only be met by using welded construction, Sparklet
does not argue that it could not meet this requirement by using welded
construction or that the requirement can only be met by a single
manufacturer. DLA states that Sparklet did compete, albeit
unsuccessfully, on a prior similar solicitation. The contracting agency
emphasizes the fact that it did receive two responsive bids on the
instant IFB.
DLA states that according to the Air Force engineering and design
experts, the 0.75-pound cylinder weight limitation is necessary to
decrease the overall weight of the survival kit, to help alleviate
center-of-gravity problems in the ejection system, and to minimize the
probability of injury to aircrew members during descent and entry into
water.
The agency further explains that because the cylinder is the largest
single item on the life raft, an increase in its weight or size
adversely affects the weight of the kit and increases its potential to
inflict injury. DLA therefore concludes that there are valid reasons
for the weight limitation and the fact that Sparklet is unable or
unwilling to compete for the IFB requirements does not render the weight
limitation unduly restrictive of competition. The agency cited our
decisions in Audiometer Corporation of America, B-194557.2, January 4,
1980, 80-1 CPD 14; D&S Word Processing Systems, B-194247, June 25,
1979, 79-1 CPD 451; J. S. Tool Co., Inc., B-193147, March 7, 1979, 79-1
CPD 159; and Constantine N. Polites & Co., B-189214, December 27, 1978,
78-2 CPD 437.
Finally, DLA recognizes that the contracts under which Sparklet is
furnishing its cylinder to the Navy permit a maximum weight of 1.25
pounds, and that the Army also uses Sparklet's cylinders. However, the
Navy's typical ejection is a low-altitude ejection off the deck of a
carrier and the raft is not inflated until it is in the water. Under
the Air Force procedures, the raft is inflated at high altitudes during
descent; therefore, Air Force concerns regarding the weight of the
cylinder differ from those of the Navy because of different operating
procedures.
Procuring agencies are required, pursuant to DAR Sec. 1-1201(a) (1976
ed.), to state specifications in terms which will encourage maximum
competition and still satisfy the agency's actual minimum needs. We
have consistently stated that a procuring activity is to be accorded
broad discretion in determining its needs because Government procurement
officials, familiar with the particular conditions under which equipment
has been and is to be used, are in the best position to know the
Government's actual needs and to draft appropriate specifications. D&S
Word Processing Systems, supra; J. S. Tool Co., Inc., supra. When a
protester challenges a specification as unduly restrictive of
competition, the agency must establish prima facie support for its
contention that the restrictions imposed are reasonably related to its
needs, but the protester retains the burden of showing that the
requirements complained of are clearly unreasonable, Oshkosh Truck
Corporation, B-198521, July 24, 1980, 80-2 CPD 161; Constantine N.
Polites & Co., supra.
Sparklet has failed to meet its burden of proof. Initially, the fact
that the protester's cylinder is used by the Navy or any other Federal
department or agency is not sufficient to show that the Air Force
requirement is unreasonable.
We have recognized that agency technical judgments with respect to
similar needs can reasonably differ. Security Assistance Forces &
Equipment International, B-199757, November 19, 1980, 80-2 CPD 383;
Constantine N. Polites & Co., supra. The record shows that the
operating procedures and conditions in which the Air Force uses the
assemblies are different from those under which the equipment is used by
the Navy.
Although the Air Force states that the 1.25-pound cylinder is
acceptable for use as a substitute only when the preferred cylinder
cannot be obtained because a heavier cylinder is better than no
cylinder, we believe that the reasons stated by the Air Force adequately
support its contention that the 0.75-pound cylinder is better than no
cylinder, we believe that the reasons stated by the Air Force adequately
support its contention that the 0.75-pound cylinder weight limitation is
reasonably related to the agency's needs. Where, as here, the sole
purpose of the equipment is to save lives, we are not prepared to
conclude that the specification exceeds the Government's needs for the
procurement. Oshkosh Truck Corporation, supra; 52 Comp.Gen. 801,
806(1973). Neither can we conclude that the cylinder weight restriction
prejudices Sparklet to any degree, because all bidders were subject to
the same requirement.
Contrary to Sparklet's interpretation of the IFB item description,
the cylinder specification retained endurance, flattening,
macrostructure, vibration and physical properties testing requirements.
Only the provisions regarding product qualification and fragmentation
resistance were eliminated from the cylinder specification. However,
the Air Force specification for the inflation assembly contains testing
requirements which are applicable to the contractor. We have held that
the contracting agency's responsibility for determining its actual needs
includes the determination of testing requirements requisite to assure
that the product offered does in fact meet those needs. B-166570, June
16, 1969. The agency may, for example, choose to ascertain the
acceptability of the equipment by requiring first article testing or
product qualification. B-166570, June 16, 1969; see Sparklet Devices,
Inc., B-182580, April 3, 1975, 75-1 CPD 197.
Bendix states that it produced 50,000 lightweight cylinders over a
17-year period with no report of accident or injury due to cylinder
failure, that the endurance, flattening, vibration, and other test
requirements were completed and reported for those cylinders and that
Bendix obtained DOT approval for shipment of the lightweight design,
charged cylinders and shipped 39,000 of them under DOT Special Permit
No. 3888 which was renewed six times. We have informally ascertained
from DOT that the permit, issued under 49 CFR 173.22(a)(1)(1967),
authorized Bendix to ship cylinders in compliance with an earlier
version of the instant cylinder specification (MIL-C-7905C).
In 1974, when Bendix sought to renew the permit, however, DOT did not
extend it on the basis that the agency had been advised by Headquarters,
Military Traffic Management Service, Washington, D.C., that all future
shipments of cylinders would be made under provisions similar to the
above-quoted 49 CFR 173.7(a)(1979).
Insofar as Sparklet is concerned with DLA and Air Force compliance
with DOT regulations, we concur with DLA that the cylinders may be
shipped pursuant to 40 CFR 173.7(a)(1979). For purposes of the DOT
regulations, the cylinders constitute shipping containers for the carbon
dioxide. In terms of this procurement, the DOT regulation provides that
carbon dioxide consigned to the Department of Defense (DOD) must either
be packaged (1) according to DOT regulations or (2) in containers (here,
cylinders) of equal or greater strength and efficiency, as required by
DOD regulations. The DOD regulation referred to is a Tri-Service
Regulation, "Policies and Procedures for Hazardous Materials Package
Certification," November 2, 1979, identified within DLA as Defense
Logistics Agency Regulation (DLAR) 4145.37. The regulation establishes,
among other things, certificate of equivalency (COE) procedures pursuant
to which an approval is issued by the responsible DOD command that the
proposed packaging for shipment of hazardous material or item equals or
exceeds the requirements of 49 Cfr parts 100-199. DLAR 4145.37 Secs.
3(b) and 5(b) (1979).
DLA states that it has determined that the lightweight cylinders in
question do equal or exceed the strength and efficiency required by DOT.
In so doing, DLA chose to comply with the latter of the alternative
requirements of DOT regulation 49 CFR 173.7(a); therefore, there is no
need to apply for an exemption under 49 C.F.R. 107.103(1979), contrary
to Sparklet's view.
Finally, we find no basis to question DLA's decision to award the
contract while the protest was pending. DLA has presented evidence to
show that the determination to award based on the urgent need to
replenish diminished stock was approved at an appropriate level above
that of the contracting officer and our Office was so notified, as
required by DAR Sec. 2-407.8(b) (1976 ed.). We have held that where a
contracting agency has taken the steps outlined above, the determination
to proceed with an award prior to the resolution of the protest is not
subject to question by our Office. D&S Universal Mining, Inc.,
B-199441, November 19, 1980, 80-2 CPD 381; SAI Comsystems Corporation,
B-196163, February 6, 1980, 80-1 CPD 100.
The protest is denied.
B-201918, June 2, 1981, 60 Comp.Gen. 501
Defense Acquisition Regulation - Deviations - Approval Authority -
Transportation/Storage of Household Effects
Protest that solicitation provisions which deviate from standard
Defense Acquisition Regulation (DAR) clauses are improper because DAR
Council approved only a "service test," rather than a deviation, is
without merit where record shows that, regardless of how modifications
were characterized, DAR Council carefully reviewed request for change
and, in approving service test, met all requirements for approving
actual deviation.
Matter of: Crown Transfer Co., June 2, 1981:
Crown Transfer Company (Crown) protests the award of any contract
under invitation for bids (IFB) DAHC30-81-B-0021 issued by the
Department of the Army.
The IFB is for the movement and storage of household goods within
certain designated areas.
Crown's primary basis of protest is that the solicitation contains
clauses which deviate from those specified for use by the Defense
Acquisition Regulation (DAR) and that proper authority for use of those
deviating provisions has not been obtained from the DAR Council pursuant
to DAR 1-109. We deny the protest.
The DAR provisions and clauses affected by the changes are contained
in DAR section 22, part 6 ("Shipment or Storage of Personal Property")
and in section 7. The revisions, according to the Army, were made to
more accurately describe the scope of work and the contractor's
responsibility for intra-city and intra-area movement of household goods
and to distinguish the services required from containerization
requirements. For example, DAR Secs. 22-601.1 No. 29 and 7-1601.1 were
modified to require that the contractor disassemble and reassemble
furniture as necessary to insure a safe move, while certain contract
clauses were deleted or words such as "approved storage facility" and
"packing" were substituted for "contractor's facility" and
"containerization." DAR Sec. 22-601.1 No. 30 also was changed to provide
for storage charges on a daily pro rata basis instead of allowing the
contractor to charge the same rate for one day instead of allowing the
contractor to charge the same rate for one day or 30 days of storage, as
permitted by the DAR provision.
The Army reports that the procuring activity initially sought
deviation approval under DAR Secs. 1-109.1 and 1-109.3, but that the
Army found it more suitable to have the DAR Council consider the
proposed changes in connection with a "service test" under DAR Sec.
1-108(a)(iv) and (v). The DAR Council approved a "service test" of the
revised provisions for a two-year period.
The protester's complaint is that because the modifications involve
deviations from, rather than implementations of, the DAR, the Army was
required to obtain deviation approval under DAR Sec. 1-109 rather than
service test approval under DAR Sec. 1-108. In this respect, the
protester refers to DAR Sec. 22-602, which states that modifications of
schedule formats "will be processed as a request for deviation in
accordance with 1-109." The protester's position is that a request for
deviation "is more complicated and more thoroughly scrutinized" than is
a request for approval of a service test and that had a request for
deviation been processed it is possible that the DAR Council would not
have granted the request. The protester further suggests that the Army
never informed the DAR Council that the service test approval request
involved deviations from the DAR.
The DAR does provide two distinct procedures for modifying the
traditional procurement approaches. DAR Sec. 1-109 provides for
deviations from the DAR, and DAR Sec. 1-109.3 requires that deviations
be unanimously approved in advance by the DAR Council when more than one
contract is affected by the deviation.
On the other hand, DAR Sec. 1-108, which provides for implementation of
the DAR by the military departments permits the use of contract forms
and clauses when permitted by "interim instructions, including service
test of new techniques or methods of procurement * * * ." DAR Sec.
1-108(a)(iv) envisions approval of such interim instructions.
It is not clear from the record why the Army viewed this matter as
more appropriately involving a service test of "new techniques or
methods of procurement" rather than a deviation from existing DAR
provisions, since the changes generally involve modifications and
clarifications of contractor duties specified in the DAR provisions.
Nevertheless, regardless of how the approved changes are categorized it
is clear that the body authorized to approve the changes did thoroughly
consider the matter and did grant the requisite approval.
In this respect, the record shows that the DAR Council was informed
that the service test request involved deviations from existing DAR
provisions, that the Council did carefully consider the matter, that,
through the Office of the Assistant Secretary of the Army, it requested
the Military Traffic Management Command (MTMC), which has responsibility
for establishing military standards for the preparation of household
goods for movement, to review what were termed "extensive deviations,"
and, upon receipt of MTMC's response, approved a 2-year service test of
the deviating provisions. We have also been informally advised by the
Executive Secretary of the DAR Council that the Council normally gives
the same substantive review to both deviation requests and requests for
service test approval. We have been similarly advised that the approval
in this case was unanimous.
Accordingly, we believe that the review and approval envisioned by
the DAR for deviations were obtained here and that the characterization
of what was approved as a service test rather than a deviation is of no
legal consequence with respect to this protest.
The protester also raises one other objection to this procurement.
In a memorandum by the Army representative who processed the
"deviations," one of the goals of the service test is stated to be the
promotion of competition "by use of smaller geographical contract areas
of performance." Crown asserts, without explanation, that the IFB didn't
reflect this goal. The record shows, however, that the IFB was amended
after its issuance to increase the performance areas from 3 to 7. The
areas of performance were redefined so that each new area generally was
smaller in size and total workload than the three previous areas. This
appears to satisfy the Army's objective to promote competition by
enabling smaller contractors, who otherwise may not have the ability to
perform the contract for the larger geographic areas, to compete.
The protest is denied.
B-201846, June 2, 1981, 60 Comp.Gen. 499
Contracts - Protests - Interested Party Requirement - Bidder Refusing
Bid Acceptance Time Extension - Unreasonable Award Delay Alleged -
Resolicitation Requested
Where protester alleges unreasonable delay in making award, which
required it to decline to extend bid acceptance period, it is interested
party under General Accounting Office Bid Protest Procedures since
nature of issue and requested remedy of cancellation and resolicitation
are such that protester has established direct and substantial interest.
Contracts - Awards - Delayed Awards - After Bid Acceptance Period -
Reasonableness of Delay
Protest that award was unreasonably delayed and bid acceptance period
extensions were improperly requested is denied where delay was
relatively short and resulted from administrative problems which agency
reasonably believed required resolution in order to make award.
Matter of: Yardney Electric Division, June 2, 1981:
Yardney Electric Division (Yardney) protests the award of a contract
under invitation for bids (IFB) No. DAAB07-80-B-1353, issued by the
Department of the Army for certain silver-zinc battery units. Yardney
asserts that it was the low bidder but, because the Government
unreasonably delayed making award for 105 days after bid opening,
Yardney was unable to grant a requested bid extension at its initial bid
price. Therefore, Yardney asserts that the Army should cancel the award
and resolicit the requirement. We do not find any merit in Yardney's
contention.
Bids were opened on September 19, 1980. Yardney submitted the low
bid of $2,297 per battery unit. Eagle Pitcher Industries, Inc. (Eagle
Pitcher), the only other bidder, submitted a bid of $2,875 per unit.
Yardney's bid properly limited its acceptance period to 60 calendar days
from the receipt of bids. As the result of several problems concerning
such items as the effect of the apparent illegibility of certain
aperture cards which were part of the bid package, a question concerning
the amount of Government-furnished silver to be supplied to the
contractor, and the need for the contractor to supply an IFB-mandated
subcontracting plan, award was delayed and the Government requested bid
extensions.
The initial request, made on November 13, 1980, was granted by both
bidders. Yardney subsequently granted two additional bid extensions,
the last until January 2, 1981. On December 30, 1980, the Government
again requested Yardney to extend its bid, in particular to allow
Yardney, the anticipated awardee, enough time to submit a required
subcontracting plan. Yardney declined to extend its bid acceptance
period, indicating that it desired either to negotiate a new price or
participate in a resolicitation for the batteries.
Eagle Pitcher granted an extension. Yardney protested to our Office on
January 19, 1981. The Army subsequently awarded the contract to Eagle
Pitcher.
As a threshold issue, the Army contends that, once it refused to
extend its offer, Yardney was no longer an interested party under GAO
Bid Protest Procedures. The Army cites Don Greene Contractor, Inc.,
B-198612, July 28, 1980, 80-2 CPD 74, in support of its position. This
case stands for the proposition that where a bidder refuses to extend a
bid, it is no longer an interested party under our Bid Protest
Procedures when, even if our Office were to sustain the protest, the
protester has rendered itself ineligible for award under the
solicitation being protested.
However, as a general rule, in determining whether a party is
sufficiently "interested" under our Bid Protest Procedures, in order to
have its protest considered by our Office, we will review the party's
status in relation to the procurement and the nature of the issues
involved. See generally, American Satellite Corporation
(Reconsideration), B-189551, April 17, 1978, 78-1 CPD 289; Cobarc
Services Inc., B-200360, March 2, 1981, 81-1 CPD 155. In this case, the
issue being protested is the reasonableness of the requested bid
extension. The requested remedy is not award under the solicitation,
but rather cancellation and resolicitation. Thus, in view of the nature
of the issue raised and the relief requested, we believe that Yardney is
a sufficiently interested party under our Bid Protest Procedures.
Yardney cites a number of GAO decisions for the propositions that:
an agency may not delay award of a contract without a justifiable
reason; extension of bid acceptance periods are proper only when
required by administrative necessities; and such extensions may
properly be sought only as long as the integrity of the competitive
procurement system is not compromised.
We have, in the cases cited, approved a panoply of actions as falling
within the scope of "administrative delays" warranting extension
requests, and we have afforded procuring agencies substantial leeway to
request-- but not to require-- bid acceptance period extensions. See,
for example, Tennessee Apparel Corporation, B-194461, April 9, 1979,
79-1 CPD 247. None of the cases cited have limited the appropriateness
of such extension requests to narrowly circumscribed situations
entailing administrative "necessities," as asserted by Yardney. The
cited caveat against compromising the integrity of the procurement
system as expressed in R. H. Whelan Company, B-194193, May 7, 1979, 79-1
CPD 313, was stated in relation to the fact that a bidder which extended
its bid acceptance period and accrued expenses in anticipation of an
award was not entitled to Government reimbursement for such expenses if
it did not receive award. That case emphasized the voluntary nature of
bid extensions and cited a prior case for the general proposition that a
contracting officer has the right to request-- but not to insist upon--
a bid acceptance period extension as long as the integrity of the
competitive procurement system is not compromised.
This language (in the prior case cited) was specifically used to clarify
the permissibility of a bid extension request in the situation where an
extension would revive an expired bid. United Electric Motor Company,
Inc., B-191996, September 18, 1978, 78-2 CPD 206. It is irrelevant to
the fact situation in the case at hand.
The rule regarding the permissibility of an agency request for a bid
acceptance period extension in a situation such as this one is simply
that while the Government has no right to force a bidder to grant such
an extension, it is appropriate to make such a request pursuant to
Defense Acquisition Regulation Sec. 2-404.1(c) (1976 ed.), where the
bidder has offered the full acceptance period provided in the IFB and
the agency experiences administrative delays. Environmental Tectonics
Corporation, B-183616, October 31, 1975, 75-2 CPD 266. According to the
delay, which was only for a total of just over 45 days beyond the
original bid acceptance period. Yardney argues that each of these
factors was primarily attributable to, and essentially the fault of, the
Army, while the Army contends otherwise. The record indicates that the
delays were relatively brief and were not unreasonable under the
circumstances since, regardless of the precise causes, they were
occasioned by legitimate problems and associated concerns on the part of
the agency. As such, they fall within the category of administrative
delays which properly may occasion a delay in making award and a request
for bid acceptance period extension. The bidders were free to elect not
to grant such an extension, as did Yardney.
The protest is denied.
B-201527, June 1, 1981, 60 Comp.Gen. 495
Bids - Evaluation - Savings to Government - Evaluation Requirement
Solicitation to maintain grounds maintenance equipment, which allowed
bidders to offer special discounts for off-season work as well as prompt
payment discounts, but provided for evaluation of only prompt payment
discount in determining low bid, resulted in award that did not reflect
most favorable cost to Government for total work to be performed, i.e.,
seasonal and off-season work, and thus violated statute governing
advertised procurements.
Matter of: Reppert Marine Sales and Service, June 1, 1981:
Reppert Marine Sales and Service protests the award of a contract to
Bob's Small Engines (BSE), the low bidder under General Services
Administration (GSA) invitation for bids GSD-6DPR-10017, a total small
business set-aside for the repair and maintenance of grounds maintenance
equipment and air cooled engines for the period January 1, 1981, to
December 31, 1981. The protester complains that although two discounts
were asked for in the solicitation-- a prompt payment discount, and a
special discount for work performed during the off-season of November,
December, January and February-- only the prompt payment discount was
considered in determining the low bidder. Reppert also protests that
BSE does not have the capacity to satisfactorily perform the contract,
maintaining that the awardee has an insufficient amount of space and
lacks the necessary welding facilities. Reppert suggests that the
awardee therefore improperly intends to subcontract the welding even
though it did not so indicate in its bid.
We do not agree that under the solicitation as issued the offered
special discounts should have been evaluated in determining the low
bidder. However, we believe that the solicitation was defective because
the evaluation criteria did not provide for an award at the most
favorable cost to the Government. Therefore, we recommend that the
requirement be resolicited.
The Method of Award section of the solicitation, paragraph 26,
provided that award would be made to the low responsive, responsible
bidder offering the lowest hourly rate. The section included the
following example: (TABLE OMITTED)
Bidder A is the low bidder.
Paragraph 27, entitled Prompt Payment Discount, indicated that any
offered prompt payment discount would be included in the calculation of
the low bid.
The Bid Schedule, paragraph 29, listed eight locations where service
would be needed and the volume reported at each for the period January
1979 to September 1979 and provided spaces for a bidder to enter an
hourly rate for each location. Below the Bid Schedule, and just above
the space for the bidder's signature, was the following provision:
SPECIAL DISCOUNT: Bidder offers a special discount of -% on all
repair work, performed during the months of November, December, January,
and February.
Paragraphs 26-29 and the special discount provision were all on the
same page of the IFB.
Both Reppert and BSE bid an hourly rate of $15 for one of the listed
locations, Fort Leonard Wood, Missouri. The protester offered a 2
percent prompt payment discount for work paid for within 20 calendar
days, and a 5 percent special discount for work performed during the
off-season. BSE offered a 2.1 percent prompt payment discount and a 1.5
percent special discount. Because of BSE's greater prompt payment
discount, the firm's bid was evaluated as low ($14.68 per hour, as
opposed to $14.70 per hour for the protester).
Reppert argues that the special discount should have been considered
by GSA in evaluating bids, and that in view of Reppert's knowledge of
the previous year's volume of off-season work, acceptance of Reppert's
bid would result in the lowest cost to the Government.
In response, GSA contends that the Method of Award and Prompt Payment
Discount paragraphs of the solicitation (26 and 27( clearly indicated
that only the prompt payment discount would be considered in the
evaluation of bids for award, not the special discount. GSA also
advises that the purpose for soliciting a special discount for
off-season work was to encourage using activities to send equipment in
for maintenance and repair at that time so that the contractor would not
be inundated with work during the otherwise busy months of the contract
year.
We agree with GSA to the extent that Reppert should have realized
that any special discount offered would not be considered in determining
the low bidder. The invitation's Method of Award provision simply did
not mention the special discount notwithstanding that a space for such
discount was included on the same page. Further, in contrast to the
Prompt Payment Discount paragraph which specified that any such discount
would be applied to the bid for purposes of bid evaluation, the special
discount provision included no such indication. Finally, there is no
estimate in the invitation of the amount of equipment that would need to
be serviced during the off-season by which a special discount could be
multiplied for evaluation purposes.
Nonetheless, we do not believe that the award under the IFB was
proper because it was based on defective evaluation criteria. The
advertising statute requires that award be made to the responsible
bidder whose bid is most advantageous to the Government, price and other
factors considered. 41 U.S.C. 253(b)(1976). That language mandates
award on the basis of the most favorable cost to the Government as
measured by the total amount of work to be awarded. See Crown Laundry
and Cleaners, B-196118, January 30, 1980, 80-1 CPD 82; Square Deal
Trucking Co., Inc., B-183695, October 2, 1975, 75-2 CPD 206.
As stated above, BSE's evaluated hourly labor rate was two cents less
than Reppert's because of BSE's 2.1 percent prompt payment discount as
opposed to Reppert's 2 percent prompt payment discount. However,
Reppert's offered special discount was 5 percent, while BSE's was only
1.5 percent. It is evident that if even a minimal amount of off-season
work is necessary the overall cost to the Government would be less under
a contract with Reppert, because of the 5 percent special discount, than
it would be under BSE's contract. In this regard, there is no
suggestion in the record that GSA could not reasonably estimate the
anticipated volume of off-season work so that any offered special
discounts properly could be evaluated. The record shows that GSA has
been contracting for these services at Fort Leonard Wood since 1970, and
that special discounts have been solicited since 1973. We assume that
this procurement history would provide sufficient information for the
calculation of a reasonable estimate of off-season work under the 1981
contract.
Accordingly, the solicitation was defective because it did not
provide for the evaluation of special discounts. Thus, the award did
not result in a contract at the most favorable price disclosed in the
competition for the work that could be expected to be performed, i.e.,
the aggregate of both the seasonal and off-season work. To that extent,
the protest is sustained.
We could not, of course, recommend that BSE's contract be terminated
and a contract awarded to Reppert since an advertised contract must be
awarded based on the terms under which the competition was conducted,
which in this case did not include the evaluation of special discounts
in determining the low bidder. See Com-Tran of Michigan, Inc.,
B-200840, November 11, 1980, 80-2 CPD 407. However, in view of the
solicitation defect, we recommend that GSA expeditiously solicit new
bids for the requirement for the balance of BSE's contract term. GSA
should include in the invitation an estimate of the amount of off-season
work to be expected (now only November and December), and advise that
offered special discounts will be applied to that estimate and thus
considered in calculating the bid that represents the lowest cost to the
Government.
If a firm other than BSE is low as evaluated, BSE's contract should be
terminated for the convenience of the Government and a new contract
awarded. If BSE is low as evaluated, BSE's current contract need only
be modified to reflect any changes. See Datapoint Corporation,
B-186979, May 18, 1977, 77-1 CPD 348.
We note here that GSA invited bids for work at seven locations other
than Fort Leonard Wood. Since no protest involving any of those seven
has been filed, we have no information regarding the bidding results for
those locations. Therefore, we recommend that GSA review those results.
Where the most advantageous special discount was offered by other than
the awardee so that the award price does not reflect the most favorable
price for all work to be performed, GSA should take corrective action
consistent with the above.
The remaining issue involves whether BSE has the ability to meet the
contract's requirements without subcontracting the welding work which
Reppert argues would be improper, and thus whether BSE should have been
awarded the contract in any case. This is not a matter which we
consider. The ability to satisfactorily perform a contract is a matter
of the prospective awardee's responsibility. Aerosonic Corporation,
B-193469, January 19, 1979, 79-1 CPD 35, and GSA found BSE to be a
responsible concern. Our Office does not review affirmative
determinations of responsibility unless either fraud on the part of
contracting officials is alleged or the solicitation contained
definitive responsibility criteria which allegedly were not applied.
Oregon Wilbert Vault Corporation, B-191000, January 18, 1978, 78-1 CPD
49. Neither exception applies here. We point out here that the
specifications required only that the contractor "have available, or
have access to" a welding capability, and that the invitation
specifically allowed subcontracting, even if the intention to do so was
not indicated in the bid submitted, as long as the contracting officer
approved.
This decision contains a recommendation for corrective action to be
taken. Therefore, we are furnishing copies to the Senate Committees on
Governmental Affairs and Appropriations and the House Committees on
Government Operations and Appropriations in accordance with section 236
of the Legislative Reorganization Act of 1970, 31 U.S.C. 1176(1976),
which requires the submission of written statements by the agency to the
Committees concerning the action taken with respect to our
recommendation.
B-202041, May 20, 1981, 60 Comp.Gen. 493
Fair Labor Standards Act - Comparison With Other Pay Laws - Combining
Benefits - Propriety
Employee, nonexempt under Fair Labor Standards Act (FLSA), 29 U.S.C.
201 et seq. (1976), travelled for 6 hours on a nonworkday during his
corresponding duty hours. Although such time is hours of work under
FLSA, since he had a holiday off and he only worked 38 hours under FLSA
during that workweek and he has already been compensated for 40 hours
under title 5 U.S. Code, he is not entitled under FLSA to 6 hours pay at
his regular rate in addition to the 40 hours basic pay he has received.
Matter of: Louis Pohopek - Compensation for Traveltime, May 20,
1981:
This decision is in response to a request from Mr. A. W. Countryman,
Chief Steward and Mr. John P. O'Brien, President, Federal Employees
Metal Trades Council, Portsmouth Naval Shipyard, Portsmouth, New
Hampshire. They have requested our decision concerning the entitlement
of Mr. Louis Pohopek, a pipefitter at the shipyard, to compensation for
time he spent on a nonworkday, traveling to a temporary duty site. This
question has been handled as a labor-management relations matter under
our procedures contained in 4 FR Part 21(1980). We did not receive any
comments from officials at the Portsmouth Naval Shipyard.
Mr. Pohopek was assigned to temporary duty in Scotland and was
directed to begin travel at the end of his workday on Friday, September
9, 1977. He went from his home to Boston and departed for Scotland at
11 p.m. He arrived in Scotland at 2 p.m. on Saturday. Six hours of his
traveltime on Saturday corresponded to his regular workday hours.
The union reports that the comptroller of the shipyard stated that
Mr. Pohopek, who is nonexempt under the Fair Labor Standards Act (FLSA),
29 U.S.C. 201 et seq., was not entitled to compensation for his Saturday
traveltime under the FLSA since he had worked only 32 hours during the
week prior to the travel-- the Monday of that week was Labor Day. The
comptroller apparently reasoned that because the FLSA provides only for
overtime entitlement, the traveltime could not be counted as hours of
work unless 40 hours of actual work had been completed prior to the
travel.
The union has asked whether Mr. Pohopek's Saturday traveltime can
nevertheless be considered hours of work under FLSA, and it therefore
asks if Mr. Pohopek can be compensated at his regular rate of pay for
that time.
As a nonexempt employee under the Fair Labor Standards Act, Mr.
Pohopek is entitled to overtime compensation under the FLSA or title 5,
United States Code, whichever provides the greater benefit. 54
Comp.Gen. 371, 375(1974). It is clear that Mr. Pohopek's Saturday
traveltime during his corresponding work hours is "hours of work" under
the FLSA. Attachment 4 to FPM Letter 551-1, May 15, 1974, provides at
paragraph C that:
Time spent traveling (but not other time in travel status) away from
his official duty station is "hours worked" when it cuts across the
employee's workday. The time is not only "hours worked" in regular
workdays during normal work hours but also during the corresponding
hours on nonwork days.
The same attachment, however, provides that:
Excused absences with pay (holidays, sick, annual, or other paid
leave) are not periods of work even though the employee is compensated
for those periods of nonwork.
Therefore, under the FLSA, Mr. Pohopek may be considered to have
worked a total of 38 hours-- 4 workdays of 8 hours each and 6 hours of
traveltime.
Under the provisions of 5 U.S.C. 5544(a)(1976), an employee may not
be compensated for traveltime away from the official duty station unless
the travel:
(i) involves the performance of work while traveling,
(ii) is incident to travel that involves the performance of work
while traveling,
(iii) is carried out under arduous conditions, or
(iv) results from an event which could not be scheduled or controlled
administratively.
It does not appear that Mr. Pohopek's Saturday travel falls within
any of the above categories.
Under title 5, unlike the FLSA, a paid absence for holidays or annual
or sick leave is considered employment. FPM Supp. 532-1, subchapter
S-8-4.b. (8), May 31, 1978. According to the provisions of title 5,
therefore, Mr. Pohopek is entitled to 40 hours of basic pay-- 8 hours
for the holiday he was off and 32 hours for four, 8 hour days worked
Tuesday through Friday.
Mr. Pohopek may not receive his regular rate of pay for his
traveltime under FLSA in addition to the 40 hours he has been paid under
title 5. Such compensation would be an improper combination of the
benefits provided by the FLSA and title 5. Since Mr. Pohopek has
received compensation for 40 hours under title 5 for the workweek in
question and since under FLSA he has only worked 38 hours he has
therefore received the greater of the benefits provided by the
applicable laws.
B-201842, May 20, 1981, 60 Comp.Gen. 490
TELEPHONES - PRIVATE RESIDENCES - PROHIBITION - INAPPLICABILITY -
GOVERNMENT-LEASED QUARTERS OVERSEAS - NONOCCUPANCY PENDING STAFF CHANGE
- ACCRUED CHARGES
Because of necessity to ensure telephone service in the Air Deputy's
residence upon his occupancy of quarters in Norway, telephone service is
secured by the U.S. Government under long-term lease. For 2 months,
between incumbents, the residence was vacant but the telephone charges
continued to accrue. Although 31 U.S.C. 679 prohibits using
appropriated funds for telephone service in a private residence, the
statute is not to be applied here where neither the outgoing nor
incoming Air Deputy occupied the premises during the period covered by
the charges. 11 Comp.Gen. 365(1932), modified.
Matter of: Charges for Telephone Service in a Private Residence, May
20, 1981:
This case concerns whether the statutory prohibition in 31 U.S.C.
679, against using appropriated funds to pay for telephone services in a
private residence, applies to Government-leased quarters when they are
vacant for a short period between the incoming and outgoing occupants to
whom the quarters are assigned. As will be explained, the statute is
not for application in the limited circumstances presented and
appropriated funds may be used.
The case was presented for an advance decision by Captain P. E.
Ruter, Accounting and Finance Officer, Department of the Air Force,
Headquarters 86th Tactical Fighter Wing (USAFE), APO New York 09012.
The Air Deputy for the Allied Forces Northern Europe, a United States
Air Force general officer, is stationed in Norway and is provided with
quarters leased by the Government. For these quarters, the Budget and
Finance Office at Headquarters Allied Forces Northern Europe secures
telephone service under a long-term lease with the Norwegian Telephone
Company for which the Air Deputy pays the charges. The lease is
necessary to ensure that each new Air Deputy immediately will have the
24-hour telephone service mandated by the nature of his position. If
the service were terminated upon the departure of each Air Deputy, there
is a likelihood of delay in providing telephone service to the
successor.
From July 14 until September 16, 1979, the Air Deputy's quarters were
vacant due to a change in command. On September 17, the new Air Deputy
moved into the quarters.
Since the telephone service is on a leased basis, the basic monthly
charge continues to accrue during the time the residence is vacant. The
former Air Deputy paid for the service until he departed and the new Air
Deputy assumed the cost of the service when he commenced occupancy. The
Finance Officer questions whether, in view of the statutory prohibition
in 31 U.S.C. 679, appropriated funds may be used to pay for the service
during the period that the residence was vacant. As he points out, if
the service charge may not be paid out of appropriated funds, the
charges may be assessed against the current Air Deputy for a period when
he did not occupy the residence.
Section 679 of title 31, United States Code (derived from section 7
of the act of August 23, 1912, ch. 350, 37 Stat. 414, as amended)
provides in pertinent part:
Except as otherwise provided by law, no money appropriated by any Act
shall be expended for telephone service installed in any private
residence or private apartment or for tolls or other charges for
telephone service from private residences or private apartments * * * .
While it is clear that the statutory prohibition would preclude
appropriated funds from being used to pay for telephone service supplied
to the Air Deputy, this does not resolve this case. Here, the telephone
service was maintained during the interim period by the Government and
no Government official received the benefit of this service. Thus, the
question to be resolved is whether the statutory prohibition is to be
applied to this situation.
In sight into the purpose and scope of 31 U.S.C. 679 is provided in
an unpublished decision of the Comptroller of the Treasury of November
12, 1912, 63 Manuscript Decision 575, issued shortly after the statute
was enacted.
The decision ruled that the statute did not prohibit the installation of
telephones in Government buildings provided to forest rangers as
residences but which also served for official purposes. In support of
the holding, it was stated in part:
Section 7 of the Legislative, Executive and Judicial Appropriation
Act, set out in your letter, was not passed as I under stand for the
purpose of requiring government employees to bear the expense of
telephone messages on public business, but on the contrary, its plain
intent was that the Government should not be chargeable with the cost of
private and personal messages of such employees. The provision in
question was passed to secure the latter purpose and grew out of the
fact that a large number of public officers here in the District of
Columbia had installed in their private residences telephones at
Government expense under the guise of their use for public purposes,
when in truth the Government had provided them with sufficient
telephones in their public offices to transact all the public business.
As can be seen, the statute was enacted to stop public officers from
obtaining telephone service at Government expense under the guise of the
telephone being necessary for public purpose. As further indicated
above, this legislative intent must be kept in mind in all cases but
should not cause an inflexible rule to be formulated which then results
in an officer or employee bearing the cost of a telephone for public
(i.e., Government) use. We have recognized and applied these principles
in certain situations such as authorizing reimbursement of a telephone
reconnection charge to a service member who was required by the
Government to move his mobile home from one mobile home park to another.
56 Comp.Gen. 767(1977). There we indicated that the statute should not
be interpreted so as to preclude reimbursement to an individual "for an
expense incurred as a result of governmental action over which he had no
control."
However, in a case somewhat similar to the present case it was held
that the statute prohibited the use of appropriated funds to pay for
telephone service in the residence quarters of the United States
Ambassador to Mexico from September 1 to October 31, 1930, a period
during which there was no occupant of such quarters. 11 Comp.Gen.
365(1932). That case differs from the present case in that in the 1932
case the telephone service was apparently retained during the interim
period primarily due to the inadvertence of the responsible Government
official and not due to any long-term contract or pressing Government
requirement for the service.
In any event we believe that the instant case does not fall within
the statutory prohibition. Clearly, there is no public official who
received the benefit of the telephone service. Indeed, no public
official received the telephone service and the quarters were not the
"private residence" of either the outgoing or incoming officer during
the period in question. Thus, there would be no frustration of
congressional intent if appropriated funds were used to pay for this
telephone service.
While ordinarily telephone service should be cancelled during periods
of nonoccupancy of Government-procured quarters to prevent incurring
expenses such as these, in this limited situation where public necessity
required retention of telephone service during the nonoccupancy,
appropriated funds may be used to pay for the telephone service. To the
extent that the decision in 11 Comp.Gen. 365(1932) is inconsistent with
this decision, it is modified.
The voucher presented is being returned for payment.
B-200121, May 20, 1981, 60 Comp.Gen. 487
Contracts - Time and Materials - Evaluation Factors - Material Handling
Costs - Not Included in Basic Labor Rates - Separate Item for Evaluation
Recommended
Evaluation scheme for award of time and materials contract which does
not take into account reimbursable material handling costs when not
included in basic labor rates violates fundamental principle that all
competitors must be evaluated on comparable basis since offerors who do
include these costs in hourly labor rates will be evaluated on basis of
total cost to Government while others will not. Scheme is further
defective because it may not indicate which offer does represent lowest
overall cost to Government.
Matter of: Beta Industries, Inc., May 20, 1981:
Beta Industries, Inc. protests the evaluation method of Air Force
solicitation No. F33601-80-RX194 which requests proposals for a time and
materials type contract to provide quick response engineering and
related technical services to support the scientific and engineering
staff of the Wright Aeronautical Laboratories, Flight Dynamics
Laboratory, Wright-Patterson Air Force Base.
Essentially, Beta contends that under the terms of the RFP it will be
evaluated for award on the basis of its offered hourly labor rates which
include certain material handling costs, whereas a competitor could be
evaluated on the basis of hourly labor rates which do not include
material handling costs despite the fact that the competitor will be
reimbursed for those indirect costs by the Air Force if awarded the
contract.
We sustain the protest.
Defense Acquisition Regulation (DAR) Sec. 3-406.1(a)(1976 ed.)
explains the time and materials type of contract as follows:
The time and materials type of contract provides for the procurement
of supplies or services on the basis of (i) direct labor hours at
specified fixed hourly rates (which rates shall include wages, overhead,
general and administrative expense, and profit) and (ii) material at
cost, and, in addition, where appropriate, material handling costs as a
part of material cost. Material handling costs may include all indirect
costs, including general and administrative expense, allocated to direct
materials in accordance with the contractor's usual accounting practices
consistent with Section XV (Contract Cost Principles and Procedures).
Such material handling cost should include only costs clearly excluded
from the labor hour rate. * * *
The RFP contained the following "Notice to Offerors" regarding
material handling costs:
Reference DAR Sec. 7-901.6 entitled "Payments." Material Handling
Costs will be reimbursed separately under the resulting contract, only
to the extent that they are excluded from the hourly rate. Material
handling costs will be audited upon completion of the contract. * * *
Final payment will be withheld pending completion of the audit.
DAR Sec. 7-901.6 defines material handling costs in substantially the
same way as does DAR Sec. 3-406.1.
The RFP provided that the "lowest total price will be the controlling
factor for an award to (an) offeror whose proposal has been evaluated as
technically acceptable," and that the lowest total price would be
determined by multiplying the offered labor rates by the estimated
required manhours listed in the schedule of supplies/services and then
totaling the products.
In addition, the schedule listed an estimated amount of $320,000 for
materials, subcontracting and travel.
Beta suggests that an evaluation procedure which does not consider
all offerors' material handling costs improperly might prejudice Beta in
the competition. Beta points out that where a reasonable estimate of
the material handling costs for a time and materials contract is, for
example, $200,000, the offer by a firm such as Beta which distributes
that amount over labor costs of $800,000 will be evaluated as
$1,000,000. However, an offer from a firm which intends to bill
material handling costs separately and whose labor costs also are
$800,000 will be evaluated as only $800,000. Thus, assuming both offers
were technically acceptable, the one excluding material handling costs
from its labor rate would be selected for award, not withstanding that
both offers represent the same $1,000,000 overall cost to the
Government.
The Air Force argues that the solicitation treats offerors equally
because each offeror has the option of including material handling costs
in its hourly labor rates or billing for these costs outside the hourly
rate after receiving the contract, and presumably offerors would
structure their proposals to their advantage-- by not including handling
costs in labor rates-- pursuant to the RFP evaluation scheme.
We find the Air Force position to be without merit for two reasons.
First, offerors do not necessarily have the option of structuring their
proposals as the Air Force suggests. DAR Sec. 3-406.1 permits the
billing of material handling costs outside of the hourly labor rate only
"in accordance with the contractor's usual accounting practices
consistent with Section XV." Thus, a contractor which usually
distributes its indirect material handling costs over direct labor hours
for billing purposes may not change its accounting approach for bidding
on a particular Government contract. Second, even if offerors have such
an option, there is no guarantee, given the audit requirement, that all
offerors would choose to bill separately for the material handling
costs. Consequently, under the Air Force evaluation scheme, it is
conceivable that an offeror who does so will be evaluated as low even
though its offer in fact would not represent the lowest overall cost to
the Government because another offeror does not do so.
To insure that offerors compete on an equal basis so that the
evaluation will reflect the actual low offer on the basis of all
contract costs, we believe the Air Force should require offerors to
state in their offers whether they included material handling costs in
their hourly labor rates, and to the extent that they intend to seek
reimbursement of such costs separately pursuant to the RFP's Notice to
Offerors," to state the estimated amount of material handling costs. In
evaluating offers, the Air Force should analyze offerors' estimated
material handling costs to determine their reasonableness and consider
them in determining which offer would be most advantageous to the
Government.
In this respect, the Air Force, for example, may rely on prior
procurement data, see DAR Sec. 3-807.2(a)(2), or even a limited preaward
field audit to determine such costs' reasonableness. See DAR Sec.
3-801.5(b)(2). This is so regardless of whether the Air Force decides,
as it did here, that adequate price competition exists, exempting
offerors from submitting cost and pricing data. See DAR Sec.
3-807.7(a).
Apparently, in a previous procurement the Air Force had required the
submission of cost data for evaluation, including projected material
handling costs as a fixed percentage of the Government's estimate of
required materials, but canceled the solicitation principally for two
reasons: DAR Sec. 7-901.6, which authorizes the payment of material
handling costs as an element of material handling costs as an element of
material cost, does not mention the use of material handling costs in
the evaluation process; and the Air Force believed that the
solicitation's requirement that material handling costs be estimated as
a fixed percentage of material cost would violate the statutory
prohibition against the cost-plus-a-percentage-of-cost system of
contracting at 10 U.S.C. 2306(a)(1976).
We think DAR Sec. 7-901.6 and 10 U.S.C. 2306(a) are inapposite.
Simply put, neither of these provisions concerns the manner in which an
agency evaluates costs; they address the allowability of certain costs.
The fact that DAR Sec. 7-901.6 authorizes the payment of material
handling costs as material costs does not preclude an agency from
evaluating the impact of a particular offeror's estimated costs in
determining the offer which is most advantageous to the Government.
Similarly, the statutory ban on the cost-plus-a-percentage-of-cost
system of contracting does not prohibit the evaluation of provisional
percentage overhead rates subject to adjustment to reflect actual costs
to determine the actual amount of payment. See 35 Comp.Gen. 434,
436(1956).
In its report on the protest, the Air Force introduced another
objection to evaluating material handling costs: the Air Force itself
allegedly cannot provide a reasonable estimate as to the amount of the
material or material handling costs which will be incurred.
We do not understand the Air Force's objection. First, this would
not preclude an offeror from furnishing an estimate of material handling
costs. Second, to the extent that the Air Force is concerned that it
will have difficulty in evaluating the reasonableness of an offeror's
estimate, as already noted a limited preaward field audit could be
helpful in that regard. Moreover, as illustrated above, the evaluation
of proposals under the solicitation as presently constructed essentially
frustrates the requirement for equal competition. The Air Force in fact
was able to compute and include in the solicitation an estimate of
materials, subcontracting and travel costs ($320,000) and estimates of
man-hours for each of the numerous labor categories.
We assume that those are based on procurement history, and we do not see
why an estimate of materials and material handling costs could not also
similarly be computed which would at least equalize the competition to
an acceptable degree. In this respect, an estimate need only be based
on the best information available to be deemed reasonable and thus
properly form a basis for evaluation. See JETS Services, Inc.,
B-190855, March 31, 1973, 78-1 CPD 259. While there is no guarantee of
total accuracy in any estimate used for evaluating costs, that does not
alleviate the necessity for an agency to analyze all nonspeculative
costs risks. Cf. Dynatrend, Inc., B-192038, January 3, 1979, 79-1 CPD 4
(where we sanctioned the Government's use of cost estimates to evaluate
cost while cautioning against undue reliance upon them given the
certainties associated with cost reimbursement contracting).
In view of the foregoing, we recommend that the Air Force take
appropriate steps, including amending the RFP, to provide for an
evaluation of the material handling costs as a separate item for those
offerors who do not include those costs in their basic labor rates. We
are bringing this matter to the attention of the Secretary of the Air
Force by separate letter.
The protest is sustained.
B-198031, May 20, 1981, 60 Comp.Gen. 478
Officers and Employees - Transfers - Expenses - Relocation v. Training
Department of Army employee stationed in Germany and assigned to
long-term training in United States is not entitled to full permanent
change of station entitlements until the training is completed and he is
transferred to a new permanent duty station. Officers and Employees -
Training - Transportation and/or Per Diem - Cost Comparison Requirement
Army employee on long-term training assignment may have orders
retroactively amended to authorize per diem where cost comparison
required by statute was not made prior to issuing orders authorizing
transportation of dependents and household goods. Officers and
Employees - Training - Transportation and/or Per Diem - Cost Comparison
Requirement - Exceptions - Entitlements Under Service Agreements
Army employee may have orders issued authorizing advance return of
dependents and household goods. Cost studies need not be made when it
is agency's intent not to allow dependent travel and transportation of
household goods incident to the training assignment. Transportation -
Automobiles - Overseas Employees - Reimbursement Basis - Return to U.S.
for Training Prior to Transfer
Army employee who is not expected to return to overseas assignment
after training in United States may be reimbursed transportation costs
for shipping privately owned vehicle by American flag vessel on
Government bill of lading after training is completed, agreement is
signed, and employee is assigned to new permanent duty station. Storage
- Household Effects - Overseas Employees - Nontemporary - Training
Periods
Army employee may not be reimbursed for nontemporary storage expenses
incident to training. However, agency has broad discretion to authorize
period of time expenses can be allowed. Foreign Differentials and
Overseas Allowances - Effective Date - Dependents Return to United
States
Army employee's overseas post allowances would cease when employee's
family no longer occupies quarters and departs from overseas post.
Officers and Employees - Transfers - Service Agreements - Overseas
Employees Transferred to U.S. - Return Travel, etc. Expense Liability -
Constructive Cost Reimbursement Basis
Army employee may be reimbursed constructive cost of transportation
from his old to his new duty station, less the cost of transportation
from his old duty station to his place of residence
Matter of: Stephen T. Croall - Transfer Entitlements - Overseas Tour
of Duty - Long-Term Training in the United States, May 20, 1981:
This decision is in response to a letter dated February 25, 1980,
from the Per Diem, Travel and Transportation Allowance Committee,
Department of Defense, concerning the entitlement of overseas employees'
travel and relocation expenses while on a long-term training assignment
in the United States. The request has been assigned PDTATAC Control No.
80-8.
The case of one such employee is presented to clarify the question of
authorized entitlements. Mr. Stephen T. Croall, a civilian employee of
the Department of the Army stationed in Heidelberg, Germany, was
selected to attend the Industrial College of the Armed Forces in
Washington, D.C., from August 1979 through June 1980. After his
selection, his civilian personnel office issued travel order No. 269-79,
dated June 27, 1979, mistakenly authorizing full permanent change of
station (PCS) entitlements from Heidelberg to Washington rather than
issuing orders for an interim period of training. Mr. Croall who had
completed his original overseas tour of duty in 1975, agreed in writing
that, upon completion of the training assignment, he would either
exercise his reemployment rights to Fort Monroe, Virginia, or accept
another assignment within the continental United States.
The location of his new permanent duty station was to be determined
shortly before completion of the training assignment. We understand
that Mr. Croall has now finished his training assignment and has been
assigned to a permanent duty station in Washington, D.C.
The authority for paying expenses of training is found in 5 U.S.C.
4109(1976), which provides that the head of an agency may authorize
payment of all or part of the necessary costs of travel and per diem to
persons undergoing training. In the alternative, the cost of
transportation of the employee's immediate family, household goods and
personal effects, packing, crating, temporarily storing, draying, and
unpacking are authorized to be paid, but only when the estimated costs
of transportation and related services are less than the estimated
aggregate per diem payments for the period of training. It has been the
position of this Office that the travel expenses payable in connection
with training assignments are limited strictly to those expenses
specifically stated in the training statute. Michael G. Pond, 58
Comp.Gen. 253(1979), reconsideration denied, B-193197, January 10, 1980.
However, the Army says that our interpretation, coupled with the
Department of Army's policy of authorizing the maximum allowable
entitlements, causes a number of problems in cases involving employees
assigned to overseas duty stations who are selected to attend long-term
training programs in the United States.
We are, therefore, asked the following questions pertaining to Mr.
Croall's entitlements:
"May the fact that all ties to the overseas duty station are severed
upon departure for the training assignment and the fact that the
employee already has completed a transportation agreement, serve as a
basis for allowing payment of full PCS benefits? For example, could a
personnel action reassigning the employee to an activity nearest his
training site, coupled with his earned return transportation agreement,
establish entitlement to full PCS allowances?"
Answer. We have held in recent decisions that when an employee's
transfer is interrupted by an interim period of training at another
location before the transfer, the training site is normally regarded as
only an intermediate duty station. The permanent change of station is
not completed until after the training and the transfer to the new
permanent duty location. Donald C. Cardelli B-195976, February 8, 1980;
Ronald L. Esquerra, B-195479, March 7, 1980; 52 Comp.Gen. 834(1973).
Since it was the intention of the Army that Mr. Croall be assigned
for training purposes, he would not be performing his regular duties.
He would, in fact, be assigned to a training site and the permanent
change of station would not be completed until after the training and
his transfer to a new permanent duty station. In this respect, 2 Joint
Travel Regulations, paragraph C4502-3 (change 164, June 1, 1979),
provides instructions for civilian employees of the Department of
Defense who attend a training program without returning to their old
duty station. It is correctly stated therein that:
* * * Payment of allowances prescribed in Chapter 14, as well as
other permanent change of station allowances authorized in conjunction
with an employee's transfer, however, may not be authorized until the
employee has successfully completed the training program, signed the
transportation agreement required under par. C4002, and has been
assigned to a new permanent duty station other than the permanent duty
station at the time of selection and entry upon the training assignment.
Your first question is answered in the negative.
"If the answer to the above question is negative, it appears that THE
ORIGINAL PCS ORDER IS IN VIOLATION OF 5 U.S.C. 4109 AND, THEREFORE must
be amended, as a minimum, to delete the authorization for temporary
quarters subsistence expense (TQSE), miscellaneous expenses, and
shipment of the privately owned vehicle (POV). However, the cost
comparison required by 5 U.S.C. 4109 (per diem expenses versus movement
of dependents and household goods (HHG)) was not performed. Since it
has now been determined that authorizing per diem expenses would be more
cost effective than authorizing movement, may Mr. Croall's order be
retroactively amended, at this time, to authorize per diem?"
Answer. The above issue was discussed recently in our decision Ms.
Lynn C. Willis et al., 59 Comp.Gen. 619(1980). We cite the general rule
that orders may be modified when they are clearly in conflict with a law
or regulation to make them consistent with the applicable law or
regulation. We found that proper cost comparisons had not been made as
required by 5 U.S.C. 4109(1976) prior to the issuance of orders
authorizing the transportation of the employee's dependents and
household goods incident to a training assignment, and held that such
orders were not competent and may be retroactively modified to allow
payment of per diem. We noted that a cost comparison showed that per
diem would have been less costly, but apparently the actual as opposed
to the estimated transportation costs were less than the per diem.
Since the proper cost comparison required by statute was not made
prior to issuing orders authorizing payment for transportation of Mr.
Croall's dependents and household goods, the facts are essentially
analogous to Willis.
Further, there is no authority under the provisions of 5 U.S.C.
4109(1976), to pay transportation costs for the employee's privately
owned vehicle (POV), or temporary quarters subsistence expenses.
Michael S. Pond, supra; Robert V. Brown, B-185281, May 24, 1976.
However, in the instant case, see discussion under Question 3 relating
to advance return transportation.
The travel orders may be retroactively amended accordingly to
authorize per diem under the provisions of 5 U.S.C. 4109.
"If the answer to question #2 is positive, Mr. Croall desires to also
utilize his entitlement to advance return transportation of dependents
and HHG, authorized by 5 U.S.C. 5729, based upon having completed a
basic transportation agreement incident to his overseas period of
service. May a travel order be cut at this time to retroactively
authorize this advance return?"
Answer. The authority to reimburse an employee for the advance
return of members of his family and shipping his household goods and
personal effects is set forth at 5 U.S.C. 5729(1976). Subsection
5729(a) provides that, under such regulations as the President may
prescribe, an agency shall pay such expenses, not more than once, prior
to the return of the employee, when the employee has acquired
eligibility for return transportation or when the public interest
requires the return of the immediate family for compelling personal
reasons of a humanitarian or compassionate nature. The appropriate
regulations concerning this statutory requirement are found in the
Federal Travel Regulations (FPMR 101-7, May 1973) (FTR), paragraph
2-1.5g(5), and 2 JTR, paragraph C7003-4 (change 142, August 1, 1977).
We have held that the benefits arising from a transportation
agreement are part of the bargained-for consideration incident to
employment and that these rights may be divested or revoked only in very
limited circumstances. 54 Comp.Gen. 814(1975). Thus, in effect, Mr.
Croall acquired a vested right under 5 U.S.C. 5729 because he had
acquired eligibility for return transportation well before he was
ordered to return for training. 54 Comp.Gen. 814(1975). Although the
travel of the dependents and shipment of the household goods did not
precede Mr. Croall, under the statute, entitlement to return
transportation of dependents and household goods at Government expense
is not dependent upon the employee himself performing such travel. 36
Comp.Gen. 10(1956).
Mr. Croall completed his obligation under his service agreement and,
therefore, became entitled to the benefits under 5 U.S.C. 5729(1976).
The travel orders may be amended accordingly.
"If the answer to question No. 3 is positive, Mr. Croall would, in
essence, receive both per diem (under 5 U.S.C. 4109) and movement (under
5 U.S.C. 5729). To preclude this dual expenditure, is it permissible to
disregard the costs of movement of dependents and HHG in performing the
cost comparison required by 5 U.S.C. 4109 in cases where a previously
earned entitlement to movement exists? In these cases movement would
automatically be authorized in lieu of per diem, yielding a considerable
savings to the Government."
Answer. The authority for paying expenses of training in 5 U.S.C.
4109 is discretionary and it is up to the head of an agency to determine
what part, if any, of the training expenses will be paid. Raymond F.
Moss, B-180599, November 14, 1974. We have also recognized that
agencies may in fact require employees to pay some of the indirect costs
of training. Thomas B. Cox, B-187213, October 1, 1976. However, an
agency may pay for the transportation of an employee's family and
household goods pursuant to section 4109, only if the estimated cost of
that transportation is less than the aggregate cost of per diem for the
period of training. Lynn C. Willis et al., supra. A post factum
determination of this has been made herein (question and answer No. 2).
But in accordance with our answer to question No. 3, the transportation
of an employee's family and household goods may, in appropriate cases,
be authorized pursuant to 5 U.S.C. 5729, and not 5 U.S.C. 4109. Thus,
in future cases of this nature, it would not be necessary to perform a
cost comparison because dependent travel and transportation of household
goods will be performed under 5 U.S.C. 5729. The agency retains
discretion to authorize full or partial per diem for training
assignments in excess of 30 days at 55 percent of the full per diem
allowed by the Federal Travel Regulations. 45 FR 67669 (October 14,
1980).
"In a similar case dealing with long-term training prior to a known
PCS (B-185281, 24 May 1976) you stated that the employee's entitlement
to TQSE could be utilized in advance of the actual PCS as long as
selection for the training program was tantamount to notice of transfer.
May this principle be extended to allow for the advance shipment of Mr.
Croall's POV in anticipation of his PCS in June 1980? May
transportation expenses incurred in traveling to and from the ports to
DELIVER AND PICK UP THE POV BE REIMBURSED, AND IF SO, IS REIMBURSEMENT
limited to a construction of the costs which would have been incurred if
the employee had travelled directly from the foreign area to the new
permanent duty station?"
Answer. In our decision Robert V. Brown, B-185281, May 24, 1976,
cited above, we allowed reimbursement for temporary quarters subsistence
expenses where the employee's training assignment was in fact ordered in
anticipation of his further reassignment to a new but undetermined
permanent station. This decision was also based on the fact that an
employee transferred to a new permanent duty station may be reimbursed
for TQSE prior to reporting for duty at the new duty station regardless
of the location of the temporary quarters. We believe that the
rationale in that decision can be extended to the shipment of POV's
where the employee is assigned to training with the understanding that,
upon completion of the training, he or she will be assigned to a new
permanent duty station in the United States. Since such reimbursement
incident to 5 U.S.C. 5727(b)(1976), relates to a return from overseas
pursuant to transfer to a new duty station, reimbursement should not be
made until the training is completed, the appropriate agreement has been
signed, and the employee has been assigned to a new permanent duty
station. B-166943, February 16, 1971; B-161795, June 29, 1967.
Transportation expenses incurred in traveling to and from the ports
to deliver and pick up the POV should be allowed as in any permanent
change of station transfer in accordance with the applicable regulations
in the FTR, paragraph 2-10.4, and 2 JTR paragraph C11004. See also
Louis DeBeer, B-193837, July 17, 1979.
"While stationed in Germany, Mr. Croall had HHG in nontemporary
storage (NTS) authorized by 5 U.S.C. 5726(b). If his orders are amended
to authorize per diem, may his goods remain in NTS for the duration of
his training assignment? If he is authorized movement of dependents and
HHG in lieu of per diem, may that portion of his HHG which are in NTS
remain since technically, his permanent duty station remains in Germany
until completion of the training?"
Answer. There is no authority to reimburse an employee for
non-temporary storage of household goods incident to training under the
provisions of 5 U.S.C. 4109. Michael G. Pond, supra. Thus, any
authority for the nontemporary storage of household goods must arise out
of Mr. Croall's entitlement in 5 U.S.C. 5726(b)(1976). Like the
provisions authorizing travel expenses under section 4109, the
provisions of section 5726(b) are discretionary with the head of an
agency.
The regulations state in 2 JTR, paragraph C8002-c(2):
(2) Eligibility. To be eligible for nontemporary storage one of the
following conditions must be met:
1. the permanent duty station is one to which he is not authorized
to or at which he is unable to use his household goods,
2. the storage is authorized in the public interest,
3. the estimated cost of storage would be less than the cost of
round trip transportation (including temporary storage) of the household
goods to the new permanent duty station.
The regulations also state in 2 JTR, paragraph C8002-c(4), that
eligibility shall be deemed to terminate on the last day of work at the
post of duty. But,
* * * When an employee ceases to be eligible for the allowance,
storage at Government expense may continue until the beginning of the
second month after the month in which his eligibility terminates,
unless, to avoid inequity, the overseas command extends the period. * *
*
Since this authority is discretionary, we do not wish to interfere
with the exercise of the agency's discretion by establishing parameters
in which nontemporary storage must cease. However, if it is determined
by the agency in advance that the employee will no longer return to his
overseas assignment after the completion of training, then it could be
determined that the employee's eligibility terminated on his last day of
work at the post of duty.
"While assigned to Germany, Mr. Croall received a post allowance and
Living Quarters Allowance. If it is determined that Mr. Croall's
official duty station continues to be in Germany while he is attending
the training, the Department of State Standardized Regulations are
unclear as to the point in time the entitlement to these allowances
ceases. Does authorized delayed travel of the dependents have an effect
on the termination of allowances? Does the type of travel order (per
diem versus movement of dependents and HHG) have an effect on the
termination of allowances?"
Answer. We agree that the State Department Standardized Regulations
(Government Civilians, Foreign Areas), section 130, living quarters
allowance, and section 220, post allowance, are unclear as to the point
in time the entitlement to these allowances cease when long-term
training is involved. However, in response to our inquiry the State
Department advised us that:
In general, so long as the employee is assigned to Heidelberg,
Germany and is absent on temporary duty (training) orders with per diem
and so long as his family continues to reside in Heidelberg with
quarters costs incurred, the living quarters allowance and the post
(cost of living) allowance would continue. A transfer order (permanent
change of station) for employee would terminate allowances (including
quarters and post) at employee's old post as of the date of his
departure (or earlier if he stopped incurring quarters ocst at the old
post), or on the effective date of transfer, if employee is already at
the new post.
Such transfer order would include authority for transportation of
dependents and household goods.
The above is the State Department's interpretation of its own
regulations and should be given great weight. However, it is only the
general rule and without more information as to a specific case, we
would be unable to determine exactly when the allowances terminated.
If, as the answer to question No. 3 indicates, a travel order is issued
to retroactively authorize advance return travel of dependents and
household goods it would seem that the allowances would cease when the
employee's family no longer occupies quarters and departs from the
overseas post. Effective use of advance return travel for dependents
and household goods in future long-term training assignments of this
nature could alleviate the necessity for the payment of overseas
allowances. If there is still any doubt as to the payment of overseas
allowances in Mr. Croall's case, the matter could be submitted at a
later date together with more detailed information.
"Mr. Croall's actual place of residence is Fort Monroe, Virginia. If
he is authorized advance return of dependents and HHG, as contemplated
in question #3 above, he will designate an alternate destination of
Washington, D.C., and accept responsibility for any difference in cost.
Upon completion of the training assignment when the final PCS occurs,
can further movement at Government expense be authorized for the
dependents and HHG? Would such reimbursement be limited to the
constructed cost of transportation from the old to the new duty station?
Would such shipment of HHG be limited to the constructed cost of
shipment in one lot by the most economical route from the old to the new
duty station?"
Answer. The authority for the payment of transportation expenses for
the prior return of the employee's family and household goods under 5
U.S.C. 5729 limits reimbursement. The employee is entitled to
transportation expenses from his post of duty to his actual place of
residence. Mr. Croall's actual place of residence is Fort Monroe,
Virginia. Thus, since Mr. Croall has completed his training, received
his permanent change of station orders, and executed the necessary
agreement, he may be reimbursed the constructive cost of transportation
from his old to his new duty station, less the cost of transportation
from his old duty station to this place of residence. 52 Comp.Gen.
834(1973). The shipment of household goods should be limited to the
constructive cost of shipment in one lot by the most economical route
from the old to new duty station. Ramon v. Romero, B-190330, February
23, 1978; FTR paragraph 2-8.2d.
Your questions are answered accordingly.
B-199531, May 19, 1981, 60 Comp.Gen. 476
Non-appropriated Fund Activities - Sharing Facilities, Services, etc.
With appropriated Fund Activity - Cost Sharing Basis for Reimbursement -
Personal Services
Appropriated fund (AF) and non-appropriated fund (NAF) personnel on
Army base operate separate billeting facilities in single hotel/motel
type quarters. NAF and AF clerks, working alone, handle both NAF and AF
transactions on their respective shifts. Certifying officer asks
whether AF can reimburse NAF for AF work performed by NAF employees, in
light of GAO decision 58 Comp.Gen. 94, that purchases of services from
NAFs, when authorized, must be treated as procurements, and of finding
that this procurement is unauthorized because it involves personal
services. Reimbursement is authorized. Transaction should not be
treated as procurement of personal services, but as method of allocating
expenses of operating respective facilities on a cost sharing basis.
Matter of: Department of the Army: Services provided by
non-appropriated fund employees, May 19, 1981:
This decision is in response to a request from a United States Army
Finance and Accounting Officer for an advance decision. His request
concerns the propriety of reimbursing a non-appropriated fund
instrumentality (NAFI) with appropriated funds, for work performed by
NAFI employees in support of appropriated fund activities.
Specifically, this case involves billeting activities at an Army
base. There are two types of accommodations available on the base, both
housed in a single hotel/motel type accommodation. One type, which
includes Visiting Officer Quarters, Bachelor Officer Quarters,
Distinguished Visitors Quarters and Enlisted Bachelors Quarters, is
operated with appropriated funds. The other is a NAFI enterprise
operated to provide guest accommodations for relatives of military
personnel stationed on the base and other transient needs. The volume
of transactions, we are told, does not justify having two desk clerks,
one paid from appropriations and the other a NAFI employee, on duty at
all times to provide "check in-check out" services for the respective
operations. Instead:
(t)here are two appropriated fund desk clerks and three
nonappropriated fund desk clerks, each working alone for an 8-hour
shift. Each desk clerk handles both appropriated (52% of the workload)
and nonappropriated (48% of the workload) fund transactions as they
occur during the shift. * * *
Consequently, NAFI employees on their shift provide some of these
services for accommodations receiving appropriated funds.
The Finance and Accounting Officer has before him a voucher for
reimbursement of the NAFI for services involving the appropriated fund
accommodations from October 1 to December 31, 1979. The Contracting
Officer, citing the lack of authority for "personal services" contracts,
has refused to authorize procurement of these services from the NAFI for
subsequent periods. The Finance and Accounting Officer asks whether he
may certify the voucher for payment, and further, whether the NAFI can
properly be reimbursed from appropriated funds in the future; whether
the transaction is in essence a procurement from a source outside the
Government; and, if so, whether it should be treated as an Order for
Supplies and Services rather than as an Order for Reimbursable Services
from within the Government. The answer is that the voucher should not
be paid, but not for the reasons suggested in the submission.
The Finance and Accounting Officer cites our decision, 58 Comp.Gen.
94(1978) (listed in his submission as B-148581, B-189651, and B-190650)
as directing that NAFIs be treated as non-Government contractors for
purposes of securing services from them.
The dilemma arises because the contracting officer refuses to authorize
a procurement of these services from the NAFI because he is not
authorized to enter into personal service contracts.
It is not necessary to resolve the question of whether the billeting
services of the NAFI desk clerks should be regarded as "personal
services" for which the Army may not contract. In fact, 58 Comp.Gen. 94
and the Defense Acquisition Regulation (DAR) governing procurements from
non-Governmental sources are not pertinent at all, because, in our view,
no procurement is involved.
A decision has obviously been made to operate a single hotel/motel
type accommodation with some billeting facilities for appropriated fund
guests and some for non-appropriated fund guests. Obviously, an
arrangement is necessary to allocate costs for common expense items,
such as lobby maintenance and repair. Since the volume of traffic does
not justify assigning two desk clerks for every shift, according to the
submission, a cost sharing arrangement is also necessary for the salary
expenses of the total number of clerks employed. If the total number of
NAFI desk clerks is disproportionate to the total number of NAFI
transactions, as alleged, redress can be made by replacing one NAFI desk
clerk with one appropriation-funded desk clerk. If the allocation of
costs is still inaccurate, payment of the difference may be effected,
using DA Form 2544 and Standard Form 1080, treating this as a transfer
between funds.
B-195982.2, May 14, 1981, 60 Comp.Gen. 468
Contracts - Protests - Court Injunction Denied - Effect on Merits of
Complaint
Although denial of motion for preliminary injunction does not go to
merits of case, when arguments presented to court deal with identical
issues raised in protest, General Accounting Office (GAO) will consider
court's findings. Contracts - Protests - Timeliness - Significant Issue
Exception
When protest involves questions regarding timing of
Government-supervised benchmark which have not previously been
considered by GAO, matter is significant and will be considered even
though protest is untimely. Contracts - Negotiation - Competition -
Discussion With All Offerors Requirement - Actions Not Requiring -
Clarification Requests
Contracting agency may seek clarification of proposals from offerors,
and when contacts between agency and offerors are for limited purpose of
seeking and providing clarification, discussions used not be held with
all offerors in competitive range. Contracts - Negotiation - Reopening
- What Constitutes
When information is requested and provided which is essential to
determining acceptability of proposals, negotiations have been reopened
and discussions have occurred; actions of the parties, not
characterizations of contracting officer, must be considered. Contracts
- Negotiation - Offers or Proposals - Unacceptable Proposals - Precluded
From Reinstatement
When offeror has been given opportunity to clarify aspects of
proposal with which contracting agency is concerned, and responses lead
to discovery of technical unacceptability, agency has no obligation to
conduct further discussions and may drop proposal from competitive range
without allowing offeror to submit revised proposal. Contracts -
Specifications - Tests - Benchmark - After Best and Final Offers -
Reopening Negotiations
If, in connection with Government-supervised benchmark, questions are
likely to arise or additional information to be needed, benchmark is
inherent part of negotiation process during which deficiencies must be
identified and offerors given an opportunity to correct them. In this
case, benchmark should precede best and final offers or agency should be
prepared to reopen negotiations.
Matter of: CompuServe Data Systems, Inc., May 14, 1981:
CompuServe Data Systems, Inc. protests the award by the General
Services Administration (GSA) of a contract for teleprocessing services
to Boeing Computer Services Company. The dispute primarily concerns
CompuServe's interpretation of and ability to meet solicitation
provisions designed to enable GSA to audit charges under the contract.
CompuServe also alleges that GSA improperly conducted discussions after
best and final offers and permitted Boeing-- but not Compuserve-- to
make changes in its proposal. For the following reasons we are denying
the protest.
I. Background:
The procurement was conducted by GSA for the Army Military Personnel
Center, which uses a computerized reservation system, REQUEST/RETAIN, to
identify and allocate training spaces for enlisted personnel and new
recruits. This was a new competition for services previously provided
by Computer Science Corporation on its Infonet system.
Award to Boeing was based on its offering a system meeting all mandatory
technical requirements at the lowest evaluated life-cycle cost.
Two benchmarks, with programs which simulated actual REQUEST/RETAIN
operations, were scheduled during this procurement. Offerors ran the
first before completing their proposals, submitting cost tables based on
the results, printouts, and written descriptions of their execution of
the required programs to GSA. A second, Government-supervised benchmark
was held after best and final offers.
II. Resource Consumption Routine Requirement:
CompuServe's first basis of protest is that after it had completed
both benchmarks, GSA informed the firm that its proposal was technically
unacceptable because of deficiencies in its resource consumption routine
(RCR). The solicitation required offerors to provide such a routine,
which would measure and print out (1) the elapsed time for execution of
each program included in the benchmark and (2) the types and quantities
of all computer resources consumed by the programs. GSA indicated that
this information would be used to monitor the successful contractor's
performance and charges.
After protesting to our Office, CompuServe sought but was denied a
court order suspending performance by Boeing pending our decision.
CompuServe Data Systems, Inc. v. Freeman, No. 80-2327 (D.D.C., October
17, 1980) (memorandum opinion and order denying preliminary injunction).
The specific deficiencies which GSA found in CompuServe's resource
consumption routine, as described in a letter dated April 3, 1980,
involve "dynamic calculation (sic) of core" and the "bundling of element
Ta." CompuServe alleges that with regard to both of these, the agency is
now imposing new and more stringent requirements than were in the
original solicitation.
As a matter of law, CompuServe argues that GSA should have amended
the solicitation to reflect its new requirements. If the solicitation
is regarded as ambiguous as to what the resource consumption routine
required. CompuServe continues, it should be construed against GSA,
which drafted it. In any case, the firm argues, the requirements exceed
GSA's minimum needs and unduly restrict competition. Alternatively,
CompuServe contends that GSA either knew or should have known of the
so-called deficiencies in its proposal when it accepted results of the
pre-proposal benchmark, and should have discussed them before best and
final offers.
GSA, on the other hand, indicates that none of the problems with
CompuServe's resource consumption routine was apparent from its
proposal.
Rather, the agency states, it was only after the Government-supervised
benchmark that it was able to determine that CompuServe's routine did
not provide data in the form required by the solicitation.
According to GSA, satisfactory "repairs" /1/ to CompuServe's
Government-supervised benchmark could have been made only if the firm
had concurrently changed its technical and cost proposals; since best
and final offers had been submitted before GSA made this determination,
the agency refused to allow any changes on grounds that they would be
late modifications.
III. Alleged Deficiencies in CompuServe's Proposal:
A. Dynamic Allocation of Core
Dynamic allocation of core (main memory) was a mandatory feature of
the system GSA sought. This means that instead of a system in which it
was charged for a fixed amount of core, GSA required one which, before
program execution, would calculate the amount of core needed to complete
the program and allocate it accordingly, so that the Government would
not be charged for more than it actually used.
As the court observed in its memorandum opinion, CompuServe offered
what appeared to be an even more efficient system, one which allocated
and de-allocated core as needed throughout program execution.
CompuServe, however, did not display changes in core usage as they
occurred, but merely summarized them in a printout at the end of the
program. This, according to GSA, did not comply with the solicitation
and was not sufficient for audit purposes. CompuServe, on the other
hand, contends that the requirement for displaying and quantifying
resources every time the amount consumed changes during program
execution is new.
B. The Bundling of Element Ta:
Section F.2.2.4.4.b. of the solicitation required that offerors
display "specifically and separately all unique resource elements for
which a charge (was) made." Any elements which were "bundled" to produce
a compound billing unit of any kind were to be "unbundled," and offerors
were required to certify that all elements were presented in this form.
According to GSA, its ability to audit CompuServe also was limited
because the firm combined the elements E, representing the number of
instructions the computer is directed to execute, and M, representing
the amount of memory exercised, to form a unit identified in its billing
algorithm by the algebraic term Ta.
CompuServe argues that since neither E nor M is separately recorded
or billed, the element Ta should not be considered a bundled unit.
The firm concludes that it fully complied with the solicitation, since
it provided a routine which measured and printed out resources consumed
at the end of program execution and which included all elements for
which it charged.
IV. GAO Analysis of RCR Requirements:
In the words of the District Court, the Government was clearly
dissatisfied with its ability to audit the precise elements of the
charges for which it had been billed under the Computer Sciences
Corporation contract. The requirements for a resource consumption
routine were intended to facilitate examination of charges under the new
contract and to insure accurate billing. The court found that
CompuServe did not meet these requirements.
We recognize that a denial of a motion for a preliminary injunction,
such as was issued here, is by its nature interlocutory and provisional,
and does not go to the merits of a case. Nevertheless, since the
extensive oral and written arguments presented to the court deal with
the identical issues which have been raised in this protest, we believe
it is appropriate to consider the court's findings. See CSA Reporting
Corporation, 59 Comp.Gen. 338(1980), 80-1 CPD 225.
With regard to dynamic allocation of core, the court stated:
* * * Apparently, the Government had to take CompuServe's system on
faith that the final charge for memory space used was an accurate
calculation of the various component charges set during the stages of
the program.
As for the bundling of element Ta, the court found:
* * * CompuServe admits that nowhere does it display or calculate
these two units (E and M) separately. The fact that the CPU (central
processing unit) is divided into two units * * * at all, appears to
bundle elements in apparent violation of the RFP (request for
proposals), abrogating the Government's determined ability to audit
separately each aspect of the calculated computer charge.
The court concluded:
* * * The language of the RFP is unambiguous-- the Government wanted
to audit each separate component of the final charge, and it appears
that in both the calculation of CPU and the allocation of memory space,
CompuServe bundled elements of the final figure in such a manner as to
preclude the Government from auditing the usage precisely.
A computer scientist for the National Bureau of Standards concurs in
these findings; in an affidavit prepared for submission to the court,
he stated:
* * * In my professional judgment, CompuServe's element Ta is a
bundled element. It is my judgment that the separate display of the
component elements of Ta, namely E and M, is necessary to satisfy the
Resource Consumption Routine (RCR) requirements of the RFP.
In my professional judgment, the core value printed out at the
termination of the benchmark programs provided to the Government does
not comply with the Resource Consumption Routine (RCR) provisions of the
RFP and does not provide enough information to perform a detailed audit
per the requirements stated in the RFP.
In my professional judgment, the description of the SRU (system
resource usage) algorithm provided to the Army by CompuServe in its cost
proposal, along with its technical proposal and its Resource Consumption
Routine (RCR) and benchmark listings, was not sufficient information for
the Army to know:
(a) that Ta was a bundled unit; and
(b) that the algorithm recomputed SRU's when dynamic core allocation
took place within a program.
It is my professional judgment that the Army's evaluation that
CompuServe's Resource Consumption Routine (RCR) should be capable of
quantifying and displaying at the termination of a program its usage of
the elements making up the SRU * * * is not a change in the requirements
set fort, in the RFP. Rather, the Army's evaluation was totally
consistent with the RFP requirements in that the display of those
elements was necessary for CompuServe to submit an acceptable Resource
Consumption Routine (RCR).
We agree with the court and the National Bureau of Standards, and
find that the resource consumption routine requirements were neither new
nor ambiguous. Moreover, we do not believe these requirements exceeded
GSA's minimum needs or were unduly restrictive. With compound billing
units, it would be possible to change the weights in a billing algorithm
to make actual programs cost relatively more than benchmark programs,
which will be rerun for the purpose of validating costs. Since there
will be no adjustments to the contractor's invoices unless actual costs
exceed benchmark costs by more than five percent, substantial
overcharges could result. We find that GSA's audit methodology is a
reasonable attempt to prevent this type of manipulation.
The final question with regard to CompuServe's first basis of protest
is whether CompuServe met solicitation requirements.
In written responses to GSA's questions following the
Government-supervised benchmark, CompuServe acknowledged that there were
no programs available at that time which could be used by the Army for
verification of its SRU algorithm. CompuServe merely offered to
provide, 30 days after award, a software interrupt capability which
would allow the Government to detect changes in core allocation as they
occurred and to determine precisely the amounts used in CompuServe's
calculations. Nor did CompuServe show, in its responses to GSA's
questions, that it met the Government's requirements for presentation of
all elements in unbundled form. Rather, CompuServe stated, "Our
operating system specialists have indicated that we could provide the
factors 'E' and 'M' to the Army; however, this would require
prohibitively high processor overhead."
In view of these admissions, we cannot conclude that CompuServe's
resource consumption routine met solicitation requirements.
V. Discussions:
CompuServe's second broad basis of protest is that GSA improperly
conducted discussions after best and final offers without affording the
firm an opportunity to revise its proposal. The firm cites questions
posed in a letter from the technical evaluation team to CompuServe and
various exchanges between GSA and Boeing which resulted in repair of
Boeing's Government-supervised benchmark and reconciliation of its cost
proposal.
GSA's actions, CompuServe alleges, violated procurement regulations in
that all offerors were not treated fairly and equally.
GSA argues that this basis of protest is untimely, since it was not
raised within 10 days after CompuServe knew of the alleged improper
communications. The agency also asserts that it was merely seeking
clarification and that it did not conduct discussions, since it
permitted no changes in proposals. Such clarification was an essential
part of the evaluation of best and final offers, the agency continues,
and had deliberately been deferred until the Government-supervised
benchmark in order to safeguard proprietary information until the latest
possible stage of the procurement process.
While CompuServe's protest may be untimely, we believe it raises
significant issues, not previously considered by our Office, in terms of
when a Government-supervised benchmark should be conducted and what type
of questions may follow it. We therefore will consider the matter. See
Association of Soil and Foundation Engineers, B-199548, September 15,
1980, 80-2 CPD 196; 4 CFR 20.2(c)(1980).
In our opinion, GSA did conduct discussions with CompuServe after
best and final offers. The chronology was as follows: best and finals
were submitted on December 28, 1979; CompuServe ran its
Government-supervised benchmark on February 8, 1980. By letter dated
February 29, 1980, the contracting officer advised CompuServe that
results of that benchmark had been analyzed and that all but two
capabilities described in its proposal had been successfully
demonstrated. The first is not at issue here; the second was
CompuServe's resource consumption routine. The contracting officer
posed 11 specific questions regarding CompuServe's billing algorithm and
resource consumption routine which he indicated must be successfully
clarified for the firm to remain in the competition. On March 10, 1980,
CompuServe responded to those questions in writing, leading to a
determination by the technical evaluation team on March 19, 1980, that
CompuServe responded to those questions in writing, leading to a
determination by the technical evaluation team on March 19, 1980, that
CompuServe's resource consumption routine was unacceptable, primarily
because it did not provide the audit capability which the Government
sought.
Contracting agencies are permitted to seek clarification of proposals
from offerors, and when contacts between the agencies and offerors are
for the limited purpose of seeking and providing clarification,
discussions need not be held with all competitive range offerors. John
Fluke Manufacturing Company, Inc., B-195091, November 20, 1979, 79-2 CPD
367.
On the other hand, when an offeror is permitted to change a proposal or
when information is requested and provided which is essential to
determining the acceptability of a proposal, the contacts go beyond mere
clarification and, as we have often held, negotiations have been
reopened and discussions have occurred. ABT Associates, Inc., B-196365,
May 27, 1980, 80-1 CPD 362 and cases cited therein; Raytheon Service
Company et al., 59 Comp.Gen. 316(1980), 80-1 CPD 214 at 20. The actions
of the parties, not the characterizations of the contracting officer,
are what must be considered. ABT Associates, Inc., supra.
In this case, the questions asked and the written responses provided
related to how CompuServe calculated costs; they went to the heart of
CompuServe's proposal. CompuServe's responses offered various
alternatives and considerable elaboration and detail not offered in its
initial proposal, and had a substantial effect of GSA's finding of
unacceptability. In our opinion, this exchange therefore constituted
discussions and not mere clarification. See The Human Resources
Company, B-187153, November 30, 1976, 76-2 CPD 459.
This does not mean, however, that GSA was required to give CompuServe
an opportunity to revise its proposal after this evaluation was
completed. When an offeror has been given an opportunity to clarify
aspects of its proposal with which the contracting agency is concerned,
and its responses lead to a determination of technical unacceptability,
the agency has no obligation to conduct further discussions. Genesee
Computer Center, Inc., B-188797, September 28, 1977, 77-2 CPD 234.
Although it was not until after the Government-supervised benchmark that
the technical evaluation team discovered that CompuServe's proposal was
unacceptable with respect to the resource consumption routine
requirements, and that a complete revision would be needed for it to
meet those requirements, the agency could properly drop the proposal
from the competitive range at that point without allowing the offeror to
submit a revised proposal. General Electric Company, 55 Comp.Gen. 1450
at 1456(1976), 76-2 CPD 269; Electronic Communications, Inc., 55
Comp.Gen. 636(1976), 76-1 CPD 15; cf. Proprietary Computer Systems,
Inc., 57 Comp.Gen. 800 (1978) 78-2 CPD 212, involving a proposal which
the agency doubted was acceptable and dropped after discussions
confirmed this.
CompuServe has argued that GSA either knew or should have known of
the deficiencies in its proposal before it requested best and final
offers, and thus suggests that GSA failed to conduct meaningful
discussions with it. However, the technical evaluation report, included
in the record, indicates that until the Government-supervised benchmark,
GSA believed that CompuServe had submitted the information required,
both in narrative form in its cost and technical proposals and in its
resource consumption routine.
For example, according to GSA, CompuServe indicated that it provided
dynamic allocation of core, but did not explain how it dynamically
allocated and de-allocated core during program execution. Therefore,
according to GSA, this feature was never evaluated in relation to
CompuServe's resource consumption routine, and it was only during the
Government-supervised benchmark (and the discussions which followed)
that GSA determined that CompuServe could not be audited to the extent
required by the solicitation. Under these circumstances, we cannot
conclude that GSA did not meet its duty to conduct meaningful
discussions.
In view of our finding that GSA had no obligation to allow CompuServe
to revise its proposal following the post-benchmark discussions,
CompuServe's complaint that it was denied an opportunity that was given
Boeing is without merit.
We believe, however, that this procurement demonstrates the need to
run a Government-supervised benchmark earlier in the procurement process
than was done here. If such a benchmark is merely to be used to
validate results of an earlier one, it may logically be considered part
of the evaluation of best and final offers. We understand, however,
that in the majority of cases it is likely that questions will arise or
additional information will be needed upon completion of the benchmark.
In those cases, as here, the benchmark becomes an inherent part of the
negotiation process, during which deficiencies should be pointed out and
offerors given a chance to correct them if possible. See The Computer
Company-- Reconsideration, B-198876.3, January 2, 1981, 60 Comp.Gen.
151(1981), 81-1 CPD. In such cases, therefore, the benchmark should
precede best and final offers or the agency should be prepared to reopen
negotiations if necessary. By letter of today, we are so advising the
Administrator of General Services.
The protest is denied.
/1/ Repair is a broad general term which may be used to mean anything
from manual correction or change to a complete re-running of a
benchmark.
B-194153, May 13, 1981, 60 Comp.Gen. 464
Loans - Government Insured - Limitations - Two Notes Representing One
Loan - Different Interest Rates - Propriety
Economic Development Administration (EDA) has authority to allow
guaranteed loans to be represented by two notes, with fully guaranteed
note-- representing 90 percent of loan amount, having a lower interest
rate than unguaranteed note-- representing remaining 10 percent of loan.
Notwithstanding statements to contrary in B-194153, Sept. 6, 1979, in
which we said two-note procedure could be used only if substantive terms
of notes, including maturity dates and interest rates, were same, EDA is
not prohibited from using split interest rates provided other
substantive terms remain same.
Matter of: Split-interest rates on guaranteed and non-guaranteed
portions of loan, May 13, 1981:
This decision to the Administrator of the Economic Development
Administration (EDA), an agency within the Department of Commerce, is in
response to a request from its former General Counsel that we reconsider
a statement we made in an opinion, B-194153, September 6, 1979, to
Senator Charles H. Percy concerning the establishment of a then proposed
pilot program designed to bring new industrial development projects to
several depressed areas in the City of Chicago.
One of the issues we considered in that case was whether EDA's
statutory authority under 42 U.S.C. 3142(1976) to guarantee loans to
private borrowers "by private lending institutions" would allow EDA to
implement a program whereby EDA would guarantee loans made by commercial
banks with the guaranteed portions of those loans to be subsequently
assigned to the City of Chicago, which would finance their purchase with
funds raised through the "public credit markets."
We held that, since the City of Chicago "is not private, is not a
lending institution and could not have qualified for a guarantee
initially," the proposed program, which would required EDA to guarantee
notes held by the City, would allow EDA to do indirectly that which it
could not do directly, and would therefore exceed its statutory
authority.
EDA is not now questioning the ultimate conclusion we reached in that
opinion. However, one issue we also considered was whether an EDA
guaranteed loan could legally be evidence by two notes-- with one note
representing 90 percent of the loan to be fully guaranteed by EDA, and
the other note representing the remaining 10 percent of the loan to be
wholly non-guaranteed. In this connection, we said the following in our
decision:
In our view, whether two notes should be combined and treated as one
loan (or one note considered to represent two loans) depends on the
substance of a particular transaction, including the apparent intention
of the parties to the transaction and the purpose of the statutory
provision involved. In the matter at hand, we do not believe that the
proposal to evidence each guaranteed loan by two notes is legally
objectionable. Whether one note with a 90 percent guarantee, or two
notes representing 90 percent and 10 percent of the total loan amount
respectively-- the first fully guaranteed and the second without any
guarantee-- are involved, the end result is precisely the same in our
view and conforms to the statutory requirement that no more than 90
percent of the outstanding balance of a loan be guaranteed by EDA.
Finally, it appears that the primary purpose of the proposed two-note
arrangement is to effectuate the basic legislative purpose rather than
to circumvent it. Therefore, we have no objection to the use of two
notes to represent one loan. * * *
Having reached this conclusion, we do have several caveats to point
out, however. First, since the two notes involved represent only one
loan, we believe that the substantive terms of the two notes, such as
the maturity dates and interest rates, must be the same. Secondly, the
Government's potential liability must in no way be increased by adoption
of the two-note mechanism.
EDA's question here is whether we intended the underlined portion of
the opinion to prohibit the use of two notes whenever the interest rate
on each note varies-- even if the interest rate on the EDA guaranteed
note is lower than the interest rate on the unguaranteed note for the
same loan. In this respect, EDA's submission reads in pertinent part as
follows:
* * * Obviously, it would be improper for the agency to consider a
loan guarantee where the terms applicable to an EDA guaranteed note were
in any way less favorable than the term applicable to a note
representing the same loan, which note is not EDA guaranteed. We
believe that this is the intent of the quoted portion of your opinion.
It is presently proposed, however, to use two notes-- one EDA
guaranteed and one non-guaranteed-- to represent a single loan under
provisions where the substantive terms of the two notes are the same,
save only that the interest rate applicable to the guaranteed note would
be lower than the interest rate applicable to the unguaranteed note.
Because of the guarantee, a note representing a guaranteed portion of
a loan would carry a lower interest rate than a note for the
unguaranteed portion. If the single interest rate is required for both
the guaranteed and unguaranteed portions of a loan, that interest rate
will be an average of the higher rate which would have applied to the
unguaranteed portion and the lower rate for the guaranteed portion.
Therefore, the allowance of varying rates of interest for the two notes
can result in a lower interest rate for the guaranteed portion and
therefore lower cost for the Government if EDA is required to redeem the
guarantee.
We are aware of no substantive objection to the practice, but
obviously it would violate the strict meaning of the language in your
opinion.
EDA is authorized by 42 U.S.C. 3142(c)(1976) to guarantee up to 90
percent of the outstanding unpaid balance of a loan. For this reason we
stated in our opinion to Senator Percy that EDA could only use the
two-note mechanism if the substantive terms of the two notes are the
same. From a conceptual standpoint, it would be very difficult, if not
impossible, to view two notes having substantially different terms as
representing one and the same loan. Logically, if the two notes were
significantly different, we would have to conclude that each represented
a separate loan, one fully guaranteed and one not guaranteed at all. Of
course, in that event the two-note mechanism would necessarily fail,
since, as noted, EDA may only guarantee up to 90 percent of any loan.
For the reasons set forth hereafter, however, we are now inclined to
agree with the view espoused by EDA that it is not prohibited from
allowing a guaranteed loan to be represented by two notes, each with a
different interest rate, provided that the fully guaranteed note has a
lower interest rate than the unguaranteed note.
First, nothing in either the statute or its legislative history
suggests that Congress intended to prohibit the establishment of
different interest rates for the guaranteed and non-guaranteed portions
of a loan, regardless of whether each loan was represented by one or two
notes. In fact, Congress never even expressed any intention to impose
any limitations on lenders concerning the much more basic question of
the establishment of maximum interest rates for guaranteed loans.
Although the interest rate on direct loans made under this statute is
limited pursuant to 42 U.S.C. 3142(b)(8), Congress chose not to set any
such lim it on the amount of interest charged by private lenders on
guaranteed loans when it enacted the Public Works and Economic
Development Act of 1965, Pub. L. No. 89-136, August 26, 1965, 79 Stat.
556 (42 U.S.Code 3121 note). See H. Rep. No. 539, 89th Cong., 1st Sess.
(1965). No such statutory restriction or limitation on the interest
rates for guaranteed loans has ever been imposed on this program. /1/
Moreover, when the matter is considered from a broad programmatic
perspective, we see no legal reason to prohibit the split-interest rate
mechanism.
The primary reason most Federal loan guarantee programs are not made on
a 100 percent guaranteed basis but require some private participation,
is to insure that both borrowers and lenders, in addition to the Federal
Government, are exposed to some degree of commercial risk. The General
Accounting Office has consistently taken the position that such
risk-sharing is a very important element of any loan guarantee program,
since otherwise "the normal incentives for successful completion and
management of the project * * * are absent" and "the probability that
the loan guarantee program will achieve its intended objective is
diminished." (See audit report entitled "Government Agency Transactions
With the Federal Financing Bank Should Be Included On the Budget,"
PAD-77-70, August 3, 1977, at p. 16.) As we understand it, the split
interest rate mechanism will in no way harm or injure this principle of
risk sharing, since at least 10 percent of every loan will still have to
be represented by a fully unguaranteed note, albeit at a high rate of
return for the lender. In this connection, we agree with EDA that it is
reasonable to allow the holder of the unguaranteed note because of the
substantially higher risk of the former. It is understood that all
payments under either note will be credited so as to retain the
appropriate ratio between the guaranteed and unguaranteed undertakings.
Interest on guaranteed loans by private lending institutions must be
at not more than their prevailing rates and must be reasonable with
respect to the project.
Furthermore, we also agree with the statement made by EDA that the
Government actually stands to gain under the split interest mechanism
since the interest rate for the guaranteed portion would be lower than
would be the case if a uniform "average" interest rate was charged for
the entire loan, including both the guaranteed and non-guaranteed
portions. Accordingly, the cost to the Government would be less in the
event of a default requiring EDA to honor its guarantee.
Finally, we understand that for some time the loan guarantee programs
of other agencies which operate under similar statutory authority, have
allowed for split interest rates, on the guaranteed and non-guaranteed
portions of a loan. For example, in its business loan program
authorized pursuant to 15 U.S.C. 636(a), the Small Business
Administration (SBA) allows lenders to establish different interest
rates on the guaranteed and non-guaranteed portions of a loan. Although
SBA's procedure is to use only one note representing the entire loan,
SBA allows the initial lender to sell the guaranteed portion of the loan
to other participating lending institutions with which SBA has entered
into what is known as a "Secondary Participation Guarantee Agreement."
The Farmers Home Administration (FmHA) has a loan guarantee program
that operates in a manner that is even closer to what EDA is proposing
here. In its Business and Industrial Loan program established pursuant
to 7 U.S.C. 1932, FmHA allows lenders to use a multi-note system, with
one note representing the non-guaranteed portion and up to 10 notes for
the guaranteed portion. Moreover, its regulations specifically provide
for the establishment of different interest rates for the guaranteed and
non-guaranteed notes. In this connection, 7 C.F.R. 1980.423(a)(4)(1980)
provides in pertinent part as follows:
(4) It is permissible to have one interest rate on the guaranteed
portion of a loan and another interest rate on the unguaranteed portion
of the loan, provided the Lender and borrower agree and:
(i) The rate on the unguaranteed portion does not exceed that
currently being charged on loans of similar size and purpose for
borrowers under similar circumstances.
(ii) The rate on the guaranteed portion of the loan will not exceed
the rate on the unguaranteed portion.
Thus, with statutory authority not unlike that under which EDA
operates, FmHA (and to a lesser extent SBA) is carrying out a program,
without objection, that is substantially the same as that which EDA is
now proposing to adopt.
In accordance with the foregoing, and notwithstanding anything to the
contrary in B-194153, September 6, 1979, which decision should now be
considered as modified, it is our view that EDA is not prohibited from
allowing the interest rates on the guaranteed portions of a loan--
represented by one note-- to be less than the interest rate on the
non-guaranteed portion of the loan-- which is represented by a separate
note. However, as stated above, in order for us to continue to view the
two notes as representing one and the same loan, the other substantive
terms of the notes should remain the same. Furthermore, based on the
existing language in EDA's regulations (13 CRF 306.11(1980)) and
following the model established by FmHA, the interest rate on the
non-guaranteed note should not exceed the prevailing rates on comparable
private sector loans and the overall effective interest rate (based on
the average of the guaranteed and non-guaranteed loan rates) should not
be greater than would be the case had only one uniform rate for the
entire loan been used.
/1/ We note that the applicable regulations adopted by EDA with
respect to interest rates on guaranteed loans as set forth at 13 CFR
306.11(c)(1980) as follows:
B-198962, May 12, 1981, 60 Comp.Gen. 459
Subsistence - Per Diem - "Lodgings-Plus" Basis - Staying With Friends,
Relatives, etc. - Evacuated Employees - Agency for International
Development
Agency for International Development evacuees who had initially been
authorized the special subsistence allowance on a flat rate basis were
advised that the Secretary of State had authorized future payment on
lodging-plus basis and that those who stayed with friends or relatives
would not be reimbursed any amount for lodgings. Since regulations
contemplate payment on per diem basis, Secretary acted properly in
authorizing reimbursement based on the lodging-plus system now in
effect. Secretary's determination to prohibit reimbursement for
noncommercial lodgings is within his authority and consistent with per
diem regulation of certain other Federal agencies.
Matter of: Evacuation Allowances for AID Employees and Other
Dependents Lodging With Friends and Relatives, May 12, 1981:
Mr. William A. Miller, Certifying Officer, U.S. Agency for
International Development Mission to Bangladesh, requests an advance
decision on whether employees evacuated from Bangladesh and authorized a
special subsistence expense allowance may be denied lodging expenses
while occupying noncommercial facilities. Since the denial of these
expenses was mandated by the Secretary of State under a valid use of his
authority in the Standardized Regulations (Government Civilians, Foreign
Areas), there exists no basis to authorize the expenses.
Between November 29, 1979, and December 6, 1979, employees of the
U.S. Agency for International Development (AID) stationed in Bangladesh
were evacuated because of unsettled conditions in the Near East and
South Asia. The evacuees, employees and their dependents, were
authorized travel expenses to a safehaven post and a special subsistence
expense allowance (subsistence allowance) to maintain themselves at the
safehaven location.
Upon arrival in Washington, D.C., the first evacuees received an AID
instruction sheet dated December 1, 1979, which indicated that lodging
receipts would not be required for payment of the subsistence allowance
and that employees who elected to stay with friends and relatives would
receive a safehaven subsistence allowance as follows:
-- $35 per day per adult employee or dependent over 11 years.
-- $17.50 per day per child 11 and under.
-- 60% of the above after 30 days.
-- Maximum of 180 days' subsistence.
These instructions indicated that evacuees staying with friends and
relatives would receive the same allowances as those staying in
commercial facilities.
This instruction sheet of December 1, 1979, was superseded on
December 10, 1979, by new instructions. The new instructions terminated
reimbursement on a fixed rate basis and provided that effective December
15, 1979, the subsistence allowance was to be treated in the same manner
as a per diem allowance under the lodging-plus system. Employees and
adult dependents could be reimbursed up to $35 a day for the first 30
days. The specifics were that the rate was $16 a day for subsistence
and up to $19 per day for commercial lodging. For minor dependents, the
rates were $9.50 a day for subsistence and up to $8 for commercial
lodging. These maximum rates were reduced by 40 percent after the first
30 days. Unlike the earlier instructions these required lodging
expenses to be documented with receipts from commercial establishments.
The superseding instruction states that its issuance was prompted by the
determination that AID evacuees should be paid on the same basis as
those of other agencies.
On January 10, 1980, the personnel for the AID Mission to Bangladesh
who were responsible for processing payment for the evacuees'
subsistence allowance cabled AID headquarters and set forth two proposed
methods for reimbursing evacuees for lodging expenses incurred in
noncommercial facilities. Essentially, the alternate methods were (1)
to allow the evacuees staying in noncommercial facilities reimbursement
for lodging costs based on amounts paid to friends or relatives to cover
the additional expenses incurred by the host or (2) to give the evacuees
staying in noncommercial facilities a reduced fixed rate of $12 for
lodgings without receipts.
AID headquarters refused to distribute the cable to the evacuees and
informed the Mission to Bangladesh that the Secretary of State had
determined not to reimburse lodging expenses to evacuees who stayed in
noncommercial facilities.
The Secretary of State sent a confirmatory telegram to the AID
Mission in Bangladesh on January 17, 1980, which set forth his
determination not to authorize reimbursement of lodging expenses in
noncommercial facilities. After receiving this telegram, the personnel
for the AID Mission to Bangladesh sought on several occasions to have
the AID headquarters administratively reverse this policy without
success.
In requesting this decision, the Certifying Officer indicates that he
believes a reversal of the prior action is mandated because the action
of the Secretary of State and AID headquarters is contrary to the
applicable regulations and that the prior action violates fundamental
fairness when applied to the evacuees. The Certifying Officer suggests
that the law and regulations give the Secretary of State authority only
to establish a maximum daily rate but not to define the circumstances
under which all or a part of that amount may be reimbursed.
Specifically, he questions whether the Secretary of State may determine
"that one employee may be paid no lodging portion of the allowance and
that another may be paid the maximum even though both incurred expenses
as a result of the evacuation." In this latter regard, he points to our
holding in 55 Comp.Gen. 856(1976) and states that employees who stay
with friends or relatives usually feel obliged to compensate their hosts
for the additional expense and inconvenience caused by their stay, even
though those expenses may be difficult to quantify.
The general statutory authority for payment of monetary amounts to
evacuees from foreign areas is found at 5 U.S.C. 5523(a). Essentially,
the statute provides that the head of an agency may provide for payments
to employees or their dependents where an evacuation is ordered because
of imminent danger to the employees or their dependents. Among other
things, 5 U.S.C. 5527(a) and (b) provide that the President shall
coordinate the programs of executive agencies regarding evacuation
allowances and issue implementing regulations for executive agencies.
Under 5 U.S.C. 5527(c), the head of each executive agency is authorized
to issue internal regulations not inconsistent with those promulgated
under the authority of subsection 5527(b).
In Executive Order No. 10982, 27 FR 3 (December 25, 1961), as
amended, the President delegated the authority to promulgate regulations
to the Secretary of State.
Section 3(a) of the Executive order requires the Secretary of State, the
Office of Personnel Management and heads of other Federal agencies to
exercise their authority with respect to evacuees so that employees of
different agencies evacuated from the same geographic area under the
same general circumstances may be treated uniformly.
The Secretary of State has promulgated regulations for adoption
within the executive branch to implement the authority to pay special
allowances incident to an evacuation. These regulations are contained
in the Standardized Regulations (Government Civilians, Foreign Areas),
Chapter 600 and they have been adopted by AID. Of these regulations,
our concern is with Sections 130 and 131(b)(1), (2), and (3) which are
as follows:
130. Purpose of Special Allowances
Special allowances specified in sections 131 and 133 are paid to
evacuated employees to offset any direct added expenses which are
incurred by the employee as a result of his evacuation or the evacuation
of his dependents.
131. Determining Direct Added Expenses
(b) Subsistence Expense Allowance
Unless otherwise directed by the Secretary of State, a subsistence
expense allowance for the evacuated employee or his dependents shall be
determined at applicable travel per diem rates for the safehaven post or
a station other than the safehaven post; which has been approved by
appropriate authority. Such subsistence expense allowance shall be paid
as of the date following arrival and may continue until terminated under
these regulations. The daily amount of the subsistence expense
allowance shall be:
(1) The maximum rate of travel per diem for the employee and each
dependent who is 11 years of age and over; and one-half such rate for
each dependent under 11 years of age. Normally this prescribed maximum
rate shall be paid for the first 30 days of evacuation.
(2) After 30 days, unless continued payment at the maximum or other
rate has been authorized, the subsistence expense allowance shall be
computed at 60 percent of the rates prescribed in subparagraph (1).
This prescribed rate shall be paid until a determination is made by
competent authority that subsistence allowances are no longer authorized
but may not exceed in any case 180 days after the evacuation.
(3) The daily rate of the subsistence expense allowance actually paid
an employee shall be either the maximum rate determined in accordance
with 1 and 2 above, or a lower rate if, in the judgment of the
authorizing officer, such lower rate would be more in keeping with the
employee's necessary living expenses.
Those regulations were issued prior to adoption of the lodging-plus
system for per diem reimbursement and do not specifically define what
lodging costs may be reimbursed as part of the special subsistence
expenses allowance. They do contemplate that, in general, the special
subsistence expenses allowance paid to evacuees will be based on the per
diem rate for the locality to which the employee and his dependents have
been evacuated.
At the time of the particular evacuation in question, the maximum per
diem rate payable within the continental United States was $35.
See 5 U.S.C. 5702 in effect at the time. In providing that the maximum
rate for the first 30 days of evacuation was limited to $35 per day and
that reimbursement after December 15 would be made on a lodging-plus
basis, the Secretary of State did not inappropriately limit the
subsistence allowance provided for by Section 131(b)(1), quoted above.
He merely implemented that regulation in the context of the lodging-plus
system of per diem reimbursement then in effect.
Under the lodging-plus system, we have held that an employee who
stays with a friend or relative may not be reimbursed lodging expenses
based on the cost of commercial lodgings. In 55 Comp.Gen. 856(1976)
referred to by the Certifying Officer, we specifically held that to be
reimbursable the charge for such noncommercial lodgings must be
reasonable in amount and necessarily incurred and should reflect the
host's additional costs occasioned by the employee's stay. That
decision was addressed to the case in which an agency has not exercised
its discretion to establish a specific per diem rate under paragraph
1-7.3c of the Federal Travel Regulations (FTR) (FPMR 101-7, May 1973 as
amended) or otherwise limited reimbursement on the basis of its
responsibility at paragraph 1-7.3a to avoid fixing per diem rates in
excess of those required to meet the necessary authorized subsistence
expenses.
The Uniform State/AID/USIA Foreign Service Travel Regulations, 6 FAM,
do not specifically address the subject of lodging cost reimbursement
when AID and other covered employees stay with friends or relatives, and
we are advised that AID employees who lodge with relatives while on
temporary duty are reimbursed lodging expenses consistent with the
general principles discussed in 55 Comp.Gen. 856, supra. That fact does
not, however, preclude the Secretary of State from exercising his
authority under Section 131(b) of Chapter 600 of the Standardized
Regulations to proscribe reimbursement for noncommercial lodgings. We
note that the Department of Defense is one agency which disallows any
reimbursement for lodgings when its civilian employees stay with friends
or relatives. Paragraph C4552n of Volume II of the Joint Travel
Regulations specifically provides that, for an employee who lodges with
friends or relatives, the average cost of lodging will be zero. In
B-198349, November 3, 1980, 60 Comp.Gen. 57, we recognized that the
Department of Defense acted properly in similarly precluding
reimbursement for lodgings costs when a military member lodges as the
guest of friends or relatives.
Given the breadth of the Secretary of State's authority under Section
131(b) to define the special subsistence expenses allowance and the
Executive order's admonition to uniformly administer the allowance with
respect to evacuees from different agencies, we are unable to find any
impropriety in the Secretary's determination to pay that allowance on
the same basis as certain other agencies pay travel per diem.
As for the action of AID headquarters, this action was not only
proper but required under the regulations. This is the import of
Standardized Regulation, Section 131(b)(3), which provides for the
authorizing officer to pay a lower rate for employees whose necessary
living expenses are less than the maximum rate determined by the
Secretary of State under Sections 131(b)(1) and (2). The discretion
afforded the evacuees' agency, through the authorizing officer, is to
limit reimbursement where appropriate but not to increase it.
Therefore, when the Secretary of State validly used his authority to
preclude reimbursement of lodging expenses for evacuees staying with
friends and relatives, the only discretion available to the authorizing
officer was to further limit that reimbursement.
Accordingly, the evacuees may not be reimbursed for noncommercial
lodging expenses they may have incurred after December 15, 1979.
B-201528, May 11, 1981, 60 Comp.Gen. 456
Voluntary Services - Prohibition Against Accepting
In the absence of specific statutory authority, Federal agencies are
prohibited from accepting voluntary service from individuals except in
certain emergencies. Whenever an agency is authorized by statute to
accept voluntary personal services as an exception to that prohibition,
the specific terms of the particular statutory authorization govern the
conditions of the arrangement, including the scope of services which may
be performed by the volunteers and the matter of whether the agency may
pay for the volunteers' transportation, meals, and lodgings. 31 U.S.C.
665(b). Voluntary Services - Prohibition Against Accepting - Statutory
Exceptions - Civil Service Reform Act of 1978 - Student Volunteers
Section 301(a) of the Civil Service Reform Act of 1978, 5 U.S.C.
3111, authorizes a limited exception to the prohibition against the
acceptance of voluntary service by Federal agencies, by allowing
agencies to establish certain education programs for high school and
college student volunteers. Sponsoring agencies may not pay for the
student volunteers' traveling or living expenses, since the statute and
its legislative history make no provision for payment of those expenses,
and the statute specifically excludes the volunteers from being
considered Federal employees for most purposes including travel and
transportation entitlements.
Matter of: Student Volunteers - Traveling and Living Expenses, May
11, 1981:
This action is in response to a letter dated December 9, 1980, from
the Deputy Director of the Office of Personnel Management (OPM),
requesting a decision on the question of--
(W)hether the head of an agency who accepts voluntary services of
students as authorized by section 3111(b) of title 5, United States
Code, may provide travel and subsistence expenses, quarters, or any
other reimbursements or payments in kind to such volunteers.
We have concluded that expenditures of the type in question may not
be made.
In requesting a decision in this matter, the Deputy Director notes
that the Civil Service Reform Act of 1978 added section 3111 to title 5
of the United States Code relative to the services of student
volunteers. Under 5 U.S.C. 3111(b) the head of an agency may, subject
to regulations issued by OPM, accept the voluntary, uncompensated
services of students in educational programs established by the agency.
The Deputy Director suggests that many volunteers, while able to work
without pay or employee benefits, will be financially unable to
undertake any assignment at personal expense involving service at a
location away from their normal place of residence. Consequently, he
suggests that the flexibility and scope of the student volunteer
programs will be greatly enhanced if the students' traveling and living
expenses when they are away from their normal places of residence are
paid by the Government.
He therefore asks whether OPM may issue regulations under 5 U.S.C.
3111(b) which would permit the students to be reimbursed for their
out-of-pocket traveling and living expenses-- or to be provided with
transportation, meals, and quarters in kind-- by the Government while
they are participating in the volunteer programs.
Other OPM officials in subsequent informal communications have noted
that the Department of Agriculture and the Veterans Administration have
volunteer service programs in which uncompensated volunteers are
furnished with some transportation, meals, and quarters at agency
expense. Those officials have also noted that 5 U.S.C. 5703 authorizes
persons serving the Government without pay to be granted travel
allowances under invitational orders. They therefore ask whether the
features of those other volunteer programs or the provisions of 5 U.S.C.
5703 may be extended to the student volunteers to serve as a basis for
the issuance of regulations by OPM which would permit the students to
have travel allowances or be furnished with transportation, meals, and
quarters in kind by the Government.
Section 665(b) of title 31, United States Code, (section 3679,
Revised Statutes), provides that:
No officer or employee of the United States shall accept voluntary
service for the United States or employ personal service in excess of
that authorized by law, except in cases of emergency involving the
safety of human life or the protection of property.
This prohibits Federal agencies from accepting voluntary services
from individuals in the absence of specific statutory authority, except
in the emergencies mentioned. See B-159715, December 18, 1978.
Section 301(a) of the Civil Service Reform Act of 1978, Pub. L. No.
95-454, October 13, 1978, 92 Stat. 1144, added section 3111 to title 5
of the United States Code to specifically give Federal agencies
authority to accept the voluntary services of students for the purpose
of enhancing their educational experiences. Previously, agencies had
generally been prohibited by 31 U.S.C. 665(b) from accepting student
volunteers who were interested in gaining such experiences. See
B-159715, supra; and B-139261, June 26, 1959.
Although 5 U.S.C. 3111 now authorizes Federal agencies to accept the
voluntary service of students, specific limitations are imposed on the
scope and conditions of that service. For example, they are to serve
without compensation in programs established by an agency specifically
designed to provide them with educational experiences. 5 U.S.C.
3111(b). Also, they are not to be considered Federal employees for any
purpose other than 5 U.S.C. 8101-8193 (compensation for work injury) and
28 U.S.C. 2671-2680 (tort claims).
5 U.S.C. 3111(c).
The terms of 5 U.S.C. 3111 make no provision for payment of the
student volunteers' traveling or living expenses. Moreover, the
legislative history of the statute reflects the congressional intent
that expenditures thereunder be limited to payment of the students'
injury compensation and of tort claims resulting from their activities.
See sec. VIII, Sen. Rep. No. 95-969, July 10, 1978. Thus, it is our
view that 5 U.S.C. 3111 in and of itself provides no authority for
payment of the expenses here in question.
A number of other specific statutory enactments authorize certain
Federal agencies to accept the services of volunteers as an exception to
the prohibition set forth in 31 U.S.C. 665(b). The Department of
Agriculture under the express statutory authority of 16 U.S.C. 558a and
558b may accept the services of uncompensated volunteers in furtherance
of the National Forest Program, and the agency is given express
statutory authority to provide for the forest service volunteers'
"incidental expenses, such as transportation, uniforms, lodging, and
subsistence." Also, 38 U.S.C. 213 expressly authorizes the Veterans
Administration to accept such voluntary services as may be deemed
necessary in carrying out its responsibilities, and we have previously
expressed the view that under this statutory authorization meals may be
furnished without charge to volunteer workers as may be necessary in
certain circumstances at veterans' hospitals and clinics. See 43
Comp.Gen. 305(1963). In these and other situations when Federal
agencies are authorized to accept voluntary services, the specific terms
of the particular statutory authorization govern the conditions of the
arrangement, including the scope of services which may be performed by
the volunteers and the matter of whether the agency may pay for their
transportation, lodgings, meals, uniforms, etc. Compare B-173933,
December 21, 1971. Hence, in our view particular provisions of law
which may variously allow payment in some measure of the transportation
or living expenses of volunteer workers in forestry projects or
veterans' hospitals have no application to students enrolled in
educational programs under 5 U.S.C. 3111.
As to the possible application of 5 U.S.C. 5703, that statute
provides Federal agencies generally with authority to pay the travel
expenses of a person serving the Government without pay. Application of
the statute is limited to persons who may properly be regarded as
experts, consultants, witnesses, attendants, or other advisors and
aides, when they are called away from their homes at the request of an
agency to perform a direct service for the Government. See 55 Comp.Gen.
750, 752(1976) and 59 Comp.Gen. 675(1980). High school and college
students permitted to participate in educational programs under 5 U.S.C.
3111 are not necessarily performing a direct service for the Government,
and, as mentioned, the congressional intent was not to authorize the
students to travel at Government expense but rather to limit the expense
of the educational programs to payment of the students' injury
compensation and of tort claims arising from their activities.
Hence, it is our view that provisions of 5 U.S.C. 5703 have no
application to students participating in educational programs under 5
U.S.C. 3111.
In conclusion, it is evident that in enacting 5 U.S.C. 3111 the
Congress intended only to permit a limited exception to the prohibition
against the acceptance of voluntary service by Federal agencies, in
order to allow agencies to establish education programs in cooperation
with school authorities for the benefit of high school and college
students. No provision was made in 5 U.S.C. 3111 for the students'
traveling and living expenses to be borne by the Government, and it does
not appear that any such provision was intended. Furthermore, the
proposed expenditures are not allowable under any other provision of
law.
Accordingly, regulations may not be issued under 5 U.S.C. 3111(b),
which would permit Federal agencies to pay travel allowances to the
student volunteers, or to provide them with transportation, meals, and
quarters in kind.
B-174226, May 11, 1981, 60 Comp.Gen. 452
Appropriations - Obligation - Social Security Disability Benefit
Determinations - Medical Examinations - Purchase Orders
District of Columbia may obligate fiscal year funding authority
allocated to it for purpose of making determination of individual's
eligibility for Social Security disability benefits at the time it
issues purchase order for medical examination of individual,
notwithstanding fact that examination may be performed in next fiscal
year. In this case need for examination arises at time person makes
claim for disability benefits and scheduling of examination is beyond
control of District. 58 Comp.Gen. 321(1979) distinguished.
Matter of: District of Columbia's Reporting and Recording
Obligations for Disability Determination Services, May 11, 1981:
This decision is to Audrey Rowe, Commissioner, Commission on Social
Services, District of Columbia Department of Human Services (DHS),
concerning a possible conflict between the procedures set forth in the
decisions of this Office and followed by the District when obligating
appropriations by contracts or orders for services and the procedures
set forth in the Social Security Administration's (SSA) Disability
Insurance State Manual (DISM) to be followed by States when recording
and reporting as obligations orders for medical examinations. The
Commissioner is under the impression that our decisions require all
orders for services to be recorded as obligations against the
appropriation current at the time the services were rendered. The DISM,
on the other hand, requires that States report and record orders for
medical examinations as obligations when they are made.
The Commissioner therefore asks which method should be followed.
Section 221(b) of the Social Security Act (Act), 42 U.S.C. 421(b),
authorizes the Secretary of Health and Human Services (Secretary) to
enter into agreements with States to have determinations made as to the
nature and duration of an individual's disability for the purpose of
various provisions of the Act performed by State agencies, including,
for purposes of Title II of the act, the District of Columbia, 42 U.S.C.
410(h). The law also provides that each State which agrees to make
disability determinations is entitled to receive from trust funds
(either the Federal Disability Trust Fund or the Federal Old-age and
Survivors Insurance Trust Fund) reimbursement of costs incurred in
carrying out the agreements, 42 U.S.C. 421(e). The Congress prescribes
in annual appropriation acts, under the heading "Limitation on
Administrative Expenses" (LAE), the total amount in all the trust funds
that is available during the fiscal year for the purpose of
administering various SSA programs, including the program under which
States agree to make determinations of eligibility for disability
benefits. See Department of Health, Education, and Welfare
Appropriations Act, 1979, Pub. L. No. 95-480, Title II, October 18,
1978, 92 Stat. 1571.
We have been informally advised by SSA officials that funding
authority for reimbursing States their costs for providing disability
determination services is initially allocated from the LAE to the Office
of Operation Policy and Procedures. That office then allocates this
funding authority among the 10 SSA Regional Offices which, in turn,
allocate funding authority among individual States. Currently, funding
authority is allocated on a quarterly basis and States may not exceed
these allocations.
The District submits its annual estimates of costs to the SSA
Regional Office in Philadelphia which, after considering all pertinent
information, determines the amount to make available to the District for
the purpose of administering its agreement. The Regional Office then
notifies the District of the amount of funding authority it has approved
on a quarterly basis. The District has agreed not to make expenditures
exceeding this amount unless approved by the Secretary. Under the
program requirements set forth in DISM 406.2, the District is required
to file a quarterly statement of obligations which permits SSA to review
the rate at which the District is using the funding authority allocated
to it. This procedure, required of all other States, facilitates SSA's
shifting of funding authority from States which are underutilizing their
allocations to States that need additional funding authority because of
increased demands.
A person seeking to have his or her eligibility for disability
benefits established is initially interviewed and screened by a
caseworker and thereafter provided an appointment for a medical
examination. This examination is required in order to provide
information necessary to help determine the extent and duration of the
person's disability. A list of doctors approved for performing these
examinations is provided the disability staff. The caseworker calls the
doctors on the list until one is reached who can perform the examination
without delay (a program requirement, DISM 425.312). The doctors on the
list are reimbursed for services rendered at fixed rates and are not
paid by the District for cancelled appointments.
At the time the appointment is made, a purchase order authorizing
payment for the examination is prepared. However, while the purchase
order may be executed at the end of one fiscal year, the examination may
not be scheduled until the next fiscal year. This is because persons
may come in for the initial screening too late in the fiscal year to
permit their being scheduled for an appointment before the first quarter
of the next fiscal year. Also contributing to this problem are persons
who fail to keep appointments late in the fiscal year and who must be
rescheduled for an appointment during the next fiscal year, or persons
whose initial examination late in the fiscal year discloses conditions
requiring further examinations by the specialists for whom appointments
must be made for examinations during the next fiscal year. The question
which then arises is against which fiscal year's allocation or funding
authority should the purchase order be recorded and reported as an
obligation?
SSA has defined "obligation" for the purpose of recording and
reporting obligations under the program, to include:
* * * payments for goods or services received and commitments to pay
for goods or services ordered. They result from the employment of
individuals; authorization to travel; ordering services, e.g.,
consultative examinations; entering into a contract; and similar
transactions which require the present or future disbursement of money.
In addition to orders and contracts for future performance, obligations
incurred include the value of goods and services received, and other
liabilities arising without a formal order. DISM 441.21.
Additionally, DISM 441.323B1 provides that consultative examinations
may be recorded as obligations as of the date a purchase order is
issued. Thus for purposes of recording and reporting obligations by
States under the program to SSA, an obligation is incurred when the
purchase order for the examination is issued.
The District has questioned the propriety of recording and reporting
obligations as required by the DISM because of its reading of our
decisions concerning the recording of obligations by Federal agencies
against fiscal year appropriations.
For example, the District points to our decision B-174226, dated March
13, 1972. It is true that we held that the appropriation current at the
time the services are rendered is properly chargeable with the cost.
However, that decision involved the provision of evaluation services to
the Office of Economic Opportunity for a specified period of time-- July
12 through July 16-- which at that time was in the next fiscal year. By
the very terms of the purchase order, therefore, the services were
intended to fill a bona fide need of a subsequent fiscal year. Thus,
this case is clearly distinguishable. The general rule as stated in the
decisions cited by the District only precludes recording as obligations
contracts for services which do not meet a bona fide need arising during
the fiscal year in which the contract is made. See 27 Comp.Gen.
765(1948).
The circumstances in the present case are very different. Once the
person seeks to have his eligibility established by presenting himself
at the disability office and is interviewed and screened, it becomes
necessary for a medical examination to be performed. DHS has no control
over this. This situation is analogous to the procurement of goods when
the need arises in one fiscal year but actual delivery cannot possibly
be made until the next fiscal year. There the agency is permitted to
obligate the full amount of the contract against the appropriation
current at the time the contract is made or the order placed rather than
the appropriation current at the time the goods are delivered and
expenditures made. It follows therefore that the purchase order
covering a medical appointment should be treated in the same manner.
The District should obligate when the need for this disability
determination arises, that is, when an applicant requests an eligibility
determination.
Thus, the situation here is to be distinguished from that in the
matter of Norton Sound Health Corporation, 58 Comp.Gen. 321(1979).
There a contract for providing medical services to Indians was entered
into between the Indian Health Service of the Department of Health,
Education, and Welfare and the Norton Sound Health Corporation. When
HEW proposed obligating one fiscal year's funds to provide services
during the next fiscal year we disapproved. However, there the need
which provided the underlying basis for recording an obligation did not
arise until a person actually sought medical services. Here the
providing of the medical examination is merely one phase of an
eligibility determination, the necessity for which arises in the fiscal
year in which the person presents himself to claim benefits under the
program.
Consequently, in our opinion, the District should record and report
obligations as required by the DISM, when the caseworker makes the
medical appointment, and should not wait until the examination is made.
B-201809, May 8, 1981, 60 Comp.Gen. 451
Officers and Employees - Transfers - Relocation Expenses -
Co-operatively Owned Dwelling - Condominiums Cooperatives - Membership
Fees
Employee may not be reimbursed a cooperative home membership fee
required on purchase of home at new duty station. Such fees are
personal and outside the scope of costs or expenses allowable as
relocation expenses under the Federal Travel Regulations.
Matter of: Herbert W. Everett - Relocation Expenses - Membership
Fee, Cooperative Home, May 8, 1981:
The issue presented in this case upon a request of an authorized
certifying officer of the Department of Agriculture is whether a
membership fee required to be paid on the purchase of a home in a
cooperative home development is reimbursable as a relocation expense.
The answer is no.
Mr. Herbert W. Everett, an employee of the Department of
Agriculture's Soil Conservation Service, was authorized a permanent
change of station from Portland, Oregon, to Washington, D.C. In
connection with his transfer he purchased a cooperative home for which
he was required to pay a membership fee of $300 to the developer at the
time of purchase. This membership fee is a one-time fee, nonrefundable
and nontransferable, if and when Mr. Everett sells his interest in the
property.
Pursuant to 5 U.S.C. 5724a(1976), paragraph 2-6.2 of the Federal
Travel Regulations (FPMR 101-7, May 1973) provides for reimbursement of
certain expenses incurred by employees in connection with residence
transactions. Membership fees such as Mr. Everett paid are not included
as reimbursable expenses under those regulations. Instead, membership
fees in condominium or cooperatively owned homes or apartments are
regarded as items of added value continuing to benefit the purchaser.
As such, they are considered a part of the purchase price and not a part
of the cost or expenses of purchasing. In the circumstances where a
membership fee is transferable, we have held that the expenses of
selling such membership is reimbursable. See B-183812, May 4, 1976.
However, the cost of a membership is considered a personal expense of
the employee and not reimbursable. B-200082, February 25, 1981.
Compare B-171808, March 21, 1971, for membership fees in non-real estate
type organizations.
In the present case, the membership fee had no relationship to any
expense or charge for services required for the purchase of the
property. It was a requirement for occupancy and participation in the
management of the cooperative development. Accordingly, such membership
fee is not reimbursable as a relocation expense under the Federal Travel
Regulations.
B-202273, May 7, 1981, 60 Comp.Gen. 450
Checks - Delivery - Banks - Salary Payments - Expenses Incidental to
Delivery Delay - Government Liability
An employee seeks reimbursement of $129 in check overdraft charges
which resulted from the inadvertent failure of the Federal Aviation
Administration to deposit the employee's paycheck with the employee's
bank. The failure was due to the processing of the employee's address
change one pay period earlier than requested. The employee may not
recover the $129 since, absent statutory authority to the contrary, the
Government is not liable for the unauthorized acts of its officers and
employees even though committed in the performance of their official
duties. German Bank v. United States, 148 U.S. 573(1893).
Matter of: Robert G. Raske, Jr., May 7, 1981:
This action is brought by the Professional Air Traffic Controllers
Organization on behalf of Robert G. Raske, Jr. A decision is being
rendered pursuant to Part 21 of title 4 of the Code of Federal
Regulations, as amended August 21, 1980. See 45 FR 55689. In accordance
with 4 CFR 21.4 the Federal Aviation Administration (FAA) has been
served with a copy of the request for a decision which concerns its
denial of Mr. Raske's claim for reimbursement of $129 in overdraft
charges which he incurred when that agency erroneously failed to deposit
his paycheck with his bank. For the reasons discussed below, we affirm
the disallowance of Mr. Raske's claim.
On July 17, 1980, Mr. Raske, an FAA Air Traffic Control Specialist,
submitted a Form 1370-8 (Salary Disposition Record) to his payroll
office in anticipation of his impending permanent change of station from
Charlotte, North Carolina, to Vero Beach, Florida. By Form 1370-8 Mr.
Raske, whose paychecks were then being mailed to the First Union
National Bank in Charlotte, requested that his paycheck be mailed to him
at a post office box in Vero Beach, effective pay period 17 for the
paycheck dated August 18, 1980. Due to an administrative error, the
payroll office processed the address change in pay period 16 which
resulted in Mr. Raske's paycheck for that period not being deposited
with the First Union National Bank. Mr. Raske, unaware of the error,
wrote several checks on his First Union National Bank account for which
funds were insufficient and for which he incurred $129 in overdraft
charges.
The applicable statutory authority which entitled a Government
employee to elect to have his or her paycheck deposited directly into
that employee's bank account is found in 31 U.S.C. 492(b)(1)(1976).
Section 209.4 of title 31 of the Code of Federal Regulations establishes
certain procedures for the use of this direct deposit service. However,
neither that statute nor the regulations authorize the Government to
reimburse its employees for service charges on checks drawn on
insufficient funds where the Government has undertaken but failed to
deposit employees' paychecks directly with the employees' banks. In
addition, we are unaware of any other statutory authority that would
authorize this Office to allow Mr. Raske's claim. Without the proper
statutory authority, we are unable to reimburse an employee even under
the most compelling circumstances. See B-187245, October 7, 1976;
B-173783, March 2, 1976.
While it is regrettable that the claimant incurred substantial
charges which he feels resulted solely from the error of a Government
employee, it may be noted that under the direct paycheck deposit
authority the employee remains responsible for making sure that his bank
balance is sufficient to cover the checks he writes. Further, the rule
is well established that the Government is not liable for the
unauthorized acts of its officers and employees even though those acts
were committed in the performance of their official duties. German Bank
v. United States, 148 U.S. 573(1893); United States v. Hall, 588 F.2d
1214(1978); Posey v. United States, 449 F.2d 228(1971).
We affirm the disallowance of Mr. Raske's claim.
B-201777, May 6, 1981, 60 Comp.Gen. 445
Transportation - Travel Agencies - Restrictions on Use - Applicable
Regulations - Notice Status - Civilian Employees of Department of
Defense
Civilian employee of Department of Army who purchased transportation
with personal funds from travel agent in connection with official travel
may be reimbursed under principle of this Office embodied in paragraph
C2207-4 of Vol. 2, Joint Travel Regulations, that a Government employee,
unaware of the general prohibition against use of travel agents, who
inadvertently purchases transportation with personal funds from a travel
agent, may be paid for travel costs which would have been properly
chargeable had requested service been obtained by traveler directly from
carrier. 59 Comp.Gen. 433 is modified. Transportation - Travel
Agencies - Restriction on Use - Violations by Government Travelers -
Reimbursement Claims - Criteria for Allowance
In the future this Office will review claims of Government travelers
who violate the general prohibition by purchasing transportation with
personal funds from a travel agent and claim reimbursement under
exceptions such as that provided in paragraph C2207-4 of Vol. 2, Joint
Travel Regulations, to determine not only that the use of the travel
agent was inadvertent and resulted from a lack of notice of the general
prohibition, but also that these contentions regarding the use of the
travel agent were themselves reasonable in the circumstances of the
individual travel's claim.
Matter of: Ernest Michael Ward - Reimbursement of Government
Employees for Transportation Purchased Through Travel Agents, May 6,
1981:
Ernest Michael Ward, a civilian employee of the Department of the
Army, requests reconsideration of our Claims Group's adjudication
(Z-2827761) of November 17, 1980, denying his claim for reimbursement of
additional airfare in connection with official travel he performed in
July 1980.
Briefly, Mr. Ward performed round-trip air travel from El Paso,
Texas, to Washington, D.C., in July 1980 incident to a temporary duty
assignment in the Washington, D.C., area. Mr. Ward purchased a
round-trip airline ticket with his own funds from a local travel agent
prior to his departure date. Upon submission of his travel voucher Mr.
Ward was reimbursed for only $416 of his total $554 expenditure. The
agency pointed out that the particular airlines which Mr. Ward used
offers a discount rate for the round-trip fare to Washington, D.C., when
a Government transportation request is used.
As a result, in accordance with paragraph C2207-4 of Volume 2, Joint
Travel Regulations (JTR), his reimbursement was limited to the amount
which he actually paid not to exceed the cost which would have been
incurred if the transportation had been purchased directly from the
carrier. This conclusion was reaffirmed by our Claims Group's
adjudication of November 17, 1980, which determined that the agency had
correctly applied the provisions of paragraph C2207-4 of 2 JTR.
In support of his present appeal Mr. Ward contends as follows:
Your examination of my claim disallowed reimbursement by applying
Joint Travel Regulation Vol. 2, page C2207, para 4. The paragraph that
is used to disallow my claim states "When an employee purchases
transportation with personal funds from a travel agent that employee
will be reimbursed the amount paid not to exceed the cost which would
have ben incurred if the transportation had been purchased (sic)
directly from the air carrier." I am not in violation of this paragraph.
There was no charge by the travel agent. The tickets would have cost
the same if I had purchased them directly from the carrier. In your
letter you stated that your "office may settle claims only on a legal
basis * * * and may not modify the regulations (sic) * * * ." However,
it appears that you have modified this regulation because you will not
allow my claim although I am not in violation of the referenced
regulation.
While we recognize the point Mr. Ward is making in regard to the fact
that he may have had to expend the same amount (i.e., $554) of personal
funds to secure his ticket directly from the airlines, we do not agree
that the price he paid was the lowest price available to the Government,
nor do we accept his contention that he was not in violation of the
controlling provisions of paragraph C2207.2 JTR. Thus, we are
disallowing Mr. Ward's appeal pursuant to the following analysis of
reimbursement of Government employees for transportation purchased
through travel agents.
Subchapter I of chapter 57 of title 5, United States Code (5 U.S.C.
5701-5709), provides the comprehensive statutory authority pursuant to
which employees are reimbursed for expenses incurred in connection with
officially sanctioned Government travel. Pursuant to a statutory
delegation of authority implementing regulations have been promulgated
in the Federal Travel Regulations, as amended and supplemented (FPMR
101-7, May 1973). Volume 2 of the JTR is a restatement and
implementation of the Federal Travel Regulations and consistent
therewith provides among other things for the travel entitlements of
civilian employees of the Department of Defense. As regulations
implementing specific statutory authorities, the Federal Travel
Regulations and Volume 2 of the JTR have the force and effect of law and
may not be waived or modified by the General Accounting Office, an
employing agency, or any employee.
Paragraph C2207 (change 131, September 1, 1976) of Volume 2 of the
JTR provides that travel agencies may not be used to secure any
passenger transportation service within the United States.
However, in our decision, B-103315, August 1, 1978, we held that MEMBERS
OR CIVILIAN EMPLOYEES OF THE UNIFORMED SERVICES WHO individually and
inadvertently purchase official transportation from a travel agent with
personal funds without prior approval by the administrative office can
be reimbursed in an amount which does not exceed charges which would
have been payable if the transportation had been purchased directly from
the carrier. We did require that those granted the individual exemption
should be admonished that official Government travel ordinarily is
purchased directly from the carrier in the absence of an advance
administrative determination that group or charter fares sold by the
travel agents will result in a lower cost to the Government and will not
interfere with official business. Our decision has been incorporated in
paragraph C2207-4 (change 171, January 1, 1980) of Volume 2 of the JTR.
See also, Dr. Kenneth J. Bart, 58 Comp.Gen. 710(1979).
More recently in a decision addressed to the Department of the
Interior concerning the inadvertent use of travel agents, 59 Comp.Gen.
433(1980), we discussed in depth the specific guidance available as to
the use of travel agents with respect to civilian employees of the
United States covered by the Federal Travel Regulations. We went on to
state as follows:
More specific guidance as to the use of travel agents is found in the
General Services Administration (GSA) transportation audit regulations,
specifically, 41 CFR 101-41.203.1(a), which states that transportation
services whether procured by the use of cash, the Government
Transportation Request or otherwise, generally must be procured direct
from carriers and that travel agencies may be used only to the extent
permitted by the regulations of the General Accounting Office (GAO) (4
CFR 52.3) or GAO's specific exemption therefrom. Our regulations
prohibit the use of travel agencies within North America, from the
United States or its possessions to foreign countries, and between the
United States and its possessions, and between and within its
possessions, 4 CFR 52.3(a). However, both the GSA and GAO regulations
are addressed to Federal agencies generally, not specifically to
individual Government travelers, whose travel procedures are found in
the FTR or the JTR. Therefore, we are not prepared to say individual
travelers on official Government business can be charged with notice of
these provisions.
Thus, we concluded that the principle set out in our decisions in
B-103315, supra, and 58 Comp.Gen. 710, supra, was appropriately applied
in reaching the following result:
* * * A Government employee, unaware of the general prohibition
against the use of travel agents, who inadvertently purchases
transportation with personal funds from a travel agent, may be paid for
travel costs which would have been properly chargeable had the requested
services been obtained by the traveler directly from the carrier.
In applying the rationale set out above we believe there are clear
requirements that a traveler must demonstrate for purposes of claiming
reimbursement under the exception contained in paragraph C2207-4 of
Volume 2, JTR, to the general prohibition against the use of travel
agents: First, that he was unaware of the general prohibition; and
secondly, that in consequence of that ignorance the traveler's use of
the travel agent was inadvertent"-- a word commonly defined through
reference to "a lack of intent."
Moreover, we believe that it is equally necessary that the traveler's
qualification under the exception to the general prohibition against the
use of travel agents must-- in the circumstances of each case-- be
reasonable. Specifically, with reference to our analysis in the
Department of the Interior case discussed above, the standard of
reasonableness is evidenced when individual travelers on official
Government business do not know and do not have sufficient reason to
know of the applicable regulatory provisions precluding use of travel
agents.
With this understanding we turn now to the facts of Mr. Ward's case.
As we have indicated, the use of travel agents to secure passenger
transportation within the United States has been prohibited under
paragraph C2207 of Volume 2 of the JTR since 1976. Effective January 1,
1980, paragraph C2207-4 of Volume 2 of the JTR has provided for
reimbursement for the purchase of transportation with personal funds
from a travel agent to the extent stated and under the following policy
guidelines:
Except as provided herein, it is the policy of the Department of
Defense that transportation for official Government travel will be
purchased directly from the carrier. If an employee is not aware of
this policy and purchases transportation for official travel with
personal funds from a travel agent, that employee will be reimbursed the
amount paid not to exceed the cost which would have been incurred if the
transportation had been purchased directly from the carrier. In such
cases, the employee will be advised that recurrence of such use of
travel agents will result in denial of any reimbursement for the
transportation so procured unless it can be demonstrated that the
employee had no alternative (MS Comp. Gen. B-103315, 1 August 1978).
In marked contrast to the provisions of paragraph C2207 of Volume 2
of the JTR, Mr. Ward's claim submission to the agency states in part as
follows:
2. In order to perform my duties I am required to travel frequently.
I average over 14 trips a year. Each trip is approximately 1 week in
duration with about 3 different TDY points in as many different
locations. Since my travel is so extensive I have used the services of
a travel agent, without incident, for over a year. Utilizing travel
agencies have benefited the Government in several ways including:
3. The travel agency was queried about the discrepancy in price.
They were unaware of a Government discount and after investigating found
out that it only applied when tickets were purchased with a GTR
(Government Transportation Request). Therefore the discount is only
available through SATO (the agency). They assured me that this was a
very unusual circumstance and that in the future they would ensure no
Government discounts are available before issuing tickets.
This Office has consistently stated that the non-use of travel
agencies is premised on the determination that procurement directly from
the carriers is more efficient and economical than purchases from the
travel agencies. In the circumstances of Mr. Ward's case the conclusion
is inescapable that had he coordinated his travel through his agency and
dealt directly with the airlines the mistake would have been avoided and
the available discount savings to the Government would have been
realized.
Thus, we conclude that for the uninitiated and infrequent Government
traveler who inadvertently purchases transportation with personal funds
from a travel agent, the provisions of paragraph C2207-4 of Volume 2,
JTR, affords relief through an exception to the preclusive provisions on
a one time basis-- recurrence of such use of travel agents resulting in
the denial of any reimbursement for transportation so procured.
However, for the experienced and frequent Government traveler it is not
presumptively reasonable for him to consistently fail to take notice of
his agency's travel policy and implementing regulations. And, where
such a traveler's consistent actions amount to a violation of a clearly
proscribed course of conduct in using travel agents, the exception
represented by paragraph C2207-4 of the regulations is not available
because the twin contentions of ignorance and inadvertence are patently
unreasonable.
Therefore, in the circumstances of Mr. Ward's case we find that he
had or should have had notice of the prohibition provisions of paragraph
C2207 of Volume 2, JTR, and that his intentional use of the travel
agency to purchase the passenger transportation in question was contrary
to those binding provisions and not subject to the relief permitted by
the one-time exception provided in paragraph C2207-4 of the regulations.
As a result, Mr. Ward's claim for reimbursement for the round-trip
travel in question was properly subject to denial in total by the
agency.
However, since this definitive analysis extends our construction set
out in 59 Comp.Gen. 433, supra, and postdates the travel which Mr. Ward
performed in July 1980, and with consideration for the fact that the
travel performed benefited the Government in the amount already
reimbursed to Mr. Ward, we will not object to Mr. Ward's retention of
that amount of $416. But, in accordance with our decision here, we are
sustaining our Claims Group's disallowance of Mr. Ward's claim for
amounts paid to a travel agent for round-trip air travel in excess of
the cost which would have been incurred if the transportation had been
purchased directly from the carrier.
B-201708, May 6, 1981, 60 Comp.Gen. 442
Appointments - Delay - Backpay - Entitlement - Age Limitations
Individual's appointment as Deputy U.S. Marshal was delayed after
agency sought to remove his name from list of eligibles on grounds he
was over agency age limitation for appointment. Although Civil Service
Commission ruled individual must be considered for appointment, agency
retained discretion to appoint. Since individual has no vested right to
appointment, he is not entitled to retroactive appointment, backpay, or
other benefits under the Back Pay Act.
Matter of: Michael Kovalovsky - Claim for backpay and other benefits
incident to delayed appointment, May 6, 1981:
The issue in this decision is whether an applicant for employment
with the U.S. Marshals Service is entitled to backpay and other benefits
where the agency erroneously applied a maximum age limitation on
appointments and delayed his appointment nearly 2 years. We hold that
the employee is not entitled to a retroactive appointment and backpay
under the Back Pay Act, 5 U.S.C. 5596, where the agency retained the
discretion to appoint.
This decision is in response to a request from the American
Federation of Government Employees (union) concerning the claim of Mr.
Michael Kovalovsky for backpay and other benefits incident to his
delayed appointment as a Deputy U.S. Marshal. This decision has been
handled as a labor-relations matter under our procedures contained in 4
CFR Part 21(1980), as amended in 45 Fed.Reg. 55689, August 21, 1980, and
in this regard we have received comments on this matter from the U.S.
Marshals Service (agency) and the Office of Personnel Management (OPM).
The request from the union states that Mr. Kovalovsky was tested by
the Civil Service Commission (now Office of Personnel Management) in
1973 and that his name appeared on a certificate of eligibles issued to
the U.S. Marshals Service on March 24, 1975.
The union further states that Mr. Kovalovsky soon received a letter of
inquiry from the agency and that he was interviewed for the position.
The union also argues that Mr. Kovalovsky was tentatively selected for
appointment on October 20, 1975, but we note that there is no
documentary evidence in the record before us to support that contention.
It appears that instead of appointing Mr. Kovalovsky, the Marshals
Service requested from the Civil Service Commission that his name be
removed from the list of eligibles on the grounds that he exceeded the
maximum entry age requirement established under Public Law 93-350
(codified in 5 U.S.C. 3307(d)) and a Department of Justice order dated
July 16, 1975. Under the provisions of 5 U.S.C. 3307(d), agencies, with
the concurrence of the Civil Service Commission, may designate minimum
and maximum age limits for appointments to law enforcement and fire
fighter positions. However, the Commission refused to remove Mr.
Kovalovsky's name from the list of eligibles because the Commission had
not made the requisite determination under Public Law 93-350 with regard
to Deputy U.S. Marshals until January 27, 1976. Therefore, the
Commission held that the maximum entry age requirement did not apply to
Deputy U.S. Marshal positions until on or after January 27, 1976, and
the Marshals Service had no valid basis to object to candidates on the
basis of age prior to that date.
Mr. Kovalovsky was again interviewed for the position and was
eventually appointed on June 18, 1978. The union argues that the
failure of the Marshals Service to comply with Commission directives
caused a lengthy and unnecessary delay in Mr. Kovalovsky's appointment.
The union contends that several employees who were lower on the register
were hired prior to Mr. Kovalovsky, and, therefore, the union seeks on
behalf of Mr. Kovalovsky backpay and other benefits which would have
accrued but for the errors committed by the Marshals Service and the
Commission.
We requested a report on this matter from the Office of Personnel
Management (successor to the Civil Service Commission), and that report
states that the Commission did determine that the age limitation could
not be utilized prior to January 27, 1976. However, the report from OPM
denies that the decision was a mandate or directive to the Marshals
Service as to when or how soon the certified eligibles had to be
considered for appointment since generally each agency makes the final
decision as to who to select and when the appointments are effected.
The report from OPM states that their decision related only to who had
to be considered for appointment.
Generally, appointments are effective from the date of acceptance and
entrance on duty, and appointments may be made retroactively effective
only in limited circumstances. See David R. Homan, 59 Comp.Gen.
62(1979), and decision cited therein. For example, under the provisions
of 42 U.S.C. 2000e-16(b), the Civil Service Commission (now Office of
Personnel Management) has the authority to order retroactive
appointments with backpay based on findings of discrimination because of
race, color, religion, sex or national origin. However, there has been
no finding That mr. Kovalovsky was discriminated against on these
grounds. See Homan, supra. Similarly there has been no finding by an
appropriate authority that Mr. Kovalovsky has been discriminated against
on the basis of age under the provisions of 29 U.S.C. 633a, as amended.
The union seeks a remedy on behalf of Mr. Kovalovsky based on the
provisions of the Back Pay Act, 5 U.S.C. 5596. However, our Office has
held that the Back Pay Act is applicable only to employees, not
applicants for employment, and that the Act allows retroactive
appointments and backpay only where the individual has a vested right to
employment status by virtue of statute or regulation. See Homan, supra.
Our Office has permitted such a remedy in situations where an agency
has violated a statutory right of reemployment, violated a mandatory
policy on effecting appointments without a break in service following
retirement, or improperly restrained an employee from entering upon the
performance of his duties. See 54 Comp.Gen. 1028(1975); B-175373,
April 21, 1972; and B-158925, July 16, 1968.
We find no violation of a statute, regulation, or mandatory policy in
this case. Instead, the facts in this case are similar to those in
Homan, supra, where the Civil Service Commission ruled that the
applicant was improperly denied consideration for a competitive service
position in violation of veteran preference rules. Unlike the present
case, in Homan the Commission ordered corrective action by one of three
methods (the choice was left to the agency's discretion) and the agency
appointed Mr. Homan 16 months after he claimed he should have been
appointed. In Homan we held that since the agency retained the
discretion to appoint, there was no basis to retroactively appoint and
award backpay. See also James L. Hancox, B-197884, July 15, 1980.
In the present case there was no mandate or directive from the Civil
Service Commission ordering corrective action or specifying that Mr.
Kovalovsky must be appointed on a certain date. As in Homan, the agency
in the present case retained the discretion to appoint, and, absent any
evidence that Mr. Kovalovsky had a vested right to be appointed on a
certain date, he is not entitled to relief under the Back Pay Act.
See Raymond J. DeLucia, B-191378, January 8, 1979.
Accordingly, Mr. Kovalovsky's claim for a retroactive appointment,
backpay, and other benefits is denied.
B-201260, May 6, 1981, 60 Comp.Gen. 440
Appropriations - Deficiencies - Anti Deficiency Act - Violations -
Statutory Restrictions - Violation
Incurring obligation for purpose for which funds are specifically
made not available by appropriation act constitutes violation of
Antideficiency Act. By incurring obligation for administrative expenses
to pay overtime to individual in excess of $20,000, for which purpose
funds were not available under fiscal year 1980 appropriation act,
Customs Service violated Antideficiency Act.
Matter to: Customs Service Payment of Overtime Pay in Excess of
Limit in Appropriation Act, May 6, 1981:
The Commissioner of Customs has requested our opinion as to whether
the Customs Service's violation of a proviso in its fiscal year 1980
appropriation act relating to the payment of overtime pay also
constitutes a violation of the so-called Antideficiency Act, 31 U.S.C.
665(1976). The proviso in question, which is attached to the
appropriation making funds available for the necessary expenses of the
Customs Service, states:
Provided, That none of the funds made available by this Act shall be
available for administrative expenses to pay any employee overtime pay
in an amount in excess of $20,000.
The Treasury Department Appropriations Act, 1980, Pub. L. No. 96-74,
93 Stat. 559, 560.
For the reasons indicated below we conclude that by incurring an
obligation for administrative expenses to pay overtime compensation to
an individual in excess of $20,000 in fiscal year 1980, the Customs
Service has violated the Antideficiency Act.
Overtime pay for customs officers and employees is authorized by 19
U.S.C. 267(1976). Under this provision, the overtime compensation is
ultimately paid by the master, owner, agent, or consignee of the vessel
or vehicle which requires the overtime service.
In fiscal year 1980 one customs inspector was inadvertently permitted
to work an overtime assignment which, when added to his other
assignments for the year, entitled him to total overtime compensation of
$20,194.17. The Customs Service paid the inspector for the overtime
assignment, including the $194.17 in excess of $20,000, and was
reimbursed by the user of the overtime services.
The overtime assignment in excess of $20,000 occurred despite
safeguards instituted by the Customs Service to prevent such
assignments, being caused by erroneous calculations of the amount of
overtime pay that had already been earned by the inspector. The Customs
Service has not determined the amount of expenses which it may have
incurred in violation of the appropriation act proviso (i.e., the
administrative expenses of paying the excess $194.17 in overtime
compensation) but estimates that these expenses were minimal.
The so-called Antideficiency Act provides that:
No officer or employee of the United States shall make or authorize
an expenditure from or create or authorize an obligation under any
appropriation or fund in excess of the amount available therein; nor
shall any such officer or employee involve the Government in any
contract or other obligation, for the payment of money for any purpose
in advance of appropriations made for such purpose, unless such contract
or obligation is authorized by law. (31 U.S.C. 665(A).)
This, and similar statutes,
* * * evidence a plain intent on the part of the Congress to prohibit
executive officers, unless otherwise authorized by law, from making
contracts involving the Government in obligations for expenditures or
liabilities beyond those contemplated and authorized for the period of
availability of and within the amount of the appropriation under which
they are made; to keep all the departments of the Government, in the
matter of incurring obligations for expenditures, within the limits and
purposes of appropriations annually provided for conducting their lawful
functions, and to prohibit any officer or employee of the Government
from involving the Government in any contract or other obligation for
the payment of money for any purpose, in advance of appropriations made
for such purpose * * * . (42 Comp.Gen. 272, 275(1962); see B-197841,
March 3, 1980.)
The proviso in the Customs Service appropriation act limits the
availability of funds for the expenses of paying overtime compensation.
In other words, under the language of the proviso Congress has not
appropriated funds for the administrative expenses of paying overtime
compensation to any individual in excess of $20,000 in one year.
When an appropriation act specifies that an agency's appropriation is
not available for a designated purpose, and the agency has no other
funds available for that purpose, any officer of the agency who
authorizes an obligation or expenditure of agency funds for that purpose
violates the Antideficiency Act. Since the Congress has not
appropriated funds for the designated purpose, the obligation may be
viewed either as being in excess of the amount (zero) available for that
purpose or as in advance of appropriations made for that purpose. In
either case the Antideficiency Act is violated.
The Commissioner has enclosed a memorandum from the Chief Counsel of
the U.S. Customs Service giving his opinion that violation of the
appropriation act prohibition does not constitute violation of the
Antideficiency Act. In his memorandum the Chief Counsel examines
decisions of the Attorney General and of the Comptroller General and
states that the Antideficiency Act was intended only to control
deficiency spending and obligations beyond available appropriations. He
concludes:
We believe the Antideficiency Act should be viewed as restricting the
obligation of funds which are not appropriated and thus not available,
requiring Congress to appropriate funds in the future to meet the
obligation, while not dealing with the circumstance of the obligation of
available funds contrary to a statutory limitation. * * *
We cannot agree with the Chief Counsel's conclusion. In our opinion
the Antideficiency Act prohibits not only expenditures which exceed the
amount appropriated, but also expenditures which violate statutory
restrictions or limitations on obligations or spending.
We conclude that by incurring an obligation for administrative
expenses to pay overtime compensation in excess of $20,000 to an
individual, the Customs Service has violated the Antideficiency Act.
B-199360, May 5, 1981, 60 Comp.Gen. 434
Compensation - Overtime - Fair Labor Standards Act - Traveltime -
Nonworkday Travel - Training Courses
Army civilian intern who traveled to training on nonworkday at time
and via route selected by agency is entitled credit for hours worked
under the Fair Labor Standards Act (FLSA) for travel time during hours
corresponding to regular work hours. Where intern, for personal
reasons, traveled at time or via route other than time or route selected
by agency, she will be credited with lesser of (1) that portion of
actual travel time which is considered to be working time, or (2) that
portion of estimated travel time which would have been considered
working time had she traveled at time and by route selected by Army.
Compensation - Overtime - Fair Labor Standards Act - Fair Labor
Standards Act v. Other Pay Laws
An interpretation of 5 U.S.C. 5542(b)(2)(B)(iv) that travel to a
training course which is scheduled by employee's agency does not qualify
as compensable travel under that section has no relation to whether such
travel time is hours worked under the FLSA. Compensation - Overtime -
Fair Labor Standards Act - Traveltime - Nonworkday Travel - Employee v.
Agency Scheduling
If an agency allows an employee to schedule travel and the employee
travels during corresponding hours on a nonworkday, the agency may not
subsequently defeat the employee's entitlement to overtime compensation
by stating that the travel should not have been scheduled in the manner
the employee chose. If, however, the employee travels by a route or at
a time other than that directed by the agency, or if she travels by
privately owned vehicle as a matter of personal preference, then a
constructive travel time of the agency preferred schedule or mode of
travel must be used to determine the amount of hours worked under FLSA.
Matter of: Dian Estrada - Entitlement to overtime pay for travel to
training, May 5, 1981:
This decision addresses the issue of overtime entitlement for travel
on nonworkdays to and from training assignments. It involves a
consideration of overtime entitlement under both title 5, U.S. Code, and
under the Fair Labor Standards Act (FLSA), title 29, U.S. Code.
Mr. Leon Avelar, Jr., a Finance and Accounting Officer with the
Department of the Army, requests an advance decision regarding the claim
of Ms. Dian Estrada, an intern with the Department of the Army Materiel
and Readiness Command (DARCOM), for overtime pay for travel to and from
training on nonworkdays. Ms. Estrada claims a total of 24 hours 45
minutes of overtime for five separate trips from her duty station in
Corpus Christi, Texas, to various Government scheduled training programs
elsewhere. The hours of overtime claimed by Ms. Estrada, the routing
and time of actual travel, and the Army's constructed routing and time
for her training trips are as follows:
(a) Trip to Rock Island, IL. on Sunday, November 26, 1978: Hours
claimed: 7.00 (Constructed Travel Time). Actual travel: Depart San
Antonio-- 1450, Arrive Moline, IL.-- 2030. Army's constructed routing:
Depart Corpus Christi, TX.-- 1445, Arrive Moline, IL.-- 1941.
(b) Trip to Dallas on Sunday, February 25, 1979: Hours claimed:
2.00 (Constructed Travel Time). Actual travel: Depart Corpus .christi,
TX.-- 0900, Arrive Dallas, TX.-- 1450. Army's constructed routing:
Depart Corpus Christi, TX.-- 1435, Arrive Dallas, TX.-- 1620.
(c) Trip to Rock Island, IL. on Sunday, March 18, 1979: Hours
claimed: 7.00 (Constructed Travel Time). Actual travel: Depart Corpus
Christi, TX.-- 1000, Arrive Moline, IL.-- 1925.
(d) Trip to Fort Benjamin Harrison, IN.ON Sunday, June 3, 1979:
Hours claimed: 6.75. Actual travel: Depart Corpus Christi, TX.--
0645, Arrive Fort Benjamin Harrison, IN.-- 1330.
(e) Trip to Fort Worth, TX. on Sunday, September 9, 1979: Hours
claimed: 2.00 (Constructed Travel Time). Actual travel: Depart Corpus
Christi, TX.-- 0800, Arrive Fort Worth, TX.-- 1830. Army's constructed
routing: Depart Corpus Christi, TX.-- 1553, Arrive Dallas-Fort Worth--
1615.
Ms. Estrada was authorized to travel by air on the first four trips
and by personally owned vehicle on the fifth. The record indicates that
the common carrier terminal designated by the Commander of the Corpus
Christi Army Depot for use by official duty travelers was Corpus Christi
International Airport. The record also reflects that Ms. Estrada's
regular work hours were 0700-1530, Monday through Friday, with a break
for lunch between 1130 and 1200.
Mr. Avelar asks whether DARCOM interns are entitled to overtime
compensation under the Fair Labor Standards Act (FLSA), 29 U.S.C. 201,
et seq., as amended by Public Law 93-259, approved April 8, 1974, for
time spent traveling to training courses where the scheduling is
administratively controlled. In this regard the record shows that
DARCOM interns are covered (non-exempt) under FLSA. Mr. Avelar points
to the Federal Personnel Manual (FPM) Supplement 990-2, Book 550,
Subchapter S1-3, page 550-8.03 (added July 1969) as authority for the
proposition that overtime should not be paid for such travel. The
latter reference addresses the issue of employee entitlement to overtime
compensation for time spent traveling to Government controlled trained
courses outside normal work hours as follows:
* * * training courses throughout the country generally are scheduled
to start at the beginning of the workweek, and usually start at 9 a.m.
daily. Attendance at training centers located away from an employee's
duty station, therefore, usually will require the employee to travel
outside his normal work hours. Since the agency which is conducting the
training course can schedule the hours of training, the training course
is an event which can be scheduled or controlled administratively; and
employees who attend the course will not be paid for time in travel
status regardless of whether employed by the agency conducting the
training course or another agency.
This FPN provision relates to overtime compensation entitlement under
title 5, U.S. Code, however, and not to overtime compensation under
FLSA. We have held that where FLSA provides an employee with a greater
pay benefit than that to which he is entitled under 5 U.S.C. 5542, the
employee is entitled to the FLSA benefit, 54 Comp.Gen. 371, 375(1974).
Thus, it is clear that Ms. Estrada would not be entitled to overtime pay
under 5 U.S.C. 5542(b)(2)G)(iv). See e.g. B-193127, May 31, 1979.
However, a separate determination must still be made as to whether or
not she is entitled under FLSA.
We begin by noting that the Civil Service Commission (now Office of
Personnel Management) has determined that 5 U.S.C. 4109(a) "prohibits
the payment of overtime pay to an employee selected and assigned for
training, for the period of training, regardless of whether the
employee's eligibility for overtime pay is based on provisions found in
title 5 of the United States Code, or based on the Fair Labor Standards
Act, as amended by Public Law 93-259." FPM Letter No. 551-3, August 29,
1974. The Commission, however, has also determined that this
prohibition "does not prevent payment of overtime pay to employees
traveling to and from places of training." FPM Supplement 990-2, Book
550, Subchapter S1-3, page 550-8.05. Accordingly, 5 U.S.C. 4109(a) does
not bar the payment of overtime compensation to Ms. Estrada for periods
of travel to and from training assignments.
Time spent traveling outside regular working hours is "hours of work"
under FLSA if a nonexempt employee:
(1) performs work while traveling (including travel as a driver of a
vehicle), (2) travels as a passenger to a temporary duty station and
returns during the same day, or (3) travels as a passenger on
nonworkdays during hours which correspond to his/her regular working
hours. FPM Letter No. 551-10, April 30, 1976.
In Eugene L. Mellinger, B-183493, July 28, 1976, the Comptroller
General followed the Civil Service Commission's definition of "hours of
work" in determining that "(i)f the employee is traveling as a passenger
on a nonworkday * * * , he may only be compensated for the traveltime
that is within the corresponding hours of work on his workday." Time
spent traveling on a nonworkday during hours which do not correspond to
regular working hours is considered hours of work only if the employee
actually works while traveling. Meal periods are not included in hours
worked.
The Army, however, contends that since Ms. Estrada could have
scheduled her travel outside of her corresponding work hours in several
cases, much of the travel performed here should not be compensated.
When an employee travels by a mode of transportation or at a time
other than that selected by the employing agency, special rules
prescribed by the Office of Personnel Management apply. When an
employee, for personal reasons, does not use the mode of transportation
designated by the agency, the employee is credited with the lesser of
"(1) that portion of the actual travel time which is to be considered
working time under these instructions (FPM Letter 551-10), or (2) that
portion of the estimated travel time which would have been considered
working time under these instructions had the employee used the mode of
transportation selected by the employing agency." Similarly, when an
employee, for personal reasons, travels at a time or via a route other
than the time or route selected by the employing agency, the employee is
credited with the lesser of "(1) that portion of the actual travel time
which is to be considered working time under these instructions (FPM
Letter 551-10) or (2) that portion of the estimated travel time which
would have been considered working time under these instructions had the
employee traveled at the time and by the route selected by the employing
agency." FPM Letter 551-10, p. 4.
The Office of Personnel Management (OPM) has supplied us with the
following interpretation of the above rules as applied to Ms. Estrada's
case:
* * * DARCOM appears to be maintaining that an employee should
schedule his or her travel in such a manner as to assure that it is not
compensable under the FLSA. It should be noted that 5 U.S.C. 6101(b)(2)
urges agencies to schedule travel away from the official duty station
during an employee's regularly scheduled workweek (i.e., in order to
make it compensable). While this is not a binding requirement, it does
establish the principle that Federal employees should not be asked to
travel on their own time unless there is no alternative. In any case,
nothing in title 5 or the FLSA requires an employee to schedule his or
her travel so as to render it non-compensable. It is true that an
agency can schedule travel outside regular hours or "corresponding
hours," but if the agency allows the employee to schedule the travel
during corresponding hours, it is responsible for any overtime
entitlement that may be "suffered or permitted" under the FLSA.
We agree with OPM that if an agency allows an employee to schedule
travel and the employee travels during corresponding hours on a
nonworkday, the agency may not subsequently defeat the employee's
entitlement to overtime compensation by stating that the travel should
not have been scheduled in the manner the employee chose. If, however,
it is because of the employee's personal preference that she travels by
a route or at a time other than that which the agency directs, or by
POV, then a constructive travel time of the agency preferred route, or
time or mode of travel must be used to determine hours of compensable
work. FPM Letter 551-10, p. 4.
When the above rules are applied to Ms. Estrada's five trips,
therefore, the following entitlements under FLSA result:
(1) On Sunday November 26, 1978, Ms. Estrada traveled for only 40
minutes of her corresponding work hours, 1450-1530 and therefore only 40
minutes of the travel may be credited as hours worked. The routing from
San Antonio was apparently for Ms. Estrada's personal reasons as she
should have left from Corpus Christi. However, the constructive travel
from Corpus Christi to Moline would have had Ms. Estrada traveling for
45 minutes during her corresponding work hours and since the lesser of
the actual or constructive travel time is the 40 minutes of actual
travel time, Ms. Estrada is only entitled to 40 minutes. FPM Letter
551-10, p. 4.
(2) For Ms. Estrada's trip to Dallas on February 25, 1979, she is
entitled to 55 minutes credited as work time. She traveled by an
indirect route (i.e., via San Antonio) for her personal convenience.
Accordingly, she is credited with the time which would have been
considered hours worked had she traveled at the time and by the route
selected by the agency. Ms. Estrada should have departed Corpus Christi
at 1435, and her regular working hours ended at 1530, giving a
constructive work time of 55 minutes.
(3) For the trip to Rock Island, Illinois, on March 18, 1979, Ms.
Estrada is entitled to credit for 5 hours worked as follows: travel
time between 1000, when she departed, and 1530, the end of her regular
working hours, less 30 minutes for lunch.
(4) For the trip to Fort Benjamin Harrison, Indiana, on June 3, 1979,
Ms. Estrada is entitled to credit for 6 hours worked as follows: she is
credited with time between 0700, the beginning of her regular workday,
at which point she had already been traveling 15 minutes, and 1330, the
hour at which she arrived at Fort Benjamin Harrison, less 30 minutes for
lunch.
(5) For the trip to Fort Worth, Texas, on September 9, 1979, Ms.
Estrada is not entitled to any credit for hours worked. Although Ms.
Estrada traveled in an automobile during 7 of her corresponding hours of
work (the record does not show whether she was the driver), she was
authorized the use of POV because of her personal preference. On her
travel orders the following mileage reimbursement was authorized her:
Mileage reimbursement and per diem limited to constructive cost of
common carrier transportation and related per diem as determined in JTR.
Travel time limited as indicated in JTR.
Paragraph C4660 of JTR Vol. 11 reads as follows:
When temporary duty travel is performed by privately owned
conveyance, travel time will be allowed as follows:
1. actual time necessary to perform the travel when the use of a
privately owned conveyance is determined to be advantageous to the
Government;
2. constructive scheduled travel time of the common carrier used in
computing per diem when temporary duty travel by privately owned
conveyance is not determined to be advantageous to the Government,
except for travel under par. C2158.
Accordingly, the Army had in effect allowed Ms. Estrada to travel by
POV in lieu of requiring her to use common carrier because of her
personal preference. Under these circumstances, Ms. Estrada's travel
time must be computed as " * * * that portion of the estimated travel
time which would have been considered working time under these
instructions had the employee used the mode of transportation selected
by the employing agency." FPM Letter 551-10, p. 4. Since Ms. Estrada
would have been scheduled to travel by common carrier after her
corresponding work hours, there is no FLSA entitlement for the last
trip.
Ms. Estrada is entitled to have 12 hours and 35 minutes credited as
hours worked under the Fair Labor Standards Act, 29 U.S.C. 201, et seq.,
(1976). Any of these hours worked which caused her total hours worked
to exceed 40 in a week are compensable as overtime under FLSA. However,
it must be borne in mind that leave and holidays are not counted as
hours of work under FLSA. FPM Letter 551-1, Attachment 5.B., May 15,
1974.
B-195692, May 5, 1981, 60 Comp.Gen. 431
Government Printing Office - Employees - Overtime Compensation - Actual
Work Requirement - Security Police Uniforms - Acquisition Time - Not
"Overtime Work"
Security police employees of the United States Government Printing
Office who, as a result of their work schedule, must acquire their
uniforms during their off-duty hours are not entitled to overtime
compensation for the time spent in acquiring their uniforms. The time
involved does not constitute "overtime work" for the purposes of 5
U.S.C. 5544(1976). In addition, the time spent by the employees is not
compensable as overtime hours worked under the Fair Labor Standards Act,
29 U.S.C. 201 et seq.
Matter of: United States Government Printing Office Security Police
Employees, May 5, 1981:
The issue in the present case is whether security police employees of
the United States Government Printing Office (GPO) are entitled to
receive overtime compensation for off-duty time spent acquiring uniforms
prescribed by the GPO to be worn in the performance of official duties.
For the following reasons, there is no basis to pay the employees
overtime compensation under either 5 U.S.C. 5544(1976) or the Fair Labor
Standards Act of 1938, as amended, 29 U.S.C. 201 et seq. (1976).
The question was presented by Vincent T. McCarthy, Esq., General
Counsel, United States Government Printing Office.
Prior to January 1979, GPO security police employees were paid a
uniform allowance in accordance with 44 U.S.C. 309(a) and 5 U.S.C. 5901.
Each employee then purchased his/her uniform from private vendors on
off-duty time without compensation. Subsequently, the GPO standardized
its uniforms with those of the General Services Administration (GSA).
In connection with this, GPO entered into an arrangement with the GSA
whereby the GPO security police uniform items could be obtained from the
GSA store in Bladensburg, Maryland.
The GSA store is open Monday through Friday from 7:30 a.m. to 4 p.m.
Since the store operates only during these days and hours, GPO allows
its day-shift security police employees to acquire uniform items during
their regular working hours. The night-shift employees, on the other
hand, must acquire their uniforms during their off-duty hours. However,
all of the security employees are on rotating shifts which rotate on a
regular basis. Thus, all of the security employees are, at some time,
on the day shift and as such are entitled to receive administrative
leave to acquire uniform items during this time. The employees' union,
Local 2738 (American Federation of Governmental Employees), asserts that
the night-shift employees are entitled to be paid for the time they
spend including traveltime acquiring their uniforms.
We have been informed that the security police are general graded
employees and are paid under the provisions of 44 U.S.C. 305, commonly
referred to as the Kiess Act. As such, the payment of overtime
compensation to these employees is governed by the provisions of 5
U.S.C.5544.
See B-191619, May 9, 1978, and cases cited therein. Sec. 5544 provides,
in pertinent part, as follows:
(a) An employee whose pay is fixed and adjusted from time to time in
accordance with prevailing rates under section 5343 or 5349 of this
title, or by a wage board or similar administrative authority serving
the same purpose, is entitled to overtime pay for overtime work in
excess of 8 hours a day or 40 hours a week.
Thus, the question is whether the time spent obtaining uniform items
outside regular working hours constitutes "overtime work" within the
meaning of section 5544. Section 5544 does not fully set out the
standards as to what constitutes compensable overtime work. However,
the courts have applied essentially the same standards to determine
whether certain types of activities are compensable overtime work under
5 U.S.C. 5544 and 5 U.S.C. 5542 applicable to General Schedule
employees. See Detling v. United States, 432 F.2d 462 (Ct. Cl. 1970)
and Rapp v. United States, 167 Ct.Cl. 852(1964). The major factor
considered by the courts is whether the time spent by the employee in
performing the activity is predominantly for the employer's benefit.
See Armour & Co. v. Wantock, 323 U.S. 126(1944); Baylor v. United
States, 198 Ct.Cl. 331, 357(1972); and Rapp v. United States, supra.
This determination depends upon the facts and circumstances of each
case.
We do not consider the time spent by employees purchasing clothing to
wear to work as hours of work so as to entitle the individual to
overtime pay. There are a number of activities which an employee must
undertake on his own time to prepare himself for work and for which he
may not expect compensation. One of these tasks is for the employee to
dress himself in the appropriate attire required by his job. In some
circumstances this may require the purchasing of new clothing or, as in
this instance, a new uniform. The fact that an employee must purchase
his clothes in a specific store during limited hours does not alter the
fact that by purchasing the clothing the employee is fulfilling his
responsibility to be properly dressed for work. Thus, in these
circumstances the time spent by these employees in purchasing their
uniforms may not be viewed as time spent predominantly for the
employer's benefit.
Therefore, the time spent by GPO security police employees in
acquiring their uniforms is not considered "overtime work" for the
purposes of 5 U.S.C. 5544, and the employees are not entitled to receive
overtime compensation for such time. Moreover, since the purchase of
uniform items is not considered work, any travel which might be involved
would not be considered work for purposes of paying overtime
compensation.
In addition to being subject to the provisions of 5 U.S.C. 5544, the
security police employees of the GPO are also covered by the provisions
of the Fair Labor Standards Act (Act).
29 U.S.C. 203(E)(2)(A)(iii). The Fair Labor Standards Act requires
payment of overtime for hours in excess of 40 hours per week, for all
work which the employee performs. 29 U.S.C. 207.
Under 29 U.S.C. 204(f), the Office of Personnel Management (OPM) is
authorized to administer the provisions of the Act with respect to most
Federal employees. We requested OPM's opinion concerning payment of
overtime compensation under the Act in this particular situation. We
were advised that the time spent by these employees acquiring their
uniforms is not considered to be compensable hours worked under the Act.
We agree with this opinion.
Accordingly, since the off-duty time spent by the employees acquiring
their uniform items does not satisfy the requirements of either 5 U.S.C.
5544 or the Fair Labor Standards Act for payment of overtime
compensation, the employees are not entitled to receive such
compensation.
B-202116, May 1, 1981, 60 Comp.Gen. 423
Corporations - Legal Services Corporation - Lobbying
Legal Services Corporation (LSC) and its recipients organized a grass
roots lobbying campaign in support of LSC reauthorization and
appropriation pending before Congress, contending these activities are
authorized by 42 U.S.C. 2996e(c)(2)(B) and 2996f(a)(5)(B)(ii). While
these provisions allow LSC and recipients to provide testimony and
appropriate comment to Congress concerning LSC legislation, they
prohibit LSC and recipients from expending funds for grass roots
lobbying activities. Lobbying - Appropriation Prohibition
Despite Legal Services Corporation (LSC) contentions to the contrary,
the lobbying restriction in section 607(a) of the annual Treasury,
Postal Service, and General Government Appropriation Act, that prohibits
the use of funds in all appropriation acts for any given year, applies
to funds appropriated for LSC. LSC is required to implement this
provision and insure that no appropriated funds are used by the
Corporation or recipients to engage in grass roots lobbying.
Corporations - Legal Services Corporation - Lobbying - Appropriation -
Prohibition - Moorhead Amendment
The Moorhead Amendment is a direct lobbying restriction included in
the annual Legal Services Corporation (LSC) appropriation that prohibits
LSC and recipients from expending Federal funds for grass roots lobbying
activities. LSC has an obligation to implement this restriction and
insure that its appropriations are not used for such lobbying
activities.
To The Honorable F. James Sensenbrenner, Jr., House of
Representatives, May 1, 1981:
This is in response to your request that this Office investigate the
possible misuse of appropriated funds by the Legal Services Corporation
(LSC) for lobbying and political activities. In support of your
allegations, you provided us with copies of a number of LSC memoranda
covering the period from March 1980 until March 1981. After reviewing
this material we have concluded that LSC has itself engaged and allowed
its grant recipients to engage in lobbying activities prohibited by
Federal law. However, we did not find that LSC had engaged in
prohibited political activities.
The LSC memoranda indicate that LSC developed a detailed plan
designed to urge members of the public interested in its legal
assistance programs to contact Members of Congress and communicate their
support for LSC reauthorization legislation and LSC appropriations
measures being considered by the Congress. Over the years, LSC has
encouraged groups interested in legal assistance at the local, regional,
and state levels to support its legislative program. The organizations
include such groups as LSC fund recipients; clients' councils; the
National Legal Aid and Defense Association (NLADA), an organization of
poverty lawyers; the National Organization of Legal Services Workers,
an employee organization of legal assistance workers; migrant farm
worker groups; bar associations; and similar groups.
The effectiveness of the organization depends heavily on a State
Coordinator to serve as link between LSC headquarters and the State
organization. Normally, the State Coordinator is an employee or
official of a recipient organization, as opposed to being an employee of
the LSC itself. Officials of LSC's Office of Government Relations
communicate frequently with State Coordinators and develop strategy
about how local members of the State's Congressional delegation can best
be approached, how the local support base can be increased, and how
certain methods have proven successful in other states. In addition to
serving as a communications link and coordinating the activities of
local groups, State Coordinators are also responsible for reporting
information back to LSC headquarters.
Early in 1980, LSC formed a coalition with the Project Advisory Group
(PAG), a national organization of legal services programs, to direct a
lobbying campaign in support of LSC reauthorization and appropriation
legislation being considered by the Congress. In April 1980, Dan J.
Bradley, President, LSC, and Charles H. Dorsey, Chairperson, PAG, sent a
joint letter to Legal Services Project Directors, the heads of recipient
organizations, initiating the lobbying efforts as follows:
The Legal Services Corporation and the Project Advisory Group are
engaged in a joint effort to protect the interests of legal services
programs and clients in current Congressional consideration of the Legal
Services Corporation Act and appropriations for fiscal year 1981. We
are sending this letter to bring you up to date on this pending
legislation and to inform you particularly of the serious efforts in
Congress to impose further restrictions on legal services work and to
limit our appropriation.
On the issue of funding, a major threat is posed by the general
budget-cutting pressures on Congress and the Administration. Even
strong supporters of legal services have agreed to a balanced budget in
1981. This means that both the House and Senate Budget Committees are
looking more critically at funding for legal services than ever before,
and could restrict the Appropriations Committees' ability to adequately
fund the program for next year. You will recall that the Corporation
requested $353 million for 1981. PAG is urging $403 million. The White
House is supporting $321 million. Some members of the House Budget
Committee proposed termination of legal services. That was not
seriously debated, but a subsequent effort to reduce funds to $278
million lost narrowly by a vote of 11 to 14.
At the time of this writing, resolutions from both the House and
Senate Budget Committees would permit appropriations of as much as $321
million. It is certain, however, that further efforts to cut the budget
will be made on the floor of both the House and the Senate. Such
proposed cuts could be specified to legal services or could be
across-the-board reductions for all spending. The budget resolutions
will be debated on the floor in late April or early May.
The House and Senate Appropriations Committees will set the actual
1981 appropriations figure for legal services once Congress has adopted
the budget resolution setting the outer limits. Markup on
appropriations bills will probably occur in mid to late May.
The House Judiciary Committee and the Senate Labor and Human
Resources Committee are considering bills to extend the Legal Services
Corporation Act. The leaders of both Committees want a simple extension
of the law, with no amendments-- a position supported by both the
Corporation and PAG. The House Bill, H.R. 6386, is a three-year
authorization. The Senate bill, S. 2337, is a two-year bill.
Both have been reported from the appropriate subcommittee and will be
considered by the respective full committees hopefully before the end of
April.
We have clear indications that a number of crippling amendments will
be proposed-- either in full Committee or on the floor of the House and
Senate. Among those now being discussed are further restrictions on
legislative representation, representation in certain abortion cases,
representation of aliens, and recovery of attorneys' fees. None of
these are easy issues. All of them are important to effective legal
services work. We must not underestimate the risk that such amendments
present this year.
Both the Corporation and PAG have added temporary personnel in
Washington to better assure that the interests of legal services
programs and clients are heard as these issues are debated in the coming
weeks and months. * * *
On April 3, 1980, LSC sent out a packet of materials addressed to:
"Persons Coordinating Congressional Relations" that included
instructions on effective lobbying of members of Congress at the local
level for LSC legislation. The materials provided were as follows:
1. A statement of "what needs to be done" and "what to send us."
2. A Legislative update of April 3, 1980, from Anh Tu.
3. Fact sheets and background information on the LSC reauthorization
and appropriation, including membership lists of the appropriate House
and Senate Committees.
4. One page fact sheet/handouts on possible restrictive amendments.
5. Examples of supportive Bar letters and resolutions.
6. Examples of favorable editorials.
7. Examples of supportive letters from public officials.
8. A list of state coordinators for the legislative effort. (State
coordinators will also receive materials excerpted from the
Congressional Staff Directory, indicating the Washington and local
office addresses and phone numbers, and the key staff of each member of
their state's Congressional delegation.)
NOTE.-- PLEASE be in touch with your state coordinator before
initiating Congressional contacts, editorials, or support from other
suggested sources so that efforts can be coordinated among the various
legal service supporters in your state.
The "what needs to be done" brochure gives specific and detailed
guidance to local lobbyists. The brochure reads as follows:
1. Visiting Members of Congress. During the Congressional recess,
April 4-14, many members of Congress will be in their districts and can
be approached by constituents supportive of legal services. For
example, visits on behalf of legal services might be made by delegations
of bar and law school leaders, public officials, prominent figures in
the party of the member, heads of major contributing organizations (e.g.
labor unions), heads of broad-based constituent organization (e.g.
council of churches, League of Women Voters, Common Cause) and
individual campaign contributors.
NOTE.-- It is important to consider which of the above will be more
influential with respect to a given member of Congress. Many members
will want to hear from legal services staff themselves, but in most
cases, it is better to rely on your supporters in the bar and other
constituent groups to make Congressional contacts. (INSTRUCTIONS
attached)
2. Securing Local and State Bar Support. Supportive resolutions of
local and state bar association and contacts by bar leaders with members
of Congress are effective means of indicating concern to Congress.
3. Obtaining Supportive Editorials. Seek editorial support in local
papers.
4. Alerting Constituents. Many Congressional constituents will be
concerned about legal services if they are alerted to the problems we
face. These include: Local and state labor organizations; businesses
and business organizations; church groups including local council of
churches or statewide conferences, such as the statewide Catholic
conference which exists in most states; broad-based constituent
organizations (such as the League of Women Voters, Common Cause); civil
rights organizations; anti-hunger coalitions; social service
organizations (most states have some organizations involved in the
delivery of human resources); and individual campaign contributors.
Also, client and poor people's organizations, such as the National
Clients Council chapters, blockclubs, community economic development
corporations, should be informed.
5. Alerting Public Officials. State legislators, governors, local
legislators, and prominent individuals in the political party of the
Representative or Senator may be concerned about legal services if they
are alerted to the problems our clients will face if LSC's budget is cut
or our services are restricted.
6. Informing Us of Problems. Finally, it is important to determine
if members of Congress or their staff have heard allegations of
wrongdoing by a legal services program, and promptly provide a
memorandum of fact to us along with as much supporting evidence as
possible.
LSC also instructed local lobbyists in the "what to send us" brochure
that they were responsible for providing LSC with after-action reports
of their lobbying efforts. The data desired were as follows:
Please provide State Coordinators and the LSC Office of Government
Relations with all actual products of your efforts, including
editorials, communications by individuals and organizations, and other
information.
Specifically, with regard to all House and Senate contacts please
provide us with a report of:
(1) the member of Congress (and staff) contacted,
(2) persons (and their positions) making the contacts,
(3) the Member's (and staff's) attitude toward
(a) Legal services in general, and
(b) any specific provisions of the legislation or amendments
discussed, and
(4) materials or information we should deliver to the member's
Washington office.
The packet contained instructions on the preparation which supporters
of LSC legislation should make before visiting their Congressmen or
Senators. Lobbyists were advised to familiarize themselves with the
background of the Member and select highly respected persons from the
district to accompany the visiting delegation. The delegation was to
familiarize itself with LSC reauthorization and appropriation issues and
emphasize the significance of these issues to the Member.
The packet also included background information on the LSC
reauthorization and appropriation issues. This material urged support
for H.R. 6386 without amendment in the House and S. 2337 as reported out
of the Senate Subcommittee on Employment, Poverty and Migratory Labor.
The background information also urged opposition to any amendment that
would (1) restrict legislative representation, (2) restrict the ability
of legal services programs to represent aliens, (3) restrict the right
of a legal services program to receive court-awarded fees upon
successful completion of litigation, (4) limit the right of employees of
legal services programs to join labor unions, (5) limit legal services
representation in abortion proceedings, or (6) require legal services
attorneys to negotiate prior to the initiation of litigation.
The packet included several examples of support for LSC
reauthorization and appropriations in the form of editorials, local and
State bar association letters, and letters from public officials.
It was pointed out that such items had been helpful in demonstrating to
Members of Congress the support for LSC in the local area.
Similar packets were sent out from the LSC Office of Government
Relations and PAG to State Coordinators about once each month. These
subsequent packets contained specific guidance, depending on the
then-current status of LSC legislation, as to the lobbying efforts that
were needed at the local level.
There is little question that the communications set forth in detail
above constitute "lobbying," as the term is used in the applicable
restrictive legislation and construed in our decisions. "Lobbying"
activities are prohibited by provisions of the Legal Services
Corporation Act of 1974, as amended (42 U.S.C. 2996 et seq.) and
restrictions contained in various appropriation Acts applicable to
Federal funds expended by the Corporation. (See later discussions of
these statutes.)
Under the provisions of 42 U.S.C. 2996e(c), the Corporation itself,
as distinguished from recipients of funding through the Corporation, is
prohibited from attempting to influence the passage or defeat of any
legislation before the Congress, except that Corporation personnel
* * * may testify or make other appropriate communication (A) when
formally requested to do so by a legislative body, a committee, or a
member thereof or (B) in connection with legislation or appropriations
directly affecting the activities of the Corporation.
IN CONSTRUING THE EXCEPTION, WE THINK THE PHRASE "* * * TESTIFY OR
make other appropriate communication * * * " is significant. Clearly,
Congress did not intend the statutory prohibition against lobbying to
preclude Corporation personnel from testifying before that body nor do
we think that the Congress meant to preclude the Corporation from
providing to the Congress the kind of data that Executive agencies and
Departments normally supply when requested to do so or when they desire
to express their views on legislative proposals. In construing other
statutory restrictions against lobbying by officials of Executive
agencies and departments (for example, Sec. 607(a) (31 U.S.C. 724), of
the Treasury, Postal Service, and General Government Appropriation Act,
discussed infra), we have consistently recognized that these officials
have a legitimate interest in communicating with the public and with
legislators regarding their policies and activities. When their
policies or activities are affected by pending or proposed legislation,
discussion by officials of that policy or activity will necessarily,
either explicitly or by implication, refer to such legislation and will
presumably be either in support of or in opposition to it. Accordingly,
we have always construed other anti-lobbying restrictions as permitting
officials to express their views on pending or proposed legislation as
it affects their policies and activities directly to Congress or to the
public, 56 Comp.Gen. 889(1977); B-128938, July 12, 1976.
On the other hand, we have construed these other statutory
anti-lobbying restrictions as prohibiting agency and department
officials from engaging in "grass roots" lobbying, involving appeals
addressed to the public at large or to selected individuals suggesting
that they contact their elected representatives and indicate their
support of or opposition to legislation being considered by the
Congress. 59 Comp.Gen. 115(1979). In other words, direct communication
of its views by Corporation personnel to Members or Committees of the
Congress is permissible; drumming up support for the same purpose
outside the Corporation is not.
Accordingly, we do not think that the efforts by Corporation
officials or employees to appeal to members of the public or the legal
assistance community to contact their elected representatives in the
Congress on behalf of legislative positions of the Corporation
constitute "other appropriate communication."
LSC has broadly construed the exception in 42 U.S.C. 2996e(c)(2),
which reads " * * * except that personnel of the Corporation may testify
to make other appropriate communication * * * in connection with
legislation or appropriations directly affecting the activities of the
Corporation", contending that this exception authorizes Corporation
personnel to engage in all activities necessary to influence legislation
and appropriation measures that directly affect the Corporation,
including grass roots lobbying activities. We are unaware of any
support for such a broad construction in the legislative history of this
provision or elsewhere.
Indeed, the Conference Report to accompany H.R. 7824, the Legal
Services Corporation Act of 1974 (S. Rep. No. 93-845, 92d Cong., 2d
Sess. 22), supports our construction of the exception. The report
states:
Both the House bill and the Senate amendment prohibit the Corporation
from undertaking to influence the passage or defeat of any legislation
by the Congress or by any State or local legislative body. The Senate
amendment allowed the Corporation to testify and make appropriate
comment in connection with legislation or appropriations directly
affecting the activity of the Corporation. The House bill contained no
comparable provision. The House recedes.
As can be seen from the Conference Report, the exception was
understood to allow only testimony and appropriate comment on
legislation affecting the Corporation, which is consistent with our
construction.
With regard to the use of funds by recipients of LSC assistance,
under the provisions of 42 U.S.C. 2996f(a)(5), the Corporation is
charged with the responsibility of insuring that recipients do not use
appropriated funds to influence the passage or defeat of legislation
pending before the Congress except when representing a client or when:
(B) a governmental agency, legislative body, a committee, or a member
thereof
(i) requests personnel of the recipient to testify, draft, or
review measures or to make representations to such agency, body,
committee, or member, or
(ii) is considering a measure directly affecting the activities
under this title of the recipient or the Corporation.
The exception in 42 U.S.C. 2996f(a)(5)(B)(ii), quoted above, should
be given the same construction as the similar provision applicable to
LSC personnel in 42 U.S.C. 2996E(C)(2)(B), discussed above. That is, it
should be construed so as to preclude expenditures of appropriated funds
by recipients for grass roots lobbying. Here again, the Corporation has
erroneously construed this exception broadly to permit recipients to
expend appropriated funds to solicit others to contact their congressmen
in connection with legislation affecting the recipient or the
Corporation. For the reasons outlined above, we believe the
Corporation's construction is improper. LSC has, however, promulgated
regulations in 45 CFR 1612.4 that implement is erroneous interpretation
of this statutory provision as follows:
(a) No funds made available to a recipient by the Corporation shall
be used, directly or indirectly, to support activities intended to
influence the issuance, amendment, or revocation of any executive or
administrative order or regulation of a Federal, State or local agency,
or to influence the passage or defeat of any legislation by the Congress
of the United States or by any State or local legislative body or State
proposals by initiative petition.
(3) An employee may engage in such activities if a government agency,
legislative body, committee, or member thereof is considering a measure
directly affecting the activities under the Act of the recipient or the
Corporation.
As currently worded, these regulations authorize LSC fund recipients
to expend appropriated funds for grass roots lobbying campaigns in
support of legislation or appropriation measures that directly affect
the activities of the recipient or the Corporation. In our opinion, to
Representative Gilman, B-163762, November 24, 1980, (copy enclosed), we
noted certain deficiencies in these regulations and wrote to the
President of the Corporation recommending that he take appropriate
action to amend the regulations to implement adequately the statutory
restrictions on lobbying. The Corporation has not, however, acted on
our recommendations.
In addition to the limitations on lobbying activities in the above
cited statutory provisions, annual appropriation act restrictions have,
throughout the existence of the legal assistance program, also curtailed
such activities. Section 607(a) of the Treasury, Postal Service, and
General Government Appropriation Act, the language of which has been
included in the Act every year since 1972, provides as follows:
No part of any appropriation contained in this or any other Act, or
of the funds available for expenditure by any corporation or agency,
shall be used for publicity or propaganda purposes designed to support
or defeat legislation pending before Congress.
We have construed section 607(a) as prohibiting the expenditure of
Federal funds by Executive agencies and Government corporations for
activities involving appeals addressed to members of the public
suggesting that they contact Members of Congress and indicate support of
or opposition to legislation pending before Congress, or that they urge
their congressional representatives to vote in a particular manner. 56
Comp.Gen. 889, supra.
We understand from discussions with the LSC General Counsel that LSC
does not consider the restriction against lobbying activities contained
in Sec. 607(a) to be applicable to its appropriations because, when Sec.
607(a) was first enacted in 1972, the Legal Services Corporation Act of
1974 (42 U.S.C. 2996 et seq.) had not been enacted into law. The
fallacy in LSC's argument is that appropriation Acts are enacted
annually and restrictions in them apply to the use of funds for the
fiscal year for which the appropriation was made. An appropriation
restriction may forbid the use of funds by an agency even for some
activity authorized in its organic legislation. In such a case, the
restriction takes precedence over the organic legislation; that is, the
agency would have substantive authority to carry on a certain activity
but would have no funds available to spend on it. Section 607(a) has
been enacted in the same form each year since 1972 and is, by its terms,
applicable to appropriations contained in all appropriation acts. The
Sec. 607(a) restriction against the use of Federal funds for lobbying
has thus been applicable to each annual appropriation the LSC has
received.
Apparently, LSC's interpretation that Sec. 607(a) was not applicable
to its appropriations and aggressive legislative representation by
program personnel at the State level led the Congress to enact a
provision similar to Sec. 607(a), but expanded to cover State
legislatures as well as the Congress, as a proviso to fiscal year 1979
appropriations provided for LSC in the Departments of State, Justice,
and Commerce, the Judiciary, and Related Agencies Appropriation Act,
1979 (Pub. L. 95-431, October 10, 1978, 92 Stat. 1021). This proviso,
known as the Moorhead Amendment, reads as follows:
* * * Provided, No part of this appropriation shall be used for
publicity or propaganda purposes designed to support or defeat
legislation pending before Congress or any State legislature.
The Moorhead amendment has been applicable to the Corporation's
appropriations each year since it was first introduced and enacted in
1978. Under this restriction, appropriated funds may not be used by
recipients to appeal to members of the public to urge their elected
representatives to support or defeat legislation pending in the Congress
or in any State legislature. LSC has also failed to implement this
restriction.
In summary, through the use of recipient organizations and their
contacts at the State and local level, LSC has developed an extensive
lobbying campaign to support reauthorization legislation for the
corporation and related appropriation measures being considered by the
Congress. This activity violates the anti-lobbying statutory and
appropriation restrictions described above.
Because LSC's regulations and current policies appear to authorize
recipients to expend appropriated funds for prohibited lobbying
activities in derogation of the above-cited restrictions, we do not
think, as a practical matter, that the Government would be successful in
attempting to recover the illegally expended sums from the recipients.
Also, because we are not authorized to settle the accounts of the
Corporation, we are unable to take exception to these illegal payments.
We have however, written the President of the Corporation informing him
that we are advising both the Senate and House Appropriations and
Judiciary Committees that the Corporation is expending Federal funds in
violation of the above cited statutory and appropriations restrictions.
In that same letter, we reiterate the recommendations in our opinion,
B-163762, November 24, 1980.
We also reviewed the memoranda that you gave us for possible
violations of restrictions on political activities contained in 42
U.S.C. 2996e(e) and 42 U.S.C. 2996f(a) by employees of either the
Corporation or recipients. These restrictions are primarily designed to
prohibit the Corporation or its recipients from assisting a political
party or a candidate for public office. Our review did not uncover any
evidence of such violations.
We trust this opinion is responsive to your request. If we can be of
further assistance, please call on us.
B-200323, April 30, 1981, 60 Comp.Gen. 420
Travel Expenses - Headquarters - Inadequacy of Transportation - Public
Transportation Strike
Employees of Urban Mass Transportation Administration are not
eligible for reimbursement of excess cost of commuting by private or
General Services Administration rental car over normal public transit
fares, despite complete public transit shutdown during April 1980
strike. Cost of transportation to place of business is personal
responsibility of employee except in limited emergency circumstances not
applicable here. B-158931, May 26, 1966, and 54 Comp.Gen. 1066(1975),
are distinguished.
Matter of: Reimbursement of Excess Commutation Costs During New York
Transit Strike, April 30, 1981:
During the 10-day New York City transit strike in April 1980, Federal
employees who normally relied on public transit to commute to city
offices were force to find alternate means of transportation, often at a
cost in excess of normal transit fares. After the strike, two employees
of the Urban Mass Transportation Administration (UMTA) submitted
vouchers requesting reimbursement for the excess cost of commuting via
privately-owned vehicle, and another UMTA commuter submitted a voucher
for the rental fees on a General Services Administration (GSA) vehicle,
plus other associated costs. The certifying officer refused to certify
the three vouchers, and the matter was subsequently referred to this
Office for an advance decision. We affirm the certifying officer's
action in denying reimbursement.
The settled rule is that employees must bear the cost of
transportation between their residences and official duty locations. 11
Comp.Gen. 417(1932); 15 id. 342(1935); B-189114, February 14, 1978.
The fact that emergency conditions necessitate additional trips or
otherwise increase commuting costs does not alter the employee's
responsibility. 36 Comp.Gen. 450(1956); B-189061, March 15, 1978.
Similarly, the unavailability of public transportation alone does not
shift this personal obligation to the Government. 19 Comp.Gen.
836(1940); 27 id. 1(1947); B-171969.42, January 9, 1976. These
general rules clearly assign the responsibility for home-to-work
transportation to the individual employee in nearly every circumstance.
We have made exceptions to the general rule only in emergency situations
where even alternate transportation was unavailable or scarce and
Government operations were closed down except for a few essential
personnel who were ordered to report to work. However, none of those
circumstances are applicable to the 1980 transit strike or the UMTA
employees claiming reimbursement.
Most directly on point of our transit emergency cases is B-158931,
May 26, 1966. This decision arose out of the 1966 New York transit
strike. During that strike, all affected Federal employees were
permitted to remain at home without charge to annual leave.
An employee at the Internal Revenue Service's Manhattan office was
nonetheless directed by his supervisor to report to work and to
transport five co-workers in his privately-owned vehicle. 5 U.S.C. 5704
provides that mileage is payable to employees using their
privately-owned vehicles in the conduct of official business. We
approved reimbursement of the employee's commuting costs in that case,
analogizing the required conduct of a carpool transportation arrangement
to the performance of official duties. We noted that had the group
riding arrangement not been administratively directed, all six employees
would have been authorized to remain at home without a charge to leave.
Thus the Government benefitted by having essential work of the office
carried out at minimal additional expense instead of saving the
transportation expenses but losing the services of the six employees who
had to be paid anyway.
Although we approved reimbursement to the employee in question, the
case does not stand for the proposition that whenever a public transit
strike occurs, Federal employees may be reimbursed for the excess cost
of alternative transportation. Rather, we observed that the particular
circumstances warranted a limited exception to our general rule.
There are none of these exceptional circumstances in the present
case. According to the Federal Executive Board (FEB), a planning and
coordinating group, Federal employees in the New York metropolitan area
were under a "liberal leave" policy during the 1980 strike. This meant
that employees were asked to make every reasonable effort to come to
work and that failure to report would have resulted in an involuntary
charge to annual leave. In other words, unlike the 1966 case, employees
were under the usual obligation to report to work and no specific
instructions to report were given or required.
Additionally, the file does not disclose that the carpool
arrangements had official UMTA sponsorship or sanction. Although the
FEB urged agencies to use prearranged private and GSA carpools to
facilitate the presence of key employees, there is no indication that
the claiming employees had been induced to believe they would be
performing official duties while transporting themselves and colleagues
to and from work. Neither did the employees have any advance
expectation of reimbursement on the basis of the FEB statement. Thus,
the limited exception created by B-158931, cited above, does not apply
to the present case.
The employees requesting reimbursement have relied on 54 Comp.Gen.
1066(1975). That case, too, dealt with a complete transit shutdown, but
it is also distinguishable from the present situation. There, a San
Francisco transit strike caused a high rate of absenteeism among
employees of the Social Security Administration.
A particularly high rate of absenteeism occurred among those employees
responsible for processing approximately 15 percent of the national
weekly total of Social Security checks. Continued absence of
approximately 99 critically-needed employees would have impaired a vital
Government function. To combat the situation and to facilitate the
presence of essential personnel who would otherwise have chosen to
remain at home during the strike, the Administration contracted for
private bus service to transport employees to its offices. We agreed
that the rental of buses was within the realm of administrative
discretion which this Office has always acknowledged with regard to the
use of Government-procured vehicles for home-to-work transportation in
emergency situations. 31 U.S.C. 638a(c)(2)(1976); 54 Comp.Gen.
855(1975); 25 id. 844(1946). Again, we stressed the over-riding
Government interest in continuing an essential Government service, the
distribution of weekly payments to Social Security recipients dependent
upon that money.
As to whether the "administrative discretion" theory could be applied
to the situation of the UMTA carpooler in the GSA rental car, several
important distinctions must be drawn. The interest of the Government in
the presence of the five employees in the GSA vehicle carpool seems
significantly less. While the record contains an assertion that they
were "key personnel", there is no indication that they were engaged in
continuing essential services, temporary cessation of which would have
significantly affected public safety or welfare. An additional
distinction exists in that the GSA car was rented by one of the
carpooling employees rather than by UMTA. Although the rental was
apparently approved by the employee's immediate supervisor, he lacked
authority to obligate agency funds for this purpose. Further, there is
no indication that the carpool members were designated by UMTA, as were
the bus passengers in 54 Comp.Gen. 1066.
In sum, the unavailability of any particular mode of public
transportation, even for an extended period of time, does not entitle a
Federal employee to reimbursement of excess commuting costs resulting
from use of an alternative, more expensive mode. Insofar as strikes by
public transit employees are likely to occur with increasing frequency,
Federal employees should be prepared to assume responsibility for
finding as well as paying for alternate means of transportation. At the
same time Federal offices in metropolitan areas should be flexible in
planning for transit emergencies.
In accordance with the foregoing, we affirm the certifying officer's
action denying reimbursements to the claiming employees, and we will
retain the original vouchers and supporting documentation in this
Office.
B-200817, April 27, 1981, 60 Comp.Gen. 417
Compensation - Downgrading - Saved Compensation - Increases in Saved
Salary
Civil Service Reform Act repealed some salary protection benefits for
downgraded employees and enacted new ones. FAA Air Traffic Controller,
downgraded after effective date of changes but erroneously advised he
was entitled to more liberal repealed benefits, claims unjustified
personnel action and backpay. Claim must be denied. Government is not
bound by erroneous advice and it does not constitute unjustified
personnel action. FAA had no authority to grant repealed benefits and
no alternative but to apply law in effect at time of downgrading.
Matter of: Melvin Ackley, Jr. - Salary Protection Benefits, April
27, 1981:
The Professional Air Traffic Controllers Organization (PATCO) and the
Federal Aviation Administration (FAA) have jointly submitted to the
Comptroller General for decision the claim of Mr. Melvin Ackley, Jr., an
Air Traffic Control Specialist. PATCO contends Mr. Ackley suffered an
unjustified or unwarranted personnel action entitling him to backpay
because FAA misinformed him about salary protection benefits incident to
a change to lower grade. For the reasons hereinafter explained, the
claim may not be allowed.
This case arose because title VIII of the Civil Service Reform Act of
1978, Public Law 95-454, October 13, 1978, 92 Stat. 1218 (5 U.S.Code
5301 et seq.), made some changes in the provisions of title 5, United
States Code, relating to the protection of employees who are reduced in
grade. Among these were the repeal of section 5337, Pay savings, and
the enactment of a new section, 5363, Pay retention. As applicable to
the case at hand, the difference between these provisions is as follows.
Under the repealed section an eligible employee would have continued to
receive the rate he was receiving before downgrading plus full
comparability increases in that rate for up to 2 years. Under the new
section the employee continues to receive the rate he was receiving
before downgrading plus 50 percent of the comparability increases in the
maximum rate of the grade to which reduced until he becomes entitled to
an equal or higher rate by operation of law. The effective date of
these changes was January 11, 1979.
Although the record does not specify the date, it was apparently
early in 1979 when Mr. Ackley, then a journeyman Air Traffic Control
Specialist GS-14, step 5, at FAA's Indianapolis Air Route Traffic
Control Center (ARTCC), applied for a transfer to the Seattle ARTCC and
a change to lower grade, GS-13, the journeyman level there, under a
program called the National Seniority Opportunities Program.
This program provided for salary protection for those changed to lower
grade under its provisions. Mr. Ackley was advised of his tentative
selection for the Seattle position on March 9, 1979, and his selection
was confirmed by a letter to him dated April 5, 1979. However, the FAA
Northwest Region which issued this letter had not yet received
instructions concerning the changes made by the Reform Act and this
letter erroneously informed Mr. Ackley that he was entitled to the "pay
savings" benefits provided by section 5337 which, as has been indicated,
had been repealed nearly 3 months earlier on January 11, 1979.
The reassignment from Indianapolis to Seattle and the changes from
grade GS-14 to GS-13 was effective June 17, 1979. The personnel action
reiterated the erroneous information but Mr. Ackley's pay was properly
continued at the rate for grade GS-14, step 5, $36,766, the rate he was
receiving immediately prior to his change to lower grade. This was in
accord with both the repealed and the new section. However, before the
next comparability increase became effective on October 7, 1979, the FAA
Northwest Region became aware that there was some question concerning
the amount of the increase due Mr. Ackley. Therefore, the adjustment of
his pay was delayed.
Subsequently, some time in November 1979, instructions on the Reform
Act changes were received from FAA headquarters and it then became
apparent that Mr. Ackley was and since his reassignment and change to
lower grade on June 17, 1979, had been entitled only to the "pay
retention" benefits provided by the new section 5363. Thereupon, a
corrective personnel action retroactive to June 17, 1979, was issued,
Mr. Ackley's pay was adjusted in accordance with the provisions of
section 5363 retroactive to October 7,1979, and he was notified by
letter dated December 13, 1979.
The adjustment in Mr. Ackley's pay resulted in his being placed in
step 10 of grade GS-13 at $38,1886 per annum and the termination of his
"pay retention" effective October 7, 1979. Under the repealed section
5337, his pay would have been adjusted to the new rate for grade GS-14,
step 5, $39,341 per annum, which is $1,155 more than he actually
received, and his "pay savings" would have continued for up to 2 years
from the date of his change to lower grade, June 17, 1979.
PATCO alleges that Mr. Ackley was induced by the erroneous
information to accept the change to lower grade and that the erroneous
information and FAA's corrective action constituted an unjustified or
unwarranted personnel action resulting in the loss of pay under the Back
Pay Act, 5 U.S.C. 5596.
Therefore, he is entitled to have his pay adjusted effective October 7,
1979, and his "pay savings" continued in accordance with the provisions
of the repealed section 5337. FAA, while acknowledging that Mr. Ackley
was inadvertently misinformed, asserts that there has been no
unjustified or unwarranted personnel action within the purview of the
Back Pay Act and that it has no alternative but to apply the new law
which was in effect at the time of Mr. Ackley's transfer and change to
lower grade.
We find in the foregoing no unjustified or unwarranted personnel
action and no entitlement to backpay under 5 U.S.C. 5596 and the
implementing regulations, 5 C.F.R. 550.801, et seq. For entitlement to
relief under this law and these regulations there must have been an act
or omission which violated or improperly applied a nondiscretionary,
mandatory requirement imposed by law, regulation, established policy, or
binding agreement, and which resulted in the withdrawal, reduction, or
denial of pay otherwise due the employee.
The erroneous information furnished by FAA, while unfortunate, does
not meet the foregoing requirements and it is well established that the
Government is not bound by information furnished by its agents which
proves to be erroneous. James A. Shultz, 59 Comp.Gen. 28(1979).
Moreover, there may be some question as to how much Mr. Ackley relied
upon this information since the record before us indicates that he had
applied for the transfer and change to lower grade before he received
it.
Neither was the corrective action taken by FAA an unjustified or
unwarranted personnel action since it was mandatory under the law to
apply the salary protection benefits in effect at the time of the action
in question. Contrary to what may be the perception of both parties to
this controversy, Mr. Ackley never acquired entitlement to any benefits
under the repealed section 5337 since, with one exception not here
applicable, these had been put out of existence by an act of the
Congress well before Mr. Ackley's change to lower grade. Clearly they
could not be resurrected and bestowed merely by erroneous information
that they continued in effect. Therefore, Mr. Ackley was never denied
pay that was otherwise due him. As the United States Supreme Court
stated in Utah Power & Light Co. v. United States, 243 U.S. 389(1917):
The United States is neither bound nor estopped by acts of its
officers or agents in entering into arrangements or agreements to do or
cause to be done what the law does not sanction or permit.
Accordingly, it is our opinion that FAA properly adjusted Mr.
Ackley's pay in accordance with the provisions of section 5363 of title
5, United States Code, and that he is not entitled to any backpay.
B-202099, April 24, 1981, 60 Comp.Gen. 414
General Accounting Office - Jurisdiction - Grants-In-Aid - Grant
Procurements - Timeliness of Complaints Against
General Accounting Office (GAO) will no longer review complaints
regarding procurements by Federal grantees which are not filed within
reasonable time. Prompt filing is required so that issues can be
decided while it is still practicable to take action if warranted.
B-188488, Aug. 3, 1977, and B-194168, Nov. 28, 1979, overruled in part.
This decision was later extended by 61 Comp.Gen.-- (B-201613, Oct. 6,
1981). General Accounting Office - Jurisdiction - Grants-In-Aid - Grant
Procurements - Timeliness of Complaints - Solicitation Improprieties
Complaint alleging that Federal grantee's specifications for
particular type of bus washer unduly restrict competition, filed more
than 2 months after bid opening, was not filed within reasonable time
and therefore will be dismissed. In order to be considered filed within
reasonable time, future complaints based on alleged improprieties in
grantee solicitations which are apparent prior to bid opening or receipt
of initial proposals must be filed in accordance with time standards
established for bid protests in direct Federal procurements. Contracts
- Awards - Notice - To Unsuccessful Bidders - Grant Procurements
GAO is not aware of any regulation requiring notice to unsuccessful
bidders in procurements by Federal grantees; even in direct Federal
procurement, lack of notice constitutes mere procedural irregularity
which, in absence of prejudice, does not affect otherwise proper award.
Matter of: Caravelle Industries, Inc., April 24, 1981:
Caravelle Industries, Inc. complains concerning award of a contract
for furnishing and installing a drive-through vehicle (bus) washing
system by the Fairmont Marion County Transit Authority, Fairmont, West
Virginia. The system is being funded by an Urban Mass Transportation
Administration grant which will cover 75 percent of total costs.
Caravelle alleges that the specifications in the solicitation issued
by the transit authority were unduly restrictive, in that they were
provided by and identical to those for a system manufactured by N/S
Corporation, the low bidder. Caravelle also alleges that transit
authority personnel, after viewing its "roll over" model, changed the
specifications to require a drive-through system. Caravelle further
complains that although it submitted a bid bond on December 3, 1980, it
was not formally advised of the award to N/S Corporation until its check
was returned in late January.
We decline to consider the first issue because we believe the
complaint concerning the specifications was not filed within a
reasonable time. (Bid opening was December 5, 1980, but the complaint
was not received in our Office until February 6, 1981.)
We have often stated that the timeliness provisions of our Bid
Protest Procedures, 4 C.F.R. 20.2(1980), do not apply to complaints
regarding procurements by Federal grantees. Rather, these are governed
by our Public Notice appearing at 40 Fed.Reg. 42406(1975), which states
"It is important that complaints be received as promptly as possible,"
but sets no specific times for filing.
Because we did not impose specific time limits in the Public Notice,
we have considered complaints which clearly would be untimely under the
Bid Protest Procedures. For Example, Johnson Controls, Inc., B-188488,
August 3, 1977, 77-2 CPD 75, involved an award made on May 28, 1976, but
the complaint was not filed until March 4, 1977. Somewhat more
recently, in Burroughs Corporation, B-194168, November 28, 1979, 79-2
CPD 376, in a complaint involving a July 1978 solicitation by a
Department of Labor grantee, the complainant alleged, among other
things, that a 1977 solicitation for the same equipment should not have
been canceled. We stated that this objection would have more
appropriately been presented when the first request for proposals was
canceled, rather than after rejection of the complainant's proposal
under the second, although we did go on to decide that the cancellation
and resolicitation with revised technical specifications were proper.
The complaints in these cases were post-award; neither was
sustained. If there had been some legal basis for doing so, however,
our ability to provide an effective remedy would have depended upon such
countervailing considerations as degree of performance, delay in the
delivery of needed goods and services, termination costs, and effect
upon the integrity of the competitive system of corrective action after
bids had been opened and prices exposed.
In light of these considerations, our Bid Protest Procedures require
protests involving alleged deficiencies which are apparent on the face
of a solicitation to be filed either before bid opening or before the
closing date for receipt of initial proposals. In all other cases, a
protest must be filed within 10 days of adverse agency action, in the
case of a protest initially lodged with the contracting agency, or 10
days after the basis of protest is known or should have been known.
While those time limitations are not literally applicable here, and
while it may not, in all cases, be appropriate to establish strict time
limitations for grant complaints, we believe such complaints must be
filed within a reasonable time. The purpose is the same as for bid
protests-- to enable us to decide an issue while it is still practicable
to take action if warranted. Page Airways, Incorporated and Omni Coast
International, Inc., B-197896, June 5, 1980, 80-1 CPD 391; United
States Contracting Corporation, B-198095, June 27, 1980, 80-1 CPD 446.
In Caravelle's case, we do not believe that filing of a complaint
regarding specifications more than two months after bid opening is
filing within a reasonable time. Therefore, we are dismissing this
portion of the complaint without requesting or receiving a report from
the grantor agency. Moreover, since it is only a complaint filed before
opening that would allow review of the allegedly restrictive
specifications and, if necessary, amendment of the solicitation before
prices were made public and performance begun, we believe that in most
instances the only reasonable time for complaints regarding solicitation
deficiencies to be filed is that required by the Bid Protest Procedures,
i.e., prior to bid opening or the time for receipt of proposals. We
shall apply this standard in the future. To the extent that our prior
decisions are inconsistent with this one, they will no longer be
followed.
As for the transit authority's delay in returning Caravelle's bid
bond and notifying it of the award, we are not aware of any regulation
which requires notice to unsuccessful bidders in procurements by Federal
grantees. We note, however, that even in a direct Federal procurement,
lack of notice constitutes a mere procedural irregularity which, in the
absence of prejudice, does not affect the validity of an otherwise
proper award.
A.R. & S. Enterprises, Inc., B-197303, July 8, 1980, 80-2 CPD 17.
The complaint is dismissed in part and denied in part.
B-201590, April 22, 1981, 60 Comp.Gen. 412
Leaves of Absence - Court - Jury Duty - Commencing Day -
Reporting/Returning to Work Duty - Administrative Discretion
When it appears that an employee will be expected to perform jury
duty for a substantial part of the day on the date stated in the summons
commencing jury service, the employee is not required to report to work
that same day. Once summoned by a court for jury duty an employee's
primary responsibility is to the court. When it is apparent that an
employee will be required to perform jury duty for less than a
substantial part of the day, and when it is reasonable to do so, the
employee's agency may require the employee to report for work prior to
reporting for or after being excused from jury duty.
Matter of: Nora Ashe - Leave of Absence for Jury Duty, April 22,
1981:
This action is in response to a request dated December 17, 1980, by
Gordon E. Grainger, President, Local 977, National Federation of Federal
Employees, concerning entitlement to court leave of Nora Ashe, and other
employees at George Air Force Base (AFB), when called to report for jury
duty. A decision is being rendered pursuant to 4 C.F.R.Part 21(1980).
As amended August 21, 1980, Part 21 contains the provisions under which
this Office settles issues on the legality of appropriated fund
expenditures that arise in the Federal Labor-Management Relations
Program. See 45 F.R. 55689. The issue presented was initially the
subject of a grievance. The grievance has been withdrawn in favor of a
joint request for decision pursuant to 4 C.F.R. 21.7(b).
The issue concerns the propriety of the Air Force's action in
charging Mrs. Ashe 3 hours of annual leave because she did not report to
work prior to reporting for jury duty on the first day of her term of
jury service. This procedure has not been consistent throughout George
AFB; some supervisors have required employees to report to work prior
to jury duty and some have not. We understand that all employees are
presently required to report to work before they are given court leave
to report for jury duty. The union questions this requirement in view
of the instructions in Federal Personnel Manual (FPM), Supplement 990-2,
Book 630, subchapter S10-2e, and our decisions at 20 Comp.Gen. 131 and
id. 181, which indicate that employees on jury duty are assigned to the
court and are to be given court leave for all hours until they are
released by the court.
The union feels it is unreasonable to expect employees to report to work
for a very brief period and then report to the court.
Under 5 U.S.C. 6322(1976), an employee is entitled to leave of
absence without loss of or reduction in the leave to which he is
otherwise entitled, during a period of absence when he is summoned by a
court to serve as a juror. That statute, derived from the act of June
29, 1940, Chapter 446, 54 Stat. 689, states the long-standing policy of
the Congress that Government employees should be permitted to perform
jury service without loss of compensation or leave.
In 20 Comp.Gen. 181(1940) we held that an employee properly summoned
by a State or Federal Court to serve on a jury is under the jurisdiction
and control of the court for the term of jury service. As defined in
that decision the term of jury service runs from the date stated in the
summons on which he is required to report to the court until the
employee is discharged by the court.
Although an employee is not strictly under the jurisdiction and
control of his employing agency during the term of jury service, we have
nonetheless recognized the employing agency's authority to require an
employee to return to duty during periods that he is excused from jury
duty. In 20 Comp.Gen. 181(1940) we held that an employee excused or
discharged by the court either for an indefinite period subject to call
or for a definite period in excess of one day is not entitled to court
leave for such days but must report to duty or have his absence charged
to the otherwise appropriate leave account. That holding was amplified
in 26 Comp.Gen. 413(1946) in which we discussed the scope of an agency's
discretion to require an employee who has been excused from jury duty
for one day or less to return to his regular duties. We there stated:
* * * in cases where no hardship would result, it would be within
administrative discretion to inform a prospective juror that, if excused
from jury duty for one day or even a substantial portion thereof, he
would be expected to return to duty or suffer a charge against his
annual leave to the extent that he failed so to do. * * *
The determination of whether to require an employee to report to work
during the term of jury service is a matter of administrative discretion
to be exercised in a reasonable fashion in light of the particular
circumstances. B-158954, April 25, 1966.
The decisions discussed involve employees excused or discharged after
beginning their terms of jury service. However, the principle involved
is applicable to the commencement of jury duty. An employee who is not
required to report for jury duty until late in the day stated in the
summons may be required to report to his/her regular duties if it would
not pose a hardship.
However, an employee's primary responsibility once summoned by a
court for jury duty is to the court.
Thus, if it appears that an employee is or may be required to perform
jury duty for a substantial part of the day, on the first day of duty or
on any day thereafter, then the employee should not be required to
report to work that same day. However, when it is apparent that the
employee will be required to perform jury duty for less than a
substantial part of the day and when it is reasonable to do so, that
employee may be required to report for work prior to reporting for jury
duty. The employee's duty schedule, the commuting time involved, and
the employee's need for rest should be considered in making this
determination. See B-70371, August 5, 1975, and 54 Comp.Gen. 147(1974).
We have not been furnished the particular facts in Mrs. Ashe's case.
Therefore, we do not have sufficient information to determine whether
the Air Force exercised its discretion reasonably in charging her 3
hours of annual leave on her first day of jury duty. If it was
anticipated that Mrs. Ashe would perform jury duty for a substantial
part of the day on which she was summoned, her absence from work for 3
hours prior to reporting for jury duty should not have been charged to
annual leave. Thus, if she was required to report in the morning, with
the possibility of servicing on active jury service for a substantial
part of a working day, she should not have been charged leave. This is
so even if her normal work hours began early, such as 6 or 7 a.m.,
whereas jury service was not scheduled to begin until 9 or 10 a.m. To
charge her annual leave in such circumstances would be an unreasonable
exercise of discretion on the part of the agency.
B-200243, April 22, 1981, 60 Comp.Gen. 409
International Organizations - Transfer of Federal Employees, etc. -
Lump-Sum Leave Payments - Rate Payable
Employee of Nuclear Regulatory Commission transferred to
international organization under 5 U.S.C. 3581, et seq. effective August
16, 1978, at which time he elected to retain annual leave to his credit
pursuant to 5 U.S.C. 3582(a)(4). On January 22, 1980, also pursuant to
5 U.S.C. 3582(a)(4) and prior to reemployment, employee requested
lump-sum payment for annual leave retained. Consistent with computation
provisions of 5 U.S.C. 3583 and implementing regulations, computation of
employee's payment is based on rate of pay attaching to his Federal
agency position at time of his request for lump-sum leave payment under
5 U.S.C. 3582(a)(4), not the date of the transfer.
Matter of: Alfred M. Garland - Lump-sum payment for annual leave -
Transfer to International Organization, April 22, 1981:
In this action we consider the request of Mr. Angelo S. Puglise,
Director, Division of Accounting, Office of the Controller, United
States Nuclear Regulatory Commission, for a decision on the claim of Mr.
Alfred M. Garland, for a lump-sum payment of annual leave.
Specifically, Mr. Puglise has asked what rate of pay should be applied
to the computation of Mr. Garland's lump-sum annual leave payment
predicated on the following circumstances.
Mr. Garland transferred-- within the meaning of 5 U.S.C. 3581, et
seq.-- to the International Atomic Energy Agency effective August 6,
1978. At the time of his transfer Mr. Garland elected pursuant to 5
U.S.C. 3582(a)(4) to retain to his credit all accumulated and current
accrued annual leave to which he was then entitled and which would
otherwise have been liquidated by a lump-sum payment. Acting in
accordance with additional authority provided in 5 U.S.C. 3582(a)(4) Mr.
Garland subsequently delivered a letter to the agency on January 22,
1980, requesting a lump-sum payment for his retained annual leave. As a
result of these actions, Mr. Puglise asks whether Mr. Garland is
entitled to have his lump-sum annual leave payment computed based on his
rate of pay at the time of his transfer to the international
organization on August 16, 1978, or his established rate at the time of
his request on January 22, 1980.
The rights of Federal employees who transfer to an international
organization are set forth in section 3582, title 5, United States Code
(1976). Subsection (a) provides that an employee who transfers to an
international organization with the consent of the head of his agency is
entitled to certain rights and benefits pertaining to retirement, life
and health insurance, compensation for work injuries, and annual leave.
In regard to annual leave subsection (a)(4) specifically provides that
the employee is entitled:
to elect to retain to his credit all accumulated and current accrued
annual leave to which entitled at the time of transfer which would
otherwise be liquidated by a lump-sum payment. On his request at any
time before reemployment, he shall be paid for the annual leave
retained. If he receives a lump-sum payment and is reemployed within 6
months after transfer, he shall refund to the agency the amount of the
lump-sum payment. This paragraph does not operate to cause a forfeiture
of retained annual leave following reemployment or to deprive an
employee of a lump-sum payment to which he would otherwise be entitled.
In reviewing the legislative history of the Federal Employees
International Organization Service Act, as amended (Pub. L. No. 85-795,
72 Stat. 959, August 28, 1958) House Report No. 2509, August 7, 1958,
states as follows in regard to the section presently codified at 5
U.S.C. 3582(a)(4)(1976):
Section 4(a)(4) authorizes a transferred employee to retain his
accumulated annual leave to his credit rather than to liquidate the
annual leave to his credit rather than to liquidate the annual leave by
a lump-sum payment at time of transfer. This section is intended to
operate entirely within the framework of the act of December 21, 1944 (5
U.S.C. 51b), providing for lump-sum payments for annual leave unused at
time of separation, and the Annual and Sick Leave Act of 1951. (The Act
of December 21, 1944, is presently codified at 5 U.S.C. 5551, et seq.;
the Annual and Sick Leave Act of 1951 is presently codified at 5 U.S.C.
6301, et seq.) The section is intended to protect the transferring
employee's annual leave rights by reason of those acts; but it is not
intended to place the employee in a more advantageous position than he
otherwise would be entitled to under those acts.
Under 5 U.S.C. 5551 specified employees who are separated from the
service are entitled to receive lump-sum payments for accumulated and
current accrued annual leave to which they are entitled by statute. The
lump-sum payment shall equal the pay the employee would have received
had he remained in the service until expiration of the period of the
annual leave. On January 22, 1980, and prior to his reemployment on
August 29, 1980, Mr. Garland exercised his specific statutory
prerogative under 5 U.S.C. 3582(a)(4) to receive a lump-sum payment
liquidating his existing annual leave account. The exercise of this
right under 5 U.S.C. 3582(a)(4) requires a "computation" under 5 U.S.C.
3583 which in turn mandates payment in the same manner as if employee
received basic pay at the rate at which it would have been payable had
the employee continued in the position in which he was serving at the
time of transfer.
Therefore, Mr. Garland's lump-sum payment is to be computed on the
basis of 272 hours of annual leave at the rate of pay attaching to his
Federal agency position at the time of his request under 5 U.S.C.
3582(a)(4). Thus, the computation is to be based on a rate of pay that
includes all established pay adjustments affecting his Federal agency
position during the intervening period from the date of his TRANSFER ON
AUGUST 16, 1978, TO THE DATE OF HIS REQUEST ON JANUARY 22, 1980. See,
in that regard 5 C.F.R. 352.314(1979) and, in accordance with 5 U.S.C.
5551, the computation of the lump-sum payment shall equal the pay Mr.
Garland would have received commencing with the day following his
request until the expiration of the period of the annual leave.
Mr. Puglise has also presented several additional questions including
the applicable date to be applied in handling further requests of this
nature. Although this question is hypothetical in nature, we generally
believe that in the absence of a contrary statute, regulation, or agency
policy, the date that the employee's request is received in the Federal
agency is sufficient to establish the employee's compliance with the
provisions of 5 U.S.C. 3582(a)(4).
We believe that the other additional questions have been dispositively
treated in the text of our decision here.
Accordingly, we conclude that Mr. Garland should receive a lump-sum
payment for 272 hours of annual leave computed in accordance with the
above.
B-194861, April 22, 1981, 60 Comp.Gen. 406
Public Lands - Interagency Loans, Transfers, etc. - Damages Restoration,
etc. - Withdrawn Lands - Relinquishment - "Interdepartmental Waiver"
Doctrine Inapplicability
Dept. of the Interior requests GAO's views on applicability of the
"Interdepartmental waiver" doctrine when an executive department
relinquishes a withdrawn area under the Federal Land Policy and
Management Act of 1976 (Act) (43 U.S.C. 1701 et seq. (1976)) and on
proposed amendment to the public land regulations (43 C.F.R. 2374.2(b)).
Doctrine ordinarily requires that restoration costs for property of one
department which has been used by another department be borne by the
department retaining jurisdiction over the property since restoration
would be for future use and benefit of loaning department. Interior
does not benefit in the sense contemplated by the doctrine from
restoration of public lands. Accordingly, doctrine does not apply to
withdrawn property. 59 Comp.Gen. 93(1979) is distinguished.
Matter of: Interdepartmental Waiver Doctrine - Withdrawn Lands,
April 22, 1981:
An executive department, using real property of another executive
department, cannot pay either for the use of the property or, upon
returning it, for its restoration to its original condition, unless
authorized by statute. This is the so-called interdepartmental waiver
doctrine. 59 Comp.Gen. 93(1979); 44 id. 693(1965); 32 id. 179(1952);
31 id 329(1952); see 10 id 288(1930). We conclude that the doctrine
does not prohibit payment for restoration when a department uses lands
withdrawn from the public domain by the Department of the Interior under
the provisions of the Federal Land Policy and Management Act of 1976,
Public Law No. 94-579, 90 Stat. 2743(1976) (classified to 43 U.S.C. 1701
et seq. (1976)).
The Department of the Interior, which submitted this question, does
not believe that the doctrine should apply when an agency uses withdrawn
public lands, builds improvements, and then, when its need for the land
ends, gives notice of its intention to relinquish it. Citing the 1976
Act (43 U.S.C. 1701, 1712(c), and 1732(a)), the Deputy Assistant
Secretary for Land and Water Resources says that United States policy
favors retention of public lands for multiple use management. The
doctrine, in Interior's view, can sometimes result in the property being
disposed of contrary to Congressional intent, and the Department would
like to issue regulations which would prevent that.
The Deputy Assistant Secretary cites the case of the Lewistown Air
Force Station as an example of how the doctrine can prevent multiple
land use and seemingly frustrate Congressional policy favoring retention
of public lands. Between 1958 and 1961, public domain land was
withdrawn for use by the Air Force as an air station near Lewistown,
Montana. The Air Force built 67 buildings and used the Station for
about 10 years.
In 1971, the Air Force notified the Bureau of Land Management that it
intended to relinquish the land. The improvements had to be removed for
the land to be suitable for retention by the United States for multiple
use management, and a dispute arose over which agency should provide the
funds for removal. The Station was situated within a block of
Bureau-managed land classified for retention and multiple use management
in public ownership. The Air Force maintained that the doctrine
precluded it from paying for the removal, and requested the Bureau
either to accept the property for return to the public domain with the
improvements, or acknowledge that it was not acceptable so that it could
be reported to the General Services Administration for disposal.
The doctrine frustrates the Congressional policy favoring retention
of public lands because, in Interior's view, if the Air Force was not
prevented by the doctrine from removing the improvements, the property
could be made suitable for multiple use, and therefore, would not have
to be disposed of. Interior believes that it would be more equitable
for the withdrawing agency, and not the Department, to be responsible
for removing improvements constructed on public lands. Requiring the
Department to remove improvements from withdrawn public lands at the
time of relinquishment may place a severe and unpredictable strain on
its resources.
We understand that the Lewistown matter has been resolved. (A
private individual interested in acquiring the boilers in the buildings
at Lewistown agreed to remove all of the improvements at the Air Station
as part of his bargain with the Government.) However, because similar
situations are likely to occur, the Department plans to propose
amendments to the public land regulations which would require an agency,
at the time a parcel of public land is withdrawn, to assure the
Department that it will remove any improvements it may add if, at the
time the agency relinquishes the property, land use planning indicates
that removal is desired. Interior suggests that the proposed amendment
would provide a means of avoiding the operation of the interdepartmental
waiver doctrine. Further, by providing advance notice to the agencies
of their duty to remove improvements, the regulation would give them an
opportunity to obtain an appropriation specifically for removal of
improvements. Thus, the doctrine would not apply, because, in
Interior's view, the appropriation obtained by the agency using the
withdrawn land would provide the statutory authority necessary to
overcome the doctrine's application.
We agree that, where an agency has an appropriation specifically for
the purpose of removing improvements on land withdrawn for its use, this
constitutes the statutory authority, required by the interdepartmental
waiver doctrine, which permits the using department to pay for
restoration of the property.
Cf. 59 Comp.Gen. 93(1979).
It is still important, however, to determine whether the doctrine
applies in a case involving relinquishment of withdrawn public lands
when considering the efficacy of the proposed regulation. As stated
above, under the doctrine a borrowing agency cannot pay for property
restoration even if it has agreed with the lending agency to do so.
Accordingly, if the doctrine applies, and a withdrawing agency does not
seek a removal appropriation, or does not receive one, an agreement made
pursuant to the suggested regulation would not be binding.
In our opinion, the Department may promulgate an enforceable
regulation which would require an agency to agree to remove improvements
it makes on withdrawn public land if the removal is necessary to make
the property suitable for retention because we do not view the
interdepartmental waiver doctrine as applying to the Lewistown-type
situation.
The doctrine is based upon the premise that, since any repair or
replacement of the borrowed property would be for the future use and
benefit of the loaning department, the appropriation of the borrowing
agency may not be charged with the cost. 59 Comp.Gen. 93(1979),
B-159559; August 12, 1968. Early statements of the doctrine involved
personal property where the repair clearly benefited the lending agency.
For example the Quarantine Service could not pay for a mule to replace
one, borrowed from the Quartermaster Department of the Army, which
accidentally drowned. 10 Comp.Dec. 222(1903). Similarly, the Engineer
Department could not pay for a lantern, borrowed from the Lighthouse
Service of the Department of Commerce, which washed away during a heavy
squall and could not be recovered. 22 Comp.Dec. 390(1916). The Census
Bureau, in another case, could not pay to recondition furniture borrowed
from the Marine Corps. 10 Comp.Gen. 228(1930). In such cases,
restoration of the borrowed property clearly benefited the lending
agency since it would use the property upon its return to carry out
agency functions.
The Bureau of Land Management does not benefit, in the sense referred
to in the cases, from restoration by another agency of withdrawn public
lands. The public lands managed by the Bureau are simply those lands
belonging to the United States which remain from all of the Nation's
original lands. A parcel of public land is not dedicated to a specific
purpose unless the Congress or the Bureau acts. (At the time of the
Federal Land Policy and Management Act's passage, the Congress estimated
that the public lands totaled more than 450 million acres, about
one-fifth of the Nation's original total of about 1,800 million acres.
H.R. Rep. No. 1163, 94th Cong.2d Sess. 2(1976)).
The Bureau, when performing its withdrawal oversight duties, is
acting as the Executive branch delegate of the Congress, in furtherance
of the purposes of the Federal Land Policy and Management Act of 1976.
At the time of the Act's passage, over 3,000 public land laws were in
effect, presenting an incoherent expression of Congressional policies
concerning the Nation's public lands. H.R. Rep. No. 1163, 94th Cong.,2d
Sess. 1(1976). Moreover, Congress believed that the Executive Branch
"has tended to fill in missing gaps in the law, not always in a manner
consistent with a system balanced in the best interests of all the
people." Id. Therefore, the Act gave qualified withdrawal
responsibilities to the Bureau, to be exercised in accordance with the
Act's purposes in order to make the Nationa's land use policy and
practice stable and uniform. Id.
Furthermore, under the Act, Congress retained authority over certain
important withdrawals. 43 U.S.C. 1714(j)(1976). Thus, the Congress and
the Bureau share the responsibility for withdrawals from the public
domain. It is possible that a parcel of land may be withdrawn under the
Bureau's authority, relinquished by the using agency, and then withdrawn
by an Act of Congress to another agency for an altogether different
purpose.
This situation is distinguishable from 59 Comp.Gen. 93(1976), which
involved land in the DeSoto National Forest. DeSoto was established
from designated United States lands and from lands specifically acquired
for the purpose of having the Forest Service permanently administer them
as a National Forest. 1 Fed.Reg. 609; 49 Stat. 3524(1936). Therefore,
in contrast to the Bureau's situation involving public lands,
restoration of property within the Forest's boundaries clearly benefits
the Forest Service.
Moreover, charging removal expenses to the withdrawing agencies would
not impair Congressional fiscal oversight. In fact, it would seem that
the pertinent oversight committee could better determine an activity's
true cost if the removal expense were charged against the appropriation
available for the conduct of the activity than if the expense were
charged against the Bureau's appropriation. Accordingly, we agree that
the proposed regulation, requiring withdrawing agencies to agree to bear
the cost of restoring the land to its former condition returning it to
the public domain, is proper.
B-187537, April 22, 1981, 60 Comp.Gen. 403
Pay - Medical and Dental Officers - "Variable Incentive Pay" -
Entitlement - Appointment to CORD Program After Expiration of Induction
Authority - Status as "Disqualifying Active Duty Obligation"
Public Health Services (PHS) officer who agreed to accept a
commission in PHS in October 1973 and thereafter signed a memorandum of
understanding for participation in the PHS Commissioned Officer
Residency Deferred program in August 1974, whereby he received a
deferral from active military duty under the Military Selective Service
Act, should not be considered to have disqualifying active duty
obligation for purposes of variable incentive pay authorized pursuant to
37 U.S.C. 313(1976) since induction authority, with certain exceptions
not relevant here, under Military Selective Service Act expired June 30,
1973.
Matter of: Thomas G. Wise, M.D. - Variable Incentive Pay, April 22,
1981:
The issue presented is whether a commissioned officer in the Public
Health Service (PHS) who was appointed and assigned to the Commissioned
Officer Residency Deferred (CORD) program after authority for induction
and training pursuant to the Military Selective Service Act had expired
and who was otherwise qualified should have been denied Variable
Incentive Pay (VIP). The answer is no.
Dr. Wise was appointed in the Public Health Service as an assistant
surgeon in the inactive Reserve Corps effective October 12, 1973, and
was assigned to the CORD program. He entered on extended active duty
July 1, 1975, and served on active duty as surgeon in the Reserve Corps
of the PHS until June 30, 1977.
In a letter dated September 6, 1973, from the Commissioned Personnel
Division, Dr. Wise was informed of his selection for sponsorship under
the CORD program contingent upon his being found fully qualified for a
commission in the PHS. That letter also informed him that active duty
in the Commissioned Corps of the PHS for a period of 2 years would
fulfill his obligation under the Military Selective Act and that in the
event of resumption of induction under that Act, 2 years of active duty
in the PHS would relieve him from further service and training.
In a further letter dated October 12, 1973, from the Commissioned
Personnel Division, Dr. Wise was informed of his appointment as a
commissioned officer in the PHS with assignment to the CORD program.
There was no explanation of the CORD program in that correspondence.
The October 12, 1973 correspondence was accompanied by a PHS
Commissioned Corps Appointment Affidavit to which he subscribed on
October 26, 1973. No mention is made of the CORD program in the
affidavit.
It also appears that Dr. Wise executed an undated "Request for
Deferment and Hospital Agreement," for the period of July 1, 1974,
through June 30, 1975, before serving his Selective Service obligation
in the PHS Commissioned Corps. The hospital agreement portion of the
form was completed by an official of Strong Memorial Hospital and dated
August 14, 1974. On that same date, August 14, 1974, he signed a
memorandum of understanding concerning participation in the CORD
program.
On June 6, 1975, Dr. Wise was sent a VIP service agreement together
with a memorandum explaining the VIP. On June 12, 1975, he signed the
service agreement to remain on active duty for 2 years for purposes of
qualifying for VIP. Dr. Wise was recommended for the VIP by his
superiors in the PHS but his application was denied for the reason that
his CORD status rendered him ineligible since it had been determined
that all officers appointed in the CORD program prior to September 3,
1974, would have an initial active duty obligation to perform. 37
U.S.C. 313(a)(4)(1976).
The purpose of VIP is to increase the pay provided to medical
officers in the uniformed services in an attempt to provide an incentive
for those professionals to remain voluntarily in the uniformed services
in view of the disparity in pay between physicians in the private sector
and the pay and allowances otherwise allowable to members of the
uniformed services. H.R. Rep. No. 93-883, 93d Cong., 2d Sess. 7(1974).
To effect this purpose of attracting physicians who would otherwise
remain in the private sector, the Department of Health, Education and
Welfare regulations in effect at the time, provided among other things,
that the medical officer have no "disqualifying active duty obligation."
This requirement is derived from section 313(a)(4) of title 37, which
provides that VIP will not be paid to a medical officer " * * * serving
an initial active duty obligation of four years or less * * * ."
The regulations defined "disqualifying active duty obligation" to
include an obligation to enter or remain on active duty incurred as a
result of "An agreement entered into by an individual to serve after a
period of deferment. (CORD, Berry Plan.)"
The CORD and Berry Plan programs implemented pursuant to section 4(j)
of the Military Selective Service Act of 1967 (the forerunner of which
was originally enacted June 24, 1948, ch. 625, 62 Stat. 604), as
amended, 50 U.S.C.App. 454(j), incorporated an agreement whereby the
participants agreed to serve for 2 years of active duty as Reserve
commissioned officers of a uniformed service in return for a deferment
from active duty to complete their medical training.
The issue as to whether Dr. Wise should have been considered
disqualified from receiving VIP until his completion of 2 years' active
duty under the CORD program is raised here because at the time of his
election and appointment in the CORD program on October 12, 1973, he
could not have been involuntarily inducted into the Armed Forces.
Authority for induction for training and service in the Armed Forces
under the Military Selective Service Act expired on June 30, 1973, the
termination date for inductions as set forth in section 17(c), as
amended (50 U.S.C.Appendix 467(c) (Supp. V. 1975)).
Although the induction authority under the Act expired, the law
itself remained unchanged. Similarly, the CORD program was continued by
the PHS. At the time the VIP regulations were promulgated in September
1974, it seems a determination was made that those already in the CORD
program would be considered as serving an initial active duty obligation
which would preclude the payment of VIP. 37 U.S.C. 313(a)(4)(1976).
Individuals who had entered the CORD program prior to expiration of the
induction authority were properly considered to be serving an obligated
period of active service. However, those entering the program after the
expiration date did not have an obligated period of service and since
the authority to induct had expired, there was no reason to grant a
deferment.
In view of this, it is our opinion that individuals entering the CORD
program subsequent to the expiration of induction authority under the
Military Selective Service Act, should not be considered as serving an
initial active duty obligation for the purposes of 37 U.S.C.
313(a)(4)(1976).
Thus, it is our view that Dr. Wise should not have been considered as
having a disqualifying active duty obligation under 37 U.S.C.
313(a)(4)(1976), and if otherwise eligible, is entitled to VIP computed
on the service he performed from July 1, 1975, to June 30, 1977.
B-198818, April 21, 1981, 60 Comp.Gen. 399
Quarters Allowance - Basic Allowance For Quarters (BAQ) - With Dependent
Rate - Child Support Payments by Divorced Member - Both Parents Service
Members - Dual Payment Prohibition for Common Dependents
Where two Air Force members married to each other with one child are
divorced, the male member paying child support and the female member
having custody of the child, the child is the dependent of both members
under 37 U.S.C. 401; however, since only one member may receive basic
allowance for quarters (BAQ) based on the child as a dependent, only the
member paying child support (in this case the male member) receives BAQ
at the with dependent rate. Quarters Allowance - Basic Allowance For
Quarters (BAQ) - With Dependent Rate - Child Support Payments by
Divorced Member - Both Parents Service Members - Declination of Claim
Effect
Where two Air Force members married to each other with one child
divorced, the male member paying child support and the female member
having custody of the child, the male member is entitled to receive
basic allowance for quarters (BAQ) at the with dependent rate. However,
if the member receiving the increased BAQ does not claim the dependent
child, the female member who has custody of the child may claim BAQ at
the with dependent rate. Quarters Allowance - Basic Allowance For
Quarters (BAQ) - With Dependent Rate - Child Support Payments by
Divorced Members - Both Parents Service Members - Declination Evidence
Acceptability
Where two Air Force members who are married to each other and who
have one child are divorced with the male paying child support and the
female having custody of the child, the male member receives increased
basic allowance for quarters (BAQ) on account of the child, but the
female member may claim increased BAQ on account of the child, if the
male member declines to claim the child for BAQ purposes. When the male
member acquires or has different dependents on which to base his claim
for increased BAQ, it may be assumed (without a formal declination) that
he is not claiming the common dependent for increased BAQ purposes.
Quarters Allowance - Basic Allowance For Quarters (BAQ) - With Dependent
Rate - Child Support Payments by Divorced Member - Both Parents Service
Members - Declination of Claim Revocability
A declination to claim a dependent for increased basic allowance for
quarters purposes should be in writing when possible but need not be and
should not be considered irrevocable since as dependents change so
should a member's ability to claim a dependent be changeable.
Matter of: Dependency Determination for Basic Allowance for
Quarters, April 21, 1981:
This action is in response to certain questions relating to the rate
of Basic Allowance for Quarters (BAQ) payable to members of the
uniformed services, either married or formerly married to each other, in
various dependency situations.
The questions together with relevant facts were submitted by the
Chief of Accounting and Finance, Comptroller, Headquarters Warner Robins
Air Logistics Center, Robins Air Force Base. The request has been
assigned Control Number DO-AF-1345 by the Department of Defense Military
Pay and Allowance Committee.
Sergeant Martha A. Bedford, hereafter Ms. Bedford, was divorced from
Staff Sergeant George C. Butts, hereafter Mr. Butts, in August 1978.
Both members are on active duty in the Air Force. Custody of the one
child of the marriage was awarded to Ms. Bedford and Mr. Butts was
required to pay child support. As a result of these payments Mr. Butts
has been receiving BAQ at the with dependent rate.
In September 1978, Ms. Bedford married Master Sergeant Claude V.
Bedford, Jr. He is receiving BAQ at the with dependent rate on account
of dependents of a prior marriage for whom he pays child support.
Presumably Ms. Bedford is receiving BAQ at the without dependent rate.
Ms. Bedford is now claiming BAQ at the with dependent rate from
January 1, 1980, on account of the child in her custody, since on that
date Mr. Butts remarried another individual who is not a service member.
Ms. Bedford contends that since Mr. Butts is now entitled to claim the
increased allowance on the basis of his dependent wife, she should be
entitled to the increased allowance on account of the child in here
custody. She indicates that Mr. Butts will not decline to claim the
child as his dependent.
In view of these facts the following questions are presented:
a. Where a member, claiming BAQ on the basis of paying court ordered
support for a dependent child in the custody of a former spouse who is
also a service member, acquires an additional dependent through
marriage, may the former spouse then claim the child for BAQ purposes,
if otherwise proper?
b. If the answer to "a" is affirmative, must the member paying
court-ordered support decline to continue claiming the child for BAQ
purposes as a prerequisite to the member having custody claiming the
child for BAQ purposes?
c. If the answers to "a" and "b" are affirmative, what evidence of
declination is required and under what circumstances, if any, may it be
revoked?
With regard to questions "b" and "c" it is noted in the submission
that the Air Force is of the view that a declination should be in
writing, irrevocable, and endorsed by the member's commanding officer.
Under the provisions of 37 U.S.C. 403(1976), a member who is entitled
to basic pay is entitled to BAQ unless he is provided with Government
quarters adequate for himself and his dependents.
There are two rates of BAQ, the with dependent rate and the without
dependent rate, and this allowance is intended to at least partially
reimburse a member for the expense of providing quarters for himself and
his dependents. The term dependent as used in 37 U.S.C. 401(1976),
includes a member's spouse and child. However, members who are married
to each other may not include each other as dependents for increased
allowance purposes since 37 U.S.C. 420(1976), prohibits the claiming of
a dependent who is entitled to basic pay.
Under 37 U.S.C. 401, a child of members married to each other is
considered the dependent of both members. However, the law does not
contemplate the payment of increased allowances to both members on
account of the same dependent. 51 Comp.Gen. 413(1972). Therefore, only
one of the members may claim the child as a dependent for increased
allowance purposes.
Paragraph 30236a of the Department of Defense Military Pay and
Allowances Entitlements Manual (DODPM) deals with cases involving
members who were married to each other but are subsequently divorced and
have dependents of the marriage. These provisions generally provide
that a member paying child support to the member with custody of the
child is entitled to the increased allowance if the child support
payments are equal to or greater than the difference in that member's
with and without dependent rate of BAQ. The member with custody of the
child can only claim the increased BAQ on account of the child if the
other member declines to claim the child as a dependent for BAQ
purposes. Further, the member receiving the increased allowance on
account of the child loses entitlement if he remarries and is assigned
to Government family quarters or the child is housed in Government
quarters. See 58 Comp.Gen. 100(1978) and paragraph 30237, DODPM.
At the outset, we would like to point out that Ms. Bedford's marriage
to Sergeant Bedford has no bearing on this case unless they are assigned
family-type Government quarters, in which case neither would be entitled
to BAQ. Ms. Bedford indicates that her former husband will not decline
to claim their dependent for BAQ purposes, even though he is entitled to
the increased allowance on account of another dependent, his wife.
Ordinarily, the dependent for whom he is paying child support would be
considered part of the class of his dependents, the child and his new
wife, and thus the child could not be claimed for BAQ purposes by Ms.
Bedford.
In our decision 52 Comp.Gen. 602(1973), we allowed payment of the
increased allowance to a female member who had custody of a child of a
former marriage to another member even though the other member was
paying child support.
The decision noted that the female member contributed more than half of
the child's support as was then required by 37 U.S.C. 401(1970) for
female members to claim dependents. This, together with the fact that
the male member was entitled to an increased allowance on account of
other dependents independently of that marriage, was the reason, for the
conclusion. We followed this rule referring only to substantial support
(not including child support payments) in decision B-189973, February 8,
1979, after the dependency criteria applicable only to female members
was removed by Public Law 93-64, July 9, 1973, 87 Stat. 148, 37 U.S.C.
401(3), resulting from the United States Supreme Court's decision in
Frontiero v. Richardson, 411 U.S. 677(1973), declaring such requirement
unconstitutional.
Thus, while it is no longer necessary for a female member to show
that she contributes over one-half the support of a child to claim it as
a dependent, it is our view that the relative costs of the respective
members concerned (male and female) in supporting the child provide an
equitable indicator for the purposes of determining which of the members
is entitled to the increased allowances authorized in chapter 7, of
title 37, even though the specific allowance involved is quarters
allowance. Accordingly, it is our view that Ms. Bedford may receive BAQ
at the with dependent rate on account of the dependent child if she
meets the substantial support criteria, since the child is also her
dependent under 37 U.S.C. 401, and it is unnecessary for Mr. Butts to
claim the child in order to continue receiving BAQ at the with dependent
rate based on his wife as a dependent.
Question "b" involves whether a member in the circumstances presented
must decline to claim the dependent in order for the member with custody
to receive the increased allowance. While two members may not receive
increased allowance on the basis of the same dependent (51 Comp.Gen.
413(1972)), it is our view that when there is no need on the part of the
member paying child support to claim the dependent in order to receive
the increased allowance the member having custody should receive the
increased allowance if that member is furnishing the substantial support
to the dependent. Thus the answer to the question is no.
Question "c" relates to the form to be used if the member declines to
claim the dependent for increased BAQ and whether such a declination is
irrevocable. For accounting purposes, it is obviously preferred that a
member who is not claiming a dependent provide such information in
writing. However, as we noted in the answer to question "b" it is our
position that a member's formal declination to claim a dependent is not
necessary where the facts indicate that the other member is entitled to
claim the dependent, particularly in circumstances such as the instant
case where one of the members will not make a declination.
Accordingly, we do not believe any particular format is necessary,
although a written declination would be preferable.
In addition, we do not see any advantage to having the member's
commanding officer endorse the declination if a written one is provided,
nor do we believe a declination should be considered or required to be
irrevocable. Since it is possible that a member's dependents may change
a member's ability to reclaim a dependent should also be flexible
depending on circumstances. This question is answered accordingly.
The voucher is returned herewith and may be certified for payment if
Ms. Bedford demonstrates she contributes substantially to the support of
the child.
B-202781, April 20, 1981, 60 Comp.Gen. 397
Contracts - Buy American Act - Foreign Products - End Product v.
Components - Small Business Set-Asides
Furnishing of foreign product by small business does not
automatically negate its status as small business concern; firm may
qualify as small even though item is not completely of domestic origin
if it makes significant contribution to manufacturer or production of
contract end item. Contracts - Awards - Small Business Concerns - Size
- Foreign-Made Component Use
Challenge to status of small business furnishing either item with
foreign components or foreign end product must be resolved by Small
Business Administration, rather than General Accounting Office, so
protest on basis that firm does not qualify for set-aside will be
dismissed. Buy American Act - Small Business Concerns - Buy American
Act v. Small Business Requirements
Buy American Act requirement that preference be given to domestic end
items is separate and distinct from that for furnishing domestic end
items in small business set-aside.
Matter of: Michigan Instruments Corp., April 20, 1981:
Michigan Instruments Corp. protests the award of four items under
invitation for bids No. M1-48-81, issued February 4, 1981, by the
Veterans Administration Marketing Center, Hines, Illinois, as a total
small business set-aside.
The protester asserts that the apparent low bidder, Medical Devices,
cannot be considered a small business because it does not buy any raw
materials, i.e., forgings, in the United States. Medical Devices has
previously submitted bids on scissors and instruments originating in
Pakistan and England to the Defense Personnel Support Center, the
protester continues. Acceptance of such a bid, the protester indicates,
cannot help the nation achieve full productive capacity and would not be
in the interest of our national defense program.
The solicitation in question defines a small business concern as one
which, among other things, agrees to furnish items manufactured or
produced by small business concerns in the United States, its
territories and possessions, Puerto Rico, the Trust Territory of the
Pacific Islands, and the District of Columbia.
We have previously considered protests involving surgical instruments
in which it was contended that in a small business set-aside, the
Government should not consider bids in which foreign material or labor
was offered. Our holding has been that an indication that a small
business will furnish a foreign product does not automatically negate
its status as a small business concern. In such cases, a firm may
qualify as a small business even though the item it offers is not
completely of domestic origin if it makes a significant contribution to
the manufacture or production of the contract end item. Therefore, if a
bidder indicates that foreign components will be used, the procuring
agency should question the extent of foreign involvement and, if
appropriate, refer the matter to the Small Business Administration (SBA)
for decision. A&P Surgical Co., Inc., B-196843, B-196929, April 8,
1980, 80-1 CPD 262. If a foreign end product is offered, the procuring
agency should question the bidder's self-certification as a small
business and also refer the matter to the SBA. Ammark Corporation,
B-192052, December 21, 1978, 78-2 CPD 428. In either case, any
challenge to a small business' status must be resolved by the SBA,
rather than by our Office.
As for productive capacity and the national defense, these are policy
matters which the Congress has considered and sought to protect by
requiring that preference be given to domestic end items under the Buy
American Act. This, however, is a separate and distinct requirement
from that for furnishing domestically manufactured end items in a small
business set-aside. A&P Surgical Co., Inc., supra.
Since this protest deals with a matter not subject to review under
our Bid Protest Procedures, 4 C.F.R.Part 20(1980), we are dismissing it
and have not requested or received a report from the Veterans
Administration.
See Gateway Van and Storage Company, B-198900, July 1, 1980, 80-2 CPD 4.
The protest is dismissed
B-202455, April 20, 1981, 60 Comp.Gen. 386
Department of Energy - Advisory Committees - Establishment - Energy
Policy Task Force - Federal Advisory Committee Act Compliance
The Energy Policy Task Force (EPTF), a Department of Energy (DOE)
advisory committee, was not legally established on the date of its first
meeting because the Secretary of Energy had not completed consultation
with General Services Administration (GSA), published determination
notice, or filed its charter with the Library of Congress or
congressional committees with "legislative jurisdiction" at that time as
required by the Federal Advisory Committee Act (FACA). But it is
thought DOE officials made good faith attempt to follow approval and
filing procedures. 5 U.S.C.App.I, sec.9(1976); OMB Circular No. A-63,
Revised (1974).
Department of Energy - Advisory Committees - Establishment -energy
Policy Task Force - Federal Advisory Committee Act Compliance - Approval
and Coordination Functions
FACA legislative history shows requirement for agency head approval
of advisory committee, after consultation with Office of Management and
Budget (OMB), was developed to limit growing number of advisory
committees. Since coordination and approval functions, although late,
were duly performed by both GSA and OMB, with final decision made to
authorize creation of EPTF, responsible officials had made determination
this advisory committee was necessary, so basic concerns motivating
Congress to establish these requirements had been addressed. Department
of Energy - Advisory Committees - Establishment - Energy Policy Task
Force - Federal Advisory Committee Act Compliance - Notice Requirements
FACA requirement for public notice of creation and objectives of
advisory committee was met only minimally because first Federal Register
notice, printed 8 days before first meeting of EPTF, gave only broad
description of EPTF purpose without referring to its major function,
i.e., preparation of the National Energy Plan draft. Congress and
public had no access to EPTF charter or membership list prior to
meeting. Department of Energy - Advisory Committees - Establishment -
Energy Policy Task Force - Federal Advisory Committee Act Compliance -
Charter Statement Requirements
EPTF charter does not describe in sufficient detail its objectives
and scope of activity or its duties as required by sections 9(c)(B) and
(F) of FACA since no mention is made of the National Energy Policy Plan,
even though development of a proposed plan is EPTF's sole function.
Further, if EPTF's Plan drafting role gives it more than solely advisory
functions, its charter should so state, citing authority given for those
functions. Unless provided by statute or Presidential directive,
advisory committees may be utilized solely for advisory functions under
5 U.S.C.App.I, sec. 9(b), but under 15 U.S.C. 766(a), DOE may be able to
use advisory committee to perform some operational tasks. Department of
Energy - Advisory Committees - Establishment - Energy Policy Task Force
- Federal Advisory Committee Act Compliance - Membership Balance
Requirements
All interests need not be represented or represented equally to meet
FACA and Federal Energy Administration Act balance of membership
requirements. Required standard must be judged on case-by-case
determination depending on statute or charter creating committee. EPTF
does not achieve FACA minimum balance of interest or represent all
interests required by Federal Energy Administration Act. Deficiency may
be overcome by changing EPTF membership to achieve better balance of
energy, environmental and consumer interests. 15 U.S.C. 776(a) (Supp.
III, 1979); 5 U.S.C.App.I, secs. 5(b), (c)(1976). Department of Energy
- Advisory Committees - Expenditures - Propriety - Energy Policy Task
Force
Review of EPTF expenditure information supplied by DOE indicates all
funds utilized to date were for travel expenses of task force members or
incurred in connection with recording of meeting transcripts and were
charged to Office of Secretary's Budget for travel, salary and related
expenses. Since each agency is held responsible by section 5 of FACA
for providing support services for each advisory committee established
by or reporting to it, the use of these funds for this purpose seems
legitimate.
To The Honorable Richard L. Ottinger, House of Representatives, April
20, 1981:
This refers to your letter of March 4, 1981, requesting an opinion on
the legality of the establishment and operation of the Energy Policy
Task Force (EPTF), an advisory committee of the Department of Energy
(DOE). You expressed concern that not all requirements of section 17 of
the Federal Energy Administration Act of 1974, the Federal Advisory
Committee Act and DOE regulations had been followed in relation to the
EPTF Charter filing requirements and the composition of its membership.
Due to the urgency of your request, there was insufficient time to
obtain an official response from DOE. The information contained herein
was developed through interviews with Office of Management and Budget
(OMB), DOE, and General Services Administration (GSA) officials
concerned with the formation of the EPTF, memoranda and other materials
supplied by DOE, including the DOE Secretary's letter to you dated March
20, 1981.
Section 17 of the Federal Energy Act of 1974, Pub. L. No. 93-275,
approved May 7, 1974, 88 Stat. 96, 110, 15 U.S.C. 776(1976), set forth
procedures for the Administrator of the Federal Energy Administration,
the predecessor of the Department of Energy, to establish advisory
committees. Subsection (d), 15 U.S.C. 776(d), provides that unless
inconsistent with this section, the provisions of the Federal Advisory
Committee Act (FACA), 5 U.S.C.App.I (1976), will also apply to DOE's
advisory committees. For the reasons discussed below, we conclude that
some of FACA's provisions governing the establishment of advisory
committees were not complied with.
Section 9(a) of the FACA prohibits establishment of an advisory
committee unless there has been a formal determination by the head of
the involved agency, after consultation with the Director of the OMB,
that the proposed committee is "in the public interest in connection
with the performance of duties imposed on that agency by law." A
"timely" Federal Register notice of that determination is also required.
5 U.S.C.Appendix I, Sec. 9(a) (1976). (Executive Order No. 12024,
December 1, 1977, 42 Fed.Reg. 61445, under authority of Reorganization
Plan No. 1 of 1977 (42 Fed.Reg. 56101, October 21, 1977), transferred
advisory committee act oversight functions from OMB to GSA.)
The required determination and request for concurrence was sent in a
letter from the Secretary of DOE to the Acting Administrator of GSA on
February 9, 1981, after reviews by the DOE Offices of General Counsel
and Committee Management found that it contained the necessary findings.
Enclosed with the letter was a copy of the proposed EPTF Charter and a
proposed Notice of Determination to Establish the Task Force.
The FACA, as modified by Executive Order 12024, requires GSA approval
of an agency determination of need for an advisory committee. In this
connection, section 6(a) of OMB Circular A-63, Revised (1974), requires
that the GSA Committee Management Secretariat be " * * * satisfied that
establishment of the advisory committee would be in accord with the Act
* * * ," before the agency head can publicly certify that the " * * *
committee is in the public interest." This certification is then
required by the Circular to be published in the Federal Register with a
description of the nature and purpose of the proposed committee at least
15 days prior to the filing of the Committee's Charter. A shorter
period between the notice and filing is permitted " * * * for good cause
* * * ." DOE requested a waiver of the 15 day period for EPTF.
Following review of the proposal for creation of the EPTF, GSA
requested the Energy and Science Division of OMB to conduct a
"substantive review" of it. Our interviews with GSA and OMB officials
indicate that OMB reviews of advisory committee proposals have been
routinely sought even though responsibility has been transferred to GSA.
GSA's review of the EPTF was made following the recent release of OMB
Bulletin 81-8, ordering a 5 percent reduction in expenditures for
consultants and advisory committees. Additional caution by GSA in
concurring in establishment of the EPTF may have been prompted by that
bulletin. According to an OMB official, work on revising the Federal
Budget prevented OMB from completing consideration of the EPTF proposal
until after the February 19 meeting of the Task Force.
The GSA Committee Management Secretariat advised the DOE Deputy
Advisory Committee Management Officer by telephone on February 27, 1981,
that GSA concurrence had been granted "as of February 19," with
termination for the EPTF set at June 30, 1981, instead of the two-year
period requested. Waiver of the 15-day waiting period between
publication of the Notice of Intent to Establish and the Charter filing
was granted. However, the record indicates that both officials
concluded that February 19 could not be used as the effective date of
the Charter or in the establishment notice "since the Committee is not
officially established until the Charter is filed." It was not until
March 5 that the determination notice was published. 46 Fed.Reg. 15310.
The EPTF charter was filed with the congressional oversight committees
and the Library of Congress on the following day.
Technically then, the EPTF was not legally established on the date of
its first meeting. Although the Secretary of DOE had made the necessary
determination, consultation with GSA had not been completed, and no
determination notice had been published. 5 U.S.C.APP.I, Sec. 9(a)(2).
Additionally, at the time of the February 19 meeting, the Charter had
not been filed "with the standing committees of the Senate and of the
House of Representatives having legislative jurisdiction" of DOE as
required by section 9(c)(2) of the FACA. We understand that the DOE
Office of General Counsel informed the Secretary that although the first
EPTF meeting could be considered to violate the FACA, he felt that there
had been substantial compliance with the law and that any postponement
of the meeting could prevent the Department from making the deadline for
submission of a National Energy Policy Plan, with respect to which the
EPTF was to advise DOE.
Facing what they believe to be a choice between responding to an
urgent need to develop a comprehensive energy plan for the new
Administration within the time period promised, which would be two
months after the deadline imposed by the DOE Organization Act, DOE
officials concluded that the FACA violations constituted "harmless
error" and opted to proceed with the EPTF meeting according to the
schedule announced in the Federal Register on February 11. 46 Fed.Reg.
11858.
Although the FACA and OMB Circular A-63 were not complied with, we
think that DOE officials acted in good faith in attempting to follow the
approval and filing procedures for establishing an advisory committee
and, in fact, addressed most of the concerns that motivated the Congress
to establish these requirements. The delay in concurrence by OMB had
not been anticipated. Our study of the legislative history of the FACA
showed that the requirement for approval by the agency head, after
consultation with OMB, was developed to limit the growing number of
advisory committees. Since the coordination and approval functions,
although late, were duly performed by both GSA and OMB, with a final
decision made to authorize the creation of EPTF, the responsible
officials had made the determination that this additional advisory
committee was necessary.
There were, however, some more significant FACA provisions which were
also not complied with. The requirement that the public be given notice
of the creation and objectives of the advisory committee was met only
minimally. The first notice appeared in the Federal Register just eight
days before EPTF's first meeting. It provided only a broad description
of the purpose for the Task Force without reference to the National
Energy Policy Plan.
The tentative agenda for the meeting, however, clearly stated that the
meeting would be open for the public and written and oral statements
would be accepted.
The public did not have access to the advisory committee's charter or
membership lists before the meeting, nor was Congress adequately
informed so that it could perform its oversight functions before the
February 19 meeting. However, as letters from the National Wildlife
Federation and other groups demonstrate, at least some of the public was
able to challenge the selection of members for the eptf by the time of
the first meeting.
Section 9(c)of FACA requires that before an advisory committee meets,
a charter describing, among other things, the committee's objectives and
scope of activity must be filed. EPTF's charter does not appear to
reflect its duties adequately since no mention is made of the National
Energy Policy Plan, even though the imminence of the Plan's due date was
cited by DOE in justification for proceeding with the February 19
meeting, and, as discussed below, the sole function of the EPTF seems to
be develop a proposed plan.
Section 801 of the Department of Energy Organization Act, Pub. L. No.
95-91, approved August 4, 1977, 91 Stat. 565, 610, 42 U.S.C. 7321 (Supp.
III 1979), requires the President to prepare and submit a National
Energy Policy Plan to Congress "not later than April 1, 1979, and
biennially thereafter" which is to "consider and establish energy
production, utilization, and conservation objectives * * * necessary to
satisfy projected energy needs of the United States * * * ."
EPTF's Charter describes the committee's objectives, scope,
activities and duties as follows:
The DOE Energy Policy Task Force provides the Secretary of Energy
with advice and recommendations on the broad range of policy and
programmatic issues in energy. The functions of the Task Force will be
fourfold. First, the Task Force, individually and collectively, will
identify and select critical national energy problems and issues.
Second, the Task Force will suggest changes in energy policies and
programs to address those issues and problems. Third, the Task Force
will assess both the relative importance of particular energy policy or
program initiatives and the feasibility of forming the national
consensus necessary to their implementation. Fourth, the Task Force
will examine for reasonableness both mature policy proposals and the
analyses and assumptions on which they are based.
No mention is made of the Plan required by section 801.
It is thus not clear from the Charter precisely what role EPTF will
play in the drafting of the National Energy Policy Plan. Nonetheless,
when DOE asked GSA to waive the 15 day advance notice period, its
rationale was its need to seek "advice immediately from a group of
experts concerned with energy production, utilization and conservation"
for use in drafting the National Energy Policy Plan.
Further, we were informally advised that when GSA and OMB approved the
Task Force, they limited its life to June 30 in the belief that its
functions relative to preparation of DOE's contribution to the Plan
would then be complete.
The DOE Organization Act requires that in developing the Plan, the
President must consult with "consumers, small business, and a wide range
of other interests, including those of individual citizens who have no
financial interests in the energy industry." Apparently pursuant to this
requirement, the EPTF was to hold a series of public meetings in a
number of cities beginning in early March (later postponed to April).
We have also been advised the EPTF will actually prepare a draft of
the National Energy Policy Plan for the Secretary's approval. It
certainly appears that the evident haste in establishing the EPTF was
connected with attempts to begin the Plan drafting process which was
already behind the statutory deadline. (By letters of February 4, 1981,
the Secretary of DOE informed the Congress that the April 1 statutory
deadline would not be met but promised to have the Plan ready by about
June 1, 1981.)
Accordingly, we believe that EPTF's charter does not describe in
sufficient detail its objectives and scope of activity or its duties as
required by section 9(c)(B) and (F) of FACA. Further, if EPTF's actual
role in drafting the Plan gives it more than solely advisory functions,
its charter should have so stated, citing the authority given for those
functions. Section 9(c)(F). Unless provided by statute or presidential
directive, advisory committees may be utilized solely for advisory
functions, 5 U.S.C.App.I 9(b). While it appears that under 15 U.S.C.
776(a), DOE may be able to use an advisory committee to perform some
operational tasks, EPTF's charter explicitly states that it has only
advisory functions.
One of the primary concerns of Congress in enacting FACA generally
and the more specific provisions of section 17 of the Federal Energy Act
of 1974, 15 7.S.C. 776, supra., was to assure that advisory committee
membership would not be dominated by any particular interest. The
Congress wished to limit, as far as possible, advisory committee bias in
the reports such committees furnish to the President or to the
sponsoring agency.
As noted above, we do not have a clear idea of the extent of EPTF's
involvement in preparing a draft National Energy Policy Plan for the
Secretary's (and then the President's) approval. Since that Plan is
intended to address the interests of all citizens, it seems to us that
the more involvement EPTF has in preparing a draft of the Plan, the more
care is needed in selecting the committee's membership.
Before turning our attention to the apparent imbalance in EPTF's
membership, we will discuss the two statutory provisions requiring
balance.
The provisions of 5 U.S.C.App.I 5(b) and (c) require " * * * the
membership of the advisory committee to be fairly balanced in terms of
the points of view represented and the functions to be performed by the
advisory committee * * * " and that "the advice and recommendations of
the advisory committee will not be inappropriately influenced by the
appointing authority or by any special interest * * * ."
The House Government Operations Committee's report on H.R. 4383, 92d
Cong., which later was enacted as the FACA, stressed this point:
Particularly important among the guidelines are (1) the requirement
contained in Sec. 4(b)(2) that "the membership of an advisory committee
be fairly balanced in terms of the points of view represented and
functions to be performed" and (2) the requirement contained in Sec.
4(b)(3) that in creating an advisory committee the creating authority
should include "appropriate provisions to assure that the advice and
recommendations of the advisory committee will not be inappropriately
influenced by the appointing authority or by any special interest. H.R.
Rep. No. 92-1017, 92d Cong.2d Sess. 6(1972).
Advisory committees were seen as wielding great influence and the
Congress found that without the "balance" requirements and provisions to
guarantee public access to meetings and committee records, they could
become havens for special interests. The House report stated:
One of the great dangers in the unregulated use of advisory
committees is that special interest groups may use their membership on
such bodies to promote their private concerns. Testimony received at
hearings before the Legal and Monetary Affairs Subcommittee pointed out
the danger of allowing special interest groups to exercise undue
influence upon the Government through the dominance of advisory
committees which deal with matters in which they have vested interests.
id.
The Congress showed particular concern over the possibility of biased
advisory committees in the FEA and its successor, the DOE. Instead of
merely specifying that FACA should apply to the FEA, which is basically
what H.R. 11793, 93d Cong., the House version of the FEA Act of 1974 had
done, the Conference Committee accepted the Senate's more specific
restrictions. H.R. Rept. No. 93-999, 93d Cong.,2d Sess. 30(1974).
Section 17 of the FEA Act of 1974, 15 U.S.C. 776, supra, which now
governs establishment of DOE advisory committees, directs that each
advisory committee be reasonably representative of the various affected
interests. Section 17(a) provides:
Whenever the Administrator shall establish or utilize any board, TASK
FORCE, COMMISSION, COMMITTEE, OR SIMILAR GROUP, NOT COMPOSED entirely of
full-time Government employees, to advise with respect to, or to
formulate or carry out, any agreement or plan of action affecting any
industry or segment thereof, the Administrator shall endeavor to insure
that each such group is reasonably representative of the various points
of view and functions of the industry and users affected, including
those of residential, commercial, and industrial consumers, and shall
include, where appropriate, representation from both State and local
government, and from representatives of State regulatory utility
commissions, selected after consultation with the respective national
associations.
DOE's process for selection of members for the EPTF was marred at the
outset by the pressures created by the short time allotted for its
creation. It was not until February 4, only 15 days before the EPTF's
first meeting, that the first tentative list of proposed members was
compiled, and no prospective members were contacted before February 9.
As a result, we were informally advised, only cursory attention could be
given to the qualifications and characteristics of all the Committee
members by reviewing officials. For example, officials in DOE's Office
of General Counsel informed us that they had to accept the
representations made on submitted lists as to the characteristics of the
proposed members. The responsible GSA official said that he could only
make a spot check on the membership and that it is the responsibility of
the sponsoring agency to assure balance requirements are met.
While DOE representatives said that the list of candidates was
compiled from suggestions made from staff throughout DOE, some of the
persons named as contributing to the selection process said that they
were only consulted after the list of candidates had essentially been
compiled. The Director of the Office of Consumer Affairs, DOE, said she
did not see the list until February 13. At that time, she informed the
Secretary's Office that in her opinion, the proposed Task Force was
illegal because it did not contain any minority members. She submitted
a list of minority people with past advisory committee experience.
Although none of her suggested members were appointed, a black woman was
subsequently added to the EPTF. While we cannot say how much weight
others' views were given in the selection process, all of the accepted
nominations appear to have been made from within the Secretary's Office
or by the Committee Chairman.
Twenty-two persons had been appointed to the EPTF at the time of its
first meeting on February 19, 1981. While the DOE press release
announcing formation of the Task Force, released on that date, described
its members as including "a broad representation from the oil and gas
industry, consumer interests, environment and conservation, civic,
academic, and public service," the background of its membership appears
to be of a considerably narrower composition. Half of its members are
chief executives or senior executives of major energy corporations, four
are academicians, and three are from state governments, including a
State Governor.
We conclude that there is an absence of effective representation from
several of the interests specified in the FEA Act. Not only is there an
absence of representation from residential and consumer users and of
local government, some "functions" of industry, such as gas transmission
lines, oil jobbers and service station dealers are also missing. At a
minimum, the interests specifically named in 15 U.S.C. 776(a) should be
represented on DOE's advisory committee.
Further, if EPTF will have a major impact in formulating the National
Energy Policy Plan, several groups not represented among current EPTF
appointees suggest themselves:
(1) consumer advocates (the members identified as consumer
representatives do not seem to be recognized spokespersons on consumer
energy issues. Some appear to be members of research organizations
rather than of consumer advocate groups, or representatives of
individual consumers.)
(2) environmentalists (the only representation in this area is again
by members of research oriented groups which do not cover the broad
spectrum of environmental energy interests such as synthetic fuels,
coal, and nuclear energy. Furthermore, the person designated as an
environmentalist at the Task Force meeting denied that he fit this
description, DOE, EPTF Meeting Transcript 13 (February 19, 1981)).
(3) labor
(4) local governments
(5) customer owned utility companies
(6) low-income consumers
(7) elderly persons
(8) oil jobbers
(9) natural gas transmission lines
(10) independent, small refiners
(11) rural interests
(12) independent marketers
(13) service station dealers.
We might point out that the statutory balance requirements do not
require that all interests be represented equally or that all interests
be represented in any given committee. The determination of whether the
standard of balance is met must be made on a case-by-case basis and
depends largely on the statute or charter creating the committee.
However, we think that the EPTF as presently constituted does not
achieve even a minimum balance of interests, as contemplated by the
FACA, nor does it even have representation from all the interests
specified by the FEA Act.
This deficiency might be overcome by changing the Task Force's
membership. For example, the Secretary of Energy might immediately
appoint additional members to the EPTF to provide for representation by
interests now missing from the advisory committee.
Many of the problems encountered in the establishment of the EPTF
might have been avoided if recommendations of past GAO reports
concerning advisory committees had been followed. For example, in our
February 2, 1979 report, "Use, Cost, Purpose, and Makeup of Department
of Energy Advisory Committees," EMD 79-17, B-127685, we concluded:
* * * DOE should formalize all its written guidelines to help insure
that the criteria are consistently applied. Such criteria and overall
guidelines are needed to insure that committee membership is balanced
and at the optimum level necessary to meet the objectives of the
committee." EMD 79-17, B-127685 at 2.
In that same report, we criticized existing DOE advisory committee
charters as follows:
The Federal Advisory Committee Act requires that each advisory
committee's charter contain the scope and responsibilities of the
committee and the time period necessary for it to carry out its purpose.
* * * We found that although DOE's advisory committee charters contain
general information on the committees' activities, responsibilities, and
length of existence, 12 of the 20 charters do not contain specifics on
these matters. These specifics are needed so that each committee has a
clear understanding of its scope and objectives, which in turn helps to
prevent the potential for overlap and duplication among the committees.
In our previous report, "Better Evaluations Needed to Weed Out
Useless Federal Advisory Committees" (GGD-76-104, April 7, 1977), we
recommended that OMB require Federal agency committee charters to be
clear and specific in stating their purposes and include specific
timespans for committees to accomplish their purposes. * * *
(R)esponsibility for these matters has been transferred to GSA. GSA
officials told us that they have emphasized the need for committee
charters to be clear and specific in their discussions with Federal
agencies. However, * * * DOE is still producing charters which are
vague and general, reinforcing our belief that formal guidance is
needed. * * * Therefore, we reiterate the recommendation contained in
our April 7, 1977, report. * * * Id. at 3.
Furthermore in our recent report, "Conduct of DOE's Gasohol Study
Group: Issues and Observations," EMD 80-128, B-200545, September 30,
1980, we found:
* * * that the process used to select Gasohol Study Group members was
highly personalized and non-systematic. Members were selected primarily
on the referral of others without detailed knowledge of their
backgrounds or financial interests. * * * EMD 80-125, B-200545 at iii.
In that report we concluded:
GAO believes problems with the study group member selection process
are at the heart of the allegations raised concerning possible conflicts
of interest and inadequate qualifications on the part of Gasohol Study
Group members. * * * Id. at v.
We continue to believe the Secretary should take more care in the
selection of advisory committee members and should adopt uniform
guidelines to aid in the selection process.
As agreed by your staff, in response to your request for us to audit
the expenses of EPTF, we have reviewed expenditure information supplied
by DOE and determined that $1272.25 in direct expenses were incurred in
connection with the EPTF Task Force meeting of February 19, 1981. These
are the only direct expenses attributable to EPTF to this date. Of this
amount, $519.85 was spent as reimbursement for travel expenses of three
task force members. Most of the members did not request reimbursement.
The other $752.40 in expenses were incurred in connection with recording
of the meeting transcript. These items were charged to the Office of
Secretary's budget for travel, salary and related expenses (budget
account no. 89X0232). Since each agency is held responsible by section
5 of FACA for providing support services for each advisory committee
established by or reporting to it, the use of these funds for this
purpose seems legitimate.
With your permission, we will release this letter to the Secretary of
Energy and recommend actions be taken to reconstitute the EPTF so that a
more satisfactory balance of energy interests may be represented in its
membership. We hope this information will be useful to your
subcommittee.
B-201591, April 16, 1981, 60 Comp.Gen. 384
Officers and Employees - Transfers - Relocation Expenses - Pro Rata
Expense Reimbursement - House Purchase or Sale - Two Adjoining Plots
Sold Separately to One Buyer
Transferred employee sold residence on one acre lot to single
purchaser as two separate parcels to enable buyer to obtain financing on
portion of land containing residence. Fact that portion of land not
containing residence was too small to use as separate building site and
fact that one-acre lot size was common acreage for single family
residences in area rebut presumption raised by separate sale that
smaller parcel was land in excess of that reasonably related to the
residence site within meaning of paragraph 2-6.1h of the Federal Travel
Regulations. Realtor's fees paid for sale of both parcels may be
reimbursed.
Matter of: W. Carl Linderman - Pro Rata Reimbursement of real estate
expenses, April 16, 1981:
We have been asked by a Certifying Officer for the Department of
Agriculture to determine whether Mr. W. Carl Linderman may be reimbursed
a $300 realtor fee incurred in connection with the sale of his former
residence.
Mr.Linderman, a Department of Agriculture employee, was transferred
from Pineville, Louisiana, to Pocatello, Idaho, in February 1980. In
connection with that move, Mr. Linderman sold his Pineville residence
which was situated on a one acre parcel of land. To enable the buyer to
qualify for a low income, low interest loan, Mr. Linderman sold his
residence to a single purchaser by means of two separate but related
transactions. He sold the smaller portion of the land, consisting of
less than one-half acre, to the buyer for cash. This enabled the buyer
to purchase the residence with the remaining land at a price that was
sufficiently reduced to qualify for the financing sought.
The Department of Agriculture has reimbursed Mr. Linderman for the
realtor's fee paid in connection with the sale of the residence portion
of the land. The agency is in doubt, however, whether the $300
realtor's fee associated with the smaller portion of the land may be
reimbursed. In this regard, the Certifying Officer refers to our
holding in 54 Comp.Gen. 597(1975) and to the following provision at
paragraph 2-6.1f of the Federal Travel Regulations (FTR) (FPMR 101-7,
May 1973):
f. Payment of expenses by employee-- pro rata entitlement. * * *
The employee shall also be limited to pro rata reimbursement when he
sells or purchases land in excess of that which reasonably relates to
the residence site.
In arguing that the smaller portion of land was reasonably related to
the residence site, Mr. Linderman points out that the residence was
located in a rural area where septic system limitations had the
practical effect of requiring him to sell the entire one-acre parcel to
one buyer. His assertion that the smaller portion is too small to be
used as a residence site has been confirmed by the agency. Information
obtained from the local county supervisor indicates that until recently
the State of Louisiana had required a minimum of one acre of land to
support a septic system. Subject to percolation tests, that requirement
has recently been relaxed to permit a one-half acre parcel to support a
single septic system.
In 54 Comp.Gen. 597, we discussed the proration requirement of the
above-quoted regulation insofar as it relates to an employee's purchase
or sale of a large tract of land. Where a transferred employee buys or
sells a large tract of land, we held that FTR para 2-6.1f limits
reimbursement of real estate expenses to those costs associated with
conveyance of the residence itself and such land as reasonably relates
to the residence site. The decision details those factors that may be
considered in determining how much of the land relates to the residence
site and how much is excess. That decision does not itself require
proration where the employee purchases or sells a residence located on a
reasonably small parcel of land that is comparable in size to those on
which other single family dwellings in the area are situated.
We have recognized, in a line of decisions related to 54 Comp.Gen.
597, that where an employee divides his property into separate parcels
for sale purposes, there is a strong presumption that parcels other than
that on which the house is located do not relate to the residence site.
B-171493, February 2, 1971. Where the separate parcels are sold to
separate purchasers, we have treated that presumption as compelling,
regardless of the size of the parcels involved.
See Franklin J. Rindt, B-199900, February 10, 1981, and Harold J. Geary,
B-188717, January 5, 1978. Where the separate parcels are conveyed to
an individual purchaser, however, we have treated the separate
transactions as giving rise to a presumption that the parcel not
containing the residence is excess, thus warranting consideration of the
factors discussed in 54 Comp.Gen. 597.
In William C. Sloan, B-190607, February 9, 1978, we considered the
claim of an employee who had divided his land into two parcels. Within
a period of 3 days, he sold the two-acre parcel on which the residence
was situated and the adjacent five-acre parcel to the same purchaser.
In that case, we upheld the agency's finding, based on the factors set
forth in 54 Comp.Gen. 597, that the five-acre parcel was not related to
the residence site. In part, the agency's finding was based on the fact
that one acre was generally regarded as an adequate building site in the
area and the fact that the five-acre parcel could be developed
separately from the parcel containing the residence.
Consistent with the above decisions, the fact that Mr. Linderman
divided his residence and the one-acre lot into two parcels for the
purpose of sale raises a presumption that he conveyed land in excess of
that which reasonably relates to the residence site. However, the
information obtained by the Department of Agriculture regarding land use
in the vicinity of Mr. Linderman's residence reasonably rebuts any
inference that any part of the land sold did not reasonably relate to
the residence site. In fact the separate conveyances were part of a
single transaction in which the entire one-acre parcel was transferred
to a single purchaser for use as a residence.
Since the two realtor's fees paid by Mr. Linderman do not exceed the
fee he would have paid to transfer the one acre as a single parcel, he
may be reimbursed the $300 amount claimed.
B-200665, April 16, 1981, 60 Comp.Gen. 381
Leaves of Absence - Civilians on Military Duty - Unlimited Military
Leave - Purpose of Duty Consideration - District of Columbia National
Guard Duty
Employee of the District of Columbia was ordered to perform 20 days
of full-time training duty and 15 days of annual field training as a
member of the District of Columbia National Guard. Since full-time
training duty directed under the authority of 32 U.S.C. 502 is active
duty, employee is entitled to military leave under 5 U.S.C. 6323(a) for
15 of the 20 days of such duty. Because the additional 15 days of
annual field training was ordered under the authority of title 39 of the
District of Columbia Code, applicable specifically to the District of
Columbia National Guard, he is entitled to military leave for that
encampment under 5 U.S.C. 6323(c). Leaves of Absence - Civilians on
Military Duty - Charging - Legal Holidays
Employee of the District of Columbia was ordered to perform duty as
member of District of Columbia National Guard for two periods that
included holidays. Since the holidays in question were totally within
the periods of absence on military leave, employee must be charged
military leave for them. 27 Comp.Gen. 245(1947).
Matter of: Reginald L. Campbell - Military Leave, April 16, 1981:
The Executive Officer of the District of Columbia Courts has asked
our Office to furnish advice regarding the military leave entitlement of
Mr. Reginald L. Campbell, a full-time employee of the Superior Court of
the District of Columbia. During three periods in 1979 Mr. Campbell
took the leave in connection with his duties as an officer in the
District of Columbia National Guard (DCNG). For the 14-day period from
May 19 through June 1, 1979, Mr. Campbell was ordered to full-time
training duty as the DCNG Officer's Candidate School (OCS), Fort Meade,
Maryland. From June 23 through July 7, 1979, he was ordered to 15 days'
annual training at Fort Pickett and for 6 days in December 1979 he was
directed to perform full-time training duty which involved the ferrying
of aircraft from Texas to Fort Belvoir, Virginia.
The Executive Officer's questions concern the extent of Mr.
Campbell's entitlement to military leave under the following two
subsections of 5 U.S.C. 6323 (Supp. I, 1977):
(a) An employee as defined by section 2105 of this title or an
individual employed by the government of the District of Columbia,
permanent or temporary indefinite, is entitled to leave without loss in
pay, time, or performance or efficiency rating for each day, not in
excess of 15 days in a calendar year, in which he is on active duty or
is engaged in field or coast defense training under sections 502-505 of
title 32 as a Reserve of the armed forces or member of the National
Guard.
(c) An employee as defined by section 2105 of this title or an
individual employed by the government of the District of Columbia, who
is a member of the National Guard of the District of Columbia, is
entitled to leave without loss in pay or time for each day of a parade
or encampment ordered or authorized under title 39, District of Columbia
Code. This subsection covers each day of service the National Guard, or
a portion thereof, is ordered to perform by the commanding general.
The Executive Officer first asks whether Mr. Campbell may be granted
military leave under 5 U.S.C. 6323(c) for all three periods that he was
on duty with the DCNG. More specifically, he asks whether civilian
employees who are members of the District of Columbia National Guard are
entitled to unlimited military leave under 5 U.S.C. 6323(c) for all DCNG
duty regardless of purpose if such duty is supported by orders from the
Commanding General. If not, the Executive Officer asks whether leave in
excess of the 15 days authorized by 5 U.S.C. 6323(a) may be granted for
purposes such as OCS training and the ferrying of aircraft.
Subsection 6323(c) is a substantial reenactment of section 608 of
title 39 of the District of Columbia Code. In 27 Comp.Gen. 78(1947) we
recognized that the provision which currently appears as 5 U.S.C.
6323(c) authorizes unlimited military leave for members of the DCNG for
specific purposes. In that case, we held that the 15-day limit
currently found in 5 U.S.C. 6323(a) has no application to employee
members of the DCNG who are entitled under 5 U.S.C. 6323(c) to military
leave with pay, without time limitation, when ordered by the Commanding
General to duty in connection with parades or encampments.
We have held that leave under 5 U.S.C. 6323(c) may not be granted
without regard to the purpose of the military duty. In 19 Comp.Gen.
687(1940) we stated (quoting from the syllabus):
There is no limit on the number of days (of) military leave with pay
which may be granted civilian officers and employees who are members of
the National Guard of the District of Columbia when ordered to active
duty of the kind for which such leave is authorized under the act of
March 1, 1889, as amended * * * .
The terms of the 1889 act, which provided for the organization of the
militia of the District of Columbia, are currently embodied in title 39
of the District of Columbia Code. The title is incorporated by
reference in 5 U.S.C. 6323(c). Examples of the kinds of duties under
title 39 for which such leave would be authorized are encampments,
drills, and parades.
This Office has disapproved the use of military leave under 5 U.S.C.
6323(C) to perform certain activities not within the scope of title 39
of the District of Columbia Code. In 15 Comp.Gen. 633(1936) we held
that the authority now contained in 5 U.S.C. 6323(c) has no application
to periods of attendance at a service school by members of the District
of Columbia National Guard. In 6 Comp.Gen. 635(1927) we held that that
authority did not extend to participation by members of the DCNG in
rifle tournaments in a foreign country. In reaffirming 6 Comp.Gen.
635(1927) in A-14746, May 5, 1927, we rejected the argument that
employees of the United States or District of Columbia who were members
of the DCNG were entitled to unlimited military leave for any duty the
Commanding General thought proper.
In answer to the Executive Officer's first question, while there is
no specific limit on the duration of leave under 5 U.S.C. 6323(c), such
leave can be taken only for encampments, parades or other duties ordered
or authorized under title 39 of the District of Columbia Code.
The term "encampment" as used in 5 U.S.C. 6323(c) includes annual
field training performed pursuant to the requirements of title 39 of the
District of Columbia Code. The annual training duty performed by Mr.
Campbell at Fort Pickett was directed by orders which cite 32 U.S.C.
503, the general authority for participation of members of the National
Guard in "encampments * * * or other exercises for field or coast
defense instruction," as well as Permanent Order 14-1 promulgated by
Headquarters for the DCNG. The Permanent Order relies in part on the
authority of title 39 of the District of Columbia Code to require annual
encampments of the DCNG. Thus, the 15 days of annual training duty
performed by Mr. Campbell would qualify for military leave under either
subsection 6323(a) or 6323(c). See 44 Comp.Gen. 224(1964).
The two periods of full-time training duty performed by Mr. Campbell
were directed by orders issued under the authority of 32 U.S.C. 502(f).
Because the duty did not involve an encampment or parade and because it
was not otherwise ordered or authorized under title 39 of the District
of Columbia Code, it does not come within the purview of subsection
6323(c) and Mr. Campbell is not entitled to unlimited leave therefor.
However, Mr. Campbell may be granted military leave under 5 U.S.C.
6323(a) for 15 of the 20 days that he was on full-time training duty.
As used in that subsection and as defined at 32 U.S.C. 101(22), the term
"active duty" includes full-time training duty. Thus, subject to the
15-day limitation contained in that section, Mr. Campbell's time in a
full-time training status qualified for military leave under 5 U.S.C.
6323(a).
For 1979, Mr. Campbell should be granted 15 days of military leave
under subsection 6323(a) for the time that he was in a full-time
training duty status and he is entitled to military leave under
subsection 6323(c) for the 15 days that he performed annual training
duty at Fort Pickett.
The Executive Officer's final question relates to the fact that a
holiday occurred during each of the first two periods of DCNG duty
performed by Mr. Campbell. He asks whether Mr. Campbell's absence on
these two holidays should be charged to military leave.
In computing leave of absence under 5 U.S.C. 6323 nonworkdays,
including holidays, must be charged to military leave unless the
nonworkdays are not wholly within a period of absence on military leave.
27 Comp.Gen. 245, 253(1947). Since the two holidays in question,
Memorial Day and Independence Day, were wholly within the periods of
DONG duty Mr. Campbell must be charged military leave for them.
B-199951, April 16, 1981, 60 Comp.Gen. 379
Advertising - Newspapers, Magazines, etc. - Authorization Requirement -
Applicability - Executive Branch Agencies - Environmental Protection
Agency
Claimant, former Environmental Protection Agency (EPA) Assistant
Regional Counsel, had notices published in newspapers without prior
written authorization as required by 44 U.S.C. 3702 and EPA directives.
Claimant paid newspapers from his own personal funds and sought
reimbursement from EPA. Since EPA could not have paid claim by
newspapers directly, and since employee may not create claim in his
favor by voluntarily making payment from personal funds, claim must be
denied.
Matter of: Richard A. Du bey, April 16, 1981:
Richard A. Du bey has requested reconsideration of the action of our
Claims Group disallowing his claim in the amount of $89.93 arising in
the circumstances set forth below. For the reasons that follow, we
conclude that the disallowance was correct.
On January 5 and February 2, 1980, Mr. Du bey, then the Assistant
Regional Counsel, Region X, Environmental Protection Agency (EPA),
requested that a notice of a public hearing be advertised in two Boise,
Idaho newspapers. The notice had been provided for in a stipulation by
the parties in a lawsuit brought against EPA by a homeowner's
association. Upon discovering that he had failed to comply with a
requirement, imposed by statute and EPA directive, that he obtain
written authorization before placing the notices, Mr. Du bey paid the
newspapers from his own personal funds and sought reimbursement from
EPA. EPA referred the matter to our Claims Group which disallowed the
claim by Settlement Certificate dated June 10, 1980 (claim no.
Z-2822295).
The primary reason Mr. DuBey's claim cannot be allowed is 44 U.S.C.
3702, which provides:
Advertisements, notices, or proposals for an executive department of
the Government, or for a bureau or office connected with it, may not be
published in a newspaper except under written authority from the head of
the department; and a bill for advertising or publication may not be
paid unless there is presented with the bill a copy of the written
authority.
An EPA directive, EPA Procurement Information Notice No. 79-25, dated
May 21, 1979, implements this statute and prescribes the procedures to
be followed in placing orders for paid notices or advertisements.
An initial question is whether the statute applies to EPA. This
question arises because the statute uses the language "for my executive
department of the Government, or for a bureau or office connected with
it," and, strictly speaking, EPA is not an "executive department" nor is
it a bureau or office connected with an executive department. The
question is thus whether Congress could have intended to make the
statute applicable only to cabinet-level departments and not to
executive branch agencies like EPA. Research discloses that 44 U.S.C.
3702 was originally enacted in 1870 (16 Stat. 308). The practice of
creating executive agencies outside of the departmental structure is
essentially a 20th century phenomenon. Thus, when the statute was
originally enacted, Congress could not have intended to exclude
executive branch agencies outside of the departmental structure because
such agencies did not exist at that time. On the contrary, it appears
that Congress was taking extra caution to ensure that the entire
executive branch (as it then existed) was included. Accordingly, we
think 44 U.S.C. 3702 was intended, and must be construed, to apply to
the entire executive branch.
A long and consistent line of decisions of the Comptroller General
and of his predecessor, the Comptroller of the Treasury, has held that,
under the plain terms of the statute, a voucher cannot be paid nor can a
claim by a newspaper be allowed unless the prior written authority
required by section 3702 has been obtained. Also, in view of the
mandatory language of the statute, after-the-fact approval or attempted
ratification is not sufficient to remove the statutory bar against
payment. 5 Comp.Dec. 166(1898); 3 Comp.Gen. 737(1924); 4 Comp.Gen.
841(1925); 17 Comp.Gen. 693(1938); 35 Comp.Gen. 235(1955); B-181337,
November 25, 1974; B-196440, April 3, 1980; B-199453, October 2, 1980.
As an early Comptroller of the Treasury noted, "If any statute is
mandatory this is . . . " 5 Comp.Dec.,supra, at 168.
Since EPA could not have paid the claim under the existing statutory
language if filed directly by the newspapers, we see no legal basis to
reimburse Mr. Du bey. As stated in 3 Comp.Gen. 681, 682(1924), "the
voluntary intervention of claimant in the matter cannot operate to
authorize the making indirectly of a payment that could not legally be
made directly."
There is an additional principle involved here-- the well-established
rule that no officer or employee of the Government can create a valid
claim in his favor by paying obligations of the United States from his
own funds. E.g., 33 Comp.Gen. 20(1953); B-184982, October 13, 1976.
Exceptions have been recognized where the necessity for an expenditure
arose in urgent and unforeseen circumstances, which is not the case
here.
A recent decision, B-186474, June 15, 1976, stated:
Voluntary payments of Government obligations from personal funds must
be very strongly discouraged, and the general rule remains that
reimbursement will not be authorized.
For the reasons stated above, the settlement action of our Claims
Group must be affirmed.
B-202133, April 15, 1981, 60 Comp.Gen. 378
Contracts - Protests - Interested Party Requirement - Bidder Refusing
Bid Acceptance Time Extension
Where low bidder refuses to extend its bid when Government requests
such an extension, bidder loses standing to protest subsequent award to
second low bidder.
Matter of: Duraclean by Simpson, April 15, 1981:
Duraclean by Simpson (Duraclean) protested the award of a contract
under solicitation GSD-5DPR-00003 issued by the Property Rehabilitation
Division, Federal Property Resources Service, General Services
Administration (GSA).
The invitation for bids was issued on September 25, 1979. The bid
opening date was originally scheduled for October 24, 1979, but was
extended by amendment to November 1, 1979. Duraclean's bid was
submitted on October 15 and included a 10-day acceptance limitation.
Since Duraclean was the lowest bidder, GSA sent it a mailgram on
December 26 requesting an extension of its bid and an answer by December
31. No response was received. Again, on March 24, 1980, Duraclean was
requested to extend its bid but it refused because it could not get a
subcontractor. The contract was awarded on April 30, 1980, to the
second lowest bidder.
Duraclean inquired about the disposition of the contract and agreed
to extend the date of acceptance of its bid in a letter which was
postmarked June 24, 1980. On January 14, 1981, GSA informed Duraclean
that its bid had expired and the contract had been awarded to another
bidder. GSA received a letter from Duraclean on January 27, 1981.
However, because the letter was addressed to the Comptroller General,
but sent to GSA, and stated no basis of protest, GSA contacted Duraclean
and found that it intended the letter to be a protest to the Comptroller
General.
Duraclean's express refusal to extend its bid presents the threshold
question of whether the firm is still an "interested party" entitled to
maintain a protest before our Office. A party must be "interested"
under our Bid Protest Procedures, 4 C.F.R.part 20(1980), in order to
have its protest considered by our Office. Determining whether a party
is sufficiently interested involves consideration of the party's status
in relation to the procurement. Don Greene Contractor, Inc., B-198612,
July 28, 1980, 80-2 CPD 74.
By refusing to extend its bid, Duraclean withdrew its offer and,
therefore, rendered itself ineligible for award. Therefore, even if we
were to sustain Duraclean's protest, it could not receive award of this
contract. In view thereof, no useful purpose would be served by ruling
on the protest even if it was otherwise for our consideration.
Accordingly, the protest is dismissed.
B-200283, April 15, 1981, 60 Comp.Gen. 375
Appropriations - Permanent Indefinite - Judgments - Against Government -
Availability for "Front Pay"
As a result of an employment discrimination suit brought by certain
female employees, the Government Printing Office (GPO) was ordered in a
court judgment to pay the plaintiffs back pay for past economic harm and
an added increment of pay above that to which they were otherwise
entitled, for continuing economic harm until a certain number of
plaintiffs were promoted. The so-called award of "front pay" in this
instance amounts to damages and should be paid from the permanent
indefinite appropriations provided in 31 U.S.C. 724a. Agency
appropriations are not available to pay compensation above the amount
prescribed for the particular job level in question. 55 Comp.Gen.
1447(1976) is distinguished.
Matter of: Payment of "Front Pay" Court Judgment against GPO, April
15, 1981:
The Acting Public Printer has requested a decision from this Office
concerning the source of payment of one element of a judgment against
the Government Printing Office (GPO). A class action suit was initiated
by certain GPO female employees, hereafter referred to as plaintiffs,
under the Equal Pay Act of 1963, as amended, 29 U.S.C. 206(d)(1) and
Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. 2000e
et seq. alleging that they had sustained economic loss from GPO
discriminatory employment practices. In Thompson v. Boyle, 499 F.Supp.
1147(1979), the court found for the plaintiffs and rendered a judgment
in their behalf.
Among other things, the judgment awarded the plaintiffs back pay on a
pro-rata basis in a lump sum, representing the difference in pay the
class as a whole would have received had 50 percent of its members been
promoted to the next higher position, less the pay the class as a whole
actually received. In addition, the court awarded what it termed "front
pay," which amounts to an added increment of pay over each class
member's current pay for each future pay period after the date of the
judgment until such time as GPO is able to promote members of the class
into a designated number of higher grades.
GPO has correctly assumed that the back pay award may be paid from
the permanent indefinite appropriations authorized by 31 U.S.C. 724a.
See e.g., 58 Comp.Gen. 311(1979). However, GPO is uncertain whether the
"front pay" award may be paid from this appropriation or whether it must
use appropriations available within the agency. The front pay question
is further complicated by the fact that the above captioned case has
been appealed and the judgment has been stayed pending review of the
lower court decision and judgment. As a result of the stay, GPO wishes
to know whether it should obligate and reserve its own appropriations to
make the front pay payments if the judgment is affirmed. Based on the
rationale set forth below, we are of the opinion that both front pay and
back pay should be paid from the permanent indefinite appropriations
provided by 31 U.S.C. 724a and hence the agency appropriations should
not be used for any part of the judgment.
The provisions of the judgment concerning front pay are as follows:
It is FURTHER ORDERED, that from the date hereof, until the class
plaintiffs fill one-half of all promotion positions in the Bindery, for
each pay period each Title VII plaintiff remains employed by defendant,
she shall receive the difference between her wages and the wages she
would have received on a pro-rata basis as if JBWs (journeyman bindery
workers) for that pay period filled one-half of all promotion positions
in the Bindery or a proportionate number of such promotion positions,
whichever number is lower, provided, however, that no JBW receiving a
promotion shall receive compensation under this paragraph after
receiving said promotion. It is provided further that, because of the
equalization of wages ordered in part III supra, the Grade 4 JBWs shall
not receive any compensation under this paragraph.
The term "front pay" is used in the instant decision to differentiate
the money award payable each pay period subsequent to the date of the
decision from the lump sum award payable to redress discriminatory
practices in the past. While the latter award is termed "Back Pay,"
there was no finding made that any individual plaintiff would have been
promoted but for the agency's discriminatory practices.
The award, therefore does not represent a make-whole remedy; that is,
the court is not attempting to place each plaintiff in the same
financial position she would have enjoyed had she been promoted at some
fixed date in the past. Rather, the court has awarded a measure of
damages for lost promotional opportunities due to past discriminatory
practices.
This distinction is important in considering the source of funds for
the post-judgment payments ordered by the court. We had occasion to
consider the issue of a judgment provision that ordered continuing
future payments to employees in our decision concerning certain National
Aeronautics and Space Administration (NASA) employees entitled: Matter
of the source of funds to pay judgment in favor of Jack M. Whaley and
Victor C. Wolff, 55 Comp.Gen. 1447(1976). Among other things, the
judgment in that case required the agency to pay the plaintiffs front
pay beyond the date of the judgment. However, there, the court
determined that NASA had erred in computing the rate of pay of certain
wage grade employees that had been converted to the General Schedule.
As a remedy, the court ordered NASA to pay the employees an added
increment of pay to which they were duly entitled under applicable
statutes and regulations and would have received except for the
conversion error. We held that backpay to the date of the judgment
should be paid from the permanent indefinite appropriations provided by
31 U.S.C. 724a, but all pay after the date of the judgment for these
employees should be paid from NASA appropriations at the corrected rate.
In other words, the NASA employees were entitled to pay at the higher
rate, and NASA's appropriations were available to pay the salary and
benefits to which the employees were entitled on an ongoing basis.
The judgment in the instant case is different from the judgment in
the NASA case. The court recognized that individual employees were not
entitled to a higher rate of pay commensurate with the salary of the
next higher grade. Again, there was no finding that any individual
employee was entitled to be promoted. While the salary differential was
taken into account in determining the dollar amount of the award, the
award itself was simply a measure of damages. Therefore, GPO does not
have authority under applicable statutes and regulations to pay the
added increments to each individual plaintiff since its appropriations
for salary are available only for the compensation prescribed for the
particular grade level. We conclude that the added increments of pay
authorized solely by the judgment must be paid out of appropriations
provided under 31 U.S.C. 724a.
If the instant judgment should be affirmed on appeal, front pay from
the date of the judgment until the date of implementation may be handled
as if it were backpay, which is what it has in fact become during the
period of the stay.
At that time representatives of GPO and this Office can discuss the most
efficient manner in which to handle the front pay payments from the
judgment fund.
B-200260.3, April 15, 1981, 60 Comp.Gen. 373
Contracts - Awards - Small Business Concerns - Size - Appeal - Contract
Termination Pending Awardee's Appeal
Awardee's filing of request for reconsideration with Small Business
Administration Size Appeals Board provides no basis to withdraw
recommendation that improperly awarded contract be terminated since for
purposes of determining propriety of award, reliance on Size Appeals
Board's initial determination is appropriate.
Matter of: Mil-Tec Systems Corp.; ACR Electronics, Inc. -
Reconsideration, April 15, 1981:
Quadratec Electronics, Inc., requests reconsideration of our decision
Mil-Tec Systems Corp.; ACR Electronics, Inc., B-200260; B-200260.2,
February 9, 1981, 81-1 CPD 78.
In that decision, we recommended termination of a contract awarded to
Quadratec since the Air Force did not provide the pre-award notice to
other offerors required by Defense Acquisition Regulation (DAR) Sec.
1-703(b)(1)(1976 ed.), and the Small Business Administration (SBA)
subsequently found Quadratec not to be small pursuant to a timely size
status protest filed by ACR Electronics, Inc.
Quadratec argues that it is and always has been a small business and
states that it has filed a request for reconsideration with the SBA Size
Appeals Board. Therefore, Quadratec contends our February 9, 1981
recommendation for contract termination should be withdrawn.
We do not view Quadratec's filing of a request for reconsideration
with the SBA Size Appeals Board as providing any basis on which to
withdraw our recommendation. While it is possible that the Size Appeals
Board might reverse its prior position on reconsideration, we believe
that for the purposes of determining the propriety of a contract award,
reliance upon the initial Size Appeals Board determination is
appropriate.
In this regard, we note that in the case of an appeal the applicable
regulations (DAR Sec. 1-703(b)(3)) provide only for withholding contract
award for 30 working days from the time the protest is initially filed
with the SBA District Office. If no decision on the appeal has been
rendered at the end of this period, the contract may be awarded on the
basis of the SBA District Director's size determination. S&G Services,
Inc., B-195980, April 15, 1980, 80-1 CPD 268. There is no provision for
withholding award for any length of time pending a request for
reconsideration.
Thus, the applicable regulations establish a point at which the
contracting officer may regard the SBA's decision as final for purposes
of determining the propriety of an award under the pending procurement.
As we have emphasized with respect to our own Bid Protest Procedures,
the resolution of protests stemming from the award or proposed award of
Government contracts requires the balancing of conflicting
considerations: the need for the Government procurement process to
proceed in an orderly and expeditious manner, and the need to afford
protesters and interested parties a fair opportunity to present their
cases. Bird-Johnson Company-- Request for Reconsideration, B-199445.3,
October 14, 1980, 80-2 CPD 275. To that end, we recognize the need for
the resolution of such protests in an expeditious manner and at a point
at which corrective action, if necessary, is most practicable and thus
least burdensome on the conduct of the procurement. Id.
In this case, the Air Force failed to notify the unsuccessful
offerors of the apparent successful offeror's identify prior to award,
as required by DAR Sec. 1-703(b)(a). This omission prevented the filing
of a size status protest prior to award, the time at which corrective
action would have been most practicable, and for which the regulations
established a procedure for determining the propriety of award in the
face of such a protest.
See DAR Sec. 1-703(b)(3).
Had the applicable regulations been followed, award would have been
made either on the basis of the District Director's size status
determination or the Size Appeals Board's initial decision, depending on
the circumstances of the case. Id. The filing of a request for
reconsideration with the Size Appeals Board would have had no bearing on
the propriety of award. We see no reason why the result should be any
different where the established procedures have been circumvented by the
agency's failure to provide the pre-award notice on which the procedures
are predicated. Nor do we think it appropriate to allow an individual,
by the simple expedient of filing a request for reconsideration with the
Size Appeals Board, to delay the recommended determination of a contract
beyond the point at which, based on the extent of contract performance,
such termination remains a practicable remedy. See Dyneteria, Inc.,
B-178701, February 22, 1974, 74-1 CPD 89.
Our decision of February 9, 1981, is affirmed.
B-202137, April 9, 1981, 60 Comp.Gen. 372
General Accounting Office - Jurisdiction - Contracts - In-House
Performance v. Contracting Out - Cost Comparison - Finality of
Administrative Decision Where Appeal Procedure Provided For
Protest against propriety of cost evaluation performed under Office
of Management and Budget Circular No. A-76 is dismissed where protester
did not exhaust available administrative appeal process.
Matter of: JAC Management, Inc., April 9, 1981:
JAC Management, Inc. (JAC), protests the determination by the
Department of the Army to perform laundry services in-house rather than
contracting them out under solicitation No. DAKF57-81-B-0003. This
determination was made as the result of a cost comparison which was
conducted under the guidance of Office of Management and Budget Circular
No. A-76 (A-76), as implemented by Army Circular 235-1 (February 1,
1980). Based on a cost comparison between the Government's in-house
estimate and JAC's low bid, the Army decided to perform the services
in-house.
JAC argues that the Army in-house cost estimate did not include all
the costs related to the in-house operation and that the Army should
comply with A-76 requirements before making a final determination on
whether a contract award should be made.
Our Office will review A-76 cost evaluations to assure that bidders
are not induced to prepare and submit bids which are then arbitrarily
rejected because of an erroneous cost evaluation. Crown Laundry and Dry
Cleaners, Inc., B-194505, July 18, 1979, 79-2 CPD 38.
However, where, as here, a relatively speedy appeal procedure is has
been exhausted. Urban Enterprises, B-201619, February 17, 1981,
formally included as part of the administrative decision making process,
the administrative decision is not final until that review procedure
81-1 CPD 101. In this connection, we note that at bid opening on
January 30 (attended by a representative of JAC) and by followup
telegrams, the Army advised all bidders of the appeal procedure and that
the final contracting decision would not be made during the period from
February 3 to February 9.
Apparently, however, JAC elected not to follow the administrative
appeals procedure. Therefore, we will not consider this protest
challenging the A-76 cost evaluation since the available administrative
appeal process was not exhausted. Urban Enterprises, supra; Direct
Delivery Systems, 59 Comp.Gen. 465(1980), 80-1 CPD 343.
JAC notes that the administrative appeal procedure provided by the
solicitation for challenging the cost comparison results is permissive,
not mandatory, i.e., "interested parties may file * * * specific
objections * * * ." Therefore, JAC contends that it was not required to
exhaust its administrative remedy with the agency prior to filing with
G.A.O. However, our decisions in Direct Delivery Systems, supra, and
Urban Enterprises, supra, are clear in this regard. We held that:
Where, as here, a relatively speedy review procedure is formally
included as part of the administrative decision-making process, the
administrative decision is not final until that review procedure has
been exhausted.
Furthermore, Sanders Company Plumbing and Heating, 59 Comp.Gen.
243(1980), 80-1 CPD 99, cited as the basis for the above holding,
involved our decisions not to review a grant related procurement where
the complainant voluntarily did not first seek resolution of its
complaint through an established Environmental Protection Agency (EPA)
protest process which was part of the EPA grant administration function.
The EPA protest procedures, 40 C.F.R. 35.939(1980), contained
permissive language similar to the language used in this solicitation,
i.e., "a protest * * * may be filed."
Thus, the fact that the administrative review is not mandatory does
not relieve the protester of an obligation under our decisions to use
the agency procedure prior to seeking review by our Office.
Accordingly, the protest is dismissed.
B-198464, April 9, 1981, 60 Comp.Gen. 361
Contracts - Solicitation - What Constitutes - Essential Information
Requirements
Procuring agency's letter to protester requesting "budgetary cost
quote" did not amount to formal solicitation or request for quotations
where letter did not advise protester of such essential Government
requirements as time for delivery of procured items or cut-off date for
submission of proposals and letter itself stated twice that it was
merely request for "budgetary proposal" or "budgetary cost quote."
Contracts - Negotiation - Sole-Source Basis - Parts, etc. - Competition
Availability
Failure of procuring agency to institute formal qualification
procedure for known potential supplier, or to act in conjunction with
Air Force in its qualification process of same supplier for similar
parts for Air Force, contravened Defense Acquisition Regulation
3-101(d), which requires contracting officers to take action to avoid
noncompetitive procurements.
Matter of: Algonquin Parts, Inc., April 9, 1981:
Algonquin Parts, Inc. (Algonquin), protests the procurement
procedures used by the Department of the Navy, Naval Air Systems Command
(NAVAIR), in awarding an order for certain parts for the F-4 aircraft,
to the McDonnell Douglas Corporation (McDonnell), under Basic Ordering
Agreement (BOA) No. N00019-78-G-0471.
The BOA with McDonnell was negotiated under the authority of 10
U.S.C. 2304(a)(10)(1976) and the Determination and Findings of the Navy,
dated July 20, 1979, wherein the Navy concluded that only certain
designers, developers and sole manufacturers of various aircraft
possessed the requisite knowledge of the design, production and assembly
to perform the necessary work on the aircraft within the requisite
timeframe. Accordingly, it was concluded that orders for certain parts,
including aircraft retrofit change kits, could be placed with only
specified contractors and without formal advertising since competition
was impracticable. The Determination and Findings further provided that
McDonnell was the approved supplier for the F-4 aircraft.
Algonquin contends that it is capable of producing part IV of the
retrofit change kits and, therefore, protests the Navy's sole-source
procurement of part IV for 91 AFC No. 598 retrofit change kits for the
F-4 aircraft. Algonquin states that the Navy solicited a bid from it
and then refused to award it the order even though it submitted the
low-responsive offer. Algonquin argues further that the Navy was fully
aware at the time it placed its order that Algonquin was capable of
producing part IV for the retrofit change kits but nevertheless
improperly disqualified Algonquin as a supplier on the ground that
Algonquin had not successfully produced part IV on a continuous basis.
Algonquin argues in essence that the Navy's determination not to
consider Algonquin a qualified supplier constituted a prequalification
of Algonquin which was unduly restrictive of competition and violative
of our decision in Tymshare Inc., 57 Comp.Gen. 434(1978), 78-1 CPD 322;
and Defense Acquisition Regulations (DAR Secs. 3-210(i) and
3-410.2(c)(2)(i) (1976ed.).
By way of background, the record indicates that in March of 1979,
NAVAIR received a proposal from Algonquin, indicating that Algonquin was
a potential supplier of part IV of the F-4 No. 598 retrofit change kits.
NAVAIR's supplier of these kits in the past had been McDonnell. In
June 1979, NAVAIR requested a budgetary pricing proposal from McDonnell
for procurement of the F-4 retrofit change kits. In November of 1979,
McDonnell responded to NAVAIR's request, offering to supply 54 kits for
a price of $2,430,000, and offering to deliver part IV of the kit in 19
months. Apparently, due to the long lead time for delivery of the
retrofit change kits, NAVAIR began to take steps to consider Algonquin
as a potential supplier. In December of 1979, Navy officials inspected
Algonquin's production facilities and were informed by Algonquin that
the Air Force had conducted a preaward survey on Algonquin which
qualified Algonquin to produce a part substantially similar to part IV
of the AFC No. 598 retrofit change kits the Navy required. By letter
dated January 21, 1980, the Navy asked Algonquin to submit a budgetary
proposal for production and delivery of part IV of the retrofit change
kits, which Algonquin submitted by letter dated January 25, 1980,
followed up by a letter dated February 4, 1980, stating that the
budgetary proposal was an estimate which would be finalized at the time
the Navy was prepared to process an order. Thereafter, Algonquin
informed the Navy that it had received an Air Force contract to produce
a part almost identical to the one Algonquin proposed to supply to the
Navy. The Navy, however, on March 20, 1980, placed a sole-source order
with McDonnell for the procurement of 91 F-4 AFC No. 598 retrofit change
kits, including part IV.
The order was placed with McDonnell for delivery in 12 months
notwithstanding the fact that the Navy had been previously advised that
McDonnell was unable to meet the Navy's specified delivery schedule.
The Navy states that its determination to place the order with
McDonnell was predicated on the fact that, at the time it placed its
order for the retrofit change kits, it was still unsure of Algonquin's
ability to produce a technically acceptable part for the F-4 aircraft.
The Navy indicates that if Algonquin had been successfully producing
these parts for the Air Force on a continuous basis at the time this
order was placed, this would have sufficiently demonstrated Algonquin's
capability, and if time permitted, a solicitation would have been
issued. The Navy states, however, that it was unable to wait until
Algonquin commenced production of the parts due to the need for the
retrofit change kits.
Algonquin protests the Navy's use of the BOA to place its order with
McDonnell alleging initially that the Navy, by letter dated January 21,
1980, solicited a bid from Algonquin which Algonquin responded to with
the low-responsive offer. Algonquin argues that the Navy's letter
contained sufficient information to inform it of the Government's needs
and to allow Algonquin to compete on an equal basis with others and,
therefore, it amounted to a formal solicitation. See, e.g., Servrite
International, Ltd., B-187197, October 8, 1976, 76-2 CPD 325; American
Chain and Cable Company, Inc., B-188749, August 19, 1977, 77-2 CPD 129.
Furthermore, Algonquin asserts that the letter contained far more
information than required by DAR Sec. 16-102.1/DD Form 1707 and,
therefore, the letter amounted to a request for quotation (RFQ).
Accordingly, Algonquin concludes that its letter of January 25, 1980,
was a responsive offer which bound the Navy to place the order with
Algonquin. Algonquin further contends that the F-4 weapons system
manager who issued the letter had the requisite authority to issue a
solicitation.
The Navy argues on the other hand that its letter was issued to
Algonquin merely for budgetary planning purposes in the event that
Algonquin was awarded the order after a properly conducted competition.
The Navy contends that the letter contained insufficient information to
enable it to be characterized as a solicitation.
A fundamental precept of Federal procurement law is the requirement
that a written solicitation contain sufficient information with respect
to the procurement to assure that all offerors are fully informed of the
Government's needs so that they are able to compete on an equal basis.
This requirement exists for the protection of both the offerors and the
Government. Tymshare, Inc., supra. With regard to an RFQ, DAR Sec.
3-501(b)(2) states that these requests should be prepared on Standard
Form 18 (see DAR Sec. 16-102.1), or on forms prescribed by departmental
regulations.
DAR Sec. 16-102.1(a) provides that DD Form 1707 is authorized for
obtaining price, cost, delivery, and related information from suppliers.
The body of DD Form 1707 sets out such detailed information as the
solicitation number, whether the procurement is a negotiated or an
advertised one, and the date and local time for bid opening or receipt
of proposals.
When viewed against these standards, we conclude that the Navy's
letter of January 21, 1980, did not amount to either a solicitation for
a bid or an RFQ as Algonquin suggests. Because the Navy's letter did
not advise Algonquin of such essential Government requirements as the
time for the delivery of the procured parts or the cut-off date for the
submission of proposals, it was inadequate as a formal solicitation.
See Complete Irrigation, Inc., B-187423, November 21, 1977, 77-2 CPD
387; DAR Sec. 1-305.2(a). Furthermore, the letter was not an RFQ or a
request for price/delivery information since DAR Sec. 16-201.1
specifically states that such requests will be made using either
Standard Form 18 or DD Form 1707, and neither form was utilized in this
instance. Additionally, the letter was not the informational equivalent
of an RFQ as Algonquin contends since DD Form 1707 sets out, among other
things, whether the procurement is a negotiated or advertised one, and
the solicitation number for the procurement. The Navy's letter, on the
other hand, contained none of this information and in no manner
indicated that it was a solicitation or a request for an offer. To the
contrary, the Navy's letter specifically stated in paragraph one and two
that it was merely a request for a "budgetary cost quote" or "budgetary
proposal." In our opinion, the phrase "budgetary proposal" in the letter
was adequate to place Algonquin on notice that the Government did not
intend to award a contract to it based solely upon this request. It
appears that Algonquin understood this to be the case as Algonquin
stated in its follow-up letter of February 4, 1980, that its budgetary
proposal was an estimate which would be finalized at the time the Navy
was prepared to process an order. In view of our conclusion that the
Navy's request for a budgetary proposal was not a solicitation, we find
it unnecessary to address the question of the F-4 Weapon System
Manager's authority to issue a solicitation.
The procurement statutes and regulations require agencies to obtain
maximum competition consistent with the nature and extent of the
services or items being procured. Department of Agriculture's use of
master agreements, 56 Comp.Gen. 78, 80(1976), 76-2 CPD 390; Department
of Agriculture's use of master agreements, 54 Comp.Gen. 606, 608(1976),
76-1 CPD 40.
The procurement method of placing orders under a BOA is a procedure
predicated on a prequalification of competitors and is appropriate under
the same circumstances where a sole-source procurement would have been
justified. Rotair Industries, et al., 58 Comp.Gen. 149(1978), 78-2 CPD
410; RAM Enterprises, Inc., B-198681, October 14, 1980, 80-2 CPD 274.
As a general matter, any system of prequalification of competitors to
some degree is in derogation of maximum competition in the procurement
system. However, it is well accepted that procuring agencies are
nonetheless vested with a reasonable degree of discretion to determine
the extent of competition which may be required consistent with the
needs of the agency and nature of the item to be procured. 54
Comp.Gen.at 608; Department of Agriculture's use of master agreements,
supra, at 80. Even though procedures which prequalify potential
offerors prior to bid opening limit competition to a certain degree,
this Office has approved with reservation special agency procedures
which limit competition where it is demonstrated that such limitations
serve a bona fide need of the Government. 50 Com.Gen. 542(1971);
Department of Agriculture's use of master agreements, supra, at 608,
609; Department of Health, Education and Welfare's use of basic
ordering agreement procedure, 54 Comp.Gen. 1096, 1097(1975), 75-1 CPD
392; see Rotair Industries et al., supra. Where, however, the
governmental interests cited to support such prequalification procedures
do not in fact advance bona fide interests of the Government, or they do
so in an overly restrictive manner, the general rule that such
prequalification procedures are an undue restriction on competition is
applicable. 54 Comp.Gen.at 608, 609.
The Navy's report indicates that this order was placed with McDonnell
on the basis of the Navy's Determinations and Findings which concluded
that competition was impracticable because the highly complex and
technical nature of the aircraft's replacement components made it
necessary that suppliers have a thorough knowledge of the aircraft's
design and assembly in order to assure timely delivery of orders, and
this knowledge was possessed solely by the manufacturer of the F-4
aircraft, McDonnell. It appears, therefore, that one of the Navy's
principal justifications for placing the order for the parts with
McDonnell was its concern with respect to McDonnell's capability to
produce parts which would prove to be safe, reliable, and technically
acceptable when installed in the F-4 aircraft. The Navy's position is
supported by DAR Sec. 1-313 which provides that any:
* * * part, subassembly, or component * * * for military equipment to
be used for replenishment of stock, repair, or replacement, must be
procured so as to assure the requisite safe, dependable, and effective
operation of the equipment.
This provision further states that where is it feasible to do so
without impairing the above-mentioned interests, "parts should be
procured on a competitive basis." In those cases where competition is
not feasible, Sec. 1-313(a) also states that parts should be procured
from the original manufacturer of the equipment or his supplier.
With regard to the Navy's argument that the procurement of these
parts under its BOA with McDonnell was proper since Algonquin was not a
qualified supplier at the time it placed its order and, therefore,
competition was not feasible or practicable at that time, we do not
believe this to be the dispositive inquiry in this case. In our view,
the Navy's position that competition was not feasible or practicable at
the time the order was placed is a separate question, the disposition of
which is dependent upon the validity of the Navy's action prior to that
time when it became aware that Algonquin was potentially an alternative
supplier.
While we do not question the bona fide need of the Navy to obtain
parts for the F-4 aircraft which meet the level of quality and
reliability assurances necessary to insure the safe and efficient
operation of this aircraft, or the need to prequalify potential
suppliers of parts of a critical nature to achieve these assurances,
these considerations do not serve as a justification for the procuring
agency's failure to qualify a potential supplier who may demonstrate
that it has the capability to supply the agency's requirements in a
satisfactory manner. As we noted in Rotair Industries, supra, at pages
153 and 154, DAR Sec. 1-313 does not prohibit a procuring agency from
receiving and considering proposals from previously unapproved sources
who could otherwise qualify under applicable regulations. To the
contrary, this Office has recognized that requiring an offeror to
furnish data and samples for examination and testing as a prerequisite
to the qualification of the offeror was consistent with that regulation
and the needs of the agency to obtain assurances that such offerors
would be capable of supplying parts which would be reliable and
interchangeable. Id. at 154. We recommended for example, in 50
Comp.Gen. 184(1970), that notwithstanding the applicability of DAR Sec.
1-313 to the procurement of aircraft combustion chamber clamps, the Air
Force should institute a qualification test program to determine the
feasibility of procuring the subject clamps from a source other than the
original manufacturer. Id. at 191.
In our decision in D. Moody & Company, Inc., 56 Comp.Gen. 1005(1977),
77-2 CPD 233, we stated that the use of a BOA to place order, was
restrictive of competition in violation of procurement statutes and
regulations where an alternative source offers a surplus item and the
Government disqualifies that supplier for purposes of future competitive
procurements without adequate cause.
Although the procuring agency in that case also had legitimate concerns
over the quality and conformance of the parts offered by the alternative
source, as the Navy does here, we determined that such concerns did not
preclude a competitive procurement where adequate procedures were
available to determine the quality of the parts offered by the
alternative source. Id. at 1007, 1008.
Although we do not dispute the Navy's assertion that, at the time the
order for the kits was placed, a competitive procurement may not have
been feasible or practicable due to the urgent need for the aircraft
parts, it is manifest from the record that the Navy knew that Algonquin
was a potential supplier of the part as early as March of 1979, at which
time Algonquin submitted a proposal for the part IV item involved here.
In this connection, there is uncontroverted evidence in the record that
the Navy was aware of Algonquin's potential as a supplier both before
and after the March 1979 proposal. Nevertheless, there is nothing in
the record to indicate that the Navy took any steps to begin qualifying
Algonquin. Although the Navy began in December of 1979 a process to
determine the feasibility of procuring the parts from Algonquin on a
competitive basis, the import of the Navy's action in not instituting
action before that time to formally qualify Algonquin for its upcoming
fiscal year 1980 procurement contravened DAR Sec. 3-101(d), which
requires contracting officers to take such action as is necessary to
foster competitive conditions for future procurements, including the
breakout of parts.
Further, while the Navy advised Algonquin in early December 1979 that
it would "study the possibility of considering Algonquin a qualified
producer of Part IV" based upon Air Force qualification, and Algonquin
furnished the Navy a copy of the Air Force approval by letter of
December 8, 1979, the record fails to indicate what, if any,
consideration was given to the fact that Algonquin's part had received
Air Force approval. The only statement, without explanation, provided
by the Navy for not considering Algonquin qualified is that the Navy
"still had doubts about Algonquin's ability" and "successful continuous
production of Air Force parts would have sufficed as a qualification
criteria." In our view, it was incumbent upon the Navy to institute its
own qualification program in March 1979 when it was informed that this
potential supplier existed or, in the alternative, to have acted in
conjunction with the Air Force's qualification process when it learned
that Algonquin was being qualified to produce a similar part for the Air
Force.
In sum, we conclude that the sole-source award of this order to
McDonnell was improper in that the Navy failed to follow available
qualification procedures in derogation of the procurement and
regulations which require negotiated procurements to be made on a
competitive basis to the maximum extent possible and which require
contracting officers to avoid noncompetitive procurements whenever
possible by reviewing the reasonableness of delivery requirements and
considering the possibility of breaking out components of an item for a
competitive procurement.
See e.g., 10 U.S.C. 2340(a); DAR Sec. 1-300.1; DAR Sec.
3-101(a)(b)(d). Therefore, Algonquin's protest is sustained.
Algonquin contends that the Navy's part IV procurement from McDonnell
must be terminated because it was improper and void ab initio. In
Algonquin's view, the Navy intentionally contravened existing law and
regulations requiring competition and that failure on the part of our
Office to recommend termination here will result in the perpetuation of
an illegal contract.
We have stated that the determination whether termination of an
improperly awarded contract is in the best interest of the Government
involves the consideration of several factors, besides the seriousness
of the procurement deficiency. See System Development Corporation,
B-191195, August 31, 1978, 78-2 CPD 159, and the cases cited therein.
Among the other factors which we consider are the extent of performance,
cost to the Government, the urgency of the procurement and the impact of
a termination on the procuring agency's mission. System Development
Corporation, supra. In view of the foregoing, it is clear that we
cannot recommend termination here solely on the basis of the
deficiencies noted above.
Algonquin also urges that once the Navy's procurement from McDonnell
is terminated an immediate reprocurement should be made from Algonquin.
Algonquin asserts that the overall cost to the Government for the part
IV kits will be substantially less if procurement is made from it. In
addition, Algonquin emphasizes that it can deliver the kits with as
little as 5 months lead time so that there will be no stoppage in their
supply to the Navy.
However, in furtherance of the objective of the procurement statutes
and regulations in obtaining maximum competition, the most we could
recommend would be termination and a competition between Algonquin and
McDonnell for the part IV kits since obviously McDonnell is a qualified
source.
The Navy asserts that termination for convenience is not appropriate
in this case. According to the Navy, there has been considerable
performance by McDonnell. In support of this, the Navy states that a
good portion of the part IV kits are currently being machined by
McDonnell and that any interruption in the machining process would have
serious effects, leaving partially machined kits. Also by December 1980
McDonnell had received delivery of all forgings for machining of all of
the part IV kits called for by the Navy under its March 20, 1980, order.
The Navy believes that if the forgings were transferred upon termination
from McDonnell to Algonquin, a complete loss of material would occur
because the partially machined McDonnell Kits would not be compatible
with Algonquin's machines.
The Navy further contends that there will be substantial costs to the
Government if termination is ordered. The Navy estimates that the
termination costs at this time for the March 20, 1980, order to be
almost the full value of the order (apparently meaning part IV),
approximately $2,000,000. Moreover, the Navy believes that McDonnell
would have to raise the price on the remaining parts covered by the
order.
With regard to a competitive procurement between Algonquin and
McDonnell following a termination of McDonnell's contract, the Navy
indicates that such a procurement would require 9 months if no
difficulties, occur. According to the Navy, both companies would have
to be provided a solicitation containing a competitive data package
including drawings, specifications and details and each would then have
to have time to respond to the solicitation, including the providing of
a prototype article for first article demonstration. The proposals
submitted under the solicitation would then have to be evaluated to
determine the company that should be selected for award.
In response, Algonquin asserts that the Navy has presented no
evidence to show that any significant performance has been made by
McDonnell under the March 20, 1980, order. More specifically, Algonquin
asserts that: (1) the Navy has not provided our Office with any
meaningful, documented status of the delivery order; (2) the Navy has
not provided our Office with any determination or tabulation of
termination costs which would accrue from the termination of the order;
and, (3) the Navy has not provided our Office with any documented,
credible impact that termination of the order would have on the Navy's
mission. In this regard, Algonquin alleges that the Navy has not
conducted any audit or on-site analysis at Algonquin or McDonnell to
determine the status of the part IV kits, any purported termination
costs, or Algonquin's actual machining capabilities.
Algonquin further contends that the Navy's statements with regard to
deliveries to McDonnell for machining and actual machinings by McDonnell
do not indicate which fiscal year part IV kits are involved.
(Apparently McDonnell is providing the same parts under a 1970 fiscal
year contract as well as under the subject 1980 fiscal year contract.)
Algonquin points to estimates by the Navy that the lead time to forge
the kits to be machined is between 50 to 58 weeks. However, after
receiving the March 20, 1980, order from the Navy, Algonquin alleges
that McDonnell did not place an order with its subcontractor for the
forged kits until late April 1980.
Therefore, Algonquin argues that McDonnell could not have possibly
received forgings for machining under the March 20, 1980, order by
December 1980. Rather, Algonquin alleges that any delivery of forgings
to McDonnell in December 1980 would have been pursuant to the Navy's
fiscal year 1979 order for part IV kits.
In further support of the foregoing argument Algonquin has submitted
copies of letters dated March 19, 1980, and April 4, 1980, from
McDonnell to the Navy in which McDonnell states that while the March 20,
1980, order specifies that the delivery of Part IV is to begin in March
1981 at a rate of seven a month, manufacturing and procurement lead time
prohibit the delivery of the part until August 1982. Algonquin contends
that the Navy has not rebutted its argument in this regard.
With respect to the Navy's statement that a partially machined part
IV kit of McDonnell's would not be compatible with Algonquin's machines,
Algonquin notes that it is currently producing part IV kits, for the Air
Force and that there is no indication in the record that it has
different machining capabilities and processes than McDonnell does.
Algonquin further notes that the Navy has not to date conducted an
on-site survey of its plant. Therefore, Algonquin argues that the
Navy's statement regarding its machining capabilities and processes is
completely unsupported and should not be considered by us.
As to the Navy's termination costs, Algonquin asserts that the Navy
has provided us with alleged costs which might result from the
termination of the entire March 20, 1980, order (parts I through V) and
not the costs associated solely with the termination of the part IV
kits. Algonquin argues that there is no indication in the record of the
costs incurred to date by McDonnell for part IV alone. Moreover,
Algonquin questions whether McDonnell has any forgings under the March
20, 1980, order on hand for machining or that McDonnell has already been
machining these forgings.
Finally, in response to the Navy's position that a competitive
reprocurement would require nearly 9 months, Algonquin contends that is
unfounded. Algonquin cites evidence in the record showing that the Navy
issued the part IV data package in June 1978 and that both Algonquin and
McDonnell received such data package, including engineering drawings, in
1979. Also, Algonquin argues that both it and McDonnell have previously
had part IV first article prototypes approved within the Department of
Defense and that both companies have been qualified part IV kits
producers prior to November 1979.
Further, as pointed out previously, the Navy indicated in December
1979 that the Air Force's qualification of Algonquin would suffice for
the Navy's purposes.
After Algonquin was qualified by the Air Force, the Navy then required
"successful continuous production of Air Force parts" without any
explanation as to why this requirement was justified. It has now been
more than a year of performance by Algonquin under the Air Force
contract and the Navy has not questioned Algonquin's qualification.
From our review of the record we believe that Algonquin has raised
sufficient doubt regarding the support for the Navy's arguments as to
why termination for convenience would not be an appropriate remedy. We
believe the record clearly shows that deliveries of the part IV kits
will not begin in March 1981 as specified in the Navy's March 20, 1980,
delivery order. The Navy admits that without its assistance McDonnell's
deliveries of the 1980 part IV kits would likely have begun about
November or December 1981. The Navy states though that in order to
reduce delivery lead time, it borrowed forgings from the Air Force and
turned them over to McDonnell. Hence, the Navy asserts that McDonnell
will begin part IV deliveries under the March 20, 1980, order in May
1981.
However, the record revelas that the Navy's November or December 1981
estimate was based on a January 1980 message from McDonnell that
delivery leadtime for part IV would be 19 months after receipt of the
Navy's order. As pointed out by Algonquin, the record shows that after
the Navy placed its order in March 20, 1980, McDonnell revised its
delivery time from 19 months to 28 months. Therefore, even assuming
that whatever number of borrowed forgings that the Navy turned over to
McDonnell allowed the company to machine and deliver them in May 1981,
we fail to understand how McDonnell will be able to machine and deliver
by December 1981 the remaining part IV kits. Moreover, it appears from
the record (a milestone chart) that at least 53 of the 91 part IV kits
will not be needed until May 1982 for use by the Navy in fiscal years
1982 and 1983.
With regard to the part IV forgings borrowed from the Air Force, the
Navy has failed to explain the nature and extent of its obligation for
their return to the Air Force. Further, Algonquin believes that the
Navy borrowed part IV kits in machined form from the Air Force and
consequently machined parts corresponding to the number borrowed must be
returned to the Air Force after May 1982.
In view of the foregoing, we recommend that the Navy reconsider the
feasibility of terminating for convenience the portion March 20, 1980,
order pertaining to part IV. Also, we think that the Navy should
reconsider the time needed to conduct a competitive procurement between
Algonquin and McDonnell in view of the fact there is evidence in the
record to suggest that both companies have in the past undergone first
article testing. Finally, we believe that there is some indication in
the record that the Navy already has the basic technical data package
including drawings around which a formal solicitation could be prepared.
Since this decision contains a recommendation for corrective action,
we have furnished a copy to the congressional committees referenced in
section 236 of the Legislative Reorganization Act of 1970, 31 U.S.C.
1176(1976), which requires the submission of written statements by the
agency to the House Committee on Government Operations, Senate Committee
on Governmental Affairs, and House and Senate Committees on
Appropriations concerning the action taken with respect to our
recommendation.
B-199474, April 2, 1981, 60 Comp.Gen. 354
Office of Personnel Management - Jurisdiction - Fair Labor Standards Act
- Compliance Determination - Review by GAO - Burden of Proof
Employee filed Fair Labor Standards Act (FLSA) complaint and Office
of Personnel Management (OPM) issued a compliance order requiring agency
to pay 30 hours overtime compensation per year retroactive to May 1,
1974. Agency states that its records do not support award of 30 hours
per year. General Accounting Office will not disturb OPM's findings
unless clearly erroneous and the burden of proof lies with the party
challenging the findings. Here, agency statement that it cannot find
travel vouchers to support OPM award does not satisfy burden of proof.
Under FLSA, each agency is responsible for keeping adequate records of
wages and hours. Once employee has provided sufficient evidence of
hours worked, burden shifts to employing agency to come forward with
evidence to contrary. Compensation - Overtime - Fair Labor Standards
Act - Statute of Limitations
This Office has previously held that 6-year limitations period
contained in 31 U.S.C. 71a and 237 applies to claims arising under
section 204(f) of the FLSA, 29 U.S.C. 201, 204(f)(1976). Thus, where
agency appeals OPM/FLSA compliance order to this Office, the 6-year
limitations period continues to run until claim is received in this
Office. Therefore, any portion of award under OPM compliance order
which accrued more than 6 years prior to filing of claim in this Office
may not be paid.
Matter of: Paul Spurr - Overtime compensation under the Fair Labor
Standards Act - 6-year Limitation Period, April 2, 1981:
The Office of the Comptroller of the Army requests that we issue an
advance decision concerning the claim of Mr. Paul Spurr for overtime pay
under the Fair Labor Standards Act (FLSA).
Mr. Spurr was employed by the Army Armament Research and Development
Command, Dover, New Jersey. On September 4, 1979, a complaint on behalf
of Mr. Spurr was submitted to the Office of Personnel Management for
overtime under the FLSA for travel performed outside his normal tour of
duty for the period beginning May 1, 1974.
As a result of this complaint, the Director, Eastern Region, OPM, after
investigation, issued a compliance order under 29 U.S.C. 204(f)(1976)
awarding Mr. Spurr 30 hours of FLSA overtime compensation per year for
the period from May 1, 1974, through August 6, 1978. The
30-hours-per-year figure was derived from evidence submitted by Mr.
Spurr, substantiated by his supervisor, and confirmed by OPM during its
investigation.
It appears that OPM issued the compliance order on the basis of the
agency's failure to rebut certain evidence provided by the complainant,
citing the responsibility imposed by the FLSA that employers maintain
and preserve records pertaining to FLSA entitlements. The agency's
assertion that the complainant was not entitled to compensation unless
he provided documentation in the form of copies of his travel orders was
specifically denied. Thus, on the basis of estimates submitted by the
complainant and substantiated by the supervisor who assigned him the
travel duties, OPM found that Mr. Spurr was entitled to 30 hours of
overtime compensation per year. Although it does not dispute that Mr.
Spurr performed travel for which he is entitled to overtime compensation
under the FLSA, the agency contends that it has paid overtime for all
periods of travel that can be substantiated by travel vouchers turned up
by a search of its records. This amounts to 51 hours, or $618.54.
However, it requests an advance decision as to the " * * * legality of
payment of overtime compensation based upon a supervisor's informal memo
for record estimate as directed in the OPM compliance order * * * ."
In effect, we are requested to modify the compliance order issued by
OPM. For the reasons stated below we will not disturb the compliance
order in this case.
Section 204(f) of the Fair Labor Standards Act (FLSA), 29 U.S.C. 201,
204(f)(1976), authorizes the Civil Service Commission (now the Office of
Personnel Management) to administer the provisions of the Act with
respect to most Federal employees. In fulfilling this responsibility,
OPM has issued regulations providing for an FLSA compliance and
complaint system. See Federal Personnel Manual (FPM) Letter 551-9,
March 30, 1976. Paragraph 5 of that FPM Letter sets forth a procedure
for processing complaints that includes an initial investigation on the
basis of written presentations from all parties and also provides for
onsite investigations, if necessary. The onsite investigations may
include a review of time and attendance records, payroll records, and
all other pertinent documents. Upon completion of the investigation, a
compliance order is issued by OPM where violations are found to have
occurred.
Thus, OPM's regulations provide for a formal system of gathering
facts and issuing a decision in responding to complaints about possible
FLSA violations. This system provides OPM with the means of obtaining
all possible information upon which to base their decision. For this
reason, we will not disturb OPM's factual findings unless they are
clearly erroneous. See Department of Agriculture Meat Graders,
B-163450.12, September 20, 1978.
Once a covered ("non-exempt") employee has established the fact that
he performed work for which he was improperly compensated under the
FLSA, he must produce sufficient evidence to show the amount and extent
of that work as a matter of reasonable inference. The burden then
shifts to the employer to come forward either with evidence of the
precise amount of work performed or with evidence to negate the
reasonableness of the inference to be drawn from the employee's
evidence. See Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680(1946);
Munsower v. Callicott, 526 F.2d 1187 (8th Cir. 1975).
In the present case, the Army has submitted no evidence to us that
would compel a finding that OPM's determination was clearly erroneous.
Its only contention is that it is unable to produce travel vouchers to
support OPM's award of 30 hours of overtime compensation per year.
Local 225 of the American Federation of Government Employees (AFGE),
on behalf of Mr. Spurr, alleges that the agency's inability to retrieve
vouchers to support the award of 30 hours of overtime compensation per
year lies in the agency's inadequate management recordkeeping system.
AFGE states that:
OPM found the same situation (i.e., poor recordkeeping) in the case
of Mr. Spurr and therefore accepted evidence other than copies of the
actual vouchers. We would point out that this evidence, which Mr.
McCullough refers to in paragraph 5 of Inclosure 1 as a "supervisor's
informal memo for record," was a signed statement by Mr. Spurr's
supervisor (during the period of travel in question) which was submitted
to and investigated by OPM. It is interesting to point out that
management at no point questioned the supervisor or attempted to
discredit his statement.
We do not believe that the Army has satisfied its burden of proving
that OPM's factual findings were clearly erroneous. We are particularly
persuaded by the fact that the Army did not attempt to refute the
supervisor's estimate of Mr. Spurr's entitlements during OPM's
processing of the complaint. Clearly, the proper forum for rebutting
that evidence is during OPM's investigation of the complaint.
Accordingly, we will not overturn the compliance order of OPM in this
case.
However, we must impose the 6-year limitations period of 31 U.S.C.
71a on a portion of Mr. Spurr's claim, even though the issue was not
raised by either party. In Transportation Systems Center, 57 Comp.Gen.
44(1978), we held that the 6-year statute of limitations contained in 31
U.S.C. 71a and 237(1976) applied to claims for overtime under the FLSA.
We also stated that:
In order to protect the interests of employees, claims which have
accrued more than 4 years ago and cannot promptly be approved and paid
in full amount claimed should be forwarded to the Claims Division (of
the General Accounting Office) for recording.
Since Mr. Spurr's claim accrued at the time that the overtime was
performed and it was not received in this Office until July 3, 1980, any
portion that can be shown to have accrued prior to July 3, 1974, may not
be paid. See Unexcelled Chemical Corp. v. United States 345 U.S.
59(1953).
Accordingly, with the above modification, Mr. Spurr is entitled to
payment of overtime compensation under the FLSA pursuant to the
compliance order issued by the Office of Personnel Management on May 20,
1980.
B-201579, April 1, 1981, 60 Comp.Gen. 341
Contracts - Protests - Court-Solicited Aid - Scope of GAO Review
Where material issues of protest are before court of competent
jurisdiction which has issued preliminary injunction and which has asked
for General Accounting Office (AGO) opinion, GAO will consider findings
of fact and conclusions of law made by court, but will conduct
independent review of matter. Contracts - Protests - Court-Solicited
Aid - Scope of GAO Review - Timeliness of Protest Determination
GAO will consider untimely protests on merits where material issues
of protest are before court and court has asked for GAO decision. GAO
will also provide court with opinion as to timeliness of issue. Here,
protest that signer of Determination and Findings (D&F) had no authority
to make D&F was timely, since filed within 10 working days of knowledge
of signing of D&F. General Accounting Office - Jurisdiction - Contracts
- National Defense needs - Negotiation Authority - Delegation
Authority of Under Secretary of Defense for Research and Engineering,
or his Principal Deputy, to sign D&F authorizing negotiation of contract
under 10 U.S.C. 2304(a)(16) is not matter of executive policy which GAO
should not review, but is matter of statutory law clearly within GAO
jurisdiction. Contracts - Negotiation - Administrative determination -
"Determination and Findings" by Agency Head - Department of Defense -
Delegation of Authority
Even though 10 U.S.C. 2302(1) does not list Secretary, Under
Secretaries, or Assistant Secretaries of Defense as officials authorized
to make D&F's justifying negotiation under 10 U.S.C. 2304(a)(16),
statutes creating and reorganizing Department of Defense and expanding
power of the Secretary of Defense, and legislative history of those
statutes, make it clear that those officials may make such D&F's.
Contracts - Negotiation - Justification
D&F justifying negotiation under 10 U.S.C. 2304(a)(16) was signed
initially by Principal Deputy to Under Secretary of Defense for Research
and Engineering, an official not authorized to make such D&F. D&F was
reexecuted later by Under Secretary, an authorized official. Protester
argues that Under Secretary did not make D&F, but merely "rubber
stamped" it. Where, as here, there is written record of reasons for
decision, GAO will not probe mental processes of decisionmaker to
ascertain degree of his personal involvement in decision. Therefore, we
find that Under Secretary made decision. Contracts - Negotiation -
National Emergency Authority - Sole Source Negotiation - Maintenance of
Industrial Mobilization Base
Our review of determinations to negotiate under 10 U.S.C. 2304(a)(16)
is limited to review of whether determination is reasonable given
findings. We will not review findings, since they are made final by
statute. Where findings show that mobilization base is best served by
having two separate sources for item, protester has previously been sole
supplier, and there is only one other qualified producer, then
sole-source award to that producer is reasonable. Contracts -
Negotiation - Determination and Findings - Propriety of Determination
Contrary to protester's arguments, facts show that D&F and supporting
documents contained all required information. Protester argues that an
economic analysis was not performed to establish cost benefit of
expanding productive capacity rather than stockpiling items. Record
shows that it was performed. Degree to which Under Secretary considered
analysis in his decision will not be reviewed. Contracts - Negotiation
- Sole-Source - Basis - Authority - Awards in Interest of National
Defense
Argument that letter contract is improper here because there is no
real urgency will not be considered, since we have found that
sole-source award was proper. Therefore, form of contract could not
prejudice protester.
Matter of: Norton Company, Safety Products Division, April 1, 1981:
The Norton Company, Safety Products Division (Norton), protests the
proposed award of a letter contract on a sole-source basis to the
Brunswick Corporation (Brunswick) by the Defense Personnel Support
Center of the Defense Logistics Agency (DLA). The contract is for
chemical protective butyl gloves.
The procurement is based on the authority contained in 10 U.S.C.
2304(a)(16)(1976), a provision of the Armed Services Procurement Act of
1947, as amended, permitting negotiation when an agency head determines
that it would be in the interest of national defense to have a
manufacturer available in case of a national emergency, or that the
interest of industrial mobilization in case of such an emergency would
otherwise be served. A Determination and Findings (D&F), justifying the
use of such authority, was made by authority of the Under Secretary of
Defense for Research and Engineering. The D&F was signed on December 8,
1980, by the Principal Deputy to the Under Secretary. The Under
Secretary then signed the document on December 24, 1980. Under the D&F
contracts are to be awarded to Norton and Brunswick, by dividing the
total requirement.
Norton argues that the D&F is void ab initio because neither the
Principal Deputy nor the Under Secretary is statutorily authorized to
make such D&F's, and the D&F does not contain all of the information
which it is required to contain. Norton also contends that even if the
D&F was properly executed, it does not adequately justify a sole-source
award and, therefore, the procurement should be formally advertised or
at least competitively negotiated. Additionally, Norton argues that the
(a)(16) authority may not be used to create a new supplier of goods
weakening the present sole supplier. Finally, Norton contends that
there is no authority for the use of a letter contract in these
circumstances.
Norton filed suit in the United States District Court for the
District of South Carolina (Civil Action No. 80-2518-1), asking for
injuctive and declaratory relief. On January 20, 1981, the court issued
an order granting a preliminary injunction, enjoining award of the
contract to Brunswick.
The court made findings of fact and conclusions of law. The court also
expressed an interest in the General Accounting Office's decision on the
merits of the protest. A few days prior to the issuance of this
decision we learned that the federal defendants appealed to the United
States Court of Appeals for the Fourth Circuit from the order granting
the injunction.
It is our view that the protest is without merit.
When the material issues of a protest are also before a court of
competent jurisdiction, our Office will not consider the protest on the
merits, unless, as here, the court expresses an interest in a decision
by our Office. Allis-Chalmers Corporation, B-195311, December 7, 1979,
79-2 CPD 397.
Norton urges our Office to give great weight to the findings and
conclusions of the court stated in the order of January 20 and cites
Optimum Systems, 56 Comp.Gen. 934(1977), 77-2 CPD 165, in support of
that proposition. DLA argues that in Optimum Systems GAO conducted an
independent review of the matters at issue, and should do the same here.
DLA also points out that in Optimum Systems GAO had the same record
before it as the court had, while in this case the court did not have
the benefit of the administrative report and rebuttal comments filed
with our Office by DLA and the comments filed by Brunswick. Therefore,
DLA contends GAO should not feel bound by the court's findings and
conclusions.
We will, of course, consider the findings and conclusions of the
court in our decision. However, we assume that the court would not have
expressed an interest in our decision if it did not want our independent
review of the record, even if our conclusions might differ.
DLA argues that Norton's protest regarding the statutory authority of
the Under Secretary to execute the (a)(16) D&F is untimely. On August
21, 1980, DLA sent Norton a copy of a proposed D&F requesting authority
from the Under Secretary to negotiate contracts with Norton and
Brunswick under the (a)(16) authority. DLA contends that Norton knew at
that time that the D&F would be executed by the Under Secretary, and to
be timely should have protested the alleged lack of authority within 10
working days of receipt of that draft D&F. Then, DLA asserts, the issue
could have been developed properly and resolved without the disruption
to the procurement process that has occurred as a result of Norton's
delayed filing. DLA understands that GAO will decide untimely issues on
the merits when a court has expressed an interest in our decision, but
asks that we provide the court with our views concerning the timeliness
of Norton's protest.
DLA is correct in stating that GAO will consider an untimely protest
if the issues are before a court of competent jurisdiction and that
court requests our opinion. Dr. Edward Weiner, B-190730, September 26,
1978, 78-2 CPD 230. Also, we have provided courts with our views
concerning timeliness, id., and we will do so here.
Norton points out that while the draft D&F was submitted to the Under
Secretary by memorandum from DLA requesting authority to negotiate under
(a)(16), nothing indicated that it would be signed by the Under
Secretary. Also, Norton argues that the draft D&F statement "which I
hereby make as Agency Head" is an obvious reference to the definition of
head of an agency at 10 U.S.C. 2302(1976), which does not include the
Under Secretary. That statement would lead one to conclude that the D&F
would not be signed by the Under Secretary, but rather by a statutorily
authorized official. Therefore, Norton claims, it could not know that
the Under Secretary or his delegated agent would sign the D&F until that
actually occurred on December 8, 1980.
We agree that Norton could not have known, without doubt, that the
D&F would be signed by the Under Secretary or his delegated agent until
December 8 and consequently the protest is not untimely. A protester is
not required to anticipate that a contracting agency will take an action
that the protester feels is improper. We believe that if Norton had
protested at that time, the protest would have been dismissed as
premature. Aero Corporation, B-194495.2, October 17, 1979, 79-2 CPD
262.
DLA also urges us to conclude that the issue of the Under Secretary's
authority to execute an (a)(16) D&F is a matter of executive policy
which we would not review, but for the court's interest. We disagree.
The question of the (a)(16) authority is a matter of statutory law, not
executive policy, and clearly comes within our bid protest jurisdiction.
Norton argues that neither the Principal Deputy, who signed the D&F
on December 8, 1980, nor the Under Secretary, who signed it on December
24, 1980, have the authority to make such a D&F, and that the D&F is,
therefore, void ab initio. According to Norton, the statute clearly
limits the authority to make (a)(16) D&F's to the head of an agency. 10
U.S.C. 2304(a)(16) provides that negotiation may be used when:
(16) he (the head of an agency) determines that (A) it is in the
interest of national defense to have a plant, mine, or other facility,
or a producer, manufacturer, or other supplier, available for furnishing
property or services in case of a national emergency; or (B) the
interest of industrial mobilization in case of such an emergency, or the
interest of national defense in maintaining active engineering,
research, and development, would otherwise be subserved;
The term "head of an agency" is defined in 10 U.S.C. 2302(1)(1976),
which provides:
(1) "Head of an agency" means the Secretary, the Under Secretary, or
any Assistant Secretary of the Army, Navy, or Air Force; the Secretary
of the Treasury; or the Administrator of the National Aeronautics and
Space Administration.
10 U.S.C. 2311(1976) provides that the power to make D&F's may be
delegated only as follows:
The head of an agency may delegate, subject to his direction, to any
other officer or official of that agency, any power under this chapter
except the power to make determinations and decisions (1) under clauses
(11)-(16) of section 2304(a) of this title.
Norton contends that the plain language of the quoted statutes
prohibits anyone other than the officials listed in Sec. 2302(1) from
making an (a)(16) D&F. This includes the Principal Deputy, the Under
Secretary and even the Secretary of Defense. The protester argues that
since there is no ambiguity in the statute, it is impermissible to
resort to legislative history or other statutes to arrive at the meaning
of the statute, and cites United States v. Missouri Pacific Railroad
Company, 278 U.S. 269, 277(1929), for support. Even if the legislative
history of the Armed Services Procurement Act is consulted, asserts
Norton, the meaning of the plain language of the statute is confirmed.
In that regard, Norton quotes the following exchange from the
Congressional Hearings:
Sen. Baldwin * * * under the unification bill (unifying military
departments under predecessor to DOD), if that bill is passed, would the
final decision for letting a contract under the proviso of Section 16
(sic) be up to the Secretary of the Armed Services, or would it be up to
the Secretary of the particular military department?
Gen. Vandenberg. I think it would be up to the Secretary of the Air
Force.
Mr. Kenney. (The unification) bill preserves the existence of the
departments, and so the agency head in that case would be the Secretary
of the Army, the Secretary of the Navy, and the Secretary of the Air
Force.
We note that there is an error in Norton's quotation of this portion
of the legislative history. Senator Baldwin actually asked about the
proviso of section 15 of the bill, not section 16 as indicated by
Norton. Section 15 provided for the use of negotiation in procuring
supplies of a specialized nature requiring a substantial initial
investment or an extended preparation for manufacture, where the agency
head determines that formal advertising would result in additional cost
and/or delay to the Government as a result of duplication of investment
and/or preparation time. The exchange quoted by Norton took place
during a statement by General Vandenberg, on behalf of the Army Air
Force, which was essentially a plea for passage of proviso 15.
General Vandenberg argued that without proviso 15 the Air Force would
experience great difficulty in procuring airplanes. We think that
General Vandenberg's statement that the Secretary of the Air Force would
make the agency head determination under proviso 15 must be viewed in
the context of the special importance of that proviso to the Air Force.
The court, in its order of January 20, 1981, granting a preliminary
injunction, agreed with Norton on this issue in Conclusions of Law 6, 7,
and 8. While we feel that this position is supportable based on the
plain language of the statute, we feel that the better view is that the
Secretary of Defense has the authority to execute (a)(16) D&F's. As we
will show, this view is supported by the statutes establishing and
reorganizing the Department of Defense, and then expanding the power of
the Secretary of Defense over the Department, and by the legislative
history of those statutes. We note that on this issue, the court did
not have before it the arguments of DLA and Brunswick that are part of
our record.
While we recognize the rule of statutory construction cited by
Norton, there is an equally important countervailing rule of
construction applicable here. If the plain language of a statute would
lead to an unintended result, one may look beyond the plain language in
order to ascertain the meaning of the statute. United States v.
American Trucking Ass'ns, 310 U.S. 534(1939); United States v. Mendoza,
565 F.2d 1285 (5th Cir. 1978). The exclusion of the Secretary of
Defense from the group of officials designated to make (a)(16) and other
D&F's may have been intended, and may not have been unreasonable in the
late 1940's when his authority and role were unclear, but later
legislation changing DOD and expanding and clarifying the role of the
Secretary of Defense makes such a conclusion unreasonable in the
present.
The National Security Act of 1947, Pub. L. 80-253, July 26, 1947, 61
Stat. 495 (50 U.S.C. 401 note), established the predecessor to the
Department of Defense, the National Military Establishment, and the
office of Secretary of Defense. Section 202(a) of the act provided that
the Secretary's duties were to:
(1) Establish general policies and programs for the National Military
Establishment and for all of the departments and agencies therein;
(2) Exercise general direction, authority, and control over such
departments and agencies;
(3) Take appropriate steps to eliminate unnecessary duplication or
overlapping in the fields of procurement, supply, transportation,
storage, health, and research;
The same section contains the following proviso limiting the
Secretary's authority.
And provided further, that the Department of the Army, the Department
of the Navy, and the Department of the Air Force shall be administered
as individual executive departments by their respective Secretaries and
all powers and duties relating to such departments not specifically
conferred upon the Secretary of Defense by this Act shall be retained by
each of their respective Secretaries.
This was the "unification bill" referred to in the Armed Services
Procurement Act hearings quoted by Norton. Given the rather general
statement of supervisory control of the Secretary of Defense over the
military departments, and the retention of their status as executive
departments, it is not surprising that the Secretary was not included as
an agency head in 10 U.S.C. 2302 for the purposes of making specific
procurement decisions. Also, the nature and extent of unification was
controversial and unclear. If the relationship between the Secretary of
Defense and the individual military departments had remained the same,
it would not be unreasonable to conclude that the Secretary was
unauthorized to execute D&F's under 10 U.S.C. 2304. However, the
authority of the Secretary of Defense has been broadened and definitized
over the years in such a manner as to preclude that result.
The National Security Act Amendments of 1949, Pub. L. 81-216, 63
Stat. 578, made several relevant changes. The National Military
Establishment was changed to the Department of Defense and was made an
executive Department with cabinet-level status, while the Departments of
the Navy, Army, and Air Force were downgraded from executive departments
to military departments, thus, losing cabinet-level status. Also, the
statement of the duties of the Secretary of Defense was changed from the
previous "Exercise general direction, authority and control" over the
military departments, to "shall have direction, authority and control."
During the debate on the reported bill, S. 1843, Chairman Vinson of the
House Armed Services Committee, one of the primary architects of the
bill, made the following comments on that provision:
This sentence giving the Secretary direction, authority and control
is the heart of this legislation. * * * In order that there can be no
doubt as to what direction, authority and control mean, I want to give
you their meaning.
"Direction means the act of governing, management, superintends
(sic).
"Authority means legal power; a right to command: the right and
power of a public officer to require obedience to his order lawfully
issued in the scope of his public duties.
"Control means power or authority to manage, to direct, superintend,
regulate, direct, govern, administer, or oversee.
"So under this law the Secretary of Defense is to have clearcut
authority to run the Department of Defense."
The 1949 amendments also provided specific authority for the
Secretary of Defense to transfer, abolish or consolidate various
functions within the Department, subject to two restrictions. Section
202(c)(1) prohibited the Secretary from transferring "combatant
functions," and section 202(c)(5) required the Secretary to report to
Congressional oversight committees before transferring those functions
which were statutorily authorized.
All other functions could be transferred, abolished, or consolidated
without restriction.
Problems in DOD organization was the subject of a 1953 report by the
Rockefeller Committee on Department of Defense Organization. That
report included a memorandum of law concerning the authority of the
Secretary of Defense, under the National Security Act, as amended.
While the report is obviously not part of the legislative history of the
act, many of its recommendations were adopted by the Congress in
Reorganization Plan No. 6, H. Doc. 136, 83d Cong., 1st sess., 67 Stat.
638, and it was incorporated in the House Committee on Armed Services
print of the act. It is reasonable to conclude that Congress was aware
of and approved of the report's findings and conclusions. In a
statement particularly relevant to this case, the memorandum of law in
the report concluded that:
* * * (t)he power and authority of the Secretary of Defense is
complete and supreme. It blankets all agencies and all organizations
within the Department; it is superior to the power of all officers
thereof * * * . The fact that statutes have been passed subsequent to
the 1949 amendments to the National Security Act which statutes confer
specific authorities on a Secretary of a particular military department
or other subordinate officer of the Department does not detract from the
supreme authority of the Secretary of Defense. Once supreme authority
is established it need not be repeatedly mentioned. On the contrary, it
would require a most specific and emphatic statement to restrict or
detract from the supreme authority conferred on the Secretary of Defense
* * * . National Security Act of 1947, Rept. No. 93-21 of House Comm.
on Armed Services (1973), pp. 55-56.
Certainly, this logic is even more applicable to such statutes passed
before the 1949 amendments, since the legislators responsible for those
statutes obviously could not have foreseen the scope of authority
granted the Secretary by the amendments. Essentially, the 1949
amendments changed those statutes by implication.
The Department of Defense Reorganization Act of 1958, Pub. L. 85-599,
72 Stat. 514, 50 U.S.C. 401, further clarified the authority of the
Secretary of Defense generally, and specifically, as it relates to the
integration of supply and service functions. Section 2 changed the
phrase "to provide three military departments, separately administered"
to:
* * * provide that each military department shall be separately
organized under its own Secretary and shall function under the
direction, authority, and control of the Secretary of Defense.
This makes the subordination of the military departments and their
Secretaries to the Secretary of Defense even more clear.
Most importantly, the act clarified the authority of the Secretary to
transfer and consolidate most procurement functions without restriction.
The so-called McCormack amendment, Sec. 202(c)(6) of the National
Security Act of 1947, as amended, provides that:
Whenever he Secretary of Defense determines it will be advantageous
to the Government in terms of effectiveness, economy, or efficiency, he
shall provide for the carrying out of any supply or service activity
common to more than one military department by a single agency or such
other organizational entities as he deems appropriate.
For the purposes of this paragraph, any supply or service activity
common to more than one military department shall not be considered a
"major combatant function" within the meaning of paragraph (1) hereof.
The final sentence refers to restrictions discussed earlier placed on
the transfer, abolition or consolidation of major combatant functions.
We think that these statutes make it clear that the Secretary of
Defense has been given direct control and authority over all of the
officers of the military departments, and that the Secretary of Defense
must have all of the authority granted to those officers, subject to the
restrictions contained in the statutes. The McCormack amendment, in
particular, made it clear that the Secretary has complete discretion to
consolidate or transfer common procurement functions. In that context,
it seems unreasonable to conclude that the Secretary is not an agency
head for purposes of making D&F's under the Armed Services Procurement
Act for procurements falling within the scope of his authority under the
McCormack amendment. While Congress could have amended the Armed
Services Procurement Act to reflect the Secretary's authority, that was
not really necessary since it had already implicitly granted the
authority in the statutes discussed above.
Norton argues that even if we determine that the Secretary of Defense
is an agency head under 10 U.S.C. 2302, 10 U.S.C. 2311 prohibits the
delegation of the authority to any other DOD official. We disagree.
Section 2302 includes as agency heads, in addition to the Secretaries of
the Army, Navy, or Air Force, the Under Secretary or any Assistant
Secretary of those departments. If one agrees with the line of
reasoning that we have followed to conclude that the Secretary of
Defense is an agency head, then logic dictates that his subordinates in
the Defense Department that are greater or equal in rank to the
Secretaries, Under Secretaries or Assistant Secretaries of the military
departments are also agency heads for the purposes of the statute.
Therefore, the Under Secretary for Research and Engineering is a head of
an agency for the purposes of the statute.
The conclusions reached above concerning the Secretary of Defense and
the Under Secretary, are further supported by Congress' knowledge of and
acquiescence in the Secretary's formation of the Defense Supply Agency
(now DLA). The Secretary of Defense created DSA in November 1961. DOD
Directive 5105.22 (Nov. 6, 1961). The stated purpose of DSA was to
"(provide) the most effective and economical support of common supplies
and services to the military departments and other DOD components." The
Administrator of DSA was given the following authority:
To meet the needs of the military services and other authorized
customers, conduct, direct, supervise and control all procurement
activities with respect to property, supplies and services assigned for
procurement to DSA in accordance with applicable laws, the Armed
Services Procurement Regulations, and other DOD regulations.
To the extent that any law or executive order specifically limits the
exercise of such authority to persons at the Secretarial level of a
military department, such authority shall be exercised by the ASD (I &
L) (Assistant Secretary of Defense-- Installation and Logistics).
On May 10, 11, and 14, 1962, the Military Operations Subcommittee on
the House Committee on Government Operations held hearings concerning
the creation of DSA, including discussion of the above Directive,
Congress did not disapprove of the creation of DSA, or the authority
granted to the ASD (I & L). The authority granted the ASD (I & L)
above, was transferred to the Under Secretary for Research and
Engineering on April 20, 1977, by the Secretary of Defense. Where
Congress has had before it an agency's view of a statutory scheme and
does not disapprove of that view, it must be entitled great weight.
Constanzo v. Tillinghast, 287 U.S. 341, 345(1932).
Additionally, in a letter to the Chairman of the Special Subcommittee
on Defense Agencies, House Committee on Armed Services, GAO concluded
that the DSA had the authority to contract for common items under the
procedures set forth at 10 U.S.C. 2301, et seq., B-140389, July 10,
1962.
While the arguments of DLA and Brunswick seem to imply that the
Secretary of Defense, by virtue of his general supervisory powers, could
delegate his authority to make (a)(16) D&F's to any DOD official that he
selected, we think that the intent and purpose of 10 U.S.C. 2311 would
be violated by permitting anyone other than an Under Secretary or
Assistant Secretary to make such D&F's. Therefore, we think that the
Principal Deputy was not authorized to make the D&F in question.
Consequently, we must resolve the issue of whether the Under Secretary's
signing of the D&F on December 24, 1980, constituted "making" the D&F.
Norton contends that the Under Secretary, in reissuing the December 8
D&F, did no more than rubber stamp the work of the Principal Deputy.
The protester claims that the Under Secretary did not generate any
written documents of his own, did not verify the data in the D&F, and
did not perform any independent analyses. This argument is based on the
Under Secretary's deposition taken in connection with the civil suit
filed by Norton. Norton also relies on the Under Secretary's statement,
in the deposition, that he spent "more than a few minutes and less than
an hour" in reviewing the D&F and supporting documents, as evidence of
the Secretary's cursory review.
Therefore, Norton argues, the D&F is void because the Under Secretary
did not "make" the D&F as required by 10 U.S.C. 2310(b)(1976) which
states that:
Each determination or decision under clauses (11)-(16) of section
2304(a) * * * shall be based on a written finding by the person making
the determination or decision.
The court, in its order of January 20, 1980, found that the Under
Secretary had not:
* * * exercised the careful, independent, high level decision making
process envisioned by 10 U.S.C. 2304(a)(16), and section 2310 and 2311.
See Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402 (1971);
Portland Cement Assn'n v. Ruckelhaus, 486 F.2d 375 (D.C. Cir. 1973),
cert. denied, 417 U.S. 921(1974).
We must respectfully disagree with the court's preliminary findings.
In Overton Park, supra, the leading Supreme Court case permitting a
decisionmaker's mental processes to be probed to determine the reasons
for an administrative decision, the court stated that inquiry into the
mental processes of decisionmakers is usually to be avoided. In a case
where there are no written findings it is appropriate to examine mental
processes because there may be no other effective way to review the
decision. Where there are administrative findings supporting the
decision, there must be a strong showing of bad faith or improper
behavior before a court may inquire into the mental processes of the
decisionmaker. Here, there are written findings explaining the
determination, and no showing of bad faith or improper behavior has been
made. Therefore, we will not examine the mental processes of the Under
Secretary to determine the extent of his personal involvement in making
the D&F.
Norton argues that the 10 U.S.C. 2304(g) mandate that formal
advertising be used whenever "feasible and practicable" will be violated
in this case. Norton contends that the D&F and other information do not
support the determination to not formally advertise the procurement.
Assuming arguendo that negotiation is justified, Norton contends that
the negotiation must be competitive, not sole source.
For the following reasons, we find that not only is negotiation
justified, but sole-source negotiation is proper. We have previously
found that sole-source awards may properly be made under (a)(16).
National Presto Industries, Inc., B-195679, December 19, 1979, 79-2 CPD
418; Braswell Shipyards, Inc., B-188286, June 24, 1977, 77-1 CPD 454;
Etamco Industries, B-187532, February 25, 1977, 77-1 CPD 141. In
reviewing the propriety of a determination to negotiate, whether sole
source or competitively, under (a)(16) our Office will not disturb the
findings justifying the determination, since they are final.
10 U.S.C. 2310(b), National Presto Industries, Inc., supra. We will,
however, review whether the findings of fact legally support the
determination to negotiate. Id.
The decision to negotiate solely with Brunswick is grounded on the
following findings of fact in the D&F. Norton has been the sole
supplier of butyl gloves to the Government, and its two plants do not
possess the maximum capacity needed to meet mobilization requirements in
the event of an emergency. The use of two separate sources rather than
an expansion of the previous sole source, to increase the capacity, is
needed to protect DOD from disruptions in deliveries attributable either
to labor disputes or management decisions of a single manufacturer which
are beyond the Government's control. Only two sources are currently
qualified as planned producers, Norton and Brunswick. Planned producers
are firms which, after being examined by DLA for technical expertise,
capability and other such factors, are invited to participate in the DOD
Industrial Preparedness program and which make a commitment to maintain
their production capability for items vital to national defense.
According to DLA, eight firms were surveyed, three were invited to
participate, and Norton and Brunswick made the required commitments.
Based on these findings, the D&F concluded that formal advertising or
competitive negotiation might result in award to a firm that is not a
planned producer, and the mobilization base would not be strengthened.
Norton has attacked a number of the facts claiming that they are
inaccurate or merely state conclusions. However, as we stated above,
such factual findings are final, and will not be disturbed by our
Office. Given the validity of those findings we think that a
sole-source award is not unreasonable. As we stated in National Presto,
supra:
In a procurement negotiated under 10 U.S.C. 2304(a)(16)(1976), the
normal concern with insuring maximum competition is secondary to the
needs of industrial mobilization. The award of a contract for current
needs becomes not only an end in itself, but a means to another goal--
the creation and/or maintenance of mobilization capacity. Contracts are
awarded to particular plants or producers to create or maintain their
readiness to produce essential military supplies in the future.
In a related argument, Norton contends that (a)(16) may not be used
to create a new source, especially if to do so will weaken an existing
source. Norton, however, fails to support this assertion with any
citation to statutes, regulations, or cases. On the other hand,
language in two of the examples of situations when the use of (a)(16)
should be considered, listed at DAR Sec. 3-216.2, can reasonably be read
as contemplating creation of new suppliers. Section 3-216.2(i) states
that (a)(16) is appropriate to use when negotiation is necessary to
"make available" vital suppliers of facilities. Section 3-216.2(ii)
states that (a)(16) may be used when it is necessary to train selected
suppliers.
Certainly, none of the examples precludes creation of a new supplier.
Additionally, dicta in several of our decisions refer to using (a)(16)
to create a new supplier. For example, in the above quotation from
National Presto, we mentioned using (a)(16) to award contracts to
particular producers to "create or maintain" their production capacity.
Also, in Etamco, we stated that:
* * * it is well established that where the setting up of an
additional producer is in the interest of national defense, a contract
may be negotiated under 10 U.S.C. 2304(a)(16).
In the absence of a specific prohibition, we see no reason why
(a)(16) may not be used to create a new supplier in order to expand the
industrial mobilization base.
Norton argues that in this case the mobilization base will be
weakened not strengthened because it will be forced to lay-off one-third
of its employees, and perhaps close one of its plants. We note that
under the questioned D&F, the total current glove requirements are to be
divided between Norton and Brunswick. Based on information supplied by
Norton, DLA has determined the proportion of the requirement that Norton
needs in order to keep its plants open, and plans to award that amount
to Norton. Even assuming that DLA's estimates are incorrect and
Norton's productive capacity may be weakened, the finding by the Under
Secretary that the mobilization base will be better served by having two
separate sources encompasses such potential occurrences and is not
reviewable by us.
Norton contends that the D&F is void ab initio because it does not
contain a statement of the hazards of relying on present sources, and
the time required for a new source to achieve the production capacity
necessary to meet mobilization requirements, as required by DAR Appendix
J-200(f)(ix)(C).
The D&F clearly states the hazards of relying on only the present
source, as was discussed above, and the Justification for Authority to
Negotiate includes the other information mentioned by Norton.
Therefore, this argument is not supported by the facts.
Norton also argues that an economic analysis, comparing the
alternatives of stockpiling gloves or increasing production capacity,
was not performed as required by DOD Directive 4005.1. However, an
affidavit by a DLA procurement analyst, indicates that while an economic
analysis was considered to be futile due to constraints on stock
buildups imposed on DLA, one was prepared anyway. The Under Secretary,
in his deposition, could not recall whether he had seen such an
analysis.
DOD Directive 4005.1 states that such an analysis should be done "as
applicable." Here, it appears that the analysis may not have been
applicable due to the constraints on stockpiling. In any event, it was
prepared. Whether or not the Under Secretary in fact considered the
analysis, is not for us to review, since that would involve probing his
mental processes, which we have decided is inappropriate.
Finally, Norton argues that it is impermissible to award a letter
contract to Brunswick. Since we have concluded that a sole-source award
to Brunswick is proper in these circumstances, we fail to see how Norton
can be prejudiced by the award of a letter contract. Therefore, we see
no reason to consider this argument.
The protest is denied.
B-198246, March 31, 1981, 60 Comp.Gen. 339
Mileage - Travel by Privately Owned Automobile - Constructive Cost -
Taxicab Travel - To and From Common Carrier Terminals - Employee
Passenger in Vehicle of Other Than Government Employee
Employee on temporary duty was driven by friend in latter's
automobile to airport for return flight to official duty station.
Employee's claim for mileage and parking fee may be paid to the extent
it does not exceed cost of taxicab fare and tip. Decisions limiting
reimbursement for travel with private party to actual expenses paid to
private party apply only to regular travel on temporary duty, not travel
to and from common carrier terminals.
Matter of: Linda A. Johnson - Reimbursement for Travel to Airport,
March 31, 1981:
This decision responds to a request from Ronald Boomer, a certifying
officer with the General Services Administration (GSA), Region 10,
concerning a voucher submitted by Ms. Linda A. Johnson, a GSA employee,
for mileage and parking fees incurred during temporary duty travel. The
issue presented is whether Ms. Johnson may be reimbursed for mileage and
parking fees incurred when a friend drove Ms. Johnson to the airport at
the temporary duty station.
Ms. Johnson traveled from Auburn, Washington, to San Francisco,
California, to attend a training seminar for the period September 24-28,
1979, and she elected to remain in San Francisco on personal business
over the weekend, September 29-30.
On Sunday, September 30, Ms. Johnson was driven by a friend in the
friend's automobile from the friend's residence to the San Francisco
Airport, and for this trip Ms. Johnson has claimed mileage (26 miles
times 18 1/2 cents per mile) of $4.81 and a parking fee of $1. Since
the privately owned vehicle was not owned by Ms. Johnson, the agency
questioned whether she may be reimbursed for round-trip mileage to
exceed the cost of a taxicab fare or only for the actual expense she
paid to the driver for gas, oil, tolls, etc.
Under the authority of 5 U.S.C. 5704(1976) and the implementing
regulations contained in the Federal Travel Regulations (FTR) (FPMR
101-7), employees who use a privately owned vehicle (POV) on official
business may be reimbursed for mileage, parking fees, and other
expenses. For travel to and from common carrier terminals, the FTRs
permit reimbursement for round-trip mileage to the extent that it does
not exceed the cost of taxicab fare, including tip. See FTR paras.
1-4.2c and 1-2.2d.
Neither the Federal Travel Regulations nor our decisions limit the
payment of mileage under these circumstances to travel in a POV owned by
the employee. Therefore, we have no objection to the payment of mileage
to an employee on temporary duty for travel to or from common carrier
terminals, regardless of who owns or operates the POV.
In the present case, the voucher reviewer denied Ms. Johnson's claim
based on GSA's internal regulations, Order OAD P 7620.7, chapter
4-21.1a, which limits reimbursement for employees traveling as a
passenger in a POV owned and operated by a person not raveling on
Government business. This internal regulation reflects prior decision
of this Office limiting reimbursement under such circumstances to the
amount paid by the employee to the driver of the vehicle for gasoline,
oil, tolls, parking fees, etc., not to exceed the cost of common carrier
travel. Walter D. Felzke, B-191282, September 29, 1978; B-152030,
August 15, 1963; B-150486, February 1, 1963; and B-147455, November
21, 1961. Those decisions related to employees traveling to and from
temporary duty stations. In view of the round trip mileage authority in
the FTRs above, we do not believe that the rule set forth therein should
be applied to automobile travel to and from common carrier terminals.
Therefore, we find that GSA's internal regulation should be construed to
relate to temporary duty travel and not to apply to travel to and from
common carrier terminals.
Accordingly, we hold that Mr. Johnson's claim for mileage and the
parking fee may be paid if otherwise proper.
B-198211, March 26, 1981, 60 Comp.Gen. 336
Transportation - Household Effects - Overseas Employees - Weight
Limitation - Local Movement
A civilian employee of the Air Force was authorized local drayage of
household goods incident to his moving from local economy to Government
quarters. The maximum weight which may be drayed at Government expense
and charged as an operating expense of the installation concerned should
not exceed 11,000 pounds consistent with 5 U.S.C. 5724(a)(2). Where the
household goods shipment of the employee exceeds the maximum limitation
as determined by an appropriate official, then the employee is liable
for the excess costs. Transportation - Household Effects - Weight
Limitation - Administrative Determination
The question of whether and to what extent authorized weights have
been exceeded in the shipment of household effects is a question of fact
considered to be a matter primarily for administrative determination and
ordinarily will not be questioned in the absence of evidence showing it
to be clearly in error. The Air Force has correctly made that
determination based on regulations which provide for constructive weight
based on 7 pounds per cubic foot of properly loaded van space. Lower
cubic foot measurement of 5.7 pounds within Germany pertains only to
military members and is not applicable here.
Matter of: Donald W. Combs - Drayage Between Local Quarters - Excess
Weight Charge, March 26, 1981:
This action is in response to a request for a decision submitted by
the Assistant Secretary of the Air Force (Manpower, Reserve Affairs and
Installations) concerning the weight of household goods which may be
drayed at Government expense for a civilian employee of the armed
forces. The matter was forwarded here through the Per Diem, Travel and
Transportation allowance Committee (PDTATAC Control No. 80-10).
The submission states that Mr. Donald W. Combs was transferred to
Germany in July 1977 from Fort Monmouth, New Jersey. At the time of his
permanent change of station, Mr. Combs elected to occupy Government
quarters and the amount of household goods which he was authorized to
ship to Germany was restricted to 6,796 pounds pursuant to Volume 2,
Joint Travel Regulations (JTR) para. C8002-1b. His actual shipment
weighed 6,510 pounds and 4,400 pounds of household goods were placed in
nontemporary storage at Government expense. Upon arrival in Germany,
Government quarters were not available and Mr. Combs moved into economy
quarters with his family. In May 1978, Mr. Combs was assigned and moved
into Government quarters. In connection with the move to these
quarters, Mr. Combs was authorized drayage of his household goods in
accordance with 2 JTR para C8006. Although his household goods were not
weighed at that time, a constructive weight was established at 8,631
pounds and Mr. Combs was billed $46.37 for the excess weight. The
excess weight was computed based on a total weight allowance of 11,000
pounds minus the weight of goods in nontemporary storage.
The regulation which authorizes drayage of household goods for
civilian employees of the armed forces is contained in 2 JTR para.
C8006.
That section states that drayage of an employee's household goods is
authorized when, for the convenience of the Government, the local
commander issues written orders directing the employee to change his
local place of residence. The regulation also states that the authority
for drayage will not be used in connection with an authorized permanent
change of station and that the cost of the drayage will be charged as an
operating expense of the installation concerned. This is in conformity
with decisions of this Office. 52 Comp.Gen. 293(1972); B-163088,
February 28, 1968. The provisions for local drayage in 2 JTR para.
C8006 do not limit the amount of household goods which may be drayed at
Government expense and the statute which limits expenses for moving
household goods to 11,000 pounds specifically refers to permanent change
of station moves. See 5 U.S.C. 5724(a)(1), (2)(1976). However, in our
decision B-172276, July 13, 1971, this Office considered the local
movement of household goods for a Bureau of Indian Affairs employee as
an administrative cost of operating an installation, citing to B-163088,
supra. The employee shipped 11,025 pounds of household goods, and we
limited the allowance to 11,000 pounds consistent with 5 U.S.C.
5724(a)(2). Accordingly, local drayage should be limited to a maximum
of 11,000 pounds.
The Assistant Secretary has asked our Office to determine whether the
drayage weight limit should be lower than 11,000 pounds if the
employee's permanent change of station weight limitation is below 11,000
pounds. We believe that the determination of the employee's authorized
weight allowance is discretionary and should be decided by an
appropriate official of the Department of the Air Force prior to
movement.
Concerning Mr. Combs shipment of household goods, an appropriate
official determined the weight allowed for drayage on a total weight
allowance of 11,000 pounds minus the weight of the household goods in
temporary storage. We have no objection to such a determination since
it is consistent with regulations that provide that the weight of the
household goods placed in storage, plus the weight of the household
goods shipped, will not exceed the employee's applicable weight
ALLOWANCE. 2 JTR PARA. C8002-3C(1). WE ALSO NOTE HERE THAT MR. COMBS
was authorized 11,000 pounds for his local move by the Family Housing
Office.
Finally, the Assistant Secretary has asked us to determine what Mr.
Combs liability is in this case. Since he was only authorized drayage
for 11,000 pounds minus the amount in nontemporary storage, and he
exceeded that amount, he is liable for the excess.
This Office has always followed the general rule that the question of
whether and to what extent authorized weights have been exceeded in the
shipment of household effects is a question of fact considered to be a
matter primarily for administrative determination and ordinarily will
not be questioned in the absence of evidence showing it to be clearly in
error. Robert W. Dolch, B-197008, February 20, 1980. The Air Force has
correctly made that determination on the basis of 2 JTR para. C800-2d,
which provides for a constructive weight based on 7 pounds per cubic
foot of properly loaded van space. This provision is based, in turn, on
the Federal Travel Regulations, para. 2-8.2b(4) (FPMR 101-7, May 1973).
Thus, the provision in 1 JTR, para. M8002-4 which provides for a lower
cubic measurement of 5.7 pounds per cubit foot, within Germany, pertains
only to military members and is not applicable in Mr. Combs case.
The questions presented in the submission are answered accordingly.
B-199918.2, March 25, 1981, 60 Comp.Gen. 331
Equipment - Automatic Data Processing Systems - Rental v. Purchasing
Equipment - Funding Availability - Notice to Offerors
Allegation that protester should have received award under proper
application of solicitation provision stating that award would be made
to technically acceptable proposal offering lowest systems life cost,
subject to availability of funds for that method of acquisition, is
without merit where agency reasonably concluded that funds were not
available for exercise of purchase option under protester's lowest cost
lease with option to purchase offer.
Matter of: Interscience Systems, Inc., March 25, 1981:
Interscience Systems, Inc. protests the award of a contract to Sperry
Univac under request for proposals (RFP) No. N00600-80-R-5358 issued by
the Naval Regional Contracting Office, Washington, D.C.
The procurement was for certain Univac-compatible peripheral
automated data processing (ADP) equipment and related items. The RFP
solicited offers for a 48-month systems life on four possible methods of
acquisition (MOAs): purchase, lease with option to purchase (LWOP),
full payout lease, and straight rental.
Interscience contends that it should have received the award under a
proper application of the solicitation's evaluation and award criteria,
which provided in pertinent part as follows:
The proposal from a responsible offeror validated as being
technically acceptable and offering the lowest (present value
discounted) systems life cost, price and other factors considered, shall
be selected for award, subject to the availability of funds for the
proposed MOA.
The Navy rejected Interscience's LWOP proposal, even though it was
technically acceptable and offered the lowest systems life cost, because
it found that funds were neither available nor budgeted and could not
reasonably be expected to become available for the purchase portion of
that MOA.
"Interscience contends that this conclusion was unreasonable, that
Navy's efforts to make funds available by reprogramming were inadequate,
and that section 101-35.206(e) of the Federal Property Management
Regulations (FPMR), 41 C.F.R. 101-35.206(e)(1980), requires that award
be made on an LWOP basis in these circumstances.
We find their allegations to be without merit and deny the protest.
The Navy advises that after systems life cost evaluations were
completed, the cognizant Navy budget representatives were briefed by the
contracting officer. These representatives were advised that the lowest
evaluated systems life cost was LWOP at the end of 12 months (offered by
Interscience, which was not identified). Accordingly, in order to take
advantage of this offer, lease funds would be required in Fiscal Year
(FY) 1980 and purchase funds would be required in FY 1981 (and possibly
FY 1982, depending upon the delivery date of the equipment.
The contracting officer was advised by the budget representatives
that no purchase funds were available, or budgeted, nor could any be
expected bo become available for exercise of the purchase option in
either FY 1981 or FY 1982, and that attempts to obtain funds through
reprogramming (the method by which agencies shift funds within an
appropriation account from one program to another) had been
unsuccessful.
The contracting officer was also informed that no funds were
available for outright purchase (also offered by Interscience, which has
not protested the rejection of its proposal on this basis), the next
lowest evaluated systems life cost MOA. Consequently, award was made to
Univac on a straight rental basis since it offered the third lowest
evaluated systems life cost and lease (rental) funds were available in
FY 1980 and budgeted for FY 1981.
Interscience argues that despite the fact that the contracting
officer was advised that no funds for the exercise of the purchase
option were available, budgeted, or expected to become available, her
conclusion that funds were unavailable for the LWOP MOA was
unreasonable. In support of this contention, Interscience, pointing to
the solicitation's "Availability of Funds for Next Fiscal Year" clause,
which stated in part that "funds are presently not available for
performance under this contract beyond 1980," argues that funds for the
LWOP MOA were no more unavailable after FY 1980 than funds for the
rental MOA. In addition, Interscience argues that it was improper and
unreasonable for the Navy to award to Univac on a rental basis "simply
because funds would need to be reprogrammed in a small amount" in the
future in order to take advantage of the lower cost LWOP offer.
First we believe it is apparent that the provision contained in the
solicitation's evaluation and award criteria, warning that award would
be "subject to availability of funds for the proposed MOA," is different
in intent and scope than the "Availability of Funds for Next Fiscal Year
Clause. The latter advised offerors that no funds had yet been
appropriated for FY 9181 and made the Government's obligation and legal
liability under the contract contingent on the future availability of
appropriated funds from which contract payments could be made. (In this
regard, the Navy advises that rental funds come from its appropriation
for operation and maintenance which is available for one fiscal year
only; a purchase, however, is funded out of a separate Navy procurement
appropriation ("Other Procurement, Navy") which is available for
obligation for three fiscal years.)
In contrast, the evaluation and award contingency establishes a
prerequisite to contract award rather than a limitation on the extent of
the Government's legal liability under the contract. As such, it cannot
legally be viewed as making award on a particular MOA dependent upon
future appropriations for that purpose, since award on any MOA covering
a fiscal year for which funds had not yet been appropriated would then
be impossible. The statement that award is "subject to availability of
funds for the proposed MOA" thus references a concern with the existence
and expectation of funds availability in a more general sense.
Consequently, the evaluation and award contingency establishes that
contract award is to be based on funds presently budgeted or
reprogrammable or, with respect to future fiscal years only, reasonably
expected to become available. We find nothing objectionable in this.
It seems apparent that in order for the Navy to reasonably determine the
availability of funds for MOAs which covered a 48-month systems life, it
not only had to consider whether funds were presently available but
also, to the extent possible, had to make a reasonable projection about
the future availability of funds for that purpose.
We believe that the contracting officer, having been advised by the
cognizant budget representatives that no funds for the exercise of the
purchase option were budgeted or expected to become available, and that
none could be reprogrammed, reasonably concluded that funds were not
available for the LWOP MOA. While it is true that as a consequence, the
LWOP proposal offering a lower evaluated systems life cost was rejected
in favor of a higher cost rental offer, it is significant that
Interscience's LWOP offer was only low if the Navy could take advantage
of the purchase option.
Without a reasonable expectation that it could do so, we believe that
award on that MOA would not have been in the best interests of the
Government.
Moreover, we believe that the contracting officer was justified in
her reliance on the advice of the cognizant budget representatives.
Indeed, we believe that she could no no more since these matters which
were outside the scope of her authority.
While Interscience questions the adequacy of the budget
representatives' financial review and reprogramming efforts, largely
because of the lack of any documentation in this regard, the Navy has
provided a detailed and persuasive defense of the conclusions reached.
Furthermore, we agree with the Navy that reprogramming is essentially an
internal agency matter and we are not convinced that any procedural
deficiency which may have occurred would provide any basis to sustain
this protest. See A.R.F. Products, Inc., 56 Comp.Gen. 201(1976), 76-2
CPD 541; LTV Aerospace Corporation, 55 Comp.Gen. 307(1975), 75-2 CPD
203. We also find no merit to Interscience's allegation that
preselection documentation of the details of the Navy's funding
decisions was mandated by FPMR Sec. 101-35.208, which requires that
documentation of the considerations taken into account and the basis for
an agency's decision on an MOA be prepared and available to Office of
Management and Budget examiners and the GSA as "necessary."
In addition, we find no merit to Interscience's contention that the
contracting officer's rejection of its proposal was unreasonable because
its acceptance would only entail reprogramming of funds in a small
amount in the future. Interscience apparently bases this argument on
the assumption that the only amount which would need to be reprogrammed
is the difference between the purchase price under the option and the
rental cost (for which funds were expected to be available) for the
fiscal year in which the option was exercised. This assumption is
erroneous since, as discussed above, funds for purchase and rental are
contained in separate appropriations and consequently are not
interchangeable through reprogramming, 31 U.S.C. 628(1976).
We now turn to Interscience's allegation that it was entitled to
award under FPMs Sec. 101-35.206(e), which is part of the General
Service Administration's (GSA) ADP and Telecommunications Management
Policy. It provides:
(e) Acquisition criteria. The following criteria shall be used to
determine the appropriate method of acquisition:
(1) The purchase method is indicated when all of the following
conditions exist:
(i) The comparative cost analysis, in consideration of all the
factors noted above, indicates that purchase will provide the Government
with the lowest overall cost.
(ii) The agency's approved budget contains funds intended for the
purchase, funds can be reprogrammed, or resources are available from the
GSA ADP Fund.
(2) The lease with option to purchase method is indicated when it is
necessary or advantageous to proceed with the acquisition of the
equipment that meets system specifications, but it is desirable to defer
temporarily a decision on purchase because circumstances do not fully
satisfy the conditions which would indicate purchase. This situation
might arise when it is determined that a short period of operational
experience is desirable to prove the validity of a system design with
which there is no previous experience.
(3) The straight lease method is indicated when it is necessary or
advantageous to proceed with the acquisition of equipment that meets
systems specifications and it has been established that any one of the
conditions under which purchase is indicated is not attainable.
Interscience argues that under subsection (2) LWOP was the
appropriate MOA. Interscience contends that it was "desirable to defer
temporarily a decision on purchase because circumstances (did) not fully
satisfy the conditions which would indicate purchase" since purchase
condition (ii), as set forth in subsection (1), was not met. In
addition, LWOP, was the lowest cost MOA, and despite the Navy's current
assessment of the situation, funds might still become available in the
future for the exercise of the purchase option.
The Navy asserts that contrary to Interscience's contention, straight
lease was the appropriate MOA under FPMR Sec. 101-35.206(e). The Navy
cites subsection (3) and argues that it was faced with precisely the
situation described therein: it had been conclusively established that
one of the conditions (condition (ii)) under which purchase is indicated
was not attainable.
We are not persuaded by Interscience's argument that subsection (2)
was applicable to the circumstances of this case. While the language
relied upon is quite broad and arguably susceptible to the
interpretation urged upon us, we note that the subsection goes on to
state that "This situation might arise when it is determined that a
short period of operational experience is desirable to prove the
validity of a system design with which there is no previous experience."
We recognize that this provides only an example of the circumstances
under which subsection (2) would apply, but we believe it does militate
against Interscience's contention that subsection (2) was applicable
here.
More importantly, we agree with the Navy that the situation before us
falls squarely within the scope of the subsection (3), straight lease,
since it has been established that one of the conditions under which
purchase is indicated is not attainable.
The Navy has shown that condition (ii) is not attainable since no funds
intended for purchase are budgeted, funds cannot be reprogrammed, and
resources are not available from the GSA ADP fund. While Interscience
points out that the Navy awarded the contract to Univac before it
ascertained that no funds were available from the GSA ADP fund, the Navy
was advised shortly thereafter that no funds were in fact available. It
is therefore clear that Interscience was not prejudiced by this
procedural deficiency.
Finally, Interscience asserts that the solicitation was deficient
because it did not inform offerors that funds were not available for
particular MOAs. However, the clause in the instant RFP making award
subject to the availability of funds for the proposed MOA did apprise
offerors that funds might not be available for a given MOA. While the
contracting officer apparently did not explore the budget situation
before issuing a solicitation, we are aware of no requirement that this
be done. See Scona, Inc., B-191894, January 23, 1979, 79-1 CPD 43.
Further, such a pre-issuance exercise may have been impracticable here
in any case, since the records show that the procurement was conducted
under what were considered to be urgent circumstances. Accordingly,
this contention does not provide a basis to sustain the protest.
Nevertheless, we agree with Interscience to the extent that where a
solicitation requests offers on a basis that would necessitate the
future availability of funds in order for that offer to be selected, a
reasonable investigation into the expectation of the availability of
such funds should be made before offers are solicited, if otherwise
practicable. By separate letter, we are advising the Secretary of the
Navy of our view.
The protest is denied.
B-200996, B-200997, March 18, 1981, 60 Comp.Gen. 327
Bids - Evaluation - Aggregate v. Separable Items, Prices, etc. -
Additives - Failure to Bid On - Bidder Submitting Lowest Base Bid
Protest that successful bids were nonresponsive for alleged failure
to bid on additive items is denied. Contracting agency determined not
to accept any additive items, properly determined lowest bids on basis
of work actually to be awarded (base bid item), and made awards on basis
of lowest bids for base bid items. Bids - Aggregate v. Separable Items,
Prices, etc. - Additives - Failure to Bid On - Funding (Control Amount)
Insufficiency for Base Bid Item - Later Award on Lowest Base bid Basis
Where, under Additive or Deductive Items clause, funding available
before bid opening was insufficient to cover even lowest base item bid,
award may properly be made if funds are subsequently acquired only to
bidder submitting lowest base bid.
Matter of: Martin J. Simko Construction, Inc., March 18, 1981:
Martin J. Simko Construction, Inc. (Simko), protests against the
award of two construction contracts to E. L. Shea, Inc. (Shea), under
invitations for bids (IFB) Nos. N-62472-80-B-0069 (IFB-0069) and
N62472-80-B-0094 (IFB-0094) issued by the Department of the Navy, Naval
Facilities Engineering Command. Simko contends that because Shea did
not bid on all the bid items in either IFB, its bids should have been
rejected as nonresponsive and the improperly awarded contracts should be
terminated and awards made to Simko.
Each IFB solicited a base bid (item 1) for the entire work, exclusive
of work to be performed under items 2 through 4 which were additive bid
items for additional desired features of construction. The IFBs
provided that the control amount, the funds available for each project,
was to be recorded prior to and announced at the bid opening, pursuant
to Defense Acquisition Regulation (DAR) Sec. 2-201(b)(xli), Defense
Acquisition Circular (DAC) No. 76-17, September 1, 1978, and that the
low bidder was to be determined in accordance with clause 21, "Additive
or Deductive Items," of the IFB's instructions to bidders. The clause
provides, in pertinent part, as follows:
The low bidder for purposes of award shall be the conforming
responsible bidder offering the low aggregate amount for the first or
base bid item, plus or minus * * * those additive * * * bid items
providing the most features of the work within the funds determined by
the Government to be available before bids are opened. * * *
The control amounts for the projects were $95,715 for IFB-0069 and
$95,217 for IFB-0094 and the following bids were received at the bid
openings:
IFB-0069 (TABLE OMITTED)
IFB-0094 (TABLE OMITTED)
The Navy awarded contracts to Shea under each IFB for item 1 in the
amount of $100,000, after additional funding was made available for
award in that amount.
Simko takes the position that paragraph 2(b) of section 00101 of the
IFB, which provides that "bidders shall state prices for each basis for
bid given hereinafter," requires that bidders bid on all bid items, and
that Shea's failure to bid on items 2 through 4 of either IFB rendered
its bids nonresponsive. Similarly, Simko argues that Atlantic Builders'
bid in response to IFB-0094 is also nonresponsive, leaving Simko the low
responsive bidder. The protester states that previously the Navy has
immediately disqualified bids which did not include bid prices for all
items in the manner set forth in the IFB, and that paragraph 5(b) of the
Standard Form (SF) 22, Instructions to Bidders (Construction Contract),
included in the IFB explicitly provides that a bid which is not
completed for all items under bid instructions "will be disqualified."
Simko asserts that contrary to the terms of the Additive and Deductive
Items clause, the Navy obtained additional funds and made awards to Shea
in amounts exceeding the pertinent control amounts.
Simko also claims that the rapidity with which the awards were made to
Shea indicates that the Navy waived its past practice of refusing to
make award until it received written confirmation of the bids
notwithstanding the fact that Shea's bid prices were almost 30 percent
below those of the next low bidder. Finally, Simko questions the fact
that Shea bid the same price for two completely different projects at
two different locations.
The Navy contends that the bidder's insertion "0" in response to
items 2 through 4 of the IFB's did not render their bids nonresponsive
because the pertinent control amounts dictated that only the base items
bid could be considered and, therefore, the awards were properly made to
Shea, citing our decision in Castle Construction Company, Inc.,
B-197446, July 7, 1980, 80-2 CPD 14. However, Simko asserts that the
Navy's reliance on Castle Construction Company, Inc., supra, is
misplaced because, unlike Shea and Atlantic, the successful bidder
inserted dollar prices in response to the additive bid items on the
solicitation in question.
Contrary to Simko's assertion, we have held that where, as here, a
solicitation which contains paragraph 5(b) of SF 22 does not elsewhere
explicitly require bidding on all items, insertion of other than a
dollar price for additive bid items does not render a bid nonresponsive.
Mitchell Brothers General Contractors, B-192428, August 31, 1978, 78-2
CPD 163.
Under the circumstances we cannot agree that the entry "0", rather
than a dollar price in response to the additive bid items makes the bids
nonresponsive. We have held that whan a bidder does not bid on additive
items, the firm runs the risk that its bid will be eliminated from
consideration as nonresponsive due to the omission only if the
evaluation process dictates acceptance of items on which the firm did
not bid. Castle Construction Company, Inc., supra; C. T. Bone, Inc.,
B-194436, September 12, 1979, 79-2 CPD 190; Mitchell Brothers General
Contractors, supra. In both procurements to which Simko objects,
however, bid evaluation pursuant to clause 21 and the pertinent control
amount did not permit acceptance of the items upon which Shea and
Atlantic bid "0." We therefore conclude that their bids were properly
determined to be responsive to the IFB's.
Simko apparently believes that regardless of the fact that the
control amount in each procurement is not sufficient to permit an award
of any of the additive bid items, award must be made on the basis of the
aggregate low bid for all four bid items. We cannot agree with the
protester's characterization of the terms of the solicitations and the
bids of Shea and Atlantic.
We believe that the IFB's unequivocally stated that the awardee would be
selected in accordance with the method prescribed in the Additive or
Deductive Items clause and could not reasonably be construed to require
an "all or none" bid. Utley-James, Inc., B-198406, June 16, 80-1 CPD
417. We have consistently held that bids are to be evaluated on the
basis of the work to be contracted for because any evaluation which
considers more than the work to be contracted for in determining the
lowest bidder does not accurately assess bid prices and fails to obtain
the benefits of full competition which is one of the primary purposes of
Federal procurement laws and regulations. Castle Construction Company,
Inc., supra; 50 Comp.Gen. 583, 585(1971).
With regard to the amount of the awards, we have held that where
funds determined available before bid opening are not sufficient to
cover the lowest base bid, a bidder may nonetheless be selected for
award under the Additive or Deductive Items clause and award can be made
if funds can be obtained only to the bidder submitting the lowest bid on
the least work. Utley-James, Inc., supra; B-170795, October 6, 1970;
DAR Sec. 2-201(b)(xi), DAC No. 76-17, September 1, 1978. Because the
applicable control amounts were not sufficient to cover Shea's low base
bids and the Navy selected Shea for the awards pursuant to the clause,
the awards could properly be made only to Shea (the lowest bidder) on
the base item (the least work) when funds in the amount of $100,000 were
obrained for each project.
Simko's contentions concerning the relationship of Shea's bid prices
to those of the other bidders and the fact that Shea bid the same price
on both IFB's appear to question the reasonableness of Shea's bid prices
as well as Shea's ability to perform the work at the price bid. Price
reasonableness is, however, a determination within the contracting
officer's discretion prerequisite to the making of an award and our
Office will object to the contracting officer's finding only upon a
showing of bad faith or fraud, which has not been made here. DAR Sec.
2-404.1(b)(vi) and 2-404.2(e). DAC No. 76-17, September 1, 1978;
Harris Systems Pest Control, Inc., b-198745, May 22, 1980, 80-1 CPD 353;
Penn Landscape & Cement Work, B-196352, February 12, 1980, 80-1 CPD
126. Whether Shea is capable of performing the work at the price bid is
a matter of determination of the successful bidder's responsibility, and
our Office does not review protests concerning affirmative
determinations of responsibility absent allegations of fraud on the part
of contracting officials or the failure to apply definitive
responsibility criteria.
Advertising Distributors of Washington, Inc., B-187070, February 15,
1977, 77-1 CPD 111. Finally, whether Shea fulfills its contractual
obligations at the price bid is a matter for the contracting agency in
the administration of the contracts. Bayou State Trucking Inc.--
Reconsideration, B-198850, August 29, 1980, 80-2 CPD 158.
The protests are denied.
B-201259, March 17, 1981, 60 Comp.Gen. 323
Prisons and Prisoners - Federal Prison Industries - Prison Industries
Fund - Status as Permanent or Continuing Appropriation - Donable
Property Purpose
Prison Industries Fund, established by 18 U.S.C. 4126 as operating
fund of Federal Prison Industries (FPI), constitutes permanent or
continuing appropriation even though amounts originally appropriated
have been returned to Treasury and Fund is self-sufficient, in view of
the fact that statute authorizes deposit into Treasury to credit to Fund
of receipts for prison industries products and services and authorizes
use of such funds for operation of FPI. Surplus personal property
acquired by the Fund thus is donable under 40 U.S.C. 484(j), since it
does not constitute nonappropriated fund property within meaning of
regulation excluding such property from donation (41 C.F.R.
101-44.001-3).
Matter of: Donation under 40 U.S.C. 484(j) of surplus personal
property of Federal Prison Industries, Inc., March 17, 1981:
The General Counsel of the General Services Administration (GSA) asks
whether surplus personal property under the control of Federal Prison
Industries, Inc. (FPI) may be disposed of by donation in accordance with
section 203(j) of the Federal Property and Administrative Services Act
of 1949, as amended, 40 U.S.C. 484(j)(1976) (Federal Property Act), and
its implementing regulations, 41 Cfr part 101-44(1979).
Section 203(j)(1) of the Federal Property Act authorizes the
Administrator of General Services to transfer surplus personal property
under the control of any executive agency to State agencies for donation
to qualified recipients. It provides that, in determining whether
property is to be donated, "no distinction shall be made between
property capitalized in a working-capital fund under (what is now 10
U.S.C. 2208), or any similar fund, and any other property." FPI, as a
wholly owned Government corporation (31 U.S.C. 846(1976)), is included
in the definition of "executive agency" for purposes of the Federal
Property Act 40 U.S.C. 472(a)(1976).
The regulations (41 CFR 101-44.001-3), following the statute, define
donable property in pertinent part as follows:
"Donable property" means surplus property under the control of an
executive agency (including surplus personal property in the working
capital funds established under 10 U.S.C. 2208 or in similar
management-type funds) except:
(d) Nonappropriated fund property.
The exclusion of nonappropriated fund property gives rise to the
present inquiry. The Assistant Attorney General for Administration has
expressed the view that the operating fund of FPI constitutes a
nonappropriated fund, and thus that personal property acquired with FPI
funds does not qualify as donable property under the regulation. For
the reasons indicated below, we conclude that FPI's operating fund
constitutes a continuing appropriation and that surplus personal
property originally acquired with FPI funds is donable under section
203(j).
The prison industries program had its origin in the Act of July 10,
1918 (ch. 144, 40 Stat. 896) and the Act of February 11, 1924 (ch. 17,
43 Stat. 6). The 1918 Act established a program to equip the Federal
penitentiary in Atlanta for the manufacture of textile products for the
Government. Section 5 of that Act authorized creation of a "working
capital" fund for carrying on the program. The Act of November 4, 1918
(ch. 201, 40 Stat. 1020, 1035) appropriated $150,000 to the working
capital fund. The 1924 Act established a similar program at the
Leavenworth penitentiary, and likewise authorized a working capital fund
to implement the program, Congress appropriated $250,000 to that working
capital fund by the Act of April 2, 1924 (ch. 81, 43 Stat. 33, 45).
The working capital funds for the Atlanta and Leavenworth programs
were consolidated by section 4 of the Act of May 27, 1930 (ch. 340, 46
Stat. 391) as part of a grant of authority in section 3 of that Act to
the Attorney General to extend the prison industries program to all
Federal penal institutions. Section 5 of the 1930 Act provided for the
capitalization of the consolidated fund:
All money appropriated for, or now on deposit with the Treasurer of
the United States to the credit of the said working-capital funds at
Atlantic Penitentiary and Leavenworth Penitentiary, shall be credited to
the consolidated prison industries working-capital fund herein
authorized. All money received from the sale of the products or
by-products of such industries as are now or hereafter established, or
for the services of said United States prisoners, shall be placed to the
credit of said prison industries working-capital fund, which may be used
as a revolving fund. There are authorized to be appropriated such
additional sums as may from time to time be necessary to carry out the
provisions of this Act.
A major change in the form of the prison industries program was
accomplished by the Act of June 23, 1934 (ch. 736, 48 Stat. 1211).
Section 1 of that Act (codified at 18 U.S.C. 4121(1976)) authorized
the President to establish FPI as a Government corporation. The change
to corporate status was intended to allow existing prison industries to
operate on a large scale and to broaden the fields in which the program
could operate. Such expansion of scale was considered necessary to
accomplish the statutory purpose of providing employment to all inmates
in Federal institutions. See, e.g., S. Rep. No. 73-1377, 73d Cong.,2d
Sess. 2(1934).
Section 4 of the 1934 Act (codified at 18 U.S.C. 4126(1976)
authorized creation of a "Prison Industries Fund" to be composed of " *
* * all balances then standing to the credit of the prison industries
working capital fund." This new Fund was characterized as a "permanent
and indefinite revolving fund" for the operation of FPI. S. Rep. No.
73-1377, supra.
The substance of the 1934 Act was retained in 18 U.S.C. 4126, except
for changes in phraseology and the omission of language directing the
transfer of funds between the two working capital funds. The current
version of the statute provides as follows:
All moneys under the control of Federal Prison Industries, or
received from the sale of the products or by-products of such
Industries, or for the services of federal prisoners, shall be deposited
or covered into the Treasury of the United States to the credit of the
Prison Industries Fund and withdrawn therefrom only pursuant to
accountable warrants or certificates of settlements issued by the
General Accounting Office.
All valid claims and obligations payable but out of said fund shall
be assumed by the corporation.
The corporation, in accordance with the laws generally applicable to
the expenditures of the several departments and establishments of the
government, is authorized to employ the fund, and any earnings that may
accrue to the corporation, as operating capital in performing the duties
imposed by this chapter; in the repair, alteration, erection and
maintenance of industrial buildings and equipment; in the vocational
training of inmates without regard to their industrial or other
assignments; in paying, under the rules and regulations promulgated by
the Attorney General, compensation to inmates employed in any industry,
or performing outstanding services in institutional operations, and
compensation to inmates or their dependents for injuries suffered in any
industry or in any work activity in connection with the maintenance or
operation of the institution where confined. In no event shall
compensation be paid in a greater amount than that provided in the
Federal Employees' Compensation Act.
This Office has consistently regarded statutes which authorize
collection of receipts and their deposit in a specific fund, and which
make the fund available for a specific purpose, as constituting
continuing or permanent appropriations. 57 Comp.Gen. 311, 313(1978);
50 id. 323, 324(1970); 35 id. 615, 618(1956); 35 id. 436, 438(1956).
In this case, we conclude that, by authorizing deposit of receipts from
sales of FPI products into a special account to be used for operation of
FPI, 18 U.S.C. 4126 in effect makes a continuing appropriation of those
revenues for authorized expenditures of FPI.
Our decision in 35 Comp.Gen. 436(1956) is particularly relevant.
That decision involved the status of the Farm Labor Supply Fund, which
was created as a source of working capital for expenses incurred by the
United States in transporting and maintaining Mexican agricultural
workers employed on a temporary basis in the United States.
A total of $1,000,000 was originally appropriated to the Fund, but the
statute required that the employers who made use of the agricultural
workers reimburse the Fund for the expenses incurred by the Government.
As a result, the original appropriation was returned to the Treasury
within 1 year. From that time on, the Fund was financed exclusively
through collections from the employers.
Despite the fact that the Farm Labor Supply Fund was self-sufficient,
this Office determined that the Fund constituted a permanent
appropriation. The employers' payments were held to constitute money
collected for the use of the United States, and, in the absence of the
statute establishing the Fund, they would have been deposited to the
Treasury as miscellaneous receipts (31 U.S.C. 484(1976)). Because
Congress had by statute directed deposit of the payments into the Fund
instead, it was regarded as having created a continuing appropriation of
those funds.
The Prison Industries Fund originated with appropriated funds derived
from the seminal programs at the Atlanta and Leavenworth penitentiaries.
No direct appropriations were again made to the Fund, which became
self-supporting soon after its creation. (By 1952, for example, a total
of $20,400,000 had been paid into the Treasury as dividends. See H.R.
Doc. No. 96, 83d Cong., 1st Sess. (1953).) However, under the decisions
cited above, the fact that the original amounts appropriated have been
paid back into the Treasury does not change the character of the Prison
Industries Fund as an appropriated fund.
A narrower interpretation of the term "appropriation" to include only
moneys appropriated from the general fund of the Treasury for a specific
purpose would not be consistent with our prior decisions or the
statutory definition of the term in the Budget and Accounting Act of
1921, 31 U.S.C. 2(1976). That definition reads as follows:
The term "appropriations" includes, in appropriate context, funds and
authorizations to create obligations by contracts in advance of
appropriations or any other authority making funds available for
obligation or expenditure.
To similar effect, we conclude that funds of the St. Lawrence Seaway
Development Corporation, a Government corporation, constitute
appropriated funds despite the fact that they derive from user fees. In
that regard, we noted, * * * it is our view that any time the Congress
specifies the manner in which a Federal entity shall be funded and makes
such funds available for obligation or expenditure, that constitutes an
appropriation, whether the language is found in appropriation act or in
other legislation." B-193573, December 19, 1979.
Since we conclude that the Prison Industries Fund is not a
nonappropriated fund within the meaning of 41 CFR 101-44.001-3, personal
property acquired through the Fund does not constitute "nonappropriated
fund property." Donation of surplus personal property under the control
of FPI in accordance with section 203(j) of the Federal Property Act,
thus is not barred.
B-201146, March 17, 1981, 60 Comp.Gen. 321
CONTRACTS - SPECIFICATIONS - AMENDMENTS - ACKNOWLEDGEMENT - ORAL
Unacceptable With Respect to Material Amendments
Failure to acknowledge amendment in writing prior to bid opening
usually renders bid nonresponsive and that failure cannot be cured by
oral acknowledgment or discussions concerning amendment prior to bid
opening. Prior decisions inconsistent with this rule are overruled (60
Comp.Gen. 251(1981) and B-185198, Feb. 24, 1976).
Matter of: MET Electrical Testing, Inc., March 17, 1981:
MET Electrical Testing Company, Inc. (MET), protests the rejection of
all bids and subsequent cancellation of solicitation No.
N62477-80-b-8455 for maintenance servicing at the Washington Navy Yard.
MET initially argued that its bid was improperly rejected as
nonresponsive for failure to acknowledge an amendment to the
solicitation containing revised wage rates. MET's position is that it
orally acknowledged the amendment by telephone prior to the extended bid
opening date, and that it was the low, responsive, responsible bidder.
Prior to filing a report with this Office, the Navy advised us that
it believed the protester's case had merit and that it had decided to
reject all bids submitted under the solicitation. MET then protested
this action by the Navy. MET argues that if there is merit to its
protest, it should be awarded the contract, and that resolicitation
would be injurious to MET since the other two bidders now know MET's bid
price.
The Navy sets forth these facts. Four days prior to the bid opening,
an amendment was issued which incorporated a revised Department of Labor
wage determination and extended bid opening to September 26, 1980, 4
extra days. Due to the time constraints involved, a contracting
activity employee telephone MET to advise it of the contents of the
amendment and request acknowledgement. By that time, MET had already
submitted its bid in response to the original bid opening date. The
telegram acknowledging the amendment sent by MET was received late
through mishandling by Western Union. However, the protester states
that during the phone call initiated by the Navy on September 24, it
orally acknowledged receipt of the amendment prior to bid opening.
The Navy states that failure to acknowledge the amendment, which
contained wage rates, in writing prior to bid opening would render the
bid nonresponsive.
However, the Navy canceled the solicitation on the basis that
insufficient time had been allowed for receipt and acknowledgment of the
amendment.
MET concedes that its written telegraphic acknowledgment was late,
but contends that its oral acknowledgement prior to bid opening was
legally sufficient in that no requirement exists in the solicitation or
amendment that the acknowledgment be written.
As the Navy correctly points out, amendments incorporating wage
determinations pursuant to the Davis-Bacon Act are material. See
McHenry Cooke, B-196138, January 28, 1980, 80-1 CPD 74; 51 Comp.Gen.
500(1972). Thus, the issue to be resolved here is whether an oral
acknowledgment of a material amendment, i.e., an amendment incorporating
a wage determination, prior to bid opening is sufficient to permit
acceptance of a bid which contains no other indication of
acknowledgment.
We have previously indicated that an oral acknowledgment of a
material amendment may be acceptable where the evidence used to show
awareness of, or concurrence with, the amendment is, at the very least,
independently verifiable evidence over which the bidder does not have
exclusive control as to whether to submit it. 33 Comp.Gen. 508(1954);
United States Cartridge Company, 60 Comp.Gen. 251(1981), 81-1 CPD 94;
Nautical Manufacturing Company, B-185198, February 24, 1976, 76-1 CPD
129. This language would appear applicable to this case.
However, we have also held that the failure to acknowledge an
amendment usually renders the bid nonresponsive and that the failure
cannot be cured by oral discussion. MB Associates, B-197566, June 4,
1980, 80-1 CPD 383; Aqua-Trol Corporation, B-191648, July 14, 1978,
72-2 CPD 41. We have also expressed our preference for written
acknowledgment ofmaterial amendments in other cases, for example, 42
Comp.Gen. 490(1963).
We believe the principle stated in MB Associates, supra, and AquaTrol
Corporation, supra, is the better rule and overrule Nautical
Manufacturing Company, supra, and United States Cartridge Company,
supra, to the extent these decisions are inconsistent with that rule.
Permitting oral acknowledgment of a material amendment is detrimental
to the competitive bidding process in two ways. First, it allows a
bidder "two bites at the apple," by giving it the sole discretion to
accept or reject the contract after bid opening, by affirming or denying
that it intended to be bound by the amendment and, hence, the agreement.
See, National Investigation Bureau, Inc., B-191759, July 18, 1978, 78-2
CPD 44. Second, because of the bidder's failure to timely acknowledge
the amendment in writing, the terms of the resulting contract are not
clear since the written bid acknowledges the terms of the solicitation,
but not relevant amendments. 42 Comp.Gen., supra.
Under these circumstances, we believe MET's bid was properly rejected
as nonresponsive for failure to timely acknowledge a material amendment
in writing.
Protest is denied.
B-200753, March 13, 1981, 60 Comp.Gen. 316
Bids - Multi-Year - Evaluation - Multi-Year v. Single Year Awards -
Inflation Rate Factor - Failure to Compound
Cancellation and resolicitation of refuse collection service
requirement was improper since contracting offcer by failing to compound
assumed inflation rate erroneously calculated inflation to find bid to
be unreasonable as to price. This decision is overruled by 60
Comp.Gen.-- (B-200753.2, Aug. 12, 1981).
Matter of: Honolulu Disposal Service, Inc., March 13, 1981:
Honolulu Disposal Service, Inc. protests cancellation of Lot II of
invitation for bids (IFB) DAHC77-80-0280 for a multi-year contract for
refuse collection services required by the Army at the Schofield
Barracks, Fort Shafter, Hawaii. The protester also complains that in
resoliciting this requirement (IFB DAHC77-81-B-0011) the Army departed
from prior practice by refusing to limit participation to small
businesses and by deleting the bid bond requirement. Further, the
protester says that the procedures used by the Army in negotiating an
interim extension of the prior contract were irregular. Since we
sustain Honolulu Disposal's protest regarding cancellation of the
original solicitation, the other issues raised by the protester need not
be considered.
The IFB contained eight line items, four of which were designated as
Lot I and the balance as Lot II. Only Honolulu Disposal bid on Lot II.
Its prices, as evaluated were as follows: (TABLE OMITTED)
The IFB (1) required that prices be submitted for the first program
year; (2) stated that "prices may be submitted for the total multi-year
requirements (two (2) or three (3) program years)"; and (3) required
that the multi-year prices "be the same for all program years." Included
in the IFB was a statement reserving the right to the Government "to
disregard the bid on the multi-year requirements and to make award only
for the first program year" if only one bid was received. Bidders were
advised that award would be made "from one of the three alternatives"
(one, two or three years) "that reflects the lowest price to the
Government."
Regarding Lot II, the contracting officer found that the price bid:
represented a 25.36 percent increase over the current contract price of
$165,103.54 when taking into consideration discounts for prompt payment
as follows: (TABLE OMITTED)
Furthermore, since Honolulu Disposal Service, Inc.('s) bid prices
were identical for all program years, award on a three (3) program
years' basis would have resulted in a total increase of $125,612.61 over
the next three years as compared to the current contract price. This is
in contrast to the yearly Consumer Price Index rates, furnished by Data
Resources, Inc. for the Defense Contract Audit Agency, which reflect a
downward trend in inflation from 13.5 percent for 1980 to 9.2 percent,
9.0 percent, and 9.4 percent from 1981 thru 1983 respectively.
Because the contracting officer was unable to "reconcile this
significant disparity between the anticipated average inflation rate of
9.2 percent and Honolulu's 25.36 percent increase," he determined that
Honolulu's bid was unreasonable as to price and rejected it.
A determination that a bid price is not reasonable is a matter of
administrative discretion often involving the exercise of sound business
judgment which our Office will not question unless the determination is
unreasonable or there is a showing of bad faith or fraud. Espey
Manufacturing and Electronics Corporation, B-194435, July 9, 1979, 79-2
CPD 19. Moreover, in making such a determination the contracting
officer may compare bid prices with a Government estimate, past
procurement history, and current market conditions, as well as other
relevant factors. G.S.E. Dynamics, Inc., B-189329, February 13, 1978,
78-1 CPD 127; Westinghouse Electric Corporation, 54 Comp.Gen.
699(1975), 75-1 CPD 112.
Although the protester views the Army's actions in canceling the
solicitation and reprocuring the Lot II requirement as malicious, we do
not believe the record shows bad faith or fraud by Army personnel. We
believe, however, that the contracting officer's finding was not
reasonable.
As indicated, the solicitation evaluation criteria required that
offers be considered on a 1, 2 and 3-year basis and that award would be
made on whichever basis proved to best serve the Government's interest.
While it is true that the IFB reserved the right to award on a 1-year
basis if only a single responsive bid were received, there is not
indication in the record that the Army concluded that award otherwise
would be limited to a single program year. In addition, we believe that
under the terms of the IFB the contracting officer was required to
consider the reasonableness of Honolulu Disposal's prices for each of
the three possible evaluation periods if the bid was to be fairly
evaluated. Apparently, he understood his obligation in this regard,
because he indicates in his report that he considered multi-year
projected inflation rates in reaching his decision. However, we believe
the contracting officer's conclusion was based upon an erroneous
calculation of the inflation factor for the multi-year period. Thus,
while we agree that the protester's price can reasonably be found to be
unreasonable for the single year requirement, we do not believe the same
finding is reasonable when the 3-year price is considered.
For example, the contracting officer states that he compared the
protester's constant annual price with his estimated "average" 9.2
percent inflation rate, but he did not recognize that, while the
protester's prices would not change for 3 years, the impact of inflation
would increase because the 9.2 percent average annual rate would
compound.
As the protester also correctly points out, the contracting officer
failed to apply the 9.2 percent rate consistently since he overlooked
the fact that the incumbent's price was set 2 years earlier at a fixed
rate. Compounded, a 9.2 percent rate results in more than a 30 percent
3-year increase. If the 13.5 percent 1980 Defense Contract Audit Agency
(DCAA) price index is used to project the effect of inflation on a
mid-term fixed 1978-1980 contract price, the total increase by the third
contract year produces a 48 percent jump-- almost double the 25 percent
figure which the contracting officer found objectionable.
The contracting officer's legal adviser, in a memorandum supporting
the contracting officer's determination, cites various cases in which
our Office has upheld a determination that bid prices were unreasonable
where the determination was based on price increases ranging from 7 to
22 percent. None of those cases, however, dealt with the problem
presented here, i.e., where an inadequate analysis resulted in the
rejection of a bid which, expressed in constant dollars, was comparable
to the standard of comparison the Army selected (he prior contract
price).
In this regard we have calculated the projected increase in the prior
contract (out-of-pocket) cost which the contracting officer should have
computed had he calculated an estimated price assuming inflation at the
DCAA rates compounded for the 3-year performance period commencing with
FY 1981. We have also compared the FY 1980 (The Refuse) price with
prices bid by the protester by expressing each in constant dollars.
Since Lot II for the prior and follow-on contracts differ slightly, some
alteration must be made to account for this difference. Applying a pro
rata adjustment to reflect changes in the score of work, our
calculations indicate than Honolulu Disposal's price is actually less
than the projected cost based on the prior contract. It is within a few
percent of expected cost even if increased work is not considered.
Reviewing the relative value of the protester's and incumbent's prices
expressed in constant dollars, we also find that the average value to be
paid under the Honolulu Disposal bid is more than the prior contract
price but less than that price which would be expected were a modest
adjustment made for increased work.
Assuming some reasonable allowance for the change in the scope of the
work, therefore, Honolulu Disposal's price must be considered to be
within a percent or so of what the record before us suggests the Army
should have expected. The record provides no basis for a finding by the
Army that Honolulu prices were unreasonable.
A further comment is appropriate regarding a secondary concern raised
by the contracting officer in his report. There he explained that in
the past contractors had favored the 3-year arrangement because it
permitted them to amortize equipment over a longer period of time.
Since the contracting officer did not see such a decline in Honolulu
Disposal's pricing, he believed the protester was attempting to reap a
windfall in the second and third contract years when lower equipment
costs would be incurred. Our analysis of the effect of inflation
indicates, however, that the cost of Honolulu Disposal's pricing does
decline significantly in the second and third years when measured in
constant dollars. Indeed, the value Honolulu Disposal would receive in
the second year is comparable to that paid under the last year of the
incumbent's contract. The value paid in the third year of a Honolulu
Disposal contract would be significantly less.
As indicated by Defense Acquisition Regulation Sec. 2-404.1 and by
prior decisions of our Office, protection of the integrity of the
competitive bid system requires that an award be made once bids are
publicly opened unless there exists a compelling reason to reject all
bids and cancel the invitation. Dominion Engineering Works, Ltd., et
al., B-186543, October 8, 1976, 76-2 CPD 324. Absent some rational
basis to support rejection of the protester's bid, cancellation of IFB
DAHC77-80-B-0280 was improper.
We are aware, of course, that since this solicitation was canceled
the Army negotiated and awarded an interim extension of the incumbent's
contract and has recently awarded that firm a follow-on contract
following resolicitation. Insofar as can be determined by the record
before us, the Army should terminate the follow-on contract for the
Government's convenience, reinstate solicitation DAHC77-80-B-0280, and
award a contract to Honolulu Disposal under it.
Consequently, we recommend that the Army determine whether such
action is practical at this time and otherwise legally appropriate.
Since the contract is one for services and since the incumbent has
simply continued performing services for which presumably it already had
equipment, termination costs should be limited. In considering the
weight to be attached to termination costs, if any, the Army should keep
in mind the importance of taking corrective action to protect the
integrity of the competitive procurement system.
This decision contains a recommendation for corrective action to be
taken. Therefore, we are furnishing copies to the House Committee on
Government Operations, the Senate Committee on Governmental Affairs and
the House and Senate Committee on Appropriations in accordance with
section 236 of the Legislative Reorganization Act of 1970, 31 U.S.C.
1176(1976), which requires the submission of written statements by the
agency to the Committees concerning the action taken with respect to our
recommendation.
B-199985, March 11, 1981, 60 Comp.Gen. 314
Officers and Employees - Transfers - Relocation Expenses - Temporary
Quarters - Time Limitation - Option to Exclude Departure/Return Days
Employee, who occupies temporary quarters at old duty station and
interrupts occupancy for permanent change of station as permitted by
Federal Travel Regulations para. 2-5.2a, may elect not to count the day
of departure against his 30 day limit for temporary quarters. The
principles established in 57 Comp.Gen. 696(1978) and 57 Comp.Gen.
700(1978) are applicable regardless of whether the employee interrupts
his occupancy of temporary quarters for purposes of temporary duty or
change of station travel.
Matter Of: Darrell W. Fletcher - Per Diem and Temporary Quarters
Expenses, March 11, 1981:
By letter of June 27, 1980, LTC A. T. Holder, a Finance and
Accounting Officer at Redstone Arsenal, Alabama, requested an advance
decision regarding the computation of per diem and temporary quarters
subsistence expenses for Mr. Darrell W. Fletcher in connection with a
permanent change of duty station from the Federal Republic of Germany to
Redstone Arsenal, Alabama. This request was forwarded through the Per
Diem, Travel and Transportation Allowance Committee and assigned Control
No. 80-28.
The record shows that Mr. Fletcher began occupying temporary quarters
at his old duty station in Germany on January 11, 1980. He flew to New
York on January 17, 1980, having departed from his temporary quarters in
Germany at 8:10 a.m. that day. The employee picked up his privately
owned vehicle at the Ocean Terminal in Bayonne, New Jersey, on January
17 and drove to Alabama where he and his dependents resumed occupancy of
temporary quarters. The specific question presented by the Finance and
Accounting Officer is whether January 17 should be counted against Mr.
Fletcher's 30-day limit for temporary quarters subsistence expenses,
since he was in temporary quarters until 8:10 a.m. on that day. In
addition, he inquires whether Mr. Fletcher is entitled to per diem for
three-fourths or a full day on January 17 in the event January 17 is not
charged against his temporary quarters authorization.
For the reasons stated below we find that January 17, the day Mr.
Fletcher departed Germany, need not be counted against his 30-day limit,
and we find that he is entitled to receive per diem for three-fourths of
the day of January 17.
Under paragraph 2-5.2a of the Federal Travel Regulations (FTR) (FPMR
101-7, May 1973) the period of 30 days for temporary quarters occupancy
runs consecutively except "the period of consecutive days may be
interrupted for the time that is allowed for travel between the old and
new official stations, or for circumstances attributable to official
necessity, as for example, an intervening temporary duty assignment."
While we have held that an employee who interrupts his occupancy of
temporary quarters to perform temporary duty (TDY) may choose not to
count the days of departure and return against the 30-day period of
eligibility, we have not specifically addressed this issue in the case
where an employee interrupts his occupancy of temporary quarters to
perform permanent change of station travel. We believe, however, that
the same rule should apply.
Our decisions involving interruptions of temporary quarters occupancy
for temporary duty travel, 57 Comp.Gen. 696(1978) and 57 id. 700(1978),
were predicated on the following language of FTR para. 2-5.2g:
g. Effect of partial days. In determining the eligibility period
for temporary quarters, subsistence expense reimbursement and in
computing maximum reimbursement when occupancy of such quarters for
reimbursement purposes occurs in the same day that en route travel per
diem terminates, the period shall be computed beginning with the
calendar day quarter after the last calendar day quarter for which
travel per diem described in 2-2.1 and 2-2.2 is paid, except that when
travel is 24 hours or less the period shall begin with the calendar day
quarter during which travel per diem terminates. In all other cases,
the period shall be computed from the beginning of the calendar day
quarter for which temporary quarters subsistence reimbursement is
claimed, provided that temporary quarters are occupied in that calendar
day. The temporary quarters period shall be continued for the day
during which occupancy of permanent quarters begins.
In 57 Comp.Gen. 696, supra, we stated that since an employee's return
travel from temporary duty is not considered to be "en route" travel,
the second sentence of the quoted regulation should be applied and the
period for computing temporary quarters would resume "either the day the
employee returns from temporary duty or the following calendar day,
depending upon when the employee claimed reimbursement for temporary
quarters." We make it clear in 57 Comp.Gen. 700, supra, that this
election to claim or not claim temporary quarters subsistence expenses
extends to the day of departure for temporary duty as well as to the day
of return and has the practical effect of permitting an employee to
extend his occupancy of temporary quarters for up to 2 days.
If we were to strictly apply the language of FTR para. 2-5.2g to
interruptions of temporary quarters occupancy for "en route" or
permanent change of station travel, we would be obliged to apply the
first sentence of that regulation to at least the day en route travel is
completed. In accordance with 56 Comp.Gen. 15(1976) and 57 id. 6(1977)
we would be required to conclude that an employee whose en route travel
terminates during the third quarter of a day must count that day as one
of the 30 days for which he may be reimbursed temporary quarters
subsistence expenses. This conclusion is not compelling, however,
because FTR para. 2-5.2g is not necessarily intended to be applied to
cases in which temporary quarters occupancy is interrupted for permanent
change of station travel. As we stated in 56 Comp.Gen. 15, supra:
The quoted provision was added by section 2.5(b)(6) of Bureau of the
Budget Circular No. A-56 on June 26, 1969. By transmittal memorandum
No. 5 of the same date, the revision was explained as "clarifying the
allowances payable for the first and last day of use of temporary
quarters." The first two sentences of the regulations, then clarify the
commencement of the eligibility period: the last sentence clarifies its
cessation.
Because we do not believe the regulations require as to reach a
conclusion in this case that is inconsistent with our holdings in 57
Comp.Gen. 696, and 57 id. 700, we hold that the principles set forth in
those decisions are to be applied regardless of whether the employee's
occupancy of temporary quarters is interrupted for purposes of temporary
duty or change of station travel.
Accordingly, Mr. Fletcher may elect not to count the day he departed
Germany, January 17, 1980, in calculating his temporary quarters
allowance.
Regardless of whether Mr. Fletcher elects to count January 17 in
calculating his temporary quarters allowance he is entitled to per diem
for three-fourths of that day having entered a travel status at 8:10
a.m., i.e., during the second quarter of the day. 56 Comp.Gen. 15,
supra. While Mr. Fletcher points out that he was in a travel status for
more than three-fourths of a day (or 18 hours) based on his actual
elapsed traveltime, FTR para. 1-7.6c requires per diem calculations to
be made on the basis of "the standard time then currently in effect at
the place involved," except when the traveler crosses the international
dateline.
B-199721, March 11, 1981, 60 Comp.Gen. 311
General Accounting Office - Jurisdiction - Contracts - Small Business
Matters - Procurement Under 8(a) Program - Standard Operating Procedures
Compliance
General Accounting Office will review Small Business Administration
compliance with its Standard Operating Procedures governing award of
8(a) subcontracts only when showing of bad faith or fraud on part of
Governmental procurement officials has been made. B-193212, Jan. 30,
1979, overruled in part. Contracts - Maybank Amendment - Price
Differential Prohibition - Nonapplicability - Subcontracts Under 8(a)
Program
Maybank Amendment prohibition on use of Department of Defense
appropriations for payment of price differential on contracts made for
purpose of relieving economic dislocation does not apply to 8(a)
subcontracts. Appropriations - Authorization - Requirement to Contract
or Purchase - Compliance - Procurement Under 8(a) Program - Procedural
Irregularities
Allegation that violations of Small Business Administration's
Standard Operating Procedures (SOP) for award of 8(a) subcontracts make
award of subcontract a violation of 41 U.S.C. 11(1976) statement that
"no contract * * * shall be made, unless * * * authorized by law" is
denied because purpose of provision is to prevent officers of Government
from contracting beyond legislative authorization. Provision is not
violated by mere procedural irregularities in award of authorized
contract. Here, contract is authorized by section 8(a) of Small
Business Act, and sufficient appropriations are available for purpose.
Matter Of: Jets Services, Inc., March 11, 1981:
Jets Service, Inc. (Jets), protests the proposed award of a contract
by the Department of the Army (Army) to the Small Business
Administration (SBA) and the proposed award of a subsequent subcontract
to Wilsyk, Inc. (Wilsyk), under section 8(a) of the Small Business Act,
15 U.S.C. 637(a)(1976), as amended by Pub. L. No. 95-507, October 24,
1978, 92 Stat. 1757. The contract is for the operation of
Government-owned laundry and drycleaning facilities at Fort Richardson,
Alaska, and Fort Wainwright, Alaska, and Jets is the incumbent.
Jets argues that the SBA has violated its policies and procedures as
set forth in its Standard Operating Procedures (SOP), and that any
contract payments by the Army would violate the Maybank Amendment to the
Department of Defense Appropriation Act and could violate the 41 U.S.C.
11(1976).
Jets' protest is dismissed in part and denied in part.
Concerning Jets' allegations that the SBA has not followed the
guidelines set forth in SOP 80 05 for processing 8(a) procurements, our
review is limited. Because of the broad discretion afforded the SBA
under the applicable statute. SBA determinations will not be questioned
absent a showing of fraud or bad faith on the part of Government
procurement officials. Tidewater Protective Services, Inc., B-190957,
January 13, 1978, 78-1 CPD 33. Also, allegations of SOP violations
generally are not sufficient to invoke our review, since the SOP is
"primarily for the internal guidance of agency employees in performing
their official functions" (SOP 80 05 Sec. 2(e)), and provisions may be
waived. Orincon Corporation, 58 Comp.Gen. 665,(1979), 79-2 CPD 39.
Jets argues that Delphi Industries-- request for reconsideration,
B-193212, January 30, 1979, 79-1 CPD 70, and MISSO Services Corporation,
B-197373, June 19, 1980, 80-1 CPD 432, stand for the proposition that
GAO will review, without a showing of bad faith or fraud, SBA compliance
with SOP provisions that do not require an SBA judgmental determination.
According to Jets, the SOP violations in the instant case do not
require judgmental determinations, and, therefore, are reviewable
without a showing of bad faith or fraud. Jets also argues that while
SOB provisions can be waived, there is no evidence that the provisions
in question here have been waived and, therefore, they are reviewable.
Concerning Jets' waiver argument, we have held that questions
regarding the waiver of an SOP are a matter for SBA and not GAO. A.R. &
S. Enterprises, Inc., B-189832, September 12, 1977, 77-2 CPD 186. Thus,
we will not consider whether or not an SOP provision has been waived, or
if it has, whether that waiver was effected properly.
Regarding Jets' reading of the MISSO and
Delphi-reconsiderationdecisions, MISSO does state that GAO will not
review whether a particular procurement fall within the parameters of an
8(a) firm's business plan, absent a showing of fraud or bad faith
because that is a judgmental decision for SBA. However, the decision
does not indicate that the GAO will review violations of nonjudgmental
SOP provisions on a different basis.
The Delphi reconsideration does seem to indicate that GAO will review
purely procedural compliance with the SOP, but does not define the
nature of the review. In Delphi, the review amounted only to our being
"advised" by the SBA that the SOP in question had been followed. We
answered the protester's substantive allegations by stating that the
SBA's determinations under the allegedly violated SOP would not be
questioned absent a showing of bad faith or fraud.
It is our opinion that the use of different standards for the review
of procedural compliance with a SOP provision as opposed to substantive
determinations under the provision is an artificial and impractical
exercise which serves no useful purpose, especially in view of our
position on SOP waiver. Therefore, we will not review alleged SOP
violations without a showing of bad faith or fraud. To the extent that
Delphi Industries, Inc.-- request for reconsideration, supra, holds
otherwise it will no longer be followed.
Here, no showing of bad faith or fraud has been made. Therefore,
this portion of Jets' protest is dismissed.
Jets contend that the current version of the so-called Maybank
Amendment to the Department of Defense Appropriation Act (Sec. 724 of
Pub. L. 96-527, December 15, 1980, 94 Stat. 3068), which provides that
"no funds herein appropriated shall be used for the payment of a price
differential on contracts hereafter made for the purpose of relieving
economic dislocations," will be violated by an award to Wilsyk because a
price differential will allegedly be paid, and because Wilsyk might be
located in a labor surplus area.
The legislative history of the Maybank Amendment shows that the
prohibition applies only to a price differential paid on a contract
awarded to a firm as a result of a preference granted to that firm
because it operates primarily in a labor surplus area. B-145136, April
14, 1978. Here, the subcontract award to Wilsyk is based on a
preference granted to Wilsyk because it has been determined to be a
small business, owned by socially and economically disadvantaged
persons. Therefore, the prohibition does not apply. This result is not
altered even if Wilsyk coincidentally does operate primarily in a labor
surplus area, so long as the contract or subcontract in question was not
awarded as a result of a preference based on that fact. See Maybank
Amendment, 57 Comp.Gen. 34(1977), 77-2 CPD 333.
Finally, Jets argues that the alleged violations of the SOP in this
case render the award of a subcontract to Wilsyk a violation of 41
U.S.C. 11(1976), which states that:
No contract or purchase on behalf of the United States shall be made,
unless the same is authorized by law or is under an appropriation
adequate to its fulfillment. * * * .
The purpose of this provision is to prevent executive officers from
involving the Government in expenditures and liabilities beyond those
authorized by the legislature, 21 Op.Atty.Gen. 248(1895). The provision
is not violated by mere procedural irregularities in the award of a
contract. Here the subcontract is authorized by section 8(a) of the
Small Business Act and there are sufficient appropriated funds available
for this purpose. Therefore, there is no violation of the provision.
The protest is dismissed in part and denied in part.
B-196260, March 11, 1981, 60 Comp.Gen. 308
Officers and Employees - Transfers - Service Agreements - Overseas
Employees Transferred to U.S. - Return Travel, etc. Expense Liability -
Breach of Agreement With Gaining Agency
Employee who had fulfilled overseas service agreement with first
agency transferred to position in the United States with another agency
and thereafter breached service agreement with second agency.
Notwithstanding violation of service agreement, employee is not required
to refund transfer expenses paid by second agency where those were
solely for transportation of household goods and employee's own travel,
since he was entitled to such expenses as a consequence of having
satisfied overseas service agreement with first agency.
Matter of: Johnny R. Dickey - Violation of Service Agreement, March
11, 1981:
Mr. Johnny R. Dickey requests reconsideration of our Claims
Division's September 17, 1979 denial of his claim for refund of
transfer-related expenses collected as a result of his breach of a
service agreement.
The record indicates that Mr. Dickey was transferred on February 16,
1972, from Corbin, Virginia, to Ewa Beach, Hawaii, in connection with
his continued employment with the National Oceanic and Atmospheric
Administration. Department of Commerce (NOAA). At that time, in accord
with 5 U.S.C. 5724(d)(1976), Mr. Dickey signed a service agreement in
which he designated Memphis, Tennessee, as his actual place of residence
and by which he agreed to remain in Government service for a period of 2
years following the effective date of his transfer unless separated for
reasons beyond his control. Mr. Dickey remained with the NOAA in Hawaii
until September 22, 1977, at which time he transferred to the U.S.
Geological Survey, Department of the Interior (Geological Survey),
Metaire, Louisiana. Incident to that transfer Mr. Dickey signed a
service agreement by which he agreed to remain in the Government service
for 1 year following the date of his transfer and in consideration of
which he was reimbursed $1,404.83 for transportation of household goods
and $148.04 for airfare from Hawaii to Los Angeles. Because he resigned
from his position with the Geological Survey before he completed 1 year
of service, the Geological Survey set off the net amount of his final
salary and lump-sum payments against his indebtedness of $1,552.84.
Mr. Dickey appeals from our Claims Division's decision of September
17, 1978, upholding the Geological Survey's determination that he was
indebted in the $1,552.84 amount as a result of having violated the
1-year service agreement. In support of his claim, Mr. Dickey points
out that he was entitled to return travel and transportation expenses
under 5 U.S.C. 5724(d) because he satisfied his service obligation
incident to his employment in Hawaii with NOAA. He claims that despite
his violation of his employment agreement with the Geological Survey,
his right to be reimbursed for these return travel and transportation
expenses was not extinguished. He maintains that he should not have
been required to sign this new agreement because the cost of his move
from Ewa Beach, Hawaii, to Metaire, Louisiana, was identical to the
amount his move would have cost if he had returned to Memphis,
Tennessee, his actual place of residence.
When an employee who has satisfied his overseas service agreement is
returned to the continental United States for separation he is entitled
to expenses of travel and transportation for himself, his family and
household goods to his place of actual residence in the United States
or, at his election, the actual costs of travel and transportation to
some alternate point, the cost of which does not exceed that to his
place of actual residence. 5 U.S.C. 5724(d)(1976); B-195180, October
24, 1979; B-164084, May 29, 1968. However, if the employee, prior to
departure from his overseas duty station, accepts a transfer of official
station from a post outside the continental United States to one within
the United States, he is entitled only to the travel and transportation
expenses to his new official station, not his place of actual residence.
Id. Moreover, pursuant to 5 U.S.C. 5724(e), these expenses would be
paid by the agency to which he transfers. B-164251, June 26, 1968.
While there is no statutory requirement for execution of a service
agreement incident to a transfer from overseas to the United States, we
have held that an agency has authority to refuse to authorize or approve
payment of any expense involved in the travel or transportation of an
employee in connection with such a change of official station until the
employee concerned executes an agreement to remain in the Government
service for a specified period of time. 47 Comp.Gen. 122, 125(1969);
B-163726, May 8, 1968. Such an agreement having been executed by the
employee in the instant case, the employee is bound by the provisions
thereof.
Ordinarily, Mr. Dickey would have been entitled to be reimbursed by
the Geological Survey for any expenses he incurred incident to his move
from Hawaii to Louisiana. 5 U.S.C. 5724(d)(1976). See also 5 U.S.C.
5724(e) regarding the requirement that expenses of transfer be paid by
the gaining agency. However, since he violated the service agreement
which the Geological Survey required him to execute, he is only entitled
to be reimbursed for expenses incurred pursuant to his move to the
extent that these expenses did not exceed the cost of such travel and
transportation to his actual place of residence, Memphis, Tennessee--
the amount he would have been entitled to receive had he not transferred
to the Geological Survey. Mr. Dickey's right to this sum vested once he
completed his required tour of duty with the NOAA and only his
entitlement to expenses incurred in excess of that amount was contingent
upon his satisfying the service agreement with his new employing agency.
The transfer expenses reimbursed by the Geological Survey included
only expenses related to Mr. Dickey's own travel and movement of his
household goods.
Since these particular expenses do not exceed the cost of such travel
and transportation to his actual place of residence, they are to be
considered allowances to which he was entitled as an incident to his
return from overseas. See B-164084, May 29, 1968. Moreover, incident
to his appeal, Mr. Dickey states that he did not claim and was not
reimbursed $348.60 in mileage and per diem expenses for the portion of
his trip from Los Angeles to Louisiana. These expenses also may be paid
to Mr. Dickey incident to his transfer from funds of his new employer
the Geological Survey provided that the total amount he is reimbursed
does not exceed the cost of transportation and travel from Hawaii to
Memphis, Tennessee.
B-200695, B-200696, March 10, 1981, 60 Comp.Gen. 306
Contracts - Requests for Quotations - Evaluation Factors - Disclosure -
Life-Cycle Costing
Request for quotations for dictation equipment available under
multiple-award Federal Supply Schedule contract, one of which did not
inform quoters of life cycle evaluation factors and another which did
not indicate the life cycle cost would be evaluated at all, are
defective and, under circumstances, did not permit fair and equal
competition.
Matter of: Lanier Business Products, Inc., March 10, 1981:
Lanier Business Products Inc., protests the issuance of two purchase
orders to Dictaphone Corporation for dictating equipment by the Veterans
Administration Regional Office, Winston-Salem, North Carolina, and by
the Veterans Administration Medical Center, Montgomery, Alabama.
Lanier, a dictation equipment contractor listed on the General
Services Administration multiple-award Federal Supply Schedule (FSS),
asserts that it submitted the lowest quotes and therefore the purchase
orders should have been issued to it.
Since the VA is a mandatory user of the FSS for dictating equipment,
the agency, before issuing the orders, requested quotations from
available FSS contractors for dictating equipment. The request for
quotations (RFQ) issued by the Regional Office was silent as to the
method to be employed in evaluating the lowest priced system. The RFQ
issued by the Medical Center contained only the following statement:
Life cycle costing analysis will be used by the VA to determine the
lowest acceptable offer.
Both VA offices, after receipt of quotations, then proceeded to
perform an extensive, albeit inconsistent, life cycle costing analysis.
For example, the Regional Office evaluated such factors as paper index
strips, power consumption, telephone lines and maintenance while the
Medical Center evaluated paper index strips, maintenance and cassette
tapes. In both instances, Dictaphone was evaluated as the contractor
offering the lowest priced system.
The basis of Lanier's protest is that "the (VA) performed a life
cycle costing comparison without prior notice in the RFQ (and that) in
order to insure a fair basis for evaluation, (the VA) should have
notified all possible offerors that a life cycle costing * * * would be
the basis for award." We agree.
In our view, the real issue in this case is whether the VA's RFQs
adequately advised offerors of the basis and procedures for cost
evaluation. We do not believe that they did.
In one case, the RFQ completely failed to inform quoters that life
cycle costing would be employed. In the other case, the RFQ merely
stated that life cycle costing would be used without adequately
informing quoters of the basic evaluation factors to be used. We fail
to see how a quoter could intelligently submit an offer under the
circumstances.
We have often pointed out the need for agencies to provide in their
solicitations a clear statement of the evaluation factors to be used so
that fair and intelligent competition can be achieved. See, e.g.,
Signatron, Inc., 54 Comp.Gen. 530(1974), 74-2 CPD 368; Frontier
Broadcasting Co. d.b.a. Cable Colorvision, 53 Comp.Gen. 676(1974), 74-1
CPD 138.
Therefore, when life cycle costs are to be evaluated, the solicitation
must indicate that fact. Eastman Kodak Company, B-194584, August 9,
1979, 79-2 CPD 105. In addition, we believe that in most cases the
particular elements of the life cycle cost evaluation should be
disclosed since they may vary from procurement to procurement and from
agency to agency. See, e.g., Hasko-Air, Inc., B-192488, March 19, 1979,
79-1 CPD 190 (special inspection and repair costs were considered);
Eastman Kodak Company, supra (maintenance and operating costs were
considered); Phillips Business Systems, Inc., B-194477, April 9, 1980,
80-1 CPD 264 (telephone company rental charges were considered). The
need for such disclosure is readily evident from the present case, where
even the procurement of identical items by the same agency did not
result in the use of identical life cycle cost evaluation factors. That
disclosure of precise evaluation elements may be important to quoters
under an FSS contract is also apparent: while equipment prices are
generally fixed by the FSS, individual vendors, to be more cost
competitive under the general rules established for a particular
purchase, can vary both the equipment offered (provided that it meets
the agency's needs) and trade-in allowances offered. See Phillips
Business Systems, Inc., supra.
The VA argues that a letter it sent to potential offerors prior to
the instant procurements in which a policy of implementing life cycle
costing was set forth provided sufficient notice for the quoters. We
disagree. We fail to see how a general policy letter can sufficiently
alert quoters as to whether or not any particular procurement is to be
subject to life cycle costing. Moreover, the letter is devoid of
potential evaluation factors to be used in any procurement.
Under these circumstances, we must conclude that the RFQ did not
permit fair and equal competition. We find that no award could have
properly resulted from these RFQs because all quoters were not aware of
how they would be evaluated. Consequently, we sustain the protest and
recommend that the requirements be resolicited.
We are bringing this matter to the attention of the Administrator of
Veterans Affairs.
B-200017, March 10, 1981, 60 Comp.Gen. 303
Equal Employment Opportunity - Ethnic/Cultural Programs - Expense
Reimbursement - Entertainment v. Training - Regulation Guidelines
Internal Revenue Service may certify payment for a live African dance
troupe performance incident to agency sponsored Equal Employment
Opportunity (EEO) Black history program because performance is
ligitimate part of employee training. Although our previous decisions
considered such performance as a nonallowable entertainment expense, in
this decision we have adopted guidelines developed by the Office of
Personnel Management (OPM) that establishes criteria under which such
performances may be considered a legitimate part of the agency's EEO
program. 58 Comp.Gen. 202(1979), B-199387, Aug. 1980, B-194433, July
18, 1979, and any previous decisions to the contrary are overruled.
Travel Expenses - Private Parties - Invitation Travel on Federal
Government Business
Internal Revenue Service may use appropriated funds to buy lunches
for guest speakers on program held in observance of National
Afro-American (Black) History Month, under 5 U.S.C. 5703, which provides
authority for per diem or subsistence expenses for individuals serving
without pay.
Matter of: Internal Revenue Service - Live Entertainment and Lunch
Expense for National Black History Month, March 10, 1981:
This responds to a request from Mr. Michael J. Higgins, Chief, Fiscal
Management Branch, North Atlantic Region, Internal Revenue Service,
Department of the Treasury, for a ruling on whether to certify a
reimbursement voucher covering payments for a performance by African
dancers and for lunches for guest speakers at a ceremony observing Black
History Month in February, 1980. Based on the rationale set forth
below, we have concluded that the Service may certify payment for the
dance performance and the lunches.
President Carter declared February, 1980, as National Afro-American
(Black) History Month by a Message of the President signed on January
15, 1980. (See Weekly compilation of Presidential Documents, vol. 16,
No. 3, pages 84-86 (January 21, 1980).) The Buffalo Office of the
Service's North Atlantic Region conducted activities designed to
celebrate Black History Month. The Chief of Resources Management in
Buffalo has indicated informally that the African dance troupe's
performance was part of a 3 day program designed to familiarize
employees of the Buffalo District with the cultural history of Black
people. In addition to the dance performance the program consisted of
displays of African artifacts and wearing apparel, posters depicting
aspects of Black life, films, formal discussions of Black history, and
the serving of Black ethnic food for lunch in the cafeteria. All these
activities were conducted during the lunch hour. We also understand
that two senior citizen guest speakers were provided lunch at Government
expense once during the program.
The Buffalo District cashier paid $75 to the Buffalo African Cultural
Center for the dance troupe performance, and $4.55 for the speakers'
lunches from the Small Purchase Imprest Fund. The cashier then
presented a reimbursement voucher in the amount of $79.55, representing
the two expenditures to the Regional Office for replenishment of the
Fund. The Regional Office refused to pay the voucher, relying on our
holding in 58 Comp.Gen. 202(1979), and submitted the question to this
Office for a decision.
The factual situation of the opinion relied upon by a Regional Office
was similar to the present case in that it involved the legality of a
payment for an ethnic music presentation as a part of an Equal
Employment Opportunity (EEO) special emphasis program.
In that decision we pointed out that Federal funds could not legally be
expended for employee entertainment. Because we were unable to
distinguish between musical and other artistic presentations for
employee entertainment and such presentations for EEO program
activities, we stated that we would consider all such future
presentations as employee entertainment and therefore illegal in the
absence of official guidelines detailing the circumstances under which
such presentations may be made in connection with EEO special emphasis
programs.
Since we issued that decision we have held informal discussions with
the Director of the Office of Affirmative Employment Programs, Office of
Personnel Management (OPM) regarding the criteria that should be
instituted to govern artistic presentations at agency sponsored EEO
special emphasis programs. We discovered that the Office of Affirmative
Employment Programs has developed guidelines for artistic presentations
at agency sponsored Hispanic Heritage Week programs.
These guidelines provides as follows:
Each year Hispanic Heritage Week is celebrated by more Federal
agencies than ever before. Hispanic Heritage Week is becoming an
American traditional event. Nevertheless, some members of the Hispanic
community have expressed concerns about the purely entertainment aspect
of some celebrations. In addition, a number of Federal agencies have
found it difficult to allocate funds, and still others have raised legal
question about expenditures.
The Hispanic Heritage Week observance should not be viewed as an end
in itself. The observance is an excellent opportunity to add substance
and lasting visibility to the Hispanic Employment Program. Often,
celebrations are held year after year with no thought to their impact
during the intervening months. In addition, the celebrations often
conclude with no measurable or significant concrete accomplishments
which can benefit the Hispanic community. We can improve upon this
situation by generating official support for the Hispanic Employment
Program and its objectives. We know, for example, that stereotypes are
a major barrier to Hispanic employment. The Heritage Week activities
could be geared to eradicating these misconceptions in a direct and
unalienating manner. Further, during this week, new programatic goals
could be enunciated by management, with results to be evaluated during
the following year's celebration. By emphasizing commitment to the
program and a wide understanding of its purpose we can ensure that
substantive issues are addressed and that lasting results are achieved.
It is important to make clear that (1) cultural events are related to
the observance of Hispanic Heritage Week, and (2) intent is shown to
develop cultural awareness rather than just entertainment. If ethnic
music is provided, for example, it can be introduced as an element of
the celebration since music is one of the cultural influences Hispanics
have exerted in this country.
The observance of Hispanic Heritage Week should emphasize the rich
diversity of Hispanic cultural background, the varied manifestations of
the performing arts, values, history, and accomplishments and
contributions to the American society. It should also touch on
concerns, especially employment concerns.
Recitals, folkloric dances, and music, and other social activities
can certainly add a picturesque element to the Hispanic Heritage Week
observance. However, an explanation of the relevance, the meaning, the
roots, or the history of such activities should be an integral part of
the performance.
In doing that, we will avoid presentations or activities which instead
of enlightening the audience with the cultural aspects of the Hispanic
heritage might tend to perpetuate some of the stereotypes which are now
serving as employment-barriers.
We were informed by the Director that these guidelines were intended
to be "generic" in scope; i.e., that they should be read as applying to
analogous situations. We were also informed that OPM is considering
issuance of formal guidance which would apply to all similar ethnic or
cultural programs.
After reviewing the above-quoted guidelines, we believe they provide
a reasonable basis for distinguishing EEO special emphasis program
artistic presentations from employee entertainment. Accordingly we are
of the opinion that criteria along the lines of those developed for
Hispanic programs may be applied on a uniform basis to all EEO and
cultural special emphasis programs such as Afro-American (Black) History
and American Indian History programs.
In light of these guidelines, we now take the view that we will
consider a live artistic performance as an authorized part of an
agency's EEO effort if, as in this case, it is a part of a formal
program determined by the agency to be intended to advance EEO
objectives, and consists of a number of different types of presentations
designed to promote EEO training objectives of making the audience aware
of the culture or ethic history being celebrated. This view is contrary
to our holding in 58 Comp.Gen. 202, above, B-199387; August 22, 1980,
and B-194433, July 18, 1979, which are therefore overruled.
With reference to the expenditure for the lunches, we note that 5
U.S.C. 5703 authorizes per diem (including subsistence), travel, and
transportation expenses for individuals serving without pay while away
from their homes or regular places of business. See 37 Comp.Gen.
349(1957). The two senior citizen guest speakers had agreed to
participate in the program, without compensation, solely for the benefit
of the Government. On the assumption that they were in fact away from
their homes or regular places of business, the Service may therefore
also allow the $4.55 guest speaker luncheon expenses.
B-198510, March 9, 1981, 60 Comp.Gen. 300
Transportation - Household Effects - Weight - Tare - Determination
When tare (container) weight is not on Government bill of lading
(GBL), it is determined by subtracting net weight from gross weight.
Transportation - Household Effects - Weight - Net Determination -
Containerized v. Crated Shipments
Lift vans and overflow box are "containers" within meaning of
paragraph 2-8.2b(3) of Federal Travel Regulations (FTR); thus net
weight of household goods shipment is determined by applying 85 percent
of gross weight and subtracting weight of containers. Transportation -
Household Effects - Weight - Net - Packing Materials' Inclusion -
Containerized Shipment
Under usual household goods carriers' Tender of Services net weight
of containerized shipment contains weight of packing and household
goods. Transportation - Household Effects - Weight Limitation - Excess
Cost Liability
Assessment of excess weight against employee was improper where
excess weight was determined on basis of net weight shown on GBL;
proper formula for determining net weight of containerized shipment in
paragraph 2-8.2b(3) of FTR results in net weight below employee's
authorized maximum weight.
Matter of: Wayne L. Tucker, March 9, 1981:
A certifying officer, Office of Management and Support, Department of
Energy, Dallas, Texas, requests an advance decision pursuant to the act
of December 29, 1941, 55 Stat. 876, 31 U.S.C. 82d, concerning the proper
method for determining the net weight of the household goods of an
employee on change of station.
In connection with the permanent change of official station of Wayne
I. Tucker, the Government arranged for the transportation of his
household goods from Panama, Canal Zone (now Republic of Panama), to
Dallas, Texas, in 1978. In accordance with 5 U.S.C. 5724(a)(1976), and
the Federal Travel Regulations (FTR), FPMR 101-7, paragraph 2-8.2a (FPMR
Temp. Reg. A-11, Supp. 4, April 1977), Mr. Tucker was authorized
shipment of a maximum net weight of 11,000 pounds. The employee's
voucher was paid on the net weight shown on the Government bills of
lading (GBL), 11,060 pounds; therefore, the cost of excess weight was
assessed.
Mr. Tucker contends that his household goods should have been
considered as a "crated" shipment, and the net weight determined by
applying the formula in paragraph 2-8.2b(2) of the FTR, which is 60
percent of the gross weight. The gross weight, as shown on the Gbls, is
13,710 pounds, and 60 percent of that weight is 8,226 pounds, which
would be within Mr. Tucker's allowance.
Paragraph 2-8.2b(3), which is applicable to "containerized"
shipments, provides a different method of determining net weight than
that for "crated" shipments. This paragraph provides that if the "known
tare weight" does not include the weight of interior bracing and padding
materials, but only the weight of the container, the net weight of the
household goods is to be computed at 85 percent of the gross weight less
the weight of the container.
But if the known tare weight does include interior packing and padding
materials the net weight is to be computed as an "uncrated" shipment
which is covered by subparagraph b(1) and the net weight shall be that
shown on the bill of lading or on the weight certificate. Finally, if
the gross weight of the container cannot be obtained, the net weight of
the household goods is to be determined from the cubic measurement on
the basis of 7 pounds per cubic foot of properly loaded container space.
Since the weight of the containers and the tare weight are not shown
on the GBLs, the certifying officer contends that it is not possible to
determine the net weight under paragraph 2-8.2b(3). However, the tare
weight can be computed. The gross weight of the shipment is shown on
the GBLs, and since the net weight is the difference between the gross
weight and tare weight, tare weight of 2,650 pounds can be determined by
subtracting the net weight shown on the GBLs (11,060 pounds) from the
gross weight (13,710 pounds).
There are two pertinent factual questions: (1) whether the shipment
was "crated" or "containerized," and (2) whether the tare weight
includes the weight of packing materials.
Reference to the GBLs and to common practice, as reflected in
household goods carriers' Tenders of Service, and in the Personal
Property Traffic Management Regulation (DOD 4500.34-R) lead to the
conclusion that the method provided in paragraph 2-8.2b(3) of the FTR is
applicable to Mr. Tucker's shipment. Although DOD 4500,34-R concerns
the movement of personal property for Department of Defense personnel,
they are instructional regulations (see B-195256, November 15, 1979)
and, as such, we consider them relevant in determining the common
practice of carriers in handling international door-to-door container
shipments for employees of civilian agencies.
The record indicates that Mr. Tucker's was an international
door-to-door containerized shipment, which the Government managed
throughout by the Direct Procurement Method. See paragraph 2001 of DOD
4500.34-R. Under this method it seems clear that while the weight of
the containers is known in advance of loading, for practical reasons the
separate weights of the household goods and packing materials that are
stuffed into the containers are not known at the origin residence;
therefore, the combined weight is determined after loading.
GBL K-3438012, dated October 2, 1978, describes the shipment as
consisting of "7 liftvans" and "1 wooden box" of household and personal
effects. Liftvans are specifically mentioned in subparagraph b(3)
paragraph 2-8.2 of the FTR under "containerized" shipments.
The bills of lading show that the shipment also contained one wooden
box. However, household goods shipping boxes designed normally for
repeated use are also covered by subparagraph b(3). There is no showing
by Mr. Tucker or by anything in the record that the wooden box was a
crate.
Paragraph 20 of the Tender of Service, DOD 4500.34-R, Appendix, page
A-4, provides that the net weight of all codes of service will consist
of the actual household goods and all packing. Paragraph 40 thereof
provides that containers and overflow boxes, when moving in door-to-door
service, will be packed and stuffed at the origin residence unless a
specific exception is authorized.
In the absence of evidence to the contrary, the above warrants the
following presumptions: that the gross weight of the shipment (shown on
the GBLs as 13,710 pounds) includes the weight of the containers,
packing, and household goods, that the Panama Packing & Storage Company
packed and stuffed the shipment at Mr. Tucker's residence at origin, and
that the net weight, contained on the GBLs issued to the Panama Canal
Company and to McLean, consists of the weight of all the packing
materials as well as the household goods; and that the weight of the
empty containers and overflow box, is the equivalent of the tare weight,
2,650 pounds, because the packing is included in the net weight.
Therefore, computation of the net weight for transportation allowance
purposes on the basis of paragraph 2-8.2b(3) is possible. Applying the
formula, 85 percent of the gross weight (13,710 pounds) is 11,654
pounds, minus the weight of the containers (2,650 pounds) is 9,004
pounds, results in the conclusion that the net weight of Mr. Tucker's
shipment did not exceed his authorized weight allowance of 11,000
pounds.
Accordingly, it would be improper to assess Mr. Tucker for costs of
excess weight.
B-200092, March 6, 1981, 60 Comp.Gen. 298
Contracts - Architect, Engineering, etc. Services - Retired Employees -
Right to Compete for Award
Forest Service excluded retired employee from contract for architect
and engineering services even though employee was highest-ranked
competitor for services. Exclusion was improper since General
Accounting Office is not aware of any basis for excluding retirees from
obtaining Government contracts.
Matter of: Edward R. Jereb, March 6, 1981:
Mr. Edward R. Jereb protests the Forest Service's decision not to
enter into price negotiations with him for an architect and engineering
(A&E) contract involving surveying services in Klamath National Forest
located in Region 5 of the Forest Service. Mr. Jereb, a retired Forest
Service employee, had been selected for negotiations under the
procedures prescribed by the Brooks Bill, 40 U.S.C. 541 et seq. (1976).
Thereafter, the contracting officer, Klamath National Forest, requested
"approval for (sole-source) contracting to a retired employee."
Nevertheless, the Chief of the Forest Service disapproved the
contracting officer's request to negotiate with Mr. Jereb. Mr. Jereb
contends that the Forest Service negotiated an A&E contract with him in
1979, notwithstanding agency policy limiting contracting with retirees
and that, therefore, it should be required to do so here where he had
been found to be most qualified to perform the required services.
Based on our analysis, we sustain the protest.
In Paul F. Pugh and Associated Professional Engineers, B-198851,
September 3, 1980, 80-2 CPD 171, we summarized the A&E selection
procedure established by the Brooks Bill as follows:
Selection procedure for A&E services prescribe that the requirement
be publicly announced. An evaluation board set up by the agency then
reviews statements of qualifications and performance data already on
file and statements submitted by other A&E firms responding to the
public announcement. * * * The board must then hold discussions with no
less than three firms regarding anticipated concepts and the relative
quality of alternative methods of approach for providing the services.
The board prepares a report for the selection official ranking in order
of preference no fewer than the three firms considered most qualified.
The selection official makes the final choice of the three
highest-ranked firms and negotiations are held with the highest-ranked
A&E firm. If the contracting officer is unable to reach agreement with
that firm on a fair and equitable price, negotiations are terminated and
the second-ranked firm is invited to submit its proposed fee.
After an initial evaluation of qualification and performance data
submitted, as contemplated under the A&E procedures, the evaluation
board for these services held discussions with the contending firms and
Mr. Jereb. The evaluation board then finally evaluated each firm and
reduced its judgment to a numerical score. Mr. Jereb recieved the
highest score and Olson and Associates (Olson) was second with 16 fewer
points; Engineering Consultants, Inc. was ranked third.
The Chief of the Forest Service subsequently disapproved the contracting
officer's request to negotiate the required services on a "sole-source"
basis with Mr. Jereb because the "selection was not via competitive
price bidding but rather by panel of * * * employees who used the
judgmental approach." Thereafter, Olson was awarded the A&E contract
which was recently completed.
The Director of Administrative Services, Forest Service, states: "We
feel that as a general policy awards to retirees should be avoided
unless no other alternative is available." The Director states that this
is especially true when price competition is not present as in this case
and the difference is as minimal as 16 points out of a possible 1,840.
Mr. Jereb argues that the Forest Service had adopted inconsistent
interpretations of its procurement regulations governing contracting
with retirees as evidenced by the 1979 A&E contract awarded to him and
by the refusal to contract with him for these services. Those
regulations provide:
4G-1.302-70-- Contracts between Government and retired Government
employees.
(b) Policy. Employment procedures will be used to obtain the
services of retirees, unless nonpersonal services under circumstances
excepted below:
(1) Solicitation by bid invitation. * * * formally advertised
contracts (may be) awarded to retirees * * * when they are the low
responsible bidders on solicited bids offered to all sources of supply
and open to price competition.
(2) Solicitation by proposal. * * * negotiated contracts (may be)
awarded to retirees * * * when they are the low responsible offerors on
proposals offered to all sources of supply and open to price
competition.
(3) Solicitation by proposals from sole source. Proposals may be
solicited and negotiated contracts awarded to retirees * * * on a sole
source basis only under circumstances provided below:
(c) Sole source procedures and approvals.
(1) * * * the (contracting) officer * * * shall include the following
information in his request.
(iii) List of possible sources of supply other than the proposed sole
source, and reasons they are not considered qualified.
In our view, none of the above contracting "circumstances" precisely
apply to A&E contracting procedures. Obviously, circumstances (1) and
(2), describing advertised and competitively negotiated contracts-- both
of which involve price competition-- do not apply to A&E contracting
procedures where price is not considered until after selection of the
proposed awardee is made. Contracting circumstance (3), solicitation
from sole source, although characterized by the lack of price
competition (as is the case with A&E contracts), contemplates situations
where the retiree involved is deemed the only "source of supply" for the
contract requirement. However, A&E procurements contemplate that
several sources of supply are available for the A&E contract.
(In this procurement, for example, there were two other qualified
sources.) Another difference between A&E procurements and sole-source
procurements is that A&E procurements involve a degree of competition on
factors other than price especially involving "anticipated concepts and
the relative quality of alternative methods of approach for providing
the services;" by contrast, there is no competition on any basis for a
sole-source contract.
We appreciate the Forest Service's desire to avoid the appearance of
favoritism by limiting awards of contracts, in the case of retired
Government employees, to procurement where price competition has been
obtained or where no other source was available. However, the effect of
the policy in the case of A&E procurements is to exclude retirees
entirely, since price competition is not obtained for A&E contract
awards. We question whether such a policy is justified in the absence
of any law or government-wide regulation sanctioning the exclusion. We
recognize that there is a policy against awarding contracts to current
Government employees, but this policy is embodied in Federal Procurement
Regulations Sec. 1-1.302-3 (amend. 95, 1964 ed.). We find no such
Government-wide regulation applicable to retired Government employees.
In the absence of such a law or regulation, we believe the Forest
Service has no basis to implement a policy the effect of which is to
exclude a class of bidders (retired Government employees) from obtaining
awards of A&E contracts. To this extent, we think the Forest Service
policy is improper. Therefore, we find that Mr. Jereb was improperly
excluded from the competition.
Protest is sustained; however, we cannot recommend action to correct
the improper award since the contract has been performed. Nevertheless,
we are recommending that the Secretary of Agriculture eliminate the
Forest Service policy which permitted the exclusion. We are also
recommending that the Director, Office of Federal Procurement Policy,
consider whether a comprehensive regulation concerning contracting with
retired employees should be issued as part of the proposed Uniform
Procurement System.
B-198512, March 5, 1981, 60 Comp.Gen. 295
Subsistence - Actual Expenses - Hours of Departure, etc. - Excursion
Rates - Delay in Travel to Obtain
Employees who traveled on a nonworkday in order to take advantage of
a reduced air fare may be considered in a travel status and authorized
and paid an extra day's actual assistance where the cost of subsistence
is more than offset by the savings to the Government through use of the
reduced fare. Agency's bulletin, to the extent that it is inconsistent
with Federal Travel Regulations, need not be followed.
Matter of: Charles W. Miller - Reimbursement for expenses necessary
to obtain reduced air fare, March 5, 1981:
Mr. Richard J. Laulor, an authorized certifying officer with the
Federal Mediation and Conciliation Service (FMCS), requests an advance
decision on the propriety of paying the reclaim of Mr. Charles W. Miller
for an extra day's subsistence expenses incurred in order to obtain
reduced air travel fare. Mr. Laulor requests guidance in light of an
FMCS bulletin which purportedly limits the period for which such
expenses may be reimbursed. We hereby authorize payment for Mr.
Miller's claim, based on the following.
Charles W. Miller, a Commissioner with FMCS stationed in Toledo,
Ohio, was authorized to attend a FMCS seminar in Orlando, Florida, from
November 4 through November 9, 1979. By returning on Saturday, November
10th, Mr. Miller was able to obtain a special air fare which reportedly
reduced his travel expenses by $130. In order to obtain the special
fare, he incurred subsistence expenses for lodging and meals amounting
to $48.68, resulting in a net savings to the Government of $81.32.
Mr. Miller's claim for said expenses however, was suspended by FMCS
on December 5, 1979. He subsequently submitted a reclaim voucher for
the suspended amount which resulted in the instant request from FMCS.
In its Administrative Suspension Statement of December 5, 1979, FMCS
cites a bulletin issued by its Director of Administration on October 15,
1979. The bulletin states in pertinent part:
All FMCS employees who will be attending mini-seminars are requested
to utilize reduced/special airline fares whenever possible.
Reimbursement for subsistence will be limited to the period of
mini-seminar including travel time to and from the site, unless special
work on the mini-seminar requires a longer period of travel. Anyone
leaving his/her official duty station earlier than required or returning
later than required should base claims for subsistence on reconstructed
travel for the period stated above. 79-BUL-161, October 15, 1979.
The regional certifying officer apparently concluded that since the
subsistence expenses were incurred after the close of the conference on
November 9th, but prior to Mr. Miller's return on November 10th, they
were outside of the bulletin's stated period of allowable reimbursement.
In a letter attached to his reclaim voucher, Mr. Miller refers to a
recent Comptroller General decision in which we allowed an employee's
claim for an additional day's per diem incurred in order to qualify for
reduced air fare, since there was an overall savings to the Government,
and the employee acted in a prudent manner. See Lawrence B. Perkins,
B-192364, February 15, 1979, and cases cited therein.
The Perkins decision, supra, is also consistent with several recent
cases involving members of the uniformed services in which we allowed
payment of an employee's "extra" per diem where, as is true in the
present case, the increased travel time did not interfere with the
performance of official duties (e.g., travel occurred on a nonworkday),
was not solely for personal convenience, and the cost of the extra
expenses was more than offset by the savings to the Government. Dr.
Kenneth J. Bart, 58 Comp.Gen. 710(1979); Dr. Alexander W. Teass,
B-194381, August 2, 1979. Although the above cases involve per diem, we
believe that the same principle would apply to actual subsistence. Mr.
Miller traveled on a nonworkday (Saturday), and the cost of the actual
subsistence was more than offset by the savings to the Government
through use of the reduced fare. Thus, he may be considered to be in a
travel status for the extra time required to take advantage of the
reduced fare.
Perkins, supra.
While the above-cited cases support our allowing Mr. Miller's claim,
it is also necessary to consider the effect of the FMCS bulletin. As
will be seen, to the extent that the bulletin is contrary to existing
regulations, it must be disregarded.
The controlling statutory provisions regarding reimbursement for
travel and subsistence expenses of civilian employees are contained in
sections 5701-5709 of title 5, United States Code (1976). Regulations
implementing these provisions are issued by the General Services
Administration and are found at Chapter 1, Travel Allowances, of the
Federal Travel Regulations (FTR) (FPMR 101-7, May 1973). As a
statutorily authorized regulation, the FTR has the force and effect of
law and may not be waived or modified by an employing agency regardless
of the existence of any extenuating circumstances. 49 Comp.Gen. 145,
147 (1969); Johnnie M. Black, B-189775, September 22, 1977.
An examination of the relevant regulations shows that FTR para.
1-1.3a, and 1-3.4b(1), apply to the present case. They provide:
1-1.3. General rules.
a. Employee's obligation. 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."
1-3.4b. Reduced rates.
(1) Use of special lower fares. Through fares, special fares,
commutation fares, excursion, and reduced-rate round trip fares shall be
used for official travel when it can be determined prior to the start of
a trip that any such type of service is practical and economical to the
Government. * * *
We have held that FTR para. 1-3.4b(1) not only permits the use of
special reduced rates but actually requires a traveler to use them for
official travel when it can be determined in advance that it would be
advantageous to the Government. 54 Comp.Gen. 268, 269(1974).
In the present case, Mr. Miller effected a net savings to the
Government, and acted in the manner required of him by the FTR and
decisions of this Office. Indeed, even the FMCS bulletin clearly
instructed him to use reduced airline/fares whenever possible. Any
reading of the FMCS bulletin which would prohibit reimbursement for
expenses incurred by Mr. Miller when so acting must be disregarded as
inconsistent with provisions of the FTR, and cannot be relied on to
suspend his claim. The agency may wish to amend its bulletin to clear
up any inconsistency.
Accordingly, the reclaim voucher submitted may be certified for
payment.
B-199268, March 4, 1981, 60 Comp.Gen. 290
Bonds - Bid - Timeliness - Independent Evidence - Bond Misplaced by
Government Finding - Bid Responsive
Bid found after bid opening to include required bid bond was properly
accepted as responsive despite agency bid opening officials'
announcement at bid opening that there was no bond, since protesting
second law bidder has not submitted independent evidence to refuse
agency's evidence that bond was out of low bidder's control and in hands
of Government before bid opening.
Matter Of: A-1 Acoustical Ceilings, Inc., March 4, 1981:
A-1 Acoustical Ceilings, Inc. (A-1), protests the award of a term
contract to Brandolini Corporation (Brandolini), for partition work in
Philadelphia area Federal buildings under invitation for bids (IFB) No.
GS-03B-04404, issued by the General Services Administration, Region 3,
Philadelphia, Pennsylvania (GSA). It contends that the Brandolini bid
was not accompanied at the time of bid opening by a bid guarantee
required by the IFB and should have been rejected as nonresponsive to
the terms of the IFB, and that the contract awarded to Brandolini should
be terminated and award made to A-1. For the reasons discussed below,
the protest is denied.
The IFB, as amended, set bid opening at 11 a.m. on April 11, 1980.
Paragraph 3.1 of section 0110, "Special Conditions," provides in
pertinent part that "(t)he bidder shall submit with his bid, a bid
guarantee in the penal amount of $90,000."
Paragraph 4 of Standard Form 22, "Instructions to Bidders," included in
the IFB, warns bidders that where a bid guarantee is required by the
IFB, failure to furnish one in the proper form and amount, by the time
set for opening of bids, may be caused for rejection of the bid. See
Federal Procurement Regulations (FPR) Sec. 1-2.404-2 (1964 ed.amend.
121).
Of the three bids GSA received in response to the IFB, Brandolini was
the apparent low bidder, the protester was the second low bidder, and
F&S Quality Construction, Inc. (F&S), submitted the highest bid.
A-1 has submitted affidavits of representatives of the protester and
of F&S who were present concerning the events which transpired during
the bid opening. (Brandolini's representative deposited the firm's bid
on the morning of April 11, 1980, but did not remain for the bid
opening.) A-1's representative avers that when the Brandolini bid was
opened and the GSA employees conducting the bid opening announced that
the bid contained no bid bond, he objected to any further reading of the
Brandolini bid. Both GSA employees again searched for a bond with the
Brandolini bid whereupon one left the room, made a telephone call,
returned, stating that she was told to read the prices entered on the
Brandolini bid, and did so. On April 14, 1980, the A-1 representative
sent a letter to the GSA Assistant Regional Administrator, protesting
any award to Brandolini. The contract was awarded to Brandolini on June
9, 1980. Having received no response to the letter, A-1 filed its
protest with our Office on June 17, 1980.
The protester states that a thorough search for a bid guarantee for
the Brandolini bid was made by the GSA personnel conducting the bid
opening at the time the bids were opened, that no bid guarantee
accompanied the bid at the time, that the Tabulation of Bids for
Brandolini bears the entry "no bid bond," and that according to the
notation on the bid tabulation, a bid bond for the firm was not located
until April 18, 1980 (1 week after the bid opening). A-1 asserts that
where a bond has not been included in the bid, as required by the IFB,
it may not be added at a later date, citing our decisions in Washington
Patrol Services, Inc., B-196997, March 25, 1980, 80-1 CPD 220, and
Engineering Service Systems, Inc., B-192319, July 19, 1978, 78-2 CPD 53.
GSA reports, on the basis of affidavits submitted by the two bid
opening officials, the contract negotiator for the procurement, and the
Chief of the Real Property Services and Sales Branch, that upon
completing the opening and reading of all three bids, the bid opening
officials took the bids and envelopes to the office of the contract
negotiator, who immediately examined the materials and discovered the
Brandolini bid bond attached to the firm's bid package.
GSA states that during the entire time from bid opening until the
contract negotiator's discovery of the Brandolini bid bond, all three
bids and envelopes were in the possession and view of the two bid
opening officials or the contract negotiator and that they were neither
tampered with nor was anything removed from or added to them.
The contract negotiator states in her affidavit that when the bids
and envelopes were brought to her office at about noon on April 1, 1980,
she immediately looked at the Brandolini bid, stapled to the upper left
corner of which was a small, brown, letter-sized envelope in which she
found the firm's bid bond folded in thirds like a letter. Although one
of the bid opening officials was in the room at the time, the contract
negotiator did not say anything to her, but completed her examination of
the bids and placed them in a locked file cabinet in her office.
Sometime between April 11 and 16, 1980, she advised her superior, the
Branch Chief, that she had found the bond. (The Branch Chief avers that
she was so informed on April 14, 1980, the next working day following
the bid opening.) She further states that the envelope or envelopes
containing the Brandolini bid were discarded after bid opening but
before A-1 filed its protest with our Office, and that she customarily
discards bid envelopes shortly after bid opening unless they are late
bids.
The bid bond (Standard Form 24) is dated April 11, 1980, refers to
the instant IFB with the Brandolini Corporation as principal and
Fidelity and Deposit Company of Maryland as surety, and is in the penal
amount of $90,000. Brandolini states that at the time the firm
submitted its bid, a bid bond was enclosed with the bid from in
accordance with the requirements of the IFB and FPR Sec. 1-2.404-4 (1964
ed.circ. 1).
A-1, however, argues that none of the four persons present at the bid
opening saw the brown, letter-sized envelope in which the bond was
purportedly discovered. The protester takes the position that it is not
difficult for anyone to ascertain the contends of a bid envelope, that
neither of the two bid opening officials saw a bond in the Brandolini
envelope which they searched at least three times during the bid
opening, and that it simply beyond belief that they would not have seen
it. A-1 questions why upon finding the bond the contract negotiator did
not tell the bid opening officials of her discovery or so inform the
Branch Chief until several days after opening and did not delete the
entry, "no bid bond" on the Brandolini bid tabulation until April 18,
1980. A-1 believes that GSA's failure to retain the bid envelopes under
the circumstances, as required by General Services Administration
Procurement Regulations (GSPR) Sec. 5A-2.402(m) (1979 ed.), further
indicates that there was no bid guarantee accompanying the Brandolini
bid at the time of the bid opening, citing GSPR Sec. 5A-2.402(h) (1979
ed.), and that neither GSA nor Brandolini should be permitted to make
the firm's bid responsive by adding a bid guarantee which was not
present at the time specified in the IFB for bid opening.
The protestor concludes that the contracting agency's actions in
handling the bid opening tainted the procurement, constitute
improprieties and conduct tantamount to fraud, and together with the
agency's failure to respond to A-1's protest to the Assistant Regional
Administrator impugn the integrity of the bidding process.
GSA notes that we have held that the furnishing of a bid bond is a
material requirement which cannot be waived, and that failure to submit
one before bid opening renders a bid nonresponsive, Engineering Service
Systems, Inc., supra. Further, that the contracting agency may reject a
bid as nonresponsive, notwithstanding the bidder's assertion that the
bond was included in its bid package and was in the agency's control
before bid opening, where the bidder's contentions are not supported by
independent evidence from other than the bidder's employees or surety to
establish that the bond was submitted to the agency before bid opening
citing our decisions in P. W. Parker, Inc., B-190286, January 6, 1978,
78-1 CPD 12; Roderick Construction, B-193116, January 30, 1979, 79-1
CPD 69; and Washington Patrol Service, Inc. supra. Unlike those cases
in which the low bidder protested the rejection of its own bid for
failure to submit a bid bond, GSA points out that here A-1, the second
low bidder, has protested Brandolini's alleged failure to timely furnish
a bid bond before bid opening, GSA argues that our decision in the
Parker case shows both that a bid opening officer's statement concerning
the existence of a bid bond at the time of the bid opening is not
dispositive and that the contracting agency's determination as to the
existence of a bond will be sustained absent persuasive, independent
countervailing evidence. GSA contends that A-1 has not submitted such
evidence. GSA believes that the affidavits of the bidders'
representatives who attended the bid opening are consistent with those
of the agency's bid opening officers, but show only that at the bid
opening there appeared to be no Brandolini bid bond and do not refute
the contract negotiator's affidavit that she later located the missing
bid guarantee. Contrary to the protester's assertions, the agency
explains, the April 18 notation on the Brandolini bid tabulation is only
the date the notation (deletion of the entry, "no bid bond") was made,
not the date the bid bond was found. GSA therefore concludes that the
protester's evidence supports the contracting agency's determination
that a bid bond was properly submitted by Brandolini, that an honest
oversight by the bid opening officials created an appearance to the
contrary, and that such a mistake should not be permitted to disqualify
the low responsive, responsible bidder or to deprive the Government of a
contract awarded at the lowest competitive price.
We stated in Parker that the focus of decisions which allows
deviations from the bid bond requirement is that there must be
independent affirmative evidence that the bid bond was (1) out of
control of the bidder and (2) in the hands of the Government before bid
opening. In Parker, the bid opening officer erroneously announced that
the protester's bid included a bid bond on the basis of the protester's
indication to that effect in its bid. Shortly after bid opening,
however, the agency's contracting specialist discovered that a bid bond
had not been included with Parker's bid; upon retracing his steps and
searching the bid documents, no bid bond was found. We held that
contrary to Parker's assertion that we should assume from the bid
opening officer's announcement that the Government lost the firm's bid
bond, the fact that a thorough search of the bid after bid opening did
not produce a bond indicated that the bond was not misplaced by the
Government and that Parker failed to meet its burden of establishing by
independent evidence that the required bond was submitted with its bid.
We agree with GSA that the evidence submitted by A-1 does not meet
the standard set forth in the above-cited cases. The affidavits offered
by A-1 are those of representatives of the bidders who attended the bid
opening and, therefore, not independent evidence. More importantly, the
affidavits of the bidders' representatives are essentially consistent
with those of the GSA bid opening officials as to events in the bid
opening room, but provide no insight into the events surrounding
discovery of the bond. The affidavits of the agency's contract
negotiator and Branch Chief do not conflict with one another and
constitute independent affirmative evidence that the bid bond was out of
Brandolini's control and in the hands of the Government before bid
opening. See 40 Comp.Gen. 469, 472(1961); cf. S. Puma and Company,
Incorporated, B-182936, April 17, 1975, 751 CPD 230. We therefore
conclude that GSA's acceptance of the Brandolini bid as responsive was
proper. Accordingly, the protest is denied.
We share, however, the protester's concern with GSA's failure to
respond to A-1's objections to the consideration of Brandolini's bid.
FPR Secs. 1-2.407-8(a)(1) and 1-2.407-8(b)(1) (1964 ed.amends. 139 and
68) require that contracting officers consider all protests or
objections regarding the award of a contract made before or after award
ans that written confirmation or oral protests be requested if the
matter cannot otherwise be resolved.
See GSPR Sec. 5A-2.407-8(a) (1979 ed.). We believe it would not be
unreasonable to view the A-1 representative's oral objection to the
reading of Brandolini's bid prices during the bid opening as an oral
protest. The protester's April 14 letter objecting to any award to
Brandolini was unanswered for almost 2 months apparently because it was
addressed to the Assistant Regional Administrator rather than to the
contracting officer. The failure to respond to the protester's letter
is contrary to the agency's interest and our own policy urging that
protesters initially seek resolution of their complaints with the
contracting agency. 4 CFR 20.2(a)(1980). The matter is being called to
the attention of the GSA Administrator by letter of today.
B-199050, March 2, 1981, 60 Comp.Gen. 288
Contracts - Labor Stipulation - Service Contract Act of 1965 - Minimum
Wage, etc. Determinations - Locality Basis for Determination -
Court-Decision Effect
When Department of Labor adopts final rule indicating that it will
follow Court of Appeals decision, issued after date of solicitation, and
will examine procurements on case-by-case basis to determine appropriate
locality for wage determinations, protest that minimum hourly wage rates
were improperly set on nationwide basis is denied.
Matter of: Hayes International Corporation, March 2, 1981:
Hayes International Corporation protests the award of a contract
under a Federal Aviation Administration solicitation for painting of a
single airplane, arguing that the minimum hourly wage rates specified in
the solicitation pursuant to the Service Contract Act of 1965, as
amended, 41 U.S.C. 351(a)(1)(1976) (SCA), were improperly set on a
nationwide basis.
Hayes cites a recent U.S. Court of Appeals decision, Southern
Packaging and Storage Co., Inc. v. United States, 618 F.2d 1088(4th Cir.
1980), which held that for wage determination purposes, "locality" as
used in the SCA refers to the Standard Metropolitan Statistical Area
where the bidding party's plant or facility is located. Hayes' wage
rates, which were established by a collective bargaining agreement, were
less than those specified in the solicitation.
During development of the protest, the Department of Labor (DOL)
published final rules which indicate that it will follow Southern
Packaging. In the future, the regulation states, DOL will examine each
procurement on an individual basis to determine the appropriate locality
or localities for wage determinations. 46 Fed.Reg. 4320 at 4326, 4348
(1981). But see 29 CFR 4.53(b), as revised at 46 Fed.Reg. 4348(1981)
with respect to successor contractors). We are denying Hayes' protest.
Hayes recognizes that under prior decisions of our Office, it could
not have prevailed. E.g., The Cage Company of Abiline, Inc., 57
Comp.Gen. 549(1978), 78-1 CPD 430. Cage also concerned a contract whose
actual place of performance was not known prior to contract award except
in terms of broad geographic scope. DOL established a five-state
"composite" prevailing wage rate as applicable to the contract. While
we disagreed with DOL's position that its "flexible" approach, which it
viewed as placing all bidders on an equal footing with respect to wage
rates, was necessary to effectuate the purpose of the SCA, we
nonetheless concluded that:
DOL's use of a wide geographic area * * * as the locality basis for a
wage determination in connection with a procurement conducted by (a GSA)
regional office, when it is not known where the services will be
performed, is not clearly contrary to law.
We stated that the legislative history of the SCA did not indicate
that the Congress intended to eliminate any competitive advantage held
by a firm which operated in an area with lower prevailing wages than
other prospective contractors. Our conclusion, however, was based on
testimony to the contrary, presented during Congressional hearings on
regulations proposed by the Department of Labor in 1975, and a planned
Executive Branch review of the entire problem.
The Fourth Circuit is the first Court of Appeals to construe
"locality," as used in the SCA. We note that it affirmed a lower court
ruling for three reasons. First, DOL indicated that in 98 percent of
requested determinations, the Standard Metropolitan Statistical Area
provides an appropriate base for mean average wages, and that a
nationwide minimum wage rate is used only one-half of one percent of
requested determinations. The court found this was not an undue burden.
Second, the court believed that the definition of "locality" as a
"particular spot, situation, or location" could not, by common SENSE, BE
CONSIDERED SYNONYMOUS WITH NATIONWIDE. THIRD, THE COURT distinguished
"locality" as used in the Walsh-Healey Act from the term used in the
Service Contract Act. Both the Court of Appeals and the lower court in
Southern Packaging adopted the view of Descomp, Inc. v. Sampson, 377
F.Supp. 254 at 265 (D. Del. 1974), which, in turn, had relied on 1965
testimony of the then-Solicitor of Labor before a Congressional
subcommittee that the term "locality" was comparable to that used in the
Davis-Bacon Act, and meant the city, town or village in which the
contract was to be performed.
In a footnote, the Court of Appeals stated that it did not accept
Southern Packaging's contention that national wage rates were never
permissible, since there might be "rare and unforeseen" service
contracts which might be performed at locations throughout the country
and which would generate truly nationwide competition. Whether national
wage rates might be permissible under these circumstances was not
decided.
Although we agree with the Court of Appeals, we note that the
protested solicitation was issued before the decision was rendered and
closed before the time for seeking review by the Supreme Court had
expired. The resulting contract had been awarded and performance
completed long before DOL announced its decision to follow Southern
Packaging and issued implementating regulations. Under these
circumstances, we do not believe it appropriate to disturb the action
taken.
The protest is denied.
B-191662, March 2, 1981, 60 Comp.Gen. 285
Officers and Employees - Transfers - Relocation Expenses - Miscellaneous
Expenses - Appliances - Disconnection and Reinstallation
Transferred employee who had water line run from supply pipe to ice
maker in refrigerator at new duty station may be reimbursed for the
cost, including pipe used, under miscellaneous expenses allowance.
Drilling hole in wall is not "structural alteration" since it is
necessary for connection and proper functioning of refrigerator. Prior
decisions to contrary will no longer be followed. Officers and
Employees - Transfers - Relocation Expenses - Miscellaneous Expenses -
Structural Alteration or Remodeling - Appliance Reinstallation -
"Alteration" Status
Transferred employee who has gas line connected to and vent pipe run
from clothes dryer at new duty station may be reimbursed for the cost,
including pipe used, under miscellaneous expenses allowance. Necessary
holes in walls are not "structural alterations" since they are necessary
for connection and proper functioning of dryer. Prior decisions to
contrary will no longer be followed. Officers and Employees - Transfers
- Relocation Expenses - Miscellaneous Expenses - Telephone
Reinstallation - Comparable Service
Where transferred employee at new duty station acquires level of
telephone service comparable to what he had at old duty station, total
installation charges may be reimbursed under miscellaneous expense
allowance, even where "jacks" have been installed. Prior decisions to
the contrary will no longer be followed. General Accounting Office -
Decisions - Overruled or Modified - Prospective Application
Holdings allowing reimbursement under miscellaneous expense allowance
for cost of connecting ice maker and connecting and venting clothes
dryer are substantial departure from prior decisions and will be applied
only to cases in which the expense is incurred on or after date of this
decision. However, claimant here may be reimbursed in accordance with
this decision.
Matter of: Prescott A. Berry - Miscellaneous Expense Allowance,
March 2, 1981:
The issues presented here concern what items may be included in the
reimbursement of miscellaneous expenses paid to an employee at the time
of his transfer. The items specifically raised are the installation of
a water line to an ice maker in the refrigerator, the installation of a
gas line to and vent from a clothes dryer, and the acquisition of a
comparable level of telephone service in the employee's residence at his
new duty station. For the reasons set forth below, all of the above
items may be included within the reimbursement of miscellaneous
expenses. Prior decisions to the contrary will not longer be followed.
Mr. Prescott A. Berry, an employee of the Internal Revenue Service,
was transferred to Philadelphia, Pennsylvania. In order to complete the
installation of the refrigerator that he had transported from his old
duty station, it was necessary to drill a one-fourth inch hole in the
floor and run tubing from the water supply pipe to the ice maker in the
refrigerator.
In order to connect the gas clothes dryer, which was also brought from
the old duty station, it was necessary to drill a one-inch hole in the
wall, extend an existing gas line for approximately one foot, and run a
gas supply line from there to the dryer. It was also necessary to cut a
four-inch hole in the outside wall to connect the vent pipe.
Additionally, Mr. Berry had a telephone "jack," along with the basic
service, installed. He states that the telephone equipment installed
merely duplicated the service that existed at his prior duty station.
The costs of these installation or connection charges were: (TABLE
OMITTED)
On the basis of various decisions of this Office, the agency
disallowed Mr. Berry's claim for inclusion of all of the above items in
the miscellaneous expense allowance. On the same grounds our Claims
Division, in Settlement Certificate Z-2473522, October 5, 1977,
sustained that disallowance. Mr. Berry appealed that settlement, but in
Matter of Prescott A. Berry, B-191662, December 28, 1978, the
disallowance was again sustained. Mr. Berry has requested that the
entire matter again be reviewed.
The holding in our decision of December 28, 1978, is based upon
paragraph 2-3.1(c)(13) of the Federal Travel Regulations. (FPMR 101-7)
(May 1973) (FTR), which lists costs which may not be included within the
reimbursement for miscellaneous expenses. Subparagraph 13 excludes:
Costs incurred in connection with structural alterations; remodeling
or modernizing of living quarters, garages or other buildings to
accommodate privately owned automobiles, appliances or equipment; or
the cost of replacing or repairing worn-out or defective appliances, or
equipment shipped to the new location.
Mr. Berry contends that the work done to connect and accommodate his
dryer and refrigerator was not structural in nature, but was only what
was necessary to connect these appliances.
As a result of this appeal, we have reviewed the decision in Mr.
Berry's case and our other decisions involving appliance connection
fees. We find that these decisions have unnecessarily focused on the
exclusionary language of FTR para. 2-3.1c(3) rather than on FTR para.
2-3.1b(1), which lists among the types of costs intended to be
reimbursed as part of miscellaneous expenses:
* * * Fees for disconnecting and connecting appliances, equipment,
and utilities involved in relocation and costs of converting appliances
for operation or available utilities * * * .
Clearly, there can be a conflict between the two quoted sections. At
some point the work involved in installing appliances in a transferred
employee's new residence can exceed that normally associated with
connection and can become that of structural alteration or remodeling.
Exactly when that point may be reached is a factual question.
Although we do not believe that the term "structural alteration" is
susceptible to precise definition, we agree with Mr. Berry's view that
it was not intended to include a change so minimal as cutting a hole
through a wall or other barrier for the purpose of connecting or venting
appliances, a purpose clearly within the ambit of the miscellaneous
expenses allowance.
Thus, while each case must be individually considered, we have
concluded that our decisions in this area have been unnecessarily
restrictive in that they tend to relegate the transferred employee to
that level of appliance or equipment service already in the residence
which he has leased or purchased at his new duty station. Further, a
definition which includes drilling or cutting a hole in a wall as a
"structural alteration," includes changes that can only be categorized
as de minimis. This result is the current rule and is not altogether
consistent with the purpose of the miscellaneous expenses allowance
which, in part, was intended to reimburse costs the employee incurs in
relocating appliances and equipment to his new residence and
re-establishing the level of service he had at his old station.
Of course, in achieving a comparable level of appliance service at
his new duty station, an employee must work within the confines of the
new residence. Installing new utility service in a residence or
altering the basic structure of the residence in order to permit use of
appliances or other possessions would not come within the cost allowance
as miscellaneous expenses under this decision.
As we have indicated the determination is a factual one and should be
made by the certifying officer or other appropriate official after a
consideration of the circumstances in each case. The emphasis should be
on whether the claimed expenses were necessary to connect the appliances
in such a way that they can function properly and legally. The cost of
parts, such as pipes or wire, reasonably necessary to connect the
appliances to the existing utility service may be reimbursed as
connection costs, since the precise sizes and types of such connecting
materials are dependent upon the physical layout of each residence.
Although Mr. Berry does not specifically challenge our denial of his
claim for installation of telephone service at his new duty station, we
find that he has been improperly denied reimbursement for the
installation cost of a new telephone "jack." While our decisions on this
point have not been consistent, we held in B-170589, November 13, 1970,
that the cost of having a telephone "jack" installed in the employee's
new residence was reimbursable as a miscellaneous expense where, as in
Mr. Berry's case, the employee had similar service at his old duty
station.
The result in B-170589 is consistent with the purpose of FTR para.
2-3.1b(1) as discussed above. Therefore, our prior decision disallowing
Mr. Berry's claim in the amount of $16.42 is overruled and he may be
reimbursed for that amount. Decisions to the contrary will no longer be
followed.
Since our holding with respect to the connection costs claimed by Mr.
Berry represents a substantial departure from long-held positions which
have been justifiably relied upon by certifying and disbursing officers,
it will be applied prospectively only-- to cases where the expense in
question is incurred on or after the date of this decision. However,
the holdings will be applied to the specific claims presented by Mr.
Berry, and he may be reimbursed for the amounts set out above. See
Matter of George W. Lay, 56 Comp.Gen. 561(1977).
Accordingly, a settlement will be made in the amount found due.
B-199550.5, February 27, 1981, 60 Comp.Gen. 283
Contractors - Responsibility - Determination - Review by GAO - Effect of
Issuance of Certificate of Competency by SBA - Definitive Responsibility
Criteria
Where Small Business Administration (SBA) headquarters was aware of
definitive responsibility criteria in solicitation but decides
compliance with criteria is not necessary for issuance of Certificate of
Competency (COC), protester's "vital information" regarding small
business concern's ability to meet invitation for bid's definitive
responsibility criteria is irrelevant to SBA's decisions and SBA's
alleged failure to consider that information provides no basis for
General Accounting Office review of SBA's action.
Matter of: E-Systems, Inc., February 27, 1981:
E-Systems, Inc. requests reconsideration of our decision in Sentinel
Electronics, Inc.; E-Systems, Inc.; Cincinnati Electronics Corporation,
B-199550.2, B-199550.3 and B-199550.4, January 29, 1981, 60 Comp.Gen.
202, 81-1 CPD 52. Concurrent with its request for reconsideration,
E-Systems also protests the proposed award of a contract to Sentinel.
Since both actions are based on the same facts, we will render one
decision.
The prior decision primarily dealt with whether the second low
bidder, Cincinnati, had violated the solicitation's level option pricing
provision; it also dismissed E-Systems' protest that Sentinel (the
third low bidder and a small business) could not meet the definitive
responsibility criteria of the solicitation. That protest was dismissed
because the matter had been referred to the Small Business
Administration (SBA) for the possible issuance of a Certificate of
Competency (COC) and the SBA had informally advised us that it had
considered the solicitation's definitive responsibility criteria and
that a COC would be recommended.
Both the E-Systems' request for reconsideration and protest are
"based on knowledge and belief" that SBA headquarters did not consider
certain vital information regarding Sentinel's ability to meet the
definitive responsibility criteria. Since by law SBA conclusively
determines a small business firm's responsibility by issuing or refusing
to issue a COC, 15 U.S.C. 637(b)(7)(A) (Supp. I 1977), we ordinarily
will not question SBA's issuance of a COC unless the protester makes a
showing of either fraud or bad faith on the part of Government officials
or that SBA did not consider certain vital information bearing on the
small business bidder's compliance with the definitive criteria. J.
Baranello and Sons, 58 Comp.Gen. 509(1979), 79-1 CPD 322; Uniflite,
Inc., B-197365, January 23, 1980, 80-1 CPD 67. The "vital information"
referred to in Baranello essentially concerns SBA's awareness of the
definitive criteria imposed by the procuring activity, and, where SBA
chooses to determine a bidder's ability to comply with the criteria,
information directly bearing on that capability. See Uniflite, supra.
Where SBA decides that compliance with the definitive criteria is not
necessary for issuance of a COC in a particular case (we have recognized
that there is "no limitation on the SBA's authority which would bind
that agency to the actual requirements of" definitive responsibility
criteria contained in a solicitation. Baranello, supra; Baxter & Sons
Elevator Co., Inc., 60 Comp.Gen. 97(1980), 80-2 CPD 414), the "vital
information" test is met so long as SBA was aware of the criteria.
In this case we understand from SBA that it was aware of the
invitation's responsibility criteria and that it ultimately determined
that Sentinel could perform the contract whether or not it actually met
the criteria. Thus, the "vital information" about which the protester
is concerned is not relevant here, although we further understand that
SBA headquarters, when considering the matter, did have before it the
information to which E-Systems refers.
We affirm our prior decision and dismiss E-systems' protest.
B-199388, February 26, 1981, 60 Comp.Gen. 281
Officers and Employees - Transfers - Relocation Expenses - Temporary
Quarters - Subsistence Expenses - Declining Rate of Reimbursement
Employee, who transferred to new duty station, occupied temporary
quarters and was jointed by his family during second 10-day period of
temporary quarters at new station. He claims reimbursement for them
based upon higher rate applicable during first 10-day period. Claim is
denied since regulations governing temporary quarters provide for
reimbursement based on 10-day periods beginning when either employee or
a family member first occupies temporary quarters, irrespective of when
other family members begin to occupy temporary quarters.
Matter of: Earl B. Amey - Claim for Temporary Quarters Subsistence
Expenses February 26, 1981:
The issue in this case is whether, incident to a transfer, an
employee who preceded his family may claim reimbursement for his family
for temporary quarters subsistence expenses at the rate for the first
10-day period when the family begins occupying temporary quarters during
the second 10-day period of his occupancy. We hold that the employee is
limited to the rate applicable for each 10-day period of temporary
quarters occupancy, irrespective of when his family members begin
occupying temporary quarters.
Mr. Lorin D. Anderson, Chief, Branch of Finance, Bureau of Mines,
U.S. Department of the Interior, has requested our decision concerning
the claim of Mr. Earle B. Amey, an employee of the Bureau of Mines, for
additional reimbursement for temporary quarters subsistence expenses in
connection with his transfer from Boulder City, Nevada, to Washington,
D.C. Mr. Amey preceded his family to the new duty station and he was
reimbursed for 10 days of temporary quarters subsistence expenses at the
rate applicable for the first 10-day period.
This payment is not in dispute. During the second 10-day period Mr.
Amey was joined at the new duty station by his two children and later by
his wife, and he was reimbursed at the lower rate applicable for the
second 10-day period. Mr. Amey agrees that an employee is limited to 30
consecutive days of temporary quarters, but he argues that the rate of
reimbursement does not correspond to the consecutive day rule. That is,
he argues that when his children and his wife joined him for the second
10-day period he should be reimbursed for them at the first 10-day rate.
Under the provisions of 5 U.S.C. 5724a(a)(3)(1976) employees who are
transferred may be reimbursed for the subsistence expenses of the
employee and his immediate family for a period of 30 days while
occupying temporary quarters. This statute clearly states that
reimbursement for subsistence expenses actually incurred may not exceed
the maximum per diem rates for the first 10 days of the period,
two-thirds of the rates for the second 10 days, and one-half of the
rates for the third 10 days.
The implementing regulations contained in the Federal Travel
Regulations (FTR) (FPMR 101-7 May 1973), provide that the period for
temporary quarters runs for not more than 30 consecutive days. FTR
2-5.2a. These regulations provide further in para. 2-5.2f as follows:
Computation of 30 or 60 days allowable. In computing the length of
time allowed for temporary quarters at Government expense under the 30-
or 60-day limitations specified herein, such time will begin for the
employee and all members of his immediate family when either the
employee or any member of the immediate family begins the period of use
of such quarters for which a claim for reimbursement is made and the
time shall run concurrently. The employee may occupy temporary quarters
at one location while members of the immediate family occupy quarters at
another location. The period of eligibility shall terminate when the
employee or any member of his immediate family occupies permanent
residence quarters or when the allowable time limit expires, whichever
occurs first.
We have held in interpreting this regulation that the 30-day period
runs concurrently for all family members. B-174695, January 24, 1972.
Therefore, the remaining question is whether the declining rate of
reimbursement also runs concurrently for all family members.
Paragraph 2-5.4c of the FTR sets for the rules on computing the
maximum allowable amount for temporary quarters reimbursement as
follows:
Computation of maximum. The amount which may be reimbursed for
temporary quarters subsistence expenses shall be the lesser of either
the actual amount of allowable expense incurred for each 10-day period
or the amount computed as follows:
(1) For the first 10 days.
(a) For the employee, a daily rate not in excess of 75 percent of the
maximum statutory per diem rate for the locality in which temporary
quarters are located; and
(b) For each member of the employee's immediate family, two-thirds of
the daily rate established in (a), above.
(2) For the second 10 days.
(a) For the employee, two-thirds of the daily rate established in
2-5.4c(1)(1); and
(b) For each member of the employee's immediate family, two-thirds of
the daily rate established in 2-5.4c(1)(b).
(3) For the third 10 days and for any portion of an authorized
additional 30 day period.
(a) For the employee, one-half of the daily rate established in
2-5.4c(1)(a); and
(b) For each member of his immediate family, one-half of the daily
rate established in 2-5.4c(1)(b). * * *
It is our view that this regulation requires reimbursement computed
on the basis of three 10-day periods irrespective of whether the
employee claims reimbursement for members of his immediate family during
those periods. If, as in this case, the employee does not claim
temporary quarters reimbursement for his spouse or children until the
second 10-day period, the rate of reimbursement must be limited to that
provided for the second 10-day period as set forth in FTR para.
2-5.4c(2)(b).
Although this may appear to create a hardship for those employees who
travel to a new station in advance of their families, we point out that
employees have the option of delaying the starting date of their claim
for temporary quarters until their families join them at the new duty
station, provided they comply with the time limitations set forth in the
FTR, para. 2-5.2e. See Ronald H. Brown, B-193412, August 3, 1979, and
B-177842, March 27, 1973.
Accordingly, Mr. Amey's claim for additional reimbursement for
temporary quarters subsistence expenses is denied.
B-198894, February 23, 1981, 60 Comp.Gen. 275
Contracts - Negotiation - Responsibility of OFFERORS -
RESPONSIBILITY-RELATED CRITERIA - SECURITY Clearance - Military
Procurement
Solicitation requirement that offeror demonstrate that it had or
could obtain necessary security clearances by contract performance date
relates to offeror's responsibility. Contracts - Awards - Small
Business Concerns - Certifications - Mandatory Referral to SBA -
Security Clearance Requirement
Army decided that small business otherwise eligible for award was
nonresponsible because business lacked required security clearances to
perform contract; however, Army did not refer nonresponsibility
decision to Small Business Administration (SBA) under certificate of
competency procedure. Army's decision was consistent with provisions of
Defense Acquisition Regulation (DAR) but contrary to Small Business Act
Amendments of 1977 and SBA's implementing regulations. Nevertheless,
General Accounting Office will not recommend action leading to possible
termination of contract and disruption of services thereunder since
contracting officer reasonably relied on DAR provisions. Defense
Acquisition Regulation - Small Business Concerns - Nonresponsibility
Determinations - Referral Necessity - "Applicable Laws and Regulations"
Exception - Unauthorized by Law
General Accounting Office recommends that DAR provision, covering
certificate of competency procedures, be promptly revised to eliminate
exception to procedures for nonresponsibility determinations involving
small business' alleged ineligibility to receive award under "applicable
laws and regulations," since legislative history of Small Business Act
Amendments of 1977 and implementing regulations do not provide for
exception. Contracts - Protests - Procedures - Bid Protest Procedures -
Time for Filing - Solicitation Improprieties
Allegations after award that procurement should have been formally
advertised rather than negotiated and that request for proposals
security clearance requirements were excessive are untimely.
Allegations relate to alleged solicitation deficiencies which were
apparent on face of solicitation. Under section 20.2(b) of GAO's Bid
Protest Procedures (4 CFR part 20(1980)), protest should have been filed
prior to closing date for proposals. Contracts - Negotiation - Awards -
Initial Proposal Basis - Propriety
Protests against award on initial proposal basis and small business
size status of awardee are denied since: (1) awardee was not allowed to
change its initial proposal before award; and (2) size status protests
are for review by SBA. Contracts - Negotiation - Offers or Proposals -
Preparation - Costs - Recovery
Claim for proposal preparation expenses is denied since claimant did
not have substantial chance that it would have received award but for
alleged improper actions; moreover, procuring agency actions were not
arbitrary.
Matter of: International Business Investments, Inc.; Career
Consultants, Inc., February 23, 1981:
On May 7, 1980, the Defense Supply Service-Washington of the
Department of the Army issued request for proposals (RFP No. MDA
903-80-R-0122 to procure security guard services commencing July 1,
1980, for a Defense facility. Closing date for receipt of proposals was
June 10, 1980. Eight proposals were received; two proposals (those
submitted by Allied Security, Inc., and Halifax Engineering) were found
acceptable, two were eliminated because they did not contain technical
approaches, and four proposals-- including those submitted by the
protesters-- were eliminated from consideration for award because the
officers did not possess the necessary security clearances. Thereafter,
award was made on an initial proposal basis to Allied, the low
acceptable offeror, on June 12, 1980, under an RFP award standard which
mandated award to the "lowest offeror who submits an offer conforming to
the solicitation, and who is responsive, responsible, and technically
acceptable."
International Business Investments, Inc. (IBI), which submitted the
low offer under the RFP, and Career Consultants, Inc. (CCI), the second
lowest offeror, have protested the rejection of their offers without
referral to the Small Business Administration (SBA) under the
certificate of competency (COC) procedure. Additionally, CCI requests
bid preparation costs. Based on our review of the record, we sustain
IBI's protest; however, we deny CCI's protest and claim.
In regard to the security requirements for the contractor and his
personnel, the RFP stated:
All contractor's employees engaged in the performance of work
pursuant to this contract must have a current security clearance
(Military) authorizing them access to classified information up to and
including TOP SECRET NONFORN. * * * Employees of the contractor shall
not be assigned for classified work pursuant to this contract unless and
until the contractor has been granted necessary security clearance. * *
*
This solicitation contains a Department of Defense Contract Security
Classification Specification (DD Form 254) which requires the contractor
to have or be able to obtain a facilities clearance in accordance with
DOD Regulation 5220.22.
This clearance is required for performance under the contract. Offerors
shall be required to demonstrate that they either have a current
facilities clearance, a current "interim" facilities clearance, or can
obtain one of these (prior to performance).
Both IBI and CCI, as small businesses, contend that the issue of
whether they could obtain the necessary security clearances as required
under the RFP relates to their responsibility, and that the Army should
have referred the matter to the SBA for determination under SBA's COC
procedures.
The Army justified its actions on alternative grounds. The Army
contends that IBI's and CCI's failures to possess top secret security
clearances relate to the "responsiveness" of the offers and not the
concerns' responsibility. (Although the Army has used the term
"responsiveness"-- a term associated with advertised procurements, it is
clear that the protesters' offers were actually considered unacceptable
and rejected solely because of the security requirements of the RFP.)
Alternatively, the Army alleges that it was not required to refer the
matter to the SBA under Defense Regulation (DAR) Sec. 1-705.4(c)(v) (DAC
No. 76-15, June 1, 1978), and 1-903.1(v) (DAC No. 76-15, June 1, 1978),
which state:
1-705.4(c)(v)-- A (COC) referral need not be made to the SBA if a
contracting officer determines a small business concern nonresponsible
pursuant to 1-903.1(v) * * *
1-903.1(v)-- (a prospective contractor must) be otherwise qualified
and eligible to receive an award under laws and regulations * * *
(On August 24, 1980, the authority set forth in DAR Sec.
1-705.4(c)(v) was amended; the substance of that regulation is now
found in DAR Sec. 1-705.4(c)(5) (DAC No. 76-24, August 28, 1980) which
reads:
A (COC) referral need not be made to the SBA if a contracting officer
determines a small business concern to be unqualified and ineligible
pursuant to 1-903.1(v) * * *
DAR Sec. 1-903.1(v) remains in effect as of the date of this
decision.) The Army notes that under "applicable laws and regulations"
the SBA is not authorized to grant security clearances; that neither
CCI nor IBI could be awarded the contract without these clearances; and
that, therefore, the Army properly did not refer the matter to SBA.
In cases involving advertised procurements, we have held that similar
security requirements relate to responsibility. See Ensec Service
Corporation, 55 Comp.Gen. 494(1975), 75-2 CPD 341; 51 Comp.Gen. 168,
172(1971). As we said in Ensec Service Corporation:
We note that * * * the IFB established a requirement for a "Secret"
security clearance in the performance of the contract. * * * a
requirement of this type relates not to bid responsiveness but to bidder
responsibility. * * *
The basis in the cited cases for this position is that a security
clearance relates essentially to a concern's performance capability
rather than the concern's promise to perform the contract requirements,
which involves bid responsiveness.
The negotiated character of the procurement does not change our
conclusion that the requirement here that a contractor demonstrate that
it could obtain the necessary security clearances before performances
relates solely to responsibility. It is clear that the Army considered
the security clearance requirement to be a requirement relating to an
offeror's capability of performing the contract and not a proposal
evaluation factor admitting of comparative degrees of merit. Further
the lowest priced proposal of IBI apparently would have been accepted
for award on an initial proposal basis but for this standard of
responsibility; therefore, we consider the rejection of IBI's proposal
to have been tantamount to a non-responsibility decision and for
referral to the SBA under the COC procedure unless the Army was
otherwise authorized not to refer the decision. See Electrospace
Systems, Inc., 58 Comp.Gen. 415, 425-426(1979), 79-1 CPD 264.
Since CCI proposed a price higher than IBI's price and was,
therefore, ineligible for an immediate award, the Army was not required
to refer the question of CCI's competency to the SBA even if the Army
should have referred the question of IBI's competency. Thus, we deny
this part of CCI's protest.
Under section 501 of the Small Business Act Amendments of 1977, Pub.
L. No. 95-89, 91 Stat. 561, 15 U.S.C. 637, effective August 4, 1977, no
small business may be precluded from award because of nonresponsibility
without referral of the matter to the SBA for a final disposition under
the COC procedure. No exceptions from the referral procedure are
provided for in section 501. Thus, in What-Mac Contractors, Inc., 58
Comp.Gen. 767(1979), 79-2 CPD 179,we concluded that:
* * * there is an apparent conflict between (section 501) which
requires referral to the SBA with respect to "all elements of
responsibility" with no exceptions and (DAR) 1-705.4(c)(v) and
1-903.1(v) which create an exception for nonresponsibility
determinations where the bidder is not otherwise qualified and eligible
for award under applicable laws and regulations. * * *
Nevertheless, in that decision, we concluded that we would "not
consider whether the contracting officer properly relied on (these
regulations)" as an exception to the COC referral procedure "since SBA
has not yet issued appropriate implementing regulations."
On October 19, 1979, SBA issued final implementing rules. These
rules permit no exception to the referral requirements. 13 CFR
125.5(1980).
Subsequently in Z.A.N. Co., 59 Comp.Gen. 637(1980), which did not
involve a small purchase, we reviewed the legislative history of the act
and concluded that there was "no indication that the Congress intended
to limit the authority of the SPA (in COC procedures) to proposed awards
of more than $10,000." We therefore sustained a protest against a
contracting officer's decision to rely on the authority in DAR Sec.
1-705.4(c) (DAC No. 76-19, July 27, 1979), which provided that the COC
procedure was eliminated by DAC No. 76-24, August 28, 1980; however,
DAR Sec. 1-705.4(c) (DAC No. 76-24, August 28, 1980) provides that the
COC procedures do not apply to small purchases.) Nevertheless, we
concluded that the decision should apply only prospectively since the
contracting officer acted in reliance on the existing DAR provision
which provided for the exception to the referral procedure.
We have again reviewed the legislative history of the act. There is
no indication in the history that the Congress intended to permit an
exception to the COC procedure in those instances when a concern is
found to be nonresponsive because it is not "qualified and eligible to
receive an award under applicable laws and regulations." See H.R. Rep.
No. 95-535, 95th Cong.,1st Sess. 18(1977); H. Conf. Rep. No. 95-535,
95th Cong.,1st sess. 21(1977), reprinted in (1977) U.S. Code Cong. & Ad.
News 838, 851.
As noted above, the current DAR provision (Sec. 1-705.4(c)) does not
use the word "nonresponsible" in referring to a contracting officer's
decision that a concern is not "qualified * * * under applicable laws
and regulations"; instead, the phrase "unqualified and ineligible" is
used in referring to the decision. Nevertheless, the different wording
cannot defeat a small concern's right to a COC referral under the act
when compliance with a traditional element of responsibility is involved
as in the subject case. It is also our informal understanding that the
SBA objects to this DAR exception as currently worded and that the SBA's
failure to specifically note its objection to the exception is a recent
letter addressed to the Secretary of Defense was an "oversight."
Thus, we sustain IBI's protest under this specific ground of protest.
Nevertheless, the procurring agency reasonably relied DAR Sec.
1-705.4(c)(v) and DAR Sec. 1-903.1(v), above. Consequently, we will not
recommend any action leading to a possible termination of Allied's
contract and disruption of the security guard services provided for
thereunder. See Z.A.N. Co., supra.
We are, however, by letter of today to the Secretary of Defense,
recommending that the current DAR Sec. 1-705.4(c)(5) and 1-903.1(v) be
promptly revised to eliminate the current exception to the COC procedure
found in these provisions and that, in the interim, contracting
activities be advised to follow the holding of this decision.
Further, although we have concluded that referral to the SBA for COC
consideration is required in these circumstances, it is obvious that the
issuance of the security clearances remains the responsibility of the
appropriate DOD agency. The SBA's issuance of a COC would not be
equivalent to the granting of the required security clearances. The SBA
would determine the small business concern's ability to obtain the
clearances in the time remaining before performance. If the contractor
attempts performance without the security clearances, even though the
contractor has been issued a COC, the contract could be terminated for
default and the contractor held liable for any resulting reprocurement
costs. Additionally, in such circumstances, the Government could be
without the required security guards. Such circumstances need not
result, however, if there is close coordination between SBA and the
appropriate agency issuing the security clearances.
The protesters argue other grounds of protest as a basis for
resoliciting the requirement involved here.
This ground of protest relates to apparent RFP deficiencies; under
Sec.20.2(b)(1) of our Bid Protest Procedures (4 C.F.R.part 20(1980)),
this protest should have been filed prior to the closing date set for
receipt of proposals. Teleprompter of San Bernardino, Inc., B-191336,
July 30, 1970, 79-2 CPD 61. Consequently, this ground of protest is
dismissed.
The argument here is that the Army improperly allowed Allied to
clarify its initial proposal regarding the provision of "radio support
equipment." In response to the request for clarification, Allied assured
the Army that it had "plenty of equipment"; however, the company was
not allowed to change any term of its proposal.
Since the Army did not allow Allied to change the proposal, we reject
this ground of protest. See Fechheimer Brothers, Inc., B-184751, June
24, 1976, 76-1 CPD 404.
SBA, rather than GAO, is authorized to hear small business size
protests. Consequently, we dismiss this ground of protest.
In view of our above analysis, we cannot conclude that there was a
substantial chance the company would have received award but for the
Army action in issue since IBI rather than CCI was the lowest offeror;
moreover, we find no evidence supporting a finding of arbitrary action
on the Army's part. Thus, we deny CCI's claim. See Decision Sciences
Corporation - Claim for Proposal Preparation Costs, 60 Comp.Gen.
36(1980), 80-2 CPD 298.
B-200025, February 20, 1981, 60 Comp.Gen. 271
Contracts - Protests - Persons, etc. Qualified to Protest - Interested
Parties - Potential Subcontractors
Subcontractor which submitted quotations for electrical work to
bidders for prime contract is interested party since basis for protest
is that invitation for bids (IFB) contained incorrect Davis-Bacon Act
wage rates for electricians which would favor potential nonunion
subcontractors. Contracts - Protests - Procedures - Bid Protest
Procedures - "Adverse Agency Action" - Bid Opening Pending Prebid
Opening Protest to Agency
Decision dismissing original protest as untimely is affirmed where no
error of law is shown in original decision. Argument that award of
contract was initial adverse agency action on protest to agency does not
warrant reconsideration where record shows that initial adverse agency
action was opening of bids without taking corrective action on protest,
and protest to General Accounting Office was not filed within 10 days of
bid opening. Contracts - Labor Stipulations - Davis-Bacon Act - Minimum
Wage, etc. Determinations - Effect of New Determination - Ten-Day Notice
Requirement
Where Davis-Bacon Act wage rate revision was published in Federal
Register after bid opening but before award, cancellation of IFB is not
mandatory unless agency intends to modify contract with low bidder to
incorporate new wage rate. Award based on IFB's stated wage rate is
proper since new wage rate was published later than 10 days before bid
opening and is, therefore, not effective under Department of Labor
regulations, 29 C.F.R. 1.7(b)(2)(1980).
Matter of: Rosendin Electric, Inc., February 20, 1981:
Rosendin Electric, Inc. (Rosendin), has requested reconsideration of
our decision dismissing as untimely its protest under invitation for
bids (IBF) No. DACA05-80-B-0105 issued by the United States Army Corps
of Engineers. Rosendin Electric, Inc., B-200025, September 2, 1980.
Rosendin has also raised a new protest issue based upon the award of a
contract on September 5, 1980, to Martin Electric Company, Inc. and
Charles H. Martin, a joint venture (hereinafter referred to as Martin),
pursuant to the subject IFB.
Both the request for reconsideration and the new protest are hereby
denied.
The facts leading to Rosendin's protest were fully set forth in our
September 2, 1980, decision and will be repeated here only insofar as is
necessary. Subsequent to Rosendin's filing of its request for
reconsideration and new issue of protest, we requested and received a
report on this matter from the Corps of Engineers and Rosendin and
Martin were invited to comment on that report.
Rosendin's original protest contended that the IFB was defective
because the prevailing wage rates for electricians, required under the
Davis-Bacon Act, 40 U.S.C. 276(a)(1976), were inaccurately set forth in
the IFB. Rosendin had orally protested this issue to the Corps of
Engineers before bid opening, but bids were opened on July 23, 1980,
without amending the IFB to correct the alleged deficiency. Rosendin
filed a protest on this issue with our Office on August 18, 1980. On
August 22, 1980, the Department of Labor published a new higher wage
rate for electricians in the Federal Register. On September 2, 1980, we
dismissed Rosendin's protest as untimely because Rosendin had not filed
its protest with our Office within 10 days of the initial adverse agency
action (bid opening). On September 5, 1980, the Corps of Engineers
awarded the contract to Martin. Rosendin filed its request for
reconsideration with our Office on September 15, 1980, and
simultaneously protested against the award to Martin based upon the old
wage determination stated in the IFB rather than the new wage
determination as published in the Federal Register on August 2, 1980.
The Corps of Engineers argues, among other things, that Rosendin is
not an "interested party" with standing to protest under section 20.1(a)
of our Bid Protest Procedures. 4 CFR part 20(1980). The Corps of
Engineers believes that Rosendin is not an interested party because
Rosendin did not submit a bid response to the IFB but was merely a
potential subcontractor which had submitted quotations to a number of
firms which did bid for this contract.
We believe that Rosendin is an "interested party" as required under
section 20.1(a) of our Bid Protest Procedures. In determining whether a
protestor satisfies the interested party criterion, we examine the
degree to which the asserted interest is both established and direct.
In making this evaluation, we consider the nature of the issues raised
and the direct or indirect benefit or relief sought by the protester.
The requirement that a party be interested serves to insure the party's
diligent participation in the protest process so as to sharpen the
issues and provide a complete record on which the correctness of the
challenged action may be decided.
However, the concept of an interested party should not be equated with
the concept of standing to sue as developed by the courts. Thus, we
have recognized the rights of nonbidders to have their protests
considered on the merits where there is a possibility that recognizable
established interests will be inadequately protected if our bid protest
forum is restricted to bidders in individual procurements. See Abbott
Power Corporation, B-186568, December 21, 1976, 76-2 CPD 509;
Enterprise Roofing Service, 55 Comp.Gen. 617(1976), 76-1 CPD 5. In the
instant case, it is evidence that Rosendin has a financial interest in
making certain that the correct wage rate for electricians is used since
Rosendin submitted quotations for the electrical work required under the
prime contract to firms which bid in response to this IFB. Furthermore,
Rosendin contends that use of an incorrect wage rate which is too low
would favor a potential nonunion subcontractor over Rosendin which is a
union company. In the circumstances, Rosendin's interest is sufficient
to meet the "interested party" criterion. See Abbott Power Corporation,
supra.
Rosendin's request for reconsideration of our September 2, 1980,
decision is based upon the argument that the initial adverse agency
action on Rosendin's protest to the Corps of Engineers did not occur
until Rosendin received notification that award was made to Martin.
Rosendin argues that the Corps of Engineers did not take action on the
protest and, therefore, award to Martin constituted an implied denial of
the protest and was the initial adverse action by the agency. We do not
agree. Our Procedures require filing with our Office within 10 days of
the initial adverse agency action and actual constructive knowledge of
such action is sufficient to begin running of the 10-day period. 4 CFR
20.2(a)(1980). We have held that opening bids without taking corrective
action on a protest constitutes an adverse agency action on a protest,
Kleen-Rite Janitorial Service, Inc., B-178990, February 19, 1974, 74-1
CPD 78. Even though Rosendin is correct that the award of a contract
may represent an adverse agency action, in the present case, the award
to Martin was not the initial action on the protest. Accordingly, we
find no error of law in our September 2, 1980, decision and, therefore,
reconsideration on this issue is not warranted.
Regarding Rosendin's protest against award to Martin, this issue
differs from Rosendin's original protest by virtue of the publishing of
the new rates in the Federal Register on August 22 and award to Martin
on September 5 without changing the IFB to conform to the published wage
rate revision. Since this issue was filed within 10 days after Rosendin
knew this basis for protest (notification of award to Martin), we find
this protest issue to be timely.
Rosendin relies upon a number of our previous decisions which stand
for, among other things, the proposition that award of a contract
pursuant to the advertising statutes must be made upon the same terms
which were offered to all bidders under the solicitation. Rosendin
derives the general rule from these cases that the minimum wage rates
required under the Davis-Bacon Act cannot be incorporated into the
contract awarded in any other way than by inclusion in the IFB's stated
specifications. Rosendin relies primarily upon our decision in
Dyneteria, Inc., 55 Comp.Gen. 97(1975), 75-2 CPD 36, reconsidered and
affirmed in Tombs & Sons, Inc.-- Request for Reconsideration, B-178701,
November 20, 1975, 75-2 CPD 332, as support for its argument that, where
a new wage rate is issued after bids are opened but before award, the
proper remedy is for the contracting officer to cancel the IFB and
resolicit using the new wage rate. Furthermore, Rosendin contends that
Defense Acquisition Regulation (DAR) Sec. 18-704.2(g)(2)(i)(B)(I) (1976
ed.) is invalid in view of the above decisions, since it would allow a
contracting officer to award the present contract to Martin based upon
the IFB's old wage rate and then amend the contract to incorporate the
new wage rate.
The wage rates in question were required to be included in the IFB
under provisions of the Davis-Bacon Act. The Secretary of Labor is
authorized to issue regulations implementing the act. 40 U.S.C. 276c.
The implementating regulations state at 29 CFR 1.7(b)(2)(1980):
All actions modifying a general wage determination shall be
applicable thereto, but modifications published in the Federal Register
later than 10 days before the opening of bids shall not be effective,
except when the Federal agency * * * finds that there is a reasonable
time in which to notify bidders of the modification. * * *
Thus, since the wage rate revision was not published in the Federal
Register until after bid opening, the new wage rate is not applicable to
the present procurement.
Even though we have recommended canceling a solicitation in
circumstances where the wage rate was modified after bid opening but
before award (See, for example, Dyneteria, Inc., supra.), we do not
maintain that a solicitation must be canceled whenever a new wage
determination is issued less than 10 days before bid opening or after
bid opening but prior to award. If the procuring activity awards the
contract under the old wage determination and the contract is to be
performed under the old wage determination, then the contract awarded is
the contract advertised and there is no need to cancel the solicitation.
If, on the other hand, the procuring activity intends before award to
incorporate the new wage determination into the contract, then, under
the reasoning in the Dyneteria decision, the solicitation should be
canceled and readvertised in order to protect the equality of
competition.
Since we have been informally advised by the Corps of Engineers that it
has not modified the contract with Martin to incorporate the new wage
rate under DAR Sec. 18-704.2(g)(2)(i)(B)(I), and do not intend to, we
will not rule on the validity of the regulation. Accordingly, this
issue of Rosendin's protest is denied.
B-195315, February 20, 1981, 60 Comp.Gen. 268
Contracts - Modification - Additional Work or Quantities - Sole-Source
Procurement Result
Where (1) request for proposals primarily for support of one agency
component did not adequately communicate to potential agency's intent to
award contract which would permit addition of similar teleprocessing
services for another agency component, (2) projected funding was
approximately at rate required to maintain existing support level for
primary component, and (3) agency's conduct does not support its
"intent" position as to scope of contract, General Accounting Office
concludes that addition of work from another component to contract
constitutes "procurement" within meaning of Federal Procurement
Regulations. General Services Administration - Services for Other
Agencies etc. - Teleprocessing Services Program (TSP) - Delegation of
Procurement Authority - Absence - Procurement Unauthorized
Recommendation is made that specific, immediate corrective action be
taken by agency which procured teleprocessing support services without
delegation of authority from General Services Administration.
Matter of: Tymshare, Inc., February 20, 1981:
Tymshare, Inc., protests a determination made by the Department of
Health and Human Services (HHS) to satisfy its need for certain
teleprocessing services by adding this work to HHS contract No.
HEW-100-79-0032 with ADP Network Services, Inc. (ADP). Until June 30,
1980, Tymshare performed those services (correspondence tracking, action
document control, and regulation management) for the Health Care
Financing Administration (HCFA) of HHS under a competitively awarded
contract and a later noncompetitive order under Tymshare's Multiple
Award Schedule Contract with the General Services Administration (GSA);
the order expired on June 30, 1980. In February 1979, ADP was
competitively awarded its contract for similar teleprocessing services
in support of the Executive Secretariat of HHS. When HHS's order with
Tymshare expired, HHS determined that it was in the Government's best
interests to support HCFA under the ADP contract.
Tymshare contends that HHS's determination is improper because (1)
support for HCFA is not within the scope of the ADP contract, (2) HHS's
action constitutes an unjustified sole-source procurement, and (3) GSA
did not authorize HHS to support HCFA under the ADP contract by issuing
a delegation of procurement authority (DPA) as required by 40 U.S.C.
759(1976) and GSA's implementing regulations. GSA essentially concurs
with Tymshare. HHS contends that its action is not a "procurement" and,
therefore, was reasonable, proper, and in the Government's best
interests. ADP concurs with HHS.
Dialcom, an interested party, argues that a competitive procurement to
support HCFA is the proper result.
We conclude that Tymshare's protest is meritorious and we recommend
specific, immediate corrective action.
Our primary concern is whether HHS effectively communicated its
intent in the solicitation (request for proposals (RFP) No.
129-79-HEW-OS) resulting in the ADP contract to support HCFA along with
the Secretariat or whether HHS's action constitutes an unauthorized
procurement, violative of the above statute and regulations.
The RFP's cover page read "Executive Secretariat, Office of the
Secretary-Teleprocessing Services Requirement." The background section
of the RFP's statement of work read as follows: "Whereas the computer
support is generally for day-to-day functions of the Immediate Office of
the Secretary, other department-wide applications will be maintained
under this contract." The purpose of the procurement section of the
RFP's statement of work read as follows: "The purpose of this
procurement is to provide the Office of the Secretary (OS), plus
specified principal operating components (POC), DHEW (now HHS), with
specified data processing service * * * ."
The record provides no indication that the support of HCFA
constitutes a "department-wide application." Further, while the RFP
"specified" what data processing service was required, no principal
operating components were "specified" in the RFP. In our view, the RFP
did not notify Tymshare and other potential offerors that the HCFA
support was to be included in the work being procured. Our view is in
accord with Dialcom's and GSA's; further, because of Tymshare's
continuous interest in supporting HCFA, it seems that had Tymshare known
that its work with HCFA was to be satisfied under that RFP, it would
have competed for that award. In addition, we note that the projected
funding level for the ADP contract was approximately at the rate
required to maintain the level of support provided by the prior
Secretariat-support contractor. We further note that the projected
funding level was the amount contained in the request for procurement
authority from GSA; thus, we believe that neither GSA nor potential
offerors were aware that supporting HCFA-- with its associated more than
100-percent funding level increase in projected costs-- was HHS's intent
by the RFP. Moreover, HHS's failure to transfer the HCFA work then
being performed by Tymshare from the time of the ADP contract award in
February 1979 until June 1980-- even though substantial savings could
have resulted-- does not support HHS's position regarding its initial
intent.
The final points for consideration here are ADP's argument that the
benchmark mentioned HCFA and other HHS components and HHS
representative's statement that the RFP was intended to be broad enough
to permit support of components like HCFA.
Weighing against this position is HHS's acknowledgement that the
benchmark did not include HCFA's applications. We do not need to decide
whether the mere mention of HCFA in the benchmark documents without
including HCFA's applications in the actual benchmark was adequate
notice to potential offerors of HHS's intent because the RFP-- not the
benchmark package-- must notify potential offerors of the purpose and
scope of the procurement. We must conclude here that the RFP did not
adequately convey HHS's intent to procure support for HCFA.
Therefore, in our view, HHS's action in placing the support of HCFA
under the ADP contract constituted a "procurement" within the meaning of
the Federal Procurement Regulations (41 CFR 1-1.209(1979)), for which,
as GSA reports, HHS had no authority. Since we conclude that HHS had no
authority for a competitive or a noncompetitive procurement, we need not
address whether its action constituted an unjustified sole-source
procurement. Accordingly, Tymshare's protest is sustained.
Our recommendation for corrective action must be made with an
appreciation of the circumstances in which HHS's officials made the
determination and the current needs of HHS. First, in April 1979, HHS
issued an RFP to competitively procure support for HCFA but the RFP was
canceled because (1) six of the nine proposed HCFA applications were to
be supported in-house or became unnecessary, and (2) HCFA moved to
acquire its own data center, which would begin providing support for the
remaining three applications (now supported under the ADP contract).
HHS reports that further attempts to support HCFA by a competitive
procurement failed because its needs changed so frequently that there
was insufficient time to conduct a competitive procurement. Second,
after the failure of competitive procurement efforts, near the end of
June 1980, HHS was faced with the requirement to support HCFA by
extending Tymshare's sole-source contract or finding an alternative
method. At that time, HHS and ADP agreed that HCFA could be supported
under the ADP contract without modification to that contract. Third,
HHS reports that supporting HCFA under the ADP contract resulted in
significant savings (about 50 percent) as compared to HHS's costs under
the Tymshare contract.
In view of these circumstances, we recommend that HHS immediately
request an interim DPA from GSA to preserve the status quo for a period
not to exceed 30 days from the date of this decision.
During that period, (1) HHS should present GSA its proposal to support
(HCFA through a competitive procurement until the long-term, data center
solution is available; and (2) we recommend that HHS announce the
precise terms of the current contract under which the HCFA services are
being provided and invite all vendors to submit proposals based on
technically equal services. If a responsible vendor can perform the
work at a better price, then HHS should make a new award immediately.
If not, then no further action would be required regarding the ADP
contract until called for by HHS's long-term solicitation.
Of course, if GSA denies the interim DPA, all teleprocessing support
services for HCFA must be immediately terminated.
By letter of today, this recommendation for corrective action is
being transmitted to the Secretary of HHS.
B-201426, February 19, 1981, 60 Comp.Gen. 266
Pay - Retired - Reduction - Peace Corps Volunteers' Status
Peace Corps volunteers serving under section 5 of the Peace Corps Act
(25 U.S.C. 2504) do not hold "positions" as defined by the dual pay
provisions of 5 U.S.C. 5531 and, therefore, retired Regular officers of
the uniformed services are not subject to retired pay reduction as
required by 5 U.S.C. 5532 for retired Regular officers who hold other
Government positions.
Matter of: Peace Corps Volunteers - Dual Compensation Act, February
19, 1981:
This is in response to a request by the Director of the Peace Corps,
for a decision concerning the applicability of the dual compensation
provisions contained in 5 U.S.C. 5531 et seq. (1976), to retired
Regular officers of the uniformed services who serve as Peace Corps
volunteers. It is reported that the Peace Corps has in the past
recruited a number of retired officers to serve as volunteers overseas
and that if 5 U.S.C. 5532 operates to reduce the retired pay of these
volunteers, such recruitment would be seriously impeded.
The Director has concluded that the retired pay reduction provisions do
not apply to volunteers. We agree.
Subsection 5532(b) of title 5, United States Code, provides in part
that:
(b) A retired officer of a regular component of a uniformed service
who holds a position is entitled to receive the full pay of the
position, but during the period for which he receives pay, his retired
or retirement pay shall be reduced to an annual rate equal to the first
$2,000 of the retired or retirement pay plus one-half of the remainder,
if any. * * *
Item (2) in section 5531 defines "position" as "a civilian office or
position (including a temporary, part-time or intermittent position),
appointive or elective, in the legislative, executive, or judicial
branch of the Government of the United States * * * ." It seems clear
from the language of sections 5531 and 5532 that the retired pay
reduction provisions necessarily contemplate an employment relationship
with the Government. We have held that the essential element in
establishing the applicability or nonapplicability of dual compensation
statutes is whether the arrangements in question give rise to an
employment relationship with the Government. 45 Comp.Gen. 757(1966).
Also, we have held that for the purposes of certain travel allowances
authorized by title 5, United States Code, Peace Corps volunteers are
not considered officers or employees of the United States. See 42
Comp.Gen. 443(1963).
Further, subsection 5(a) of the Peace Corps Act, 22 U.S.C. 2504(a)
provides that " * * * except as otherwise provided in this Act,
volunteers shall not be deemed officers or employees or otherwise in the
service or employment of, or holding office under, the United States for
any purpose." The Act enumerates several statutes to which volunteers
are subject, but does not mention the dual compensation provisions in
this regard.
Additionally, the legislative history of the Peace Corps Act
indicates that volunteers shall not be considered as Federal employees
or as holding office under the United States except as provided in the
Act. House Report No. 1115, 87th Cong. (1961).
In view of the above expression of the clear intent of Congress to
exclude Peace Corps volunteers from the restrictions on benefits
applicable to Federal officers and employees generally, it is our
opinion that the restrictions on the receipt of retired pay for retired
Regular officers of the uniformed services contained in the dual
compensation provisions of title 5, United States Code, do not apply to
Peace Corps volunteers.
B-201898, February 18, 1981, 60 Comp.Gen. 263
Appropriations - Continuing Resolutions - Availability of Funds -
Department of Education - Higher Education Act - Loans/Insurance
Department of Education must make available $25 million in loan funds
under Title VII of Higher Education Act. Provision in continuing
resolution for fiscal year 1981 (Pub. L. No. 96-536) that when
appropriation has passed House only on October 1, 1980, activities in
bill shall be continued under authorities and conditions in 1980
appropriation act, does not prevent funding under resolution of activity
not funded by 1980 act. Resolution in question does not prohibit
funding of Education Department activities not funded in prior year.
Legislative history supports conclusion.
Matter of: Availability of Higher Education Act loan funds under
continuing resolution, February 18, 1981:
The former General Counsel to the Department of Education has
requested our opinion on whether the second continuing resolution for
fiscal year 1981, Pub. L. No. 96-536, 94 Stat. 3166, requires the
Department to make loan funds available under Title VII of the Higher
Education Act of 1965, as amended, Pub. L. No. 96-374, 94 Stat. 1475 (TO
BE CLASSIFIED TO 20 U.S.C. ! 1132D). THE FORMER GENERAL COUNSEL states
in her letter that because the Congress did not make any loan funds
available for this program during fiscal year 1980, there is some doubt
whether funds are available under the continuing resolution. For the
reasons indicated below we conclude that the Congress has released funds
for Title VII loans under the continuing resolution and that the
Department must make these funds available for loans.
Section 731 of the Higher Education Act, as amended by Pub. L. No.
96-374, states:
(a) From the sums available for this part, the Secretary (of
Education) shall make and insure loans to institutions of higher
education and to higher education building agencies for programs
consistent with the purposes of this title. * * *
Section 733 of the Act, 20 U.S.C. 1132d-2, as amended, states:
(a) There is created within the Treasury a revolving loan fund for
the purpose of making and insuring loans under this part (hereafter
called the "fund") which shall be available to the Secretary without
fiscal year limitation. The total of any loans made from the fund in
AND FISCAL YEAR SHALL NOT EXCEED LIMITATIONS SPECIFIED IN APPROPRIATIONS
ACTS.
Under these provisions, the Secretary of Education is to make or
insure loans, using funds from the revolving fund. However, in any
fiscal year the Secretary may use the loan only to the extent provided
by the Congress in an appropriation act. Should the Congress not
specify any amount in an appropriation act, then no funds are released
from the fund for that fiscal year and the Secretary cannot make any
loans. The former General Counsel's letter indicates that the Congress
had not released money from the loan fund since fiscal year 1978.
The Congress has not yet enacted a regular appropriation act for the
Department of Education for the current fiscal year. Rather, the
Department is operating under the terms of the "Joint Resolution making
further continuing appropriations for the fiscal year 1981, and for
other purposes," Pub. L. No. 96-536, so-called continuing resolution.
Subsection 101(a) of the resolution appropriates--
(1) Such amounts as may be necessary for projects or activities (not
otherwise specifically provided for in this joint resolution) for which
appropriations, funds, or other authority would be available in the
following appropriation Acts:
Departments of Labor, Health and Human Services, and Education,
and Related Agencies Appropriation Act, 1981 * * * .
(4) Whenever an Act listed in this subsection has been passed by only
the House as of October 1, 1980, the pertinent project or activity shall
be continued under the appropriation, fund, or authority granted by the
House, at a rate for operations not exceeding the rate permitted by the
action of the House, and under the authority and conditions provided in
applicable appropriation Acts for the fiscal year 1980 * * * .
H.R. 7998, 96th Congress, which is denominated as the "Departments of
Labor, Health and Human Services, and Education, and Related Agencies
Appropriation Act, 1981" (Appropriation Act), as it passed the House of
Representatives, contained the following proviso:
Provided, that $25,000,000, is hereby released from amounts available
in the Higher Education Loan Fund for Graduate Facilities.
Notwithstanding the campus loan limits contained in the regulations, the
Secretary may, in cases of special and critical need, provide funds in
excess of the campus loan limit.
This proviso, if H.R. 7998 were enacted, would authorize the
Secretary to make loans from the revolving fund in fiscal year 1981 in
the total amount of $25 million.
Paragraph (1) of subsection 101(a) of the resolution, quoted above,
makes funds available for each project or activity for which an
appropriation, fund, or other authority would be provided by the
Appropriation Act. Since the Appropriation Act would have provided
authority to the Secretary of Education to use money from the loan fund,
this same authority is available under the continuing resolution.
The second, third and fourth paragraphs of subsection 101(a)
establish the amounts, and any conditions on availability, of the
appropriation made or the authority granted by paragraph (1). Paragraph
(4), quoted above, applies whenever the referenced appropriation act had
passed only the House of Representatives as of October 1, 1980, as is
the case here. Under paragraph (4), the project activity in question
shall operate, first, under the appropriation, fund, or authority
provided by the House, at a rate for operations not exceeding the rate
provided by the House, and, second, under the authority and conditions
provided in the corresponding appropriation act for fiscal year 1980.
Thus, under the first provision of paragraph (4), the amount of funds
available from the revolving loan fund is not to exceed the amount
specified in the House-passed Appropriation Act; that is, $25 million.
The second provision in paragraph (4)-- that the activity operate under
the authority and conditions provided in the fiscal year 1980
appropriation act-- applies only to program provisions; that is,
provisions in the 1980 act controlling the purposes for which the
appropriation, fund, or authority is, or is not, available. See Period
of Availability of Foreign Assistance Loan Funds Appropriated by Fiscal
Year 1980 Continuing Resolutions, B-199966, September 10, 1980. It does
not affect questions of whether or not an appropriation is made, the
amount of the appropriation, or its period of availability.
The former General Counsel states that it could be argued that,
because funds for the loan program were not available in fiscal year
1980, the program cannot be continued in the present year and thus funds
are not available for loans under the continuing resolution. However,
as we have indicated, paragraph 101(a)(1) makes funds available for all
projects or activities which would have been funded by the Appropriation
Act had it become law. There is nothing in subsection 101(a) which
would limit funding to programs which were funded in fiscal year 1980.
Further, the resolution contains no general prohibition against using
funds for projects not funded during the previous fiscal year. Such a
provision was included in continuing resolutions in prior years, and was
deliberately omitted from the first continuing resolution for fiscal
year 1981. H.R. Rep. No. 96-1443 16 (1980). Rather than including such
a general prohibition, the Congress chose to prohibit new programs only
for activities funded under subsection 101(d) of the resolution.
Finally, the legislative history of the resolution indicates a
congressional intent that the Title VII loan program be funded in fiscal
year 1981. For example, in discussing the continuing resolution,
Representative Conte, ranking minority member of the House Committee on
Appropriations stated:
The release of loan funds for graduate academic facilities under the
joint resolution is provided in accordance with the legislative history
of H.R. 7998, and the funds are intended to be immediately available.
126 Cong.Rec. H11711 (daily ed. December 3, 1980).
Similarly, Representative Natcher, Chairman of the Appropriations
Subcommittee for the Department of Education stated:
The 1981 appropriation bill as passed by the House authorizes the
release of $25,000,000 from amounts available in the higher education
loan fund for graduate facilities.
Accordingly, it follows without question that the continuing resolution
provides that same authority in the manner provided by the House-passed
bill, 126 Cong.Rec. H11717 (daily ed. December 3, 1980).
Finally, Senator Eagleton included the following statement in the
Congressional Record:
Mr. President, the release of the loan funds for Graduate Academic
Facilities as contained in the continuing resolution for special and
critical needs will have no impact on the fiscal year 1981 budget. They
are released in accordance with the legislative history of H.R. 7998,
and are intended to be immediately available. * * * 126 Cong.Rec.
S16686 (daily ed. December 16, 1980).
We therefore conclude that the continuing resolution releases $25
million from the Title VII revolving loan fund. Under the mandate of
section 731 of the Higher Education Act, the Secretary is required to
make $25 million available for loans under Title VII.
Employees of the Department of Education have informally taken the
position that the Secretary cannot make funds available for loans from
the revolving fund until final regulations implementing the loan program
have been promulgated. They rely on 20 U.S.C. 1232(g) to support their
position. That provision requires the Department to promulgate final
regulations for certain "applicable programs."
Without necessarily agreeing that 20 U.S.C. 1232(g) applies to this
loan program, we can see no statutory connection between a requirement
to issue regulations for the future implementation of a program and the
Secretary's authority to use the $25 million released from the fund
prior to the promulgation of those regulations. Considering the
purposes for which the Congress released these funds, as shown in the
legislative history, this Office would not object to a decision by the
Secretary to make loan funds available before issuance of regulations.
B-200578, February 18, 1981, 60 Comp.Gen. 260
Contracts - Federal Supply Schedule - Multiple Suppliers - Agency
Issuance of a Request for Quotations - Evaluation Propriety - Price
Omission on Some Items
Where response to request for quotations for items listed on
multiple-award Federal Supply Schedule otherwise acceptable vendor who
is substantially low fails to include price for item, and omitted items
is relatively low in price, contracting officer should evaluate on basis
of omitted items, and, if vendor remains low, issue delivery order to
that vendor.
Matter of: Dictaphone Corporation, February 18, 1981:
Dictaphone Corporation protests the issuance by the Veterans
Administration (VA) of a delivery order to Lanier Business Products,
Inc. under a request for quotations (RFQ) for a dictation system
comprised of components listed on the multiple-award Federal Supply
Schedule.
The system was needed for the VA Medical Center in Altoona,
Pennsylvania. Dictaphone's low quotation for the components was
rejected because the firm failed to quote a price for interconnect
devices which in the VA's view was required by the RFQ. The devices
allow access to central recorders from telephones within the
installation through the central telephone lines. Dictaphone contends
that the RFA did not clearly ask for prices for interconnect devices,
and that the firm's quotation therefore could not be rejected for not
including them.
The protest is sustained.
Quotations were requested for listed equipment and capabilities "in
accordance with VA Specification X-1710," a copy of which was attached
to the RFQ. The cited Specification describes the VA's needs when
acquiring central dictation systems. The RFQ listed under "Ordering
Data" features which were required in the dictation system, and/or
descriptions of capabilities which would not be necessary. For example,
item (c) stated "(t)hree recorders are required," and item (g) stated
that "(n)o conference recording is required." The section did not
mention interconnect devices.
The VA reports that it rejected Dictaphone's quotation simply on the
basis that item (f) of the "Ordering Data" section advised that there
were three PBX (private branch exchange, i.e., regular telephone) lines
and that Dictaphone should have known the dictation system simply could
not interfere with the telephone system without three interconnect
devices. In this respect, item (f) stated that "(t)he existing system
has three internal PBX lines. No additional lines will be required."
Dictaphone protests that the RFQ was ambiguous concerning whether
quotations should be submitted on interconnect devices, because while
the RFQ's "Ordering Data" section did not specifically require a price
for them, a central dictation system of the type the VA wanted would not
work without them. Dictaphone states:
* * * it is generally recognized throughout the dictation equipment
industry that central recorders cannot function properly without the use
of compatible interface devices. Therefore, it seemed paradoxical that
the VA was asking for recorders on one hand, yet on the other hand they
were not asking for interface devices.
Dictaphone chose not to include in its quotation a price for the
interconnect devices on the basis that:
Dictaphone can only respond to the information contained within each
item (of the RFQ's Ordering Data section), * * * we must quote exactly
what is contained within the specifications. We cannot quote more than
the specification asks for * * * .
On that basis, Dictaphone contends that it should receive the
purchase order, albeit not including interconnect devices.
We disagree with the VA's actions here. The VA "rejected" the low
Dictaphone quotation because it was not "responsive" to the RFQ in that
the quote did not include prices for interconnect devices. While it is
not disputed that the proposed Dictaphone system would require
interconnect devices, Dictaphone's failure to quote a price on those
devices did not warrant rejection of the quotation. In this regard, we
point out that vendors were not responding to a request for proposals on
an invitation for bids with an offer that defined exactly what the
vendor would do at what price. Rather, they were responding to an RFQ
which was issued not to solicit price proposals which the Government
could accept or reject, but to obtain quotes on whatever equipment on
the Federal Supply Schedule a vendor would propose to meet the
specifications and general line item descriptions of the RFQ, along with
any trade-in offers. See Lanier Business Products, Inc., B-196189,
B-196190, February 12, 1980, 80-1 CPD 125. Consequently, once the VA
determined that the equipment proposed by Dictaphone would meet its
needs subject only to the addition of the interconnect devices included
on the Schedule, it should have evaluated the Dictaphone offer on the
basis of the additional cost of the devices and, if Dictaphone's
equipment represented the lowest overall cost to the Government, issued
a delivery order to that firm which included the interconnect devices.
In this regard, we note that an agency purchasing an item from the
multiple-award Federal Supply Schedule is required to do so at the
lowest delivered price available on the Schedule unless the purchase of
a higher-price item is fully justified, 41 C.F.R. 101-26.408-2(1979);
that Dictaphone's apparently otherwise acceptable quotation (without
interface devices) was $9,999, while Lanier's quote was $17,997.30
(which included $1,200 for three interconnect devices); and that
Dictaphone informally advises that the firm's then-current Schedule
price was $295 per device.
Under the circumstances, we believe that the issuance of the delivery
order to Lanier was improper. The VA advises that although the delivery
order was issued to Lanier, no deliveries have been made pending the
outcome of the protest. Accordingly, and since the Schedule contracts
of both Lanier and Dictaphone on which their quotations were based have
expired, the issued delivery order should be canceled and a new RFQ for
the dictation systems issued. By separate letters, we are so advising
the Administrator of Veterans Affairs.
The protest is sustained.
B-198159, February 17, 1981, 60 Comp.Gen. 257
Gratuities - Selective Reenlistment Bonus - Entitlement - Based on
Applicable Law - Not Contractual Right
The United States Supreme Court's opinion in United States v.
Larionoff, 431 U.S. 864(1977), concerning military reenlistment bonuses,
did not alter the fundamental rules of law that (1) a service member's
entitlement to military pay is governed by statute rather than ordinary
contract principles, and (2) in the absence of specific statutory
authority the Government is not liable for the negligent or erroneous
acts of its agents; hence, the amount of any reenlistment bonus payable
to a service member depends on the applicable statutes and regulations
and in no event can the bonus amount be established through private
negotiation or contract between the member and his recruiter.
Gratuities - Selective Reenlistment Bonus - Computation - Error in
Reenlistment Agreement - Government's Liability
A Navy petty officer who reenlisted became entitled to a reenlistment
bonus in the amount of $3,209.40, computed under the statutory
provisions of 37 U.S.C. 308(1976) and implementing service regulations,
but a recruiting official miscalculated the amount of his bonus
entitlement and entered the higher figure of $3,459.60 in his
reenlistment agreement as the amount of the bonus payable to him. Such
mistake may not serve as a basis for payment of a bonus to him in excess
of $3,209.40, the amount authorized by statute and regulations.
Matter of: Petty Officer John R. Blaylock, USN, February 17, 1981:
This action is in response to a letter with enclosures, from Louis J.
Frymire, Disbursing Officer, Navy Personnel Support Detachment,
Guantanamo Bay, Cuba, who requests an advance decision concerning the
correct amount of the selective reenlistment bonus to be paid Petty
Officer (OS3) John R. Blaylock, USN, 000-00-0053. The question is
whether Petty Officer Blaylock should receive the selective reenlistment
bonus amount agreed upon between him and the United States Navy
recruiting officer at the time of his reenlistment on September 20, 1979
($3,459.60), or the amount of the bonus to which he was entitled under
Navy regulations ($3,209.40), a difference of $250.20.
The request was forwarded to this Office by the Commander of the Navy
Accounting and Finance Center after being assigned control number
DO-N-1340 by the Department of Defense Military Pay and Allowance
Committee.
We conclude that since the entitlement of service members to military
pay and allowances, including reenlistment bonuses, depends upon statute
and regulation and not on ordinary contract principles, Petty Officer
Blaylock may not be paid the additional unauthorized bonus monies
amounting to $250.20 promised to him in his reenlistment agreement. We
find that this conclusion is consistent with and required by the United
States Supreme Court's reasoning in United States v. Larionoff, 431 U.S.
864(1977), which concerned promised bonuses in connection with
reenlistments.
The records before us indicate that Petty Officer Blaylock initially
enlisted in the Navy for 4 years in 1974. He was separated from active
duty on September 22, 1978, upon the completion of his 4-year term of
enlistment. After nearly a year's break in active service, he
reenlisted for a second 4-year term of active duty on September 20,
1979. Under the terms of the written reenlistment agreement executed by
him and a Navy recruiting officer, he was promised a reenlistment bonus
in the amount of $3,459.60.
After his reenlistment and arrival at Guantanamo Bay, Navy disbursing
officials there informed him that it appeared the recruiting officer had
made a mistake when filling out the reenlistment agreement, and that in
fact he was only entitled to a reenlistment bonus in the amount of
$3,209.40. That lesser amount was then paid to him.
A question has arisen concerning the entitlement of Petty Officer
Blaylock to have the additional bonus monies amounting to $250.20 which
were promised to him in the reenlistment agreement. The Navy legal
assistance officer representing Petty Officer Blaylock's interests in
the matter suggests that the reenlistment agreement should properly be
regarded as legal and binding with respect to the amount of the bonus
promised. In that connection, it is suggested that even if the
recruiter erred in figuring the correct amount of the bonus award, the
agreement should nevertheless be considered valid and the Government
should pay the additional amount, for the reason that ordinarily a
principal is liable for the acts of its agent.
Section 308 of title 37, United States Code (1976), provides that
under prescribed regulations a member of a uniformed service who is
qualified in a military skill designated as critical and who meets
certain other standards may be paid a bonus, not to exceed a stated
maximum, if he reenlists or voluntarily extends his enlistment.
Implementing regulations governing bonus payments to Navy members
reenlisting after a break in service are contained in Bureau of Naval
Personnel Instruction 1133.28B, June 1, 1978, as amended. That
administrative directive provides instructions and formulas for
computing the reenlistment bonus of an eligible Navy veteran who
reenlists more than 3 months after his last separation from active duty,
with computations based on multiples of the member's basic pay at the
time of such earlier discharge or release from service.
Under the provisions of statute and regulation cited, when Petty
Officer Blaylock reenlisted in the Navy on September 20, 1979, he became
entitled to a reenlistment bonus in an amount equal to months' basic
pay, computed on the basis of his basic pay rate at the time of his
earlier separation from active duty on September 22, 1978. On September
22, 1978, he was serving in pay grade E-4, with over 3 but not over 4
years' creditable service, so that his basic pay rate was $534.90 per
month. His reenlistment bonus entitlement under the applicable
provisions of statute and regulation was thus $534.90 multiplied by 6,
or $3,209.40.
However, it appears that when Petty Officer Blaylock's reenlistment
agreement was prepared in September 1979, the September 1978 monthly
basic pay rate for a service member in pay grade E-4 with over 4 years'
creditable service, $576.60, was mistakenly used as the basis for
computing the bonus entitlement. The resulting calculation (6x$576.60)
produced the erroneous entry in the reenlistment agreement indicating
entitlement to a bonus in the higher amount of $3,459.60.
In the case of United States v. Larionoff, supra, the Supreme Court
expressed the opinion that because Congress intended to provide at the
reenlistment decision point a promise of a reasonably certain and
specific bonus for extending service in the Armed Forces, members who
agreed to extend their enlistments at some future date were entitled by
statute to bonuses determined according to the award level multiples in
effect at the time they agreed to extend their enlistments, not the
award level multiples in effect on the future date when the extension
agreements became operative. However, the Supreme Court did not alter
or amend the fundamental rule of law that a service member's entitlement
to military pay and allowances is dependent upon a statutory right, and
that contract principles have no place in any determination regarding a
member's legal entitlement to military pay. See United States v.
Larionoff, supra, at page 869, 431 U.S.; and 58 Comp.Gen. 282,
289(1979).
See also, generally, Bell v. United States, 366 U.S. 393, 401(1961);
Abbott v. United States, 200 Ct.Cl. 384(1973), cert. denied 414 U.S.
1024(1973); 56 Comp.Gen. 943(1977); and other court opinions and
Comptroller General decisions therein cited. Furthermore, the Supreme
Court's opinion in the Larionoff case did not alter the longstanding
rule that in the absence of specific statutory authority the United
States is not liable for the negligent or erroneous acts of its
officers, agents, or employees, even though committed in the performance
of their official duties. See Federal Crop Insurance Corporation v.
Merrill, 322 U.S. 380(1947); Posey v. United States, 449 F.2d 228, 234
(1971); Parker v. United States, 198 Ct.Cl. 661(1972); and 56
Comp.Gen. 943, supra. Hence, when a service member reenlists in a
critical military specialty, the amount of any reenlistment bonus
payable to him is governed by the applicable provisions of statute and
regulation rather than the terms of his reenlistment agreement or the
promises of recruiting officials. In absolutely no event can the amount
of a bonus be established through private negotiation or contract
between a service member and his recruiter since the recruiter has no
authority to offer a bonus in any amount other than that provided under
the statute and regulations.
In the present case, therefore, Petty Officer Blaylock is entitled to
a reenlistment bonus of $3,209.40, the amount authorized by statute and
regulation, rather than $3,459.60, the amount erroneously entered in the
documents of reenlistment by the recruiting officer. To any extent that
Petty Officer Blaylock was misled or misinformed by the recruiting
officer concerning his bonus entitlements, such misleading information
could not in any event properly afford a legal basis for a payment from
appropriated funds of a bonus to him in excess of the $3,209.40
authorized by statute and regulation.
Accordingly, Petty Officer Blaylock may not be paid the additional
$250.20 here in question.
B200023, February 13, 1981, 60 Comp.Gen. 255
Contracts - Discounts - Prompt Payment - Computation Basis - Trade-In
Allowance Factor - Absence of Contract Provision
Absent contract provisions to the contrary, prompt payment discounts
offered by vendors to the Government where trade-ins are involved should
be computed on the basis of the net contract price-- that is, in the
actual cash balance due-- since such method is consistent with generally
accepted accounting principles and current trade practice. 17 Comp.Gen.
580(1938) and 18 Comp.Gen. 60(1938) are overruled to the extent
inconsistent with this decision.
Matter of: Method of computation of prompt payment discounts,
February 13, 1981:
An authorized certifying officer of the Department of Agriculture
asks, pursuant to 31 U.S.C. 82d, whether, in instances where trade-ins
are involved, prompt payment discounts offered to the United States on
its contracts with ventors should be computed on the gross contract
price or on the net price, that is, the balance due after the trade-in
value is deducted. For the reasons given below, we conclude that such
discounts should be based on the net balance due, absent specific
contract provisions to the contrary.
The certifying officer explains that the Department of Agriculture
National Finance Center, which is responsible for payment of purchase
orders issued by all agencies within Agriculture, has recently been
questioned by vendors about its method of computing prompt payment
discounts when a trade-in is included on a purchase order.
The current formula used by the Finance Center for computing prompt
payment discounts is based on the total invoice amount less freight
(gross contract price). Thus, even when trade-ins are involved, the
prompt payment discount is computed on the basis of the gross contract
price.
Vendors have complained, however, that the discount should be based
on the net contract price, that is, the actual cash balance due (gross
amount minus the value given on the trade-in). This method necessarily
would result in a smaller discount. For example, assuming a 2 percent
prompt payment discount and a $500 trade-in, if the gross contract price
were $1000, and the discount were computed on the basis of the gross
price, the discount would be $20; however, if the discount were
computed on the basis of the net price, gross price minus trade-in, the
discount would be $10. Thus, it is to the Government's advantage as
vendee to compute the discount on the gross price, and to the vendor's
advantage to use the net price.
Although this Office has not considered the question in many years,
in 1938 we held that such computations should be based on the gross
amount of the contract. 17 Comp.Gen. 580(1938); 18 Comp.Gen. 60(1938).
Thus, in 17 Comp.Gen. 580, 581, we concluded:
It has been held by this office that where the contract provides that
a certain discount will be allowed for payment within a specified time,
the amount to be deducted as discount should be based on the price fixed
in the contract * * * ; and that the gross bid price must be considered
as the contract price and the circumstance that the price of new
vehicles may be paid partly in cash and partly by the delivery of old
vehicles at an agreed price does not change the amount of the total
contract consideration for which the Government is obligated and on
which a discount is to be computed.
Whether prompt payment discounts should continue to be based on the
gross contract price is at bottom a question of contract interpretation.
The contract terms and conditions furnished with the Department's
submission by way of example are silent concerning whether discounts
should be computed on a net or gross basis, but the nature of a prompt
payment discount allows the inference that the vendor intend that it
apply only to cash. Vendors offer prompt payment discounts to induce
customers to pay cash balances due. Since vendors place premium on the
"time value" of money, it is in their interest to offer these discounts
on the basis of the net price-- the actual cash amount due. Thus, when
a trade-in is involved, before computing the discount, the vendor will
presumably seek to deduct the value of the trade-in from the gross
contract price because the amount of the trade-in does not represent
cash due. Moreover, this method of computing prompt payment discounts
is consistent both with generally accepted accounting principles and
trade practice.
Currently, the Government practice in computing prompt payment
discounts varies.
Although most Government agencies use the gross price, some use the net
price, and still others have no particular policy and may employ either
method.
Henceforth, we advise all Government agencies to use the method for
computing prompt payment discounts which is consistent with generally
accepted accounting principles and contemporary trade practice if the
contract does not provide otherwise. Accordingly, where trade-ins are
involved, these discounts should be computed on the basis of the net
contract price, that is, the actual cash balance due. To the extent
that 17 Comp.Gen. 580(1938) and 18 Comp.Gen. 60(1938) are inconsistent
with this decision, they are overruled.
At the same time, we limit our holding to instances in which
contracts between the Government and vendors do not specifically provide
for the manner of computing the discounts. If the Government and a
vendor agree to compute prompt payment discounts on the basis of the
gross contract price, that is the basis on which the discounts should be
computed.
B-200481, February 11, 1981, 60 Comp.Gen. 251
CONTRACTS - SPECIFICATIONS - AMENDMENTS - ACKNOWLEDGEMENT - CONTRACTOR'S
RESPONSIBILITY FOR DELIVERY
Where agency does not receive acknowledgement of material amendment
to solicitation, fact that bidder mailed acknowledgement is not
sufficient to constitute express acknowledgement; bidder has
responsibility to assure that acknowledgement arrives at agency. This
decision is overruled in part by 60 Comp.Gen.-- (B-201146, March 17,
1981). Contracts; Specifications; Amendments; Acknowledgement;
Implied; Mailing, etc. Records in Lieu of Actual
Records of telegraph company which show that two messages, one of
which announced that amendment would be issued and another which
constituted additional amendment, were received by protestor do not
constitute implied acknowledgement of amendments as telegraph company is
not agency's agent for receipt of amendment acknowledgements, agency was
not required to check company records prior to bid opening and first
message only announced that amendment would be issued and contained none
of the specification changes included in actual amendment. Contracts;
Specifications; Amendments; Acknowledgement Oral; Evidence
Sufficiency
Evidence of oral acknowledgment of amendments, both of which, among
other things, extended bid opening, is inconclusive where affidavit of
contract specialist indicates that only general conversations regarding
extended bid opening were held with protester prior to bid opening.
Contracts; Specifications; Amendments; Acknowledgement; Failure to
Expressly Require
Fact that telegraphic amendment does not expressly state it must be
acknowledged does not eliminate bidder's obligation to acknowledge all
material amendments.
Matter of: United States Cartridge Company, February 11, 1981:
The United States Cartridge Company (USCC) protests the rejection of
its bid and the subsequent award of a contract under solicitation No.
DAAA09-80-B-0093 issued on April 7, 1980, by the U.S. Army Armament
Material Readiness Command (ARMCOM), at Rock Island, Illinois. For
reasons set forth below, we deny the protest.
The solicitation invited bids for 23,094,000 .38 caliber high
velocity cartridges and outlined the requirements for packing the items
in containers and packing the containers in pallets. On May 28, ARMCOM
issued amendment 0001 to the solicitation, which among other changes,
extended the bid opening date to June 20. By telegram dated June 15,
the protester was informed that amendment 0002 would be issued modifying
the specifications for packing and packaging the ammunition. This
amendment, which was issued on July 14, also extended the bid opening
date to July 29 and made a number of changes in the areas specified in
the advance telegram and indicated that bidders were to acknowledge
receipt of the amendment or risk rejection of their bids.
On August 11 ARMCOM issued amendment 0003, which further extended the
bid opening date to August 20 and made additional changes to the packing
and packaging requirements set out in amendment 0002. This amendment
was transmitted by telegram which stated that it was to be considered
the amendment and that "no formal copy will be sent."
The telegram made no mention of acknowledgement. At bid opening, ARMCOM
determined that the protestor had submitted the low bid but had not
acknowledged receipt of amendments 0002 and 0003. The protester's bid,
which had been submitted prior to the issuance of amendments 0002 and
0003, was therefore rejected as nonresponsive and the contract was
awarded to the second low bidder, the Olin Corporation.
The protester argues that the rejection of its bid was improper as
receipt of amendments 0002 and 0003 was actually and constructively
acknowledged prior to bid opening. USCC states that a signed
acknowledgment of amendment 0002 was sent to ARMCOM by first-class mail
on July 21, and that no such formal acknowledgment was required of
amendment 0003. In any event, the protester contends that these
amendments were constructively acknowledged because the records of the
telegraph company which delivered the messages regarding amendments 0002
and 0003 indicate that these messages were in fact received and
acknowledged by USCC and these records were available to ARMCOM.
Further, the protester contends that it orally confirmed its intention
to be bound by these amendments during telephone conversations with an
ARMCOM contract specialist prior to bid opening.
ARMCOM states that because the protester's bid failed to indicate
acknowledgment of amendments 0002 and 0003, the bid was properly
rejected as nonresponsive. Although the protester contends that it
mailed an acknowledgment of amendment 0002, the agency indicates that it
was never received. Furthermore, ARMCOM's contract specialist denies
that USCC's representative specifically acknowledged receipt of these
amendments in conversations before bid opening.
The failure of a bidder to acknowledge, prior to bid opening, receipt
of an amendment which contains a material requirement renders the bid
nonresponsive. Imperial Fashions, Inc., B-182252, January 24, 1975,
75-1 CPD 45. However, a bidder's failure to acknowledge receipt of an
amendment may be waived if the bid submitted clearly indicates that the
bidder received the amendment. Defense Acquisition Regulation (DAR)
Sec. 2-405(iv)(A)(DAC 76-17, September 1, 1978). In this regard, we
have held that a bidder's failure to explicitly acknowledge receipt of
an amendment can be waived if there is any implied acknowledgment
through submission of a bid which reflects some change made by the
amendment, such as an extended bid opening date. Inscom Electronics
Corporation, 53 Comp.Gen. 569(1974), 74-1 CPD 56; Algernon Blair, Inc.,
B-182626, February 4, 1975, 75-1 CPD 76, and American Monorail, Inc.,
B-181226, July 31, 1974, 74-2 CPD 69.
USCC argues that it expressly acknowledged amendment 0002 in a timely
manner by mail. The bidder, however, has the responsibility to assure
that the acknowledgment arrives on time at the agency. Since there is
no indication that the agency received the acknowledgment, we cannot
find that the amendments was expressly acknowledged. See generally,
Enrico Romand, Inc., B-196350, January 21, 1980, 80-1 CPD 61.
We do not agree with the protester that the telegraph company records
which show that USCC received messages regarding the two amendments
constitute implied acknowledgment of those amendments. First, the
protester does not argue, and we do not believe, either that the
telegraph company employees were agents of ARMCOM for the purpose of
receiving acknowledgment of these amendments or that the agency was
under any duty to check these company records before bid opening to
determine whether the messages were received. Further, the message
concerning amendment 0002 was merely an announcement that an amendment
would be issued in the future and contained none of its terms other than
the extended bid opening date. Acknowledgment of such a message could
hardly be held to constitute acceptance of the many specification
changes actually included in the amendment issued later.
USCC maintains that conversations between its employees and an ARMCOM
contract specialist before bid opening constituted an implied
acknowledgment of these amendments. In this regard, the protester
insists that its representative discussed the two amendments, the
extended bid opening dates and USCC's decision not to amend its bid
price in light of the specification changes in the amendments. The
contract specialist, however, in an affidavit submitted to this Office
in connection with the protest, maintains that she had only general
conversations with the USCC representative before bid opening regarding
the fact that the bid opening had been extended and that "(n)o reference
was made to any specific amendment."
Oral acknowledgment of a material amendment prior to bid opening can
be sufficient to permit acceptance of a bid which contains no other
indication of acknowledgment, 33 Comp.Gen. 508(1954; Nautical
Manufacturing Company, B-185198, February 24, 1976, 76-1 CPD 129.
However, in order to maintain the integrity of the bidding process,
evidence used to show awareness of or concurrence with an amendment
must, at the very least, be independently verifiable evidence over which
the bidder does not have exclusive control as to whether to submit it.
Nautical Manufacturing Company, supra.
Here, the only evidence meeting this requirement is the affidavit of
the contract specialist. It is our view that this evidence is
inconclusive as to whether the amendments were orally acknowledged as it
indicates that only very general conversations occurred concerning bid
opening date extension without specific reference to either amendment or
to the specific changes contained in those amendments.
Finally, USCC argues that as amendment 0003 contained no provision
requiring formal acknowledgment and since amendment 0003 referenced
amendment 0002 there was no need to formally acknowledge amendment 0002.
The fact that amendment 0003, which was transmitted by telegraph
message, did not provide a space for acknowledgment did not, of course,
relieve USCC of its obligation to acknowledge receipt of that amendment.
In fact, paragraph 4 of Standard Form 33A, incorporated in the
solicitation by reference, provides that "receipt of an amendment to a
solicitation by an offeror must be acknowledged (a) by signing and
returning the amendment, (b) on page three of Standard Form 33, or (c)
by letter or telegram. Such acknowledgment must be received prior to
the hour and date specified for receipt offers."
It is our view that USCC's bid was properly rejected for failure to
acknowledge amendments 0002 and 0003.
The protest is denied.
B-199026, February 11, 1981, 60 Comp.Gen. 248
Officers and Employees - Inventions - Use by the Government - Licensing
Propriety - Conflict of Interest Avoidance
License contract for patent between Government employee-inventor and
Air Force would not be legal or appropriate if employee is in position
to order, influence, or induce use of invention pursuant to 28 U.S.C.
1498(1976), even though employee's invention was not related to his
official duties and there was no contribution of Government equipment,
facilities, materials or information. If employee can be insulated from
decision to use patented device so as to avoid violation of conflict of
interest statutes and regulations, the Air Force may enter into license
agreement. Neither DAR 1-302.6 28 U.S.C. 1498 nor Executive Order 10096
would prohibit such an arrangement.
Matter of: Government acquisition of license to employee's
invention, February 11, 1981:
This decision is in response to a request by Andrew R. Jeffers, a
civil service employee of the United States Air Force at
Wright-Patterson AFB, Ohio, for our opinion on the propriety of
licensing his patent to the Government. More specifically, Mr. Jeffers
has requested that we find the Air Force Determination of Rights with
respect to his invention valid, and that it would be legally justifiable
and appropriate for the Air Force to acquire a license to his invention
pursuant to DAR 1-302.6 and 28 U.S.C. 1498(1976).
In July of 1969, Mr. Jeffers invented a "high contrast legend light
display lens." This device was designed to enable aircraft pilots to see
important displays such as caution and warning lights in sunlight. If
the ordinary colored lens was replaced by a high contrast lens, standard
aircraft warning lights become visible in very high light environments.
After Mr. Jeffers had developed the invention, he requested that the
Department of the Air Force make a Determination of Rights pursuant to
Executive Order No. 10096, 23 January 1950, as amended by Executive
Order No. 10930 and Executive Order No. 10695, 35 U.S.C. 266 note (1976)
and AFR 110-8.
The Government will ordinarily obtain the entire right, title, and
interest to inventions made by Government employees under these
authorities when the invention is made during working hours; where
there is a contribution of Government facilities, equipment, materials,
funds, or information whether or not the invention is made during
working hours; or where the invention bears a direct relation to or is
made in consequence of the official duties of the inventor. Based on a
complete review of his work responsibilities and the extent of the
Government's contribution to the invention, on October 2, 1969, the Air
Force left the entire right, title, and interest in the display lens to
the inventor, Mr. Jeffers. See, in this regard, United States v.
Dubilier Condenser Corp., 289 U.S. 178(1933).
Soon thereafter, he sought and was able to obtain a patent at his
personal expense.
Over 9 years after Mr. Jeffers had patented his invention, the Air
Force expressed an interest in the device and Mr. Jeffers offered to
license the patent to the Government. While some doubt may exist
regarding the general authority of Government agencies to expend
appropriated funds for the acquisition of a license to a patent (See,
e.g., 52 Comp.Gen. 761(1973)), the Air Force has specific statutory
authority allowing it to obtain licenses. 10 U.S.C. 2386(1976).
The Chief, Patents Division of the Office of the Air Force Judge
Advocate General, stated in a letter dated December 20, 1979, that there
appeared to be sufficient governmental interest to acquire a license to
the patent, but it would not be appropriate for the Air Force to do so
because the facts indicate that the making of the invention "may not be
wholly unrelated to the duties of the employee-inventor."
After reviewing arguments presented by the Air Force, we have
concluded that under the circumstances, it would be legal and
appropriate for the United States Air Force to acquire a license to Mr.
Jeffers' invention provided he is not in violation of the conflict of
interest statutes and regulations.
The Judge Advocate General stated that the provisions of 28 U.S.C.
1498(1976) may prevent the Air Force from acquiring a license for the
use of Mr. Jeffers' invention. Generally, the statute establishes
liability on the part of the Government for patent infringement. The
patent owner's remedy is by action against the United States in the
Court of Claims for recovery of reasonable compensation for use and
manufacture. As amended in 1952, the statute in relevant part refers
specifically to inventions of Government employees:
* * * A government employee shall have the right to bring suit
against the Government under this section except where he was in a
position to order, influence, or induce use of the invention by the
Government. This section shall not confer a right of action on any
patentee or any assignee of such patentee with respect to any invention
discovered or invented by a person while in the employment or service of
the United States where the invention was related to the official
functions of the employee, in cases which such functions included
research and development, or in the making of which Government time,
materials or facilities were used * * * .
In order to determine if it is appropriate for the Air Force to pay
Mr. Jeffers for a license to his invention, one guide, used by the Air
Force, might be whether the Government would be liable to Mr. Jeffers
under section 1498 since a license is really a waiver of the licensor's
right to sue. 4 Deller, Walker on Patents 539 (2d ed. 1965).
Section 1498 presents three separate tests. First, Mr. Jeffers'
invention must have been made without the use of Government equipment,
facilities, materials, time or information. Second, the invention may
not be related to the employee's official functions if those functions
include research and development responsibilities.
Third, he cannot be in a position to order, influence, or induce use of
the invention by the Government.
The Air Force cites B-124998, January 19, 1956, as one of the few
cases having similar facts to this situation. In that case a Navy
employee assigned to improve a computer invented a new computer. While
he worked on his own time, that employee used Government machinery, and
equipment and the invention was constructed entirely of Government
materials. We held that that employee had no right to royalties.
Critical factual distinctions exist between that case and the one
presently under consideration. First, Mr. Jeffers invented his display
lens on his own time without the use of Government equipment, materials,
or facilities. Second, at the time Mr. Jeffers apparently did not have
research and development responsibilities. Third, contrary to the Air
Force's current suggestion, Mr. Jeffers developed the invention without
the benefit of Government information.
In this regard, we have been informally advised that the inability of
pilots to see important displays such as caution and warning lights in
sunlight has been well known in Government and industry. Also, the
problem has continually been a source of concern with respect to flight
safety. Therefore, knowledge of the inability of pilots to see
important displays was easily obtained by a fairly large number of
individuals and was not limited or unique to an employee in Mr. Jeffers'
position. Furthermore, it is difficult to comprehend how awareness of a
problem like this one would by itself be significant enough to give the
Government some right in the invention. The first two tests were
resolved in Mr. Jeffers' favor at the time the Air Force issued its
Declaration of Rights and need not be opened now.
In view of the above, we have no doubt that if Mr. Jeffers were not a
current employee of the Air Force, he could license his patent to the
department. Since he is an employee, however, the Air Force raises
certain issues as possible impediments, including the third test of
section 1498.
First, the Judge Advocate General pointed out that Defense
Acquisition Regulation (DAR) Section 1-302.6 forbids contracts between
the Government and employees of the Government, except for the most
compelling reasons. Cases have repeatedly held that the United States
should not, where the needs of the Government can otherwise be
reasonably supplied, contract with its officers or employees. See,
e.g., 14 Comp.Gen. 403(1934); A-99862, December 7, 1938. The reason
for this prohibition is that such contracts are against public policy,
and would afford grounds for complaint as to alleged favoritism and
fraud in the conduct of public business.
14 Comp.Gen. 403(1934).
This regulation, however, is not applicant in the instant case.
Since the display lens is not available from any source other than the
inventor, and the Government has manifested its need for the invention,
a compelling reason exists for allowing a contract between the
Government and one of its employees. Therefore, DAR 1-302.6 does not
prohibit a contract between the Air Force and Mr. Jeffers.
Second, the Air Force suggests that Mr. Jeffers' current employment
with the department may place him in an untenable position. The Air
Force cites that portion of 28 U.S.C. 1498 which allows an employee to
sue the Government for patent infringement provided that he or she is
not "in a position to order, influence, or induce use of the invention
by the Government." In the December 20, 1979, letter to Mr. Jeffers, the
Judge Advocate stated:
As you have indicated, your work in the field of high contrast
filters, and your employment with the Air Force may involve you in
future decisions by the Air Force relative to the use of your invention.
Any such involvement would likely be considered influence or inducement
of your part to use the invention and would raise doubts as to potential
liability of the Government under 1498. This raises the question of
whether the effect of the statute can be overcome by entering into a
license in advance of involvement on your part. The answer to this we
believe is negative. The consideration for either a paid-up or running
royalty license is premised on a showing that the potential liability of
the Government in an infringement action under 1498 is clear and
certain. It would be improper therefore, to enter into a license for
the use of your invention with the knowledge that the merits of such
action would be clouded by your present official position in the Air
Force.
The purpose of section 1498 is to prevent an employee who is in a
position to order, influence, or induce the Government to use his
invention and thus infringe his patent from successfully suing the
Government for patent infringement. This situation does not exist in
Mr. Jeffers' case where the Air Force seeks to purchase the right to use
his invention.
The issue as we see it is whether the inventor can be insulated from
the decision making process. We have no objection to his assisting in
the testing and use of the invention if he is in no way in a position to
determine whether, or how many, items involving his patent are procured.
The sole concern is whether there would be any violation of the
statutes and regulations involving conflicts of interest. This
determination is one, at least in the first instance, to be made by the
Air Force.
B-200090, February 10, 1981, 60 Comp.Gen. 243
Estoppel - Against Government - Employee Claims - Appointive v.
Contractual Relationship - Allowance Decreases, etc.
Civilian employee of Department of the Army claims that Government is
estopped to adjust his Living Quarters Allowance in accordance with 1974
revision of Department of State Standardized Regulations (Government
Civilians, Foreign Areas) because his entitlement to the allowance
vested under terms and conditions of 1967 regulations. Claim is denied
because doctrine of equitable estoppel does not apply in cases where, as
here, the relationship between the Government and the employee is not
contractual but appointive, and, pursuant to statute, allowance in
question is ultimately discretionary and creates no permanent
entitlement for any employee. Also, employee entered into licensing
agreement, not a contract, when he constructed portable home on
Government property, and such agreements are permissive, unassignable,
and can be canceled at any time.
Matter of: Joseph P. Carrigan - Living Quarters Allowance, February
10, 1981:
G. F. Kallina of the United States Army Finance and Accounting
Office, Japan, has submitted for our resolution the claim of Mr. Joseph
P. Carrigan, a civilian employee of the Department of the Army, for
retroactive payment of the rental portion of his Living Quarters
Allowance subsequent to August 1978. In view of controlling regulations
and in accordance with our analysis here, Mr. Carrigan's claim may not
be certified for payment.
The chronological development of Mr. Carrigan's claim as set forth in
the administrative record as follows. In 1967, as a civilian employee
within the command of the United States Army Japan (USARJ), Mr. Carrigan
constructed an on-post portable house for self-occupancy within the
meaning of and in accordance with the prevailing command policy on
family housing at that time. The USARJ letter, subject: Family Housing
Policy, dated December 18, 1967, authorized an annual quarters allowance
equivalent to 10 percent of the cost of construction to owners of
self-occupied portable-type housing. It did not place a time limitation
on the receipt of the allowance. In addition, local USARJ Regulation
420-1, "Portable-Type Family Housing," dated August 9, 1967, authorized
a maximum sale price for portables at 50 percent of the initial
construction cost after a period of 6 years.
Subsequently, Mr. Carrigan received official notice from the
Department of the Army by letter dated March 4, 1975, and referencing
Department of State Transmittal Letter TL:SR-252, October 27, 1974, that
applicable Living Quarters Allowance regulations had been changed to
limit payment of the rental portion for self-owned quarters to 10 years,
such period being cumulative from the date that payment for personally
owned quarters was initiated. Of additional consequences here, local
USARJ Regulation 420-1, "Portable and Mobile-Type Family Housing," dated
March 11, 1970, modified the sale price of a portable-type house to no
more than 10 percent of the initial construction cost after a period of
10 years. Acting within the purview of these authorities, and finding
that Mr. Carrigan had resided at his present quarters longer than 10
years, the Army terminated the rental portion of Mr. Carrigan's Living
Quarters Allowance effective August 15, 1978.
Mr. Carrigan contends that the termination of the rental portion of
his Living Quarters Allowance was contrary to regulatory agreements
existing between the Army and himself.
In essence Mr. Carrigan contends that in 1967 he risked his funds to
build an on-post house with the expectation of recovering his costs
through the rental portion of his Living Quarters Allowance, and by
eventual resale of the house at 50 percent of the construction costs.
Mr. Carrigan further states as follows:
* * * I have not recovered my costs, which are increasing without
remuneration, as provided for in government regulations at the time of
my decision to build. These regulations taken with the official letter
of encouragement for me to build at a time when the quarters situation
was extremely tight, meet all the qualifications for a contract as was
my understanding at the time. Had I opted to enter into a private
rental agreement on the local economy, I would be eligible to draw the
quarters portion of the LQA without time limitation and my funds would
not have been tied up in expectation of an eventual return at the same
time of sale.
Mr. Carrigan also contends that while the policy reflected in
Department of State Transmittal Letter TL:SR-252, October 1974, can be
readily understood in connection with privately owned houses on the
economy that have appreciated three to six times in value, as
application to on-post houses is questionable. Mr. Carrigan reasons
that:
* * * Ownership would seem to establish certain property rights of
the individual with respect to care and disposal by sale. The right to
sell at 50% of the value as initially contracted has been abrogated as
has been the right to a return on risk as provided by the agreement to
pay a quarters LQA of 10% per year. In place of these rights, the owner
must maintain the property at a level not originally specified and the
cost of the repair and maintenance is fully the responsibility of the
occupant. No other occupants of government quarters nor those drawing
rental allowance for leased properties suffer these penalties.
Thus, Mr. Carrigan concludes, in order to recover his capital costs
in keeping with the agreements under which he constructed his on-post
house, the rental portion of his Living Quarters Allowance should be
retroactively restored.
When Mr. Carrigan purchased a portable home in 1968, he entered into
a licensing agreement for the use of real estate with Headquarters
USARJ. The license provides:
That the exercise of the privileges hereby granted shall be without
cost or expense to the United States; under the general supervision and
subject to the approval of the officer having immediate jurisdiction
over the property, and subject also to such regulations as may be
prescribed by him from time to time.
The license is also further subject to the provisions of USARJ
Regulation 420-1.
A license in real property is defined as a personal, revocable, and
unassignable privilege, conferred either by writing or parol, to do one
or more acts on land without possessing any interest therein. 25
Am.Jur.2d Easements and Licenses 123. Thus, Mr. Carrigan did not enter
into a contract with USARJ. He entered into a licensing agreement, and
such agreements are permissive in nature, unassignable, and can be
cancelled at any time. See Hartzler v. Westair, Inc., 390 N.Y.S.2d 630
(N.Y. Sup. Ct. 1977). The licenses here were apparently in effect for
only a 2-year period, at which time they were renewed.
Also, as stated above, the privileges granted under the license were
subject to approval of the officer having jurisdiction over the property
and subject to prescribed regulations which could be changed from time
to time.
Further, section 5922(c) and 5923(2) of title 5, United States Code,
provide that a Living Quarters Allowance may be granted in accordance
with regulations prescribed by the President. The President's authority
was delegated to the Secretary of State by section 1(b) of Executive
Order 10903, January 11, 1961, 26 FR 217. We have noted that the
Secretary's Regulations, Standardized Regulations (Government Civilians,
Foreign Areas) 1961, bestowed considerable discretion in the granting of
a Living Quarters Allowance upon heads of agencies and required them to
withhold payment altogether when in their judgment circumstances
warranted. Section 134.2 (TL:SR-144, January 2, 1966). The
Standardized Regulations also authorized heads of agencies to issue
further implementing regulations. Section 013 (TL:SR-127, January 6,
1963). See generally, Wesley L. Goecker, 58 Comp.Gen. 738(1979).
Furthermore, in the Goecker decision we indicated that the controlling
regulations referred to above made the granting of a Living Quarters
Allowance discretionary with the employing agency and that the General
Accounting Office had no authority to overrule the agency's
determination regarding the claimant's entitlement in the absence of
evidence that it was arbitrary or capricious.
Section 136 of the Department of State's Standardized Regulations
(TL:SR-252, October 27, 1974) provides as follows:
When quarters occupied by an employee are owned by the employee or
the spouse, or both, an amount up to 10 percent of original purchase
price of such quarters shall be considered the annual rate of his/her
estimated expenses for rent. Only the estimated expenses for heat,
light, fuel (including gas and electricity), water and in rare cases
land rent, may be added to determine the amount of the employee's
quarters allowance in accordance with section 134. The payment of the
rental portion of the allowance (up to 10 percent of purchase price) is
limited to a period not to exceed ten years at which time the employee
will be entitled only to the utility expenses, including land rent, as
specified in this section.
This section, as well as implementing guidance promulgated by the
Army and referenced earlier in our decision here, clearly present the
initial requirements and additional qualifications in regard to
entitlement to a Living Quarter. Allowance in connection with
personally owned quarters. In the present case, Mr. Carrigan does not
challenge the substance of these combined provisions, but he does
challenge the application of these provisions to the evaluation of his
claim concerning the rental portion of his Living Quarters Allowance
because, as he contends, the terms and conditions of his entitlement
vested in 1967 and may not be subsequently modified.
In essence Mr. Carrigan is arguing that the doctrine of equitable
estoppel applies in his case. That is, the Government is estopped from
unilaterally adjusting his Living Quarters Allowance where he acted in
reliance upon currently existing regulations in constructing personally
owned on-post quarters in 1967, and where his qualification for and
receipt of the Living Quarters Allowance at that time evidenced the
formation of a contract with the Government for both parties based on
continued compliance with those existing 1967 regulations. Thus, Mr.
Carrigan contends that where the Government unilaterally readjusts his
Living Quarters Allowance in these circumstances it is breaching the
contract and may be estopped from effecting such action.
We do not agree. As we have noted, the grant of a Living Quarters
Allowance under section 5922(c) and 5923(2) of title 5, United States
Code, is ultimately discretionary and creates no permanent entitlement
for any employee. As we have also noted, the allowance is granted in
accordance with the Standardized Regulations (Government Civilians,
Foreign Areas) which are prescribed by the Secretary of State pursuant
to a delegation of authority from the President. As a result, the
Standardized Regulations have the force and effect of law and may not be
waived or modified by the employing agency or the General Accounting
Office regardless of the existence of any contrary understanding or
extenuating circumstances. Thus, since section 021 of the Standardized
Regulations provides that amendments and revisions are effective as of
the dates specified in each, the substantive change of section 136 of
the regulations contained in Department of State Transmittal Letter
TL:SR-252, October 27, 1974, is applicable to and controlling of the
evaluation of Mr. Carrigan's entitlement at that time. Similarly, the
Department of the Army regulations implementing the changed section 136
of the Standardized Regulations are equally applicable to Mr. Carrigan's
claim.
Furthermore, the relationship between the Federal Government and its
employees is not a simple contractual relationship. Since Federal
employees are appointed and serve only in accordance with the applicable
statutes and regulations, the ordinary principles of contract law do not
apply. See Frederick J. Killian, B-196476, May 9, 1980, and decisions
cited therein. In terminating the rental portion of Mr. Carrigan's
Living Quarters Allowance effective August 15, 1978, the Department of
the Army is enforcing a clear requirement that is founded in law, the
Standardized Regulations, and implementing Army directives.
Accordingly, we find no basis for disturbing the Department of the
Army's determination in regard to Mr. Carrigan's entitlement to a Living
Quarters Allowance.
B-199978, February 9, 1981, 60 Comp.Gen. 240
Pay - Retired - Survivor Benefit Plan - Remarriage of Member - Spouse's
Annuity Eligibility - Posthumous Child Effect
A service member elected spouse and children coverage under the
Survivor Benefit Plan at retirement. He was thereafter divorced and
remarried but died prior to the first anniversary of the remarriage.
While his surviving spouse did not qualify under 10 U.S.C. 1447(e)(A)
for any annuity at the time of his death because they had not been
married at least 1 year, she was pregnant and later gave birth to his
child. On that basis she qualifies as the eligible widow for annuity
purposes effective the date of the child's birth. Pay - Retired -
Survivor Benefit Plan - Children - Status After Member's Remarriage and
Death - Widow - Potentially Eligible
A service member who elected spouse and children coverage under the
Survivor Benefit Plan at retirement was thereafter divorced and
remarried but died prior to the first anniversary of the remarriage.
While his survivor spouse did not qualify for annuity purposes as his
eligible widow at his death, se was pregnant. In view of the 10 U.S.C.
1450(a) provision that payment of the annuity will begin "the first day
after the death," an annuity may be paid to his surviving dependent
children of the prior marriage but must terminate on the date that the
surviving spouse qualifies under 10 U.S.C. 1447(3)(B) for an annuity by
the birth of his posthumous child. Pay - Retired - Survivor Benefit
Plan - Children - Status After Death or Remarriage of Eligible Spouse -
Children by Prior Marriage
A service member who was married and had children elected spouse and
children coverage under the Survivor Benefit Plan at retirement. He was
thereafter divorced and remarried, but died prior to the first
anniversary of the remarriage. His surviving spouse, who was pregnant
when he died, later gave birth to his posthumous child. Not only does
the birth of a posthumous child qualify the surviving spouse as the
eligible widow for annuity purposes, but such child immediately joins
the member's other children in the class stipulated in 10 U.S.C.
1450(a)(2) as potential eligible beneficiaries to share the annuity
should the eligible widow thereafter lose eligibility by remarriage
before age 60 or death.
Matter of: Staff Sergeant Martin P. Roberts, Jr., USA, Retired,
Deceased, February 9, 1981:
This action is in response to a request for advance decision on
several questions concerning the eligibility of certain survivors of the
late Staff Sergeant Martin P. Roberts, Jr., USA, Retired to receive an
annuity under the Survivor Benefit Plan (SBP), 10 U.S.C. 1447-1455. The
request was submitted by the Disbursing Officer, Army Finance and
Accounting Center, and submission number DO-A-1351 by the Department of
Defense Military Pay and Allowance Committee.
It appears that Sergeant Robert retired from the Army effective
December 1, 1973, under the provisions of 10 U.S.C. 3914. He elected to
provide an SBP annuity based on his full retired pay in favor of his
spouse Helen, and his two children, Tammy and Cheri, born September 15,
1961, and April 19, 1963, respectively.
On April 20, 1978, Sergeant Roberts and Helen were divorced. As a
result, his election was changed to "children only" coverage effective
May 1, 1978. On June 11, 1978, he married Donna L. Zalvidea and on
September 26, 1978, he died. While Donna had not been married to him
for a minimum of 1 year at the date of his death, she was pregnant when
he died and on March 11, 1979, gave birth to a child, Martin P. Roberts
III.
Effective September 27, 1978, an SBP annuity was established in favor
of his two children by the former marriage. When it was determined that
the birth of the child, Martin P. Roberts III, qualified Donna to
receive the annuity, payment of the children's annuity was terminated
effective May 31, 1979, and the annuity was established in Donna's
favor, retroactively to April 1, 1979. Subsequent to that retroactive
payment, it was determined that she was entitled to Dependency and
Indemnity Compensation (DIC) from the Veterans Administration in an
amount in excess of her monthly SBP annuity, and further SBP payments
were discontinued.
The first Mrs. Roberts (Helen) questions the loss of the annuity by
her two children. Since doubt is expressed as to the proper persons
eligible to receive the annuity, the Disbursing Officer asks the
following questions:
a. Does a child born subsequent to the retiree's death meet the
criteria of 10 U.S.C. 1447(e)(B) so as to qualify the mother as an
eligible beneficiary for SBP annuity purposes?
b. If the answer to a. is affirmative, may the annuity be
established on behalf of eligible children from a prior marriage from
the day after the retiree's death until the surviving spouse becomes
eligible?
c. If the answer to a. is negative, would the child born subsequent
to the retiree's death be entitled to an equal share of the annuity
payable on behalf of the eligible child beneficiaries?
Subsection 1447(3) of title 10, United States Code, defines "widow",
for the purpose of SBP annuity entitlement under 10 U.S.C. 1450, to
mean:
* * * the surviving wife of a person who, if not married to the
person at the time he became eligible for retired or retainer pay--
(A) was married to him for at least one year immediately before his
death; or
(B) is the mother of issue by that marriage.
Subsection 1447(4) similarly defines "widower."
The legislative history of the SBP, generally, shows that while the
congressional purpose was to establish an income maintenance program for
families of deceased service members, Congress sought to prevent spouses
who become widows or widowers of SBP participants only by virtue of a
short term marriage after retirement from automatically receiving an
annuity. As a result, Congress established as a condition precedent to
receiving an annuity the surviving spouses in cases such as this must
have been married to the member for at least 1 year immediately before
the member's death, or be the parent of issue by that marriage. See in
this connection, 53 Comp.Gen. 470(1974); id. 818 (1974); and 54
Comp.Gen. 266(1974); compare B-190908, June 26, 1980. The requirement
under 10 U.S.C. 1447(3)(B) is simply that the spouse is "the mother of
issue by that marriage." There is nothing in the law or legislative
history that suggests that the meaning of that phrase is limited only to
children born prior to the member's death. Therefore, it is our view
that the birth of a posthumous child of the member's marriage qualifies
the surviving spouse as the eligible widow for annuity purposes, and
question a. is answered in the affirmative.
The second question asked involves the date on which payment of the
SBP annuity to such eligible spouse begins. Section 1450 of title 10,
United States Code, provides in part:
(a) Effective as of the first day after the death of a person to whom
section 1448 of this title applies, a monthly annuity under section 1451
of this title shall be paid to--
(1) the eligible widow or widower;
(2) the surviving dependent children in equal shares, if the eligible
widow or widower is dead, dies, or otherwise becomes ineligible under
this section;
Ordinarily, the eligibility of a surviving spouse to be a beneficiary
is determinable when the member dies. In those cases where spouse
coverage is elected, the vesting of the annuity in that spouse would
occur immediately upon that death and would continue so long as she
remains eligible. However, section 1450(a) provides that payment will
begin "the first day after the death," with distribution to be made in
the order of precedence stated. Donna Roberts had not qualified under
the law as an eligible beneficiary on the date of the member's death
since she had yet to give birth to the "issue by that marriage." It is
our view that where a member has spouse and children coverage and the
surviving spouse does not qualify as his eligible widow, an annuity may
be paid to surviving dependent children effective the first day after
the member's death. However, that annuity must be terminated effective
the date that the surviving spouse qualifies for a survivor annuity in
her own right, which in the present case is March 11, 1979, the date she
became the mother of issue by her marriage to Sergeant Roberts.
Accordingly, question b. is also answered in the affirmative.
With regard to question c., even though it is suggested that it does
not require an answer if question a. is answered in the affirmative, we
believe that the scope of the question is such that a response is
desirable.
Subsection (b) of 10 U.S.C. 1450 provides certain conditions under
which a widow or widower may lose entitlement to an annuity as follows:
(b) An annuity payable to the beneficiary terminates effective the
first day of the month in which eligibility is lost. An annuity for a
widow or widower shall be paid to the widow or widower while the widow
or widower is living or, if the widow or widower remarries before
reaching age 60, until the widow or widower remarries. If the widow or
widower remarries before reaching age 60 and that marriage is terminated
by death, annulment, or divorce, payment of the annuity will be resumed
effective as of the first day of the month in which the marriage is so
terminated. However, if the widow or widower is also entitled to an
annuity under this section based upon the marriage so terminated, the
widow or widower may not receive both annuities but must elect which to
receive.
If the widow or widower should lose eligibility for the annuity under
10 U.S.C. 1450(a)(2) the surviving dependent children would become
entitled to the annuity. Compare B-191524, June 30, 1978. In the
present case, at the time of Sergeant Roberts' death he had two
dependent children who qualified as potentially eligible beneficiaries.
Later the child posthumously born to Donna Roberts became eligible. The
fact that this child was born after Sergeant Roberts' death, would not
alter that conclusion. Therefore, Donna Roberts subsequently becomes
ineligible, all of Sergeant Roberts' children who then qualify as
dependent children under 10 U.S.C. 1447(5), would share equally in the
annuity for the remainder of their period of dependency. In that regard
question c. is answered in the affirmative.
B-198553, February 3, 1981, 60 Comp.Gen. 235
Travel Expenses - Interviews, Qualifications, Determinations, etc. -
Competitive Service Positions - Reimbursement Prohibition - Civil
Service Reform Act Effect
Office of Personnel Management (OPM) requests that we modify our rule
which prohibits agencies from paying preemployment interview travel
expenses of applicants for the competitive service except in limited
circumstances. In view of the increasing delegation by OPM of personnel
management responsibilities to agencies under the Civil Service Reform
Act of 1978, and since our decisions limiting the payment of
preemployment interview travel expenses rely on outmoded concepts of an
agency's management responsibility, we now hold agencies may pay the
preemployment interview travel expenses of applicants for the
competitive service subject to guidelines or standards imposed by OPM.
54 Comp.Gen. 554, 31 id. 175, and B-172279, May 20, 1971, overruled.
Matter of: Office of Personnel Management - Preemployment Interview
Travel Expenses, February 3, 1981:
Ms. Margery Waxman, General Counsel, Office of Personnel Management
(OPM), has requested our decision as to whether the authority of Federal
agencies to pay preemployment interview travel expenses of persons under
consideration for appointment to positions in the competitive service,
may be broadened.
Ms. Waxman proposes that agencies be allowed to pay preemployment
interview travel expenses of persons under consideration for appointment
to positions in the competitive service in (1) certain cases in which
OPM has delegated examining authority to various agencies for certain
positions for which the respective agency is the sole or predominant
user; (2) certain cases in which OPM has delegated direct hire
authority to agencies for shortage category and hard-to-fill positions.
She states that the authority to expand the preemployment interview
travel expense rule is based on certain provisions of the Civil Service
Reform Act of 1978, Pub. L. 95-454, 92 Stat. 1111, 5 U.S.Code 1101 note.
For the following reasons, under the guidelines or standards which
OPM will impose, we shall no longer object to agencies paying
preemployment interview travel expenses to applicants for positions in
the competitive service.
Until modified by 54 Comp.Gen. 554(1975), decisions of this Office
have held that a Government agency may not pay or reimburse a
prospective employee for the expenses incurred in traveling to a place
of interview for the purpose of determining the individual's
qualifications for appointment to a position in the competitive service
since the function of ascertaining the qualifications of prospective
employees is a matter within the jurisdiction of the Civil Service
Commission (now Office of Personnel Management).
See 31 Comp.Gen. 175(1951); B-172279, May 20, 1971. In response to a
request from the Commission we modified decisions 31 Comp.Gen. 175 and
B-172279 and held that where the Commission rules that a position is of
such nature that it could only be properly filled after the applicant
has had a preemployment interview with the employing agency, we would
have no objection to the agency paying for preemployment interview
travel expenses to applicants for positions in the competitive service
on certain limited instances. 54 Comp.Gen. 554. Subsequent to the
issuance of the latter decision. guidance was issued to agencies setting
out in what circumstances agencies could pay preemployment interview
travel expenses under 54 Comp.Gen. 554. See Federal Personnel Manual
(FPM) Chapter 571, Subchapter 1, May 16, 1979. Pursuant to the
limitations stated in 54 Comp.Gen. 554, Chapter 571 restricted the
payment of preemployment interview travel expenses to applicants, for
positions in the competitive service which are classified at a high
grade (GS-14 and above) or which are unique.
Ms. Waxman argues the case for broadening the authority of agencies
to pay for preemployment interview travel expenses as follows:
Since the enactment of the Civil Service Reform Act and the
implementation of the Uniform Guidelines on Employee Selection, * * * ,
the entire manner in which the Federal Government examines and selects
candidates has undergone rapid change. The changes in examining are
characterized by four significant developments:
1. A movement away from the present system of centralized examining
responsibility of OPM;
2. A substantially expanded role for federal agencies at key
decision-making points in the staffing process;
3. Less reliance on staffing inventories, and establishment of
staffing techniques that focus on examining for individual vacancies as
they occur;
4. Development of alternatives to written tests. * * *
In this regard, Ms. Waxman views the impact of the Civil Service
Reform Act of 1978 as follows:
Permitting agencies to pay preemployment interview expenses sould
implement one of the major goals of the Civil Service Reform Act, to
give more staffing responsibility to agencies and thus improve the
quality of public service. Under CSRA, OPM may delegate and has
delegated to certain agencies competitive examination authority (5
U.S.C. 1104(a)(2)). Under the Act, OPM must establish standards for
agencies delegated direct hire authority (id. Sec. 1104(b)(1));
authority to pay pre-employment interview expenses might well be one of
those standards. Further, the potential for abuse of any such authority
may be checked by OPM's oversight authority (sec. 1104(b)(2)) and OPM's
ability to require agencies to take corrective action for abuse of any
rules, regulations or standards established under Sec. 1104(b)(1) (Sec.
1104(c)). The authority requested might also enable agencies to pursue
more vigorously their recruitment efforts for women and minorities, as
mandated by CRSA.
As of May 1980, OPM had authorized the establishment of 130 separate
agency examining units. In addition, OPM is presently authorizing
agencies to announce and examine for positions at grades GS-9 through 15
in the occupational areas of general administration and management, on a
case basis. For the first quarter of fiscal year 1980 (ending December
29, 1979), agencies with delegated examining authority had reported a
total of 4,230 selections. Although OPM has not yet collected hard data
to assess the overall impact of these changes (audits are planned for
the near future), we believe that the changes described have resulted in
the following benefits:
1. Improved quality of candidates referred, due to specificity of
job requirements and recruiting efforts;
2. Full involvement of agencies, including line managers, in the
total selection process;
3. Ability of agencies to improve targeted recruiting, keyed to
short and long range staffing needs and to minority recruitment goals
established by CSRA;
4. Ability to use competitive and internal merit staffing processes
concurrently and with the same resources;
5. Swifter and more efficient staffing.
As part of the trend away from OPM responsibility for examining and
selecting candidates, we have reached agreements with most Federal
agencies to delegate examining authority to them for single agency
occupation covered by PACE. These agreements will remove about half of
all selections from PACE over the next two years. We are presently
working with other agencies to remove single agency occupations from
PACE on a longer range basis. Eventually, we anticipate that agencies
will be examining for about 70 percent of the selections now filled from
PACE: OPM will examine for the rest of the occupations.
For the immediate future we expect that most delegation authorities
will involve case examining for GS-9 through 15 life science, computer,
and accountant occupations. This coverage will expand as we
decentralize our present nationwide examinations.
In addition to the above, Ms. Waxman also refers to the great
difficulty Federal agencies are having in hiring individuals in certain
occupations.
* * * Competition from the private sector is especially intense for
certain categories of positions for which the government experiences
chronic shortages such as engineers and scientists. From all
indications, we believe this trend will worsen in 1981-82 when the
Defense Department begins to staff up for such projects as the MX
missile. Agencies reporting the greatest difficulties now (particularly
on the West Coast) are Air Force and Navy, Installations of both these
departments report only a 50 percent fill rate for their vacancies, an
extremely low rate which severely undercuts agencies to fulfill their
missions. These figures are confirmed by our Regional Office (see also
data submitted by Air Force and Navy, attached).
Agencies unanimously view the use of the authority requested as an
aid in recruiting scientists and engineers.
Our decisions which have limited the payment of travel expenses for
preemployment interviews have been based on the rationale that since the
function of ascertaining the qualifications of prospective employees is
a matter within the Civil Service Commission's/Office of Personnel
Management's jurisdiction then other agencies have no authority to spend
their appropriations for this function. 31 Comp.Gen. 175. The
limitation is not directed at prohibiting the payment of travel expenses
for preemployment interviews per se.
For example, where an agency has had the authority to determine the
qualifications of applicants for positions, whether in the competitive
service or not, we have held that that agency may pay the applicants
preemployment interview travel expenses. 31 Comp.Gen. 480(1952); 38
id. 483(1959) and 40 id. 221(1960). Preemployment interview travel
expenses, therefore, may be paid when the agency determines the
qualifications of the position which the applicant seeks.
The civil service laws were amended by section 201(a) of the Civil
Service Reform Act of 1978, 5 U.S.C. 1104, in pertinent part as follows:
Sec. 1104. DELEGATION OF AUTHORITY FOR PERSONNEL MANAGEMENT
(a) Subject to subsection (b)(3) of this section--
(1) the President may delegate, in whole or in part, authority for
personnel management functions, including authority for competitive
examinations, to the Director of the Office of Personnel Management;
and
(2) the Director may delegate, in whole or in part, any function
vested in or delegated to the Director, including authority for
competitive examinations (except competitive examinations for
administrative law judges appointed under section 3105 of this title),
to the heads of agencies in the executive branch and other agencies
employing persons in the competitive service; except that the Director
may not delegate authority for competitive examinations with respect to
positions that have requirements which are common to agencies in the
Federal Government, other than in exceptional cases in which the
interests of economy and efficiency require such delegation and in which
such delegation will not weaken the application of the merit system
principles.
(b)(1) The Office shall establish standards which shall apply to the
activities of the Office or any other agency under authority delegated
under subsection (a) of this section.
(2) The Office shall establish and maintain an oversight program to
ensure that activities under any authority delegated under subsection
(a) of this section are in accordance with the merit system principles
and the standards established under paragraph (1) of this subsection.
(3) Nothing in subsection (a) of this section shall be construed as
affecting the responsibility of the Director to prescribe regulations
and to ensure compliance with the civil service laws, rules, and
regulations.
(c) If the Office makes a written finding, on the basis of
information obtained under the program established under subsection
(b)(2) of this section or otherwise, that any action taken by an agency
pursuant to authority delegated under subsection (a)(2) of this section
is contrary to any law, rule, or regulation, or is contrary to any
standard established under subsection (b)(1) of this section, the agency
involved shall take any corrective action the Office may require.
Under the above authority OPM may delegate to agencies its examining
authority or the authority to determine the qualifications of applicants
to positions in the competitive service. Ms. Waxman states that OPM has
already delegated examining authority to various agencies for certain
positions for which the respective agency is the sole or predominant
user.
OPM has also delegated direct hire authority to agencies for shortage
category and hard-to-fill positions. We understand that such actions by
OPM effectively places in the agencies the power to make qualification
determination of the applicants to the positions in question.
See generally FPM Bulletin 331-2, dated November 8, 1979.
As noted above, our prior decisions which have prohibited agencies
from paying preemployment interview travel expenses to applicants for
positions in the competitive service have done so not because of any
prohibition in the law. Rather, it had been felt that since the role of
an agency was limited to selecting from a list of eligibles an applicant
whom the Civil Service Commission had already investigated and
determined to be qualified, there was no necessity for the agency to
conduct an interview. It was therefore felt that an agency could not
pay for travel expenses incident to such an interview.
Ms. Waxman points out, however, that preemployment interviews are in
fact often necessary agency function prior to the selection process.
She says that--
As a policy matter, our Office has long considered the ability of
federal agencies to pay for preemployment interview expenses, an
important management tool in securing quality personnel. Selection
interviews are a normal, natural and practical part of the selection
process and provide both parties with a chance to assess one another.
The private sector has always considered preemployment interview
expenses one of the normal overhead costs involved in securing high
quality staff.
Moreover the thrust of Civil Service Reform Act of 1978, which has
authorized the delegation of functions to agencies, is towards the
implementation in Federal agencies of modern and efficient management
practices. Under the authority granted in 5 U.S.C. 1104, OPM has
delegated more and more of the management functions for which it
previously had the sole responsibility.
Concerning the extent the authority to pay preemployment interviews
would be utilized if such authority were granted, Ms. Waxman says:
We do not anticipate a need to modify the criteria (in FPM Ch. 571)
for covered positions. * * * We do not believe that every position in
the categories for which we are requesting authority requires or
warrants payment of preemployment interview expenses. Our guidelines
should probably provide for OPM to review each agency's request and to
make decisions on a case basis. Certain general restrictions should
probably apply across the board. For example, we might restrict use of
the authority to positions for which--
-- no locally qualified candidates can be found,
-- shortages have been accurately documented,
-- a specified minority requirement problem exists, or
-- the interview is necessary to determine qualifications.
We would also want to limit the authority to career-conditional or
career appointments. Additional administrative restraints could include
limits on the number of visits to an agency, and limits on the number of
reimbursable visits for any one individual.
With regard to GAO's concern about possible abuse of the authority
requested, the most important safeguard would be the fact that
reimbursement authority would be delegated to agencies under specific
performance agreements. Granting the authority in this manner would
permit us to monitor the authority closely, to gather statistical data
on its use, and to require agencies to take corrective action as
warranted.
In light of the above, and bearing in mind that our decisions
prohibiting the payment of preemployment interview travel expenses were
based on our view of agencies responsibilities and not on a prohibition
in the law, we now conclude that agencies may pay the preemployment
interview travel expenses of an applicant to the positions in the
competitive service, in the circumstances requested by OPM subject to
such guidelines or standards as OPM may prescribe for agencies. See 5
U.S.C. 1104(b)(i).
B-198738, February 2, 1981, 60 Comp.Gen. 223
Contracts - Fixed Price - Agency Determination to Use - Conclusiveness
Use of firm fixed-type contract is not subject to legal review since
statute mandates use of such contract type absent determination to
contrary by agency. Contracts - Negotiation - Evaluation Factors -
Point Rating - Predetermined Score
Solicitation provision stating that award will be made to offeror
with lowest price and evaluation score of 80 points or better
establishes predetermined cut-off score which may be improper.
Contracts - Specifications - Restrictive - Justification
Request for proposals provision that contractor should not have been
associated with prior publicized position on matters which are subject
to procurement with high public interest is not overly restrictive of
competition, since biased public position is implicit in restriction,
and agency's desire to obtain unbiased contractor is reasonable.
Contracts - Negotiation - Awards - Initial Proposal Basis - Propriety
Government's standard reservation of right to make award on basis of
initial proposals does not constitute improper refusal to conduct
discussions with offerors. Contracts - Negotiation - Competition -
Discussion With All Offerors - Requirement - Opportunity To Revise
Proposal Constitutes Discussion
Discussions have occurred where offerors respond to agency request
for explanation of offers and any necessary price revision resulting
therefrom by revising technical proposals or price proposals or both.
Contracts - Negotiation - Evaluation Factors - Price Consideration Not
Mandatory
Request for proposal does not place undue emphasis on price for study
design that requires considerable technical expertise where evaluation
factors indicate agency's intent to apply high standard of technical
acceptability in establishing competitive range. Contracts -
Specifications - Restrictive - Minimum Needs Requirement -
Administrative Determination - Reasonableness
Allegation that statement in request for proposals that agency will
itself conduct epidemiological study to be designed by contractor is
restrictive of competition because many scientists will refuse to stake
their reputations on study over which they have no control is without
merit where it is not shown that conduct of such study by party other
than study designed is unusual or beyond legitimate agency needs.
Contracts - Protests - Allegations - Not Supported by Record - Studies
Mandated by Statute - Compliance
Allegations that study as contemplated by Veterans Administration
will not satisfy requirements of statute mandating study are without
merit where agency plan to conduct study itself is consistent with
statute.
Matter of: National Veterans Law Center, February 2, 1981:
The National Veterans Law Center (NVLC) protests the award of a
contract to any offeror under request for proposals (RFP) No. 101
(134c)-8-80, issued by the Veterans Administration (VA) for a protocol
(study design) of an epidemiological study of phenoxy herbicides,
specifically Herbicide Orange ("Agent Orange"), as used in Vietnam. We
are denying the protest.
Public Law 96-151, Sec. 307(a)(1), 93 Stat. 1097(1979), 38 U.S.Code
219 note, directs the VA to:
(D)esign a protocol for and conduct an epidemiological study of
persons who, while serving in the Armed Forces of the United States
during the period of the Vietnam conflict, were exposed to any of the
class of chemicals known as "the dioxins" produced during the
manufacture of the various phenoxy herbicides (including the herbicide
known as "Agent Orange") to determine if there may be long-term adverse
health effects in such persons from such exposure. * * *
On March 19, 1980, the VA issued the subject RFP requesting firm
fixed-price offers for the required study design. The NVLC filed the
instant protest with this Office, and subsequently also filed a
complaint for declaratory and injunctive relief in the United States
District Court for the District of Columbia (Civil Action No. 80-1162).
The court denied the plaintiff's request for a temporary restraining
order but retained jurisdiction over the case. The court has requested
our opinion in the matter.
We have also been requested by a member of Congress to respond to all
of the issues raised by the NVLC which, in addition to alleged
procurement law violations, include a claim that as presently
contemplated the study itself will not comply with the requirements of
Public Law 96-151.
No award has yet been made in this procurement, although it is our
understanding that proposals have been received and evaluated.
Adequacy of Specifications
I. The NVLC contends that the RFP does not meet the requirement of
section 1-3.802(c)(1) of the Federal Procurement Regulations (FPR) (1964
ed.) that RFPs contain specifications which are as complete as possible.
The specifications are alleged to be particularly deficient because the
RFP anticipates award of a firm fixed-price contract.
The NVLC has presented a number of arguments in support of its
contention that the specifications are inadequate.
It is the VA's position that the specifications are as complete as
possible. In addition, the VA states that it "provided a description of
what was available insofar as facilities, capabilities and the like at
the pre-proposal conference." The VA does not, however, deny that the
RFP itself is silent concerning the available data about the population
to be studied. Rather, it argues that if the work statement is "far
from definite" as the NVLC contends, it is because the VA intends the
contractor to exercise its own judgment in identifying the population to
be studied.
The RFP Statement of Work provides in pertinent part as follows:
The contractor will be required to develop the design for a
comprehensive epidemiological study of subjects who shall be persons
who, while serving in the Armed Forces of the United States during the
period of the Vietnam conflict were exposed to dioxins produced during
the manufacture of various phenoxy herbicides (including "Agent
Orange").
The design will include detailed methods for analysis and interpretation
of the data obtained during the study.
In addition to providing the study design, the contractor will be
expected to provide prompt justified modifications in the study's
protocol in response to the several scientific or other bodies that will
review it.
Once the study was commenced, the contractor will be expected to
consult with the responsible officials of the Veterans Administration on
the progress of the investigation in order to assure that the objectives
of the study design are being met. The epidemiological study itself
will be conducted by the VA, including examination of the subjects and
data collection, according to the design of the contractor.
-- The contractor will recommend the level of certainty that the
study should reach in concluding that specific effects are or are not
due to the phenoxy herbicides and/or their contaminants.
-- The numbers of study subjects and control populations required for
successful completion of the study must be estimated by the contractor
and the mechanism by which individual subjects and controls are to be
chosen must be specified. The contractor will be expected to adapt the
estimates of size of the study and control samples and their method of
selection to the realistic constraints of facilities, staff and time
under which the study must be conducted. The latter will be defined
during protocol development by close collaboration with the VA
contracting officer's technical representative.
No additional details regarding the source, accuracy, condition or
the availability of the data needed to identify and work with the
population to be studied are specified in the RFP.
A firm fixed-price contract provides for a price which is not subject
to adjustment based on the contractor's cost experience during
performance, and thus places full responsibility in terms of profits or
losses for costs below or above the firm fixed-price on the contractor.
FPR Sec. 1-3.404-2(a). Accordingly, firm fixed-price contracts are
suitable for use in procurements when reasonably definite design or
performance specifications are available and whenever fair and
reasonable prices can be established at the outset, and where the
uncertainties involved in contract performance can be identified and
reasonable estimates of their possible impact on costs made. FPR Sec.
1-3.404-2(b). Thus while there may be a reasonable basis under the
guidelines of FPR 1-3.404-2(b) to award a cost-type contract, the use of
a firm fixed-price contract is not legally objectionable. We reach this
conclusion because of the language of 41 U.S.C. 254(b):
Neither a cost nor a cost-plus-a-fixed-fee contract * * * shall be
used unless the agency head determines that such method of contracting
is likely to be less costly than other methods or that it is impractical
to secure property or services of the kind or quality without the use of
a cost (type) * * * contract.
We view the foregoing as creating a statutory requirement for the use
of a fixed-price contract except where the agency head in his discretion
finds otherwise under the circumstances described in the statute. We
also do not believe the agency head is required to make the
determination that the use of a fixed-price contract is inappropriate
for use in a given situation merely because a third party believes
cost-type contracting would be more appropriate under the circumstances
of a procurement such as this one.
Thus, whether or not this Office would agree with the decision to seek a
firm fixed-price contract is legally irrelevant and the decision is not
subject to legal objection.
In this respect, we point out that several offers were received from
offerors who were apparently willing to take the risks inherent in a
firm fixed-price contract. Whether additional offers might have been
received if cost-type contracting were used is legally beside the point.
We note here that the VA has argued that if modifications in a firm
fixed-price contract are necessary, mechanisms exist so that adequate
compensation can be agreed upon under the "Changes" clause of the
contract.
We believe, however, that in view of the very general nature of the
specifications the likelihood of a legally valid modification to the
contract would be minimal under the "Changes" clause. Certainly a
contractor would not be entitled to "get well" for any errors in
judgment it may have made with respect to price because of an indefinite
work statement in the RFP.
II. Next, we turn to several other allegations made by the NVLC
concerning the adequacy of the specifications, which we find to be
without merit. The first of these is that the RFP provides for the
study to be carried out by the VA but no information is provided about
the facilities or personnel available for this. The NVLC argues that it
is impossible to design the protocol without this knowledge.
While we agree with the NVLC that this information is crucial since
the protocol must take into account the facilities available for
conducting the study as designed, we believe that the RFP contains
sufficient information in this regard to allow for intelligent
competition.
Specifically, the RFP provides that the facilities, staff and time
under which the study will be conducted will be worked out during
protocol development by close collaboration between the contractor and
the VA. Consequently, all prospective offerors were advised that the
exact facilities available had not yet been determined, but that the
contractor's needs would be considered in establishing them along with
the needs of the VA. Moreover, it was clear that the contractor would
not be expected to complete development of the protocol before these
necessary determinations were made. We think that this provided an
adequate basis on which to submit a proposal.
The NVLC also argues that the RFP is deficient because it lacks
details about the "end point symptoms" it seeks to study and contains
only a cursory list of organ systems which should be considered. In
this regard, the RFP specifically provides as follows:
The variables chosen for the study should include organ systems
theoretically most often affected by exposure to the chemicals in
Herbicide Orange (e.g., liver, kidney, skin and nervous systems).
It is our understanding that the diseases and symptoms which may
result from exposure to "Agent Orange" are largely unknown and that this
is, in fact, a primary reason why there is a need for an epidemiological
study such as the one mandated by Public Law 96-151. Thus we find
nothing objectionable in the RFP's lack of detail in this regard. We
believe that the VA has sufficiently advised offerors of the general
scope of the requirement and intends that offerors use their individual
judgment in arriving at their own approach to the problem. There is
nothing objectionable in this Complete Irrigation, Inc., B-187423,
November 21, 1977, 77-2 CPD 387.
Last, the NVLC contends that the specifications are inadequate
because the RFP indicates that time and price will be heavily weighted
factors in selecting the contractor, yet no indication of time or price
expectations is offered.
At the outset, we note that while the NVLC has identified particular
portions of the RFP as containing these inadequate specifications, we
are unable to identify where it is provided that time will be a heavily
weighted selection criterion. The RFP does provide, however, that
offerors must estimate how long it will take to complete the study. We
assume that it is this requirement to which the NVLC refers.
We recognize that the length of the study can vary widely depending
upon what type of study is proposed. For example, a contractor could
propose a study to be conducted at a particular point in time or one
which would take place over a number of years, or both. It is apparent,
however, that the VA intended this to be a matter for the contractor's
judgment, and we believe that it is implicit in this requirement that
the VA would find either or both approaches acceptable, if they were
properly justified. Thus we must conclude that offerors were
sufficiently informed in regard to the Government's time expectations.
With regard to the lack of any price expectation in the RFP, we are
aware of nothing which requires the inclusion of such information in a
solicitation. Consequently, we must conclude that this allegation is
without merit.
Pre-Determined Competitive Range
The RFP provides that award will be made to that offeror with the
lowest price and with an evaluation score of 80 points or better. The
NVLC argues that this establishes a pre-determined cut-off score and is
improper under the decisions of this Office. The VA contends that this
80 point factor is a "qualifying score" and that it was cited only to
apprise offerors of the relative importance the VA attaches to the areas
of evaluation.
The VA states that it does not view this as establishing a competitive
range in advance and, further, that such factors have been determined to
be acceptable by this Office in the past, citing to our decision in 52
Comp.Gen. 382(1972).
A pre-determined cut-off score is one arrived at in advance of
proposal evaluation and subsequently used to establish the competitive
range. One example is a solicitation provision requiring that prior to
consideration of price as a determining factor, a proposal must receive
a numerical score placing it within the top three eligible proposals.
Donald N. Humphries & Associates; Master Tax, Inc.; Innocept Inc., 55
Comp.Gen. 432(1975), 75-2 CPD 275. In this case, prior to consideration
of price as a determining factor, a proposal must receive a score of 80
or above. We fail to perceive any difference between this so-called
qualifying score and a pre-determined cut-off score.
We have held that the practice of using a pre-determined cut-off
score to establish the competitive range is improper. Donald H.
Humphries & Associates; Master Tax, Inc.; Innocept, Inc., supra; 50
Comp.Gen. 59(1970). Rather, the competitive range should be determined
by examining the array of scores from all proposals submitted and
borderline proposals should not automatically be excluded from
consideration.
In 52 Comp.Gen., supra, we found that in a procurement where
proposals were required to receive a score of at least 85 points in
order to be considered technically acceptable, a decision to exclude an
offeror from the competitive range was not improper when that offeror's
score fell well below the acceptable cut-off score and was low in
comparison to the array of scores achieved by other offerors. Thus,
where offerors are not prejudiced by the application of such a cut-off
score, there is no basis to sustain a protest in that regard. This does
not mean, however, that we approve of the use of such a device. Rather,
since it cannot be prospectively determined that the actual application
of such a cut-off score will prove to be non-prejudicial in any given
case, we believe that including such a score in an RFP, for whatever
reason, is inconsistent with sound procurement policy.
Nonetheless, we point out that neither the offerors nor any of the
parties solicited objected to this provision or advanced this as a
reason for not participating in this procurement. In addition, our
examination of the record plainly indicates that none of the offerors
was in fact prejudiced by the use of this device since those who were
not within the competitive range had scores significantly below the 80
point cut-off score B-171857, May 24, 1971.
Restriction Against Offerors Associated With Prior Publicized
Positions
The NVLC argues that the inclusion of the following statement in the
RFP is ambiguous and overly restrictive of competition:
In view of the sensitive nature of this study, the contractor should
not have been associated with a prior publicized position regarding the
effects of phenoxy herbicides and/or their constituents on human health.
The NVLC contends that this restriction is ambiguous because it could
be read to cover not only academic articles but also meetings or
organizations in which an offeror, or someone with whom he is
associated, took any position on "Agent Orange" or any related chemical.
The protestor further argues that this phrase while attempting to
eliminate bias, does not necessarily do so, while excluding people who
are not biased.
The VA states that due to the publicity surrounding the Agent Orange"
issue and the agency's desire to obtain an unbiased contractor, the
requirement contained in the RFP was an essential part of the minimum
needs of the Government. The VA further points out that this Office has
frequently stated it will not question any agency's DETERMINATION OF
WHAT ITS MINIMUM NEEDS ARE UNLESS THERE IS A CLEAR showing that the
determination has no reasonable basis.
We believe that the VA's desire to obtain an unbiased contractor is
reasonable, and the NVLC does not in fact question this. Rather the
NVLC's concern lies in the alleged ambiguities in this requirement and
its consequent effect on competition.
We do not find this provision to be either ambiguous or overly
restrictive of competition. While a literal reading of the clause in
question may be interpreted to exclude any person or organization that
has previously conducted and published or reported upon a scientific
inquiry into the effects of phenoxy herbicides in any respect (there
have been a number of such inquiries conducted on behalf of or by
various agencies including the Environmental Protection Agency), we
think a reasonable interpretation of the language, in the context of the
RFP, cannot be viewed as so all inclusive. Thus a "biased public
position" is implicit in the restriction if it is to be reasonably
applied. We are not persuaded by anything in the record that the
competition was limited by the provision in question.
We recognize, however, that the clause in question does not exclude
all persons from participating in the procurement where a potential
conflict of interest may exist such as an individual or organization
which has been a paid consultant for one of the manufacturers of "Agent
Orange." There is no evidence, however, that this conflict in fact
occurred among the offers received.
Additional Grounds of Protest
The NVLC has raised several other allegations concerning the conduct
of this procurement which we find to be without merit. We will discuss
each issue briefly.
First, the NVLC alleges that the VA does not intend to negotiate with
all responsible offerors as required by section 1-3.805-1(a) of the FPR.
In this regard, we note that the RFP reserves the right to make award
on an initial proposal basis.
This reservation is consistent with FPR Sec. 1-3805-1(a) which
provides that in certain enumerated situations an agency may make award
on the basis of initial proposals without holding discussions with
offerors. Thus, we have held that the Government's reservation of the
right to make award on the basis of initial proposals does not
constitute refusal to conduct discussions with offerors. North American
Telephone Association, B-187239, December 15, 1976, 76-2 CPD 495.
In any event, the record in this case reveals that the VA did in fact
conduct discussions with all offerors. Although the VA has
characterized these as "clarifications," the test of whether discussions
have occurred is whether an offeror has been afforded an opportunity to
revise or modify its proposal. CEL-U-DEX Corporation, B-195012,
February 7, 1980, 80-1 CPD 102. In this case, after receipt and
preliminary evaluation of initial proposals, the VA wrote to each
offeror asking for additional explanation of its proposal and stating
that any necessary price revisions should accompany the response. Each
offeror responded to this request. Some offerors revised their cost
proposal, some revised their proposed staffing, and some did both. It
is, therefore, clear that discussions were in fact held with all
offerors. See 51 Comp.Gen. 479, 481 (1972).
The NVLC also alleges that the criteria for the selection of the
contractor put undue emphasis on price. The protester argues that price
is not properly the deciding factor where scientific expertise, rather
than a fungible item, is being purchased. In support of this position,
the NVLC cites FPR Sec. 1-3.805-1, which provides that while lowest
price is properly the deciding factor in many contracting decisions, it
need not be the primary consideration in the award of research or
special or professional services contracts. The NVLC concludes that
this "shortsighted" focus on price is arbitrary and unreasonable.
The selection of evaluation factors and the relative weights assigned
to them are matters primarily for consideration by the contracting
agency, and our Office will not substitute its judgment for that of the
agency unless it is clearly and convincingly shown that the agency's
actions in establishing and applying such factors and weights are
arbitrary, capricious, or not reasonably supported by the facts.
Houston Films, Inc., B-184402, December 22, 1975, 75-2 CPD 404.
Notwithstanding that we have found the VA's use of an 80 point
pre-qualifying score inappropriate as a general matter, in our view it
does reflect an intent to employ a high standard for determining
technical acceptability, rather than a minimum one. That intent appears
to be consistent with the indication in Public Law 96-151 that the study
design should be of a high caliber.
The NVLC next contends that the VA's plan to carry out the study
itself discourages potential offerors. The NVLC points out that the
contractor is expected to serve as a consultant to the VA during the
conduct of the study, yet control over the study apparently will be
entirely in the VA's hands. It is argued that many scientists will not
submit offers under these conditions since they are asked to stake their
reputations on a study over which they have no control.
This "lack of control" by the study's designer would exist whether
the VA or another contractor conducted the study. Moreover, we
understand that unlike a "laboratory" study the conduct of an
epidemiological study by a party other than the designer is not unusual.
In any case, the fact that some potential offerors may hesitate to
submit proposals because of the VA's intent does not render the
solicitation improper or the specifications unduly restrictive of
competition so long as the specification represents the legitimate needs
of the agency. See H. M. Sweeny Company, B-197302, June 12, 1980, 80-1
CPD 413. Thus, we must conclude that this allegation is without merit.
The NVLC also alleges that the RFP limits the length of proposal
submissions to three pages only. This page limitation is alleged to be
arbitrary and inappropriate for selection of a contractor best suited to
the Government's needs.
Our examination of the record shows that the RFP calls for offerors
to submit a three page summary of the components of the proposal. There
is no limitation on the length of the proposal itself and the record
shows that all offerors submitted proposals which were considerably
longer than three pages in length. Thus, we find no merit to this
allegation.
The NVLC also asserts that the study as presently contemplated by the
VA will not comply with the statutory mandate of Public Law 96-151. The
NVLC has raised several allegations in this regard. These can be
characterized as follows: (1) the RFP contemplates adapting a general
study design to meet VA capabilities and facilities, but such a design
will not produce a scientifically valid study; (2) the VA plan to carry
out the study is unscientific and will not comply with the statute
because VA personnel are biased, such a study will not be credible, and
veterans will refuse to go to VA facilities; (3) the study contemplated
by the RFP is not a scientifically valid epidemiological study as
required by the statute, but a clinical screening study instead.
In support of its first allegation, the NVLC argues that the VA plans
to select a contractor on the basis of a general submission in response
to inadequate specifications, and after the contractor and design are
selected, work with the contractor to fit the design to the study. This
allegedly will not produce a scientifically valid study since the study
design should be made to fit the problem to be investigated rather than
be predetermined and then adapted to the problem at hand.
We find no indication in the RFP that the contractor will be required
to provide a general study design and then adopt it to the problem at
hand. While, as we have previously discussed, the RFP does require the
contractor to adopt study and control sample size to the realistic
constraints of the facilities, staff and time under which the study will
be conducted, this adaptation is to take place during, not after,
protocol development.
The NVLC's second allegation stems from the RFP provision that the
epidemiological study itself will be conducted by the VA. It is argued
that the scientific validity of the study is contingent on the
neutrality of the fact gatherers, yet VA personnel are biased by the
prior positions taken by VA officials on the "Agent Orange" issue and by
the possible negative implications for the VA of finding a positive
relationship between "Agent Orange" exposure and veterans' health
problems.
This "bias" allegedly will also result in a study lacking credibility
since the VA's conclusions will inevitably be viewed with suspicion. As
a result, it is argued, the study will not dispel the suspicion, doubt
and innuendo which were underlying concerns that prompted enactment of
the statute. Finally, the NVLC alleges that veterans will refuse to
participate in the study because they are alienated by the VA's past
actions, such as ignoring the Agent Orange issue and trying to keep
information away from veterans and the general public.
At the outset, it must be recognized that Public Law 96-151
specifically provides that "the Administrator of Veterans Affairs shall
design a protocol for and conduct an epidemiological study * * * .
Consequently, we cannot conclude that a decision by the VA to conduct
the study itself is contrary to the statutory mandate. In fact, it is
entirely consistent with that mandate. Moreover, we do not believe
there is any basis upon which to presume that a study conducted by the
VA will be scientifically invalid.
We are aware that the Senate version of the provision under
consideration here would have provided for the Department of Health and
Human Services (HHS) to conduct the study and that the provision's
sponsor felt that in terms of scientific objectivity and validity, HHS
was the best equipped agency to conduct the study. See 125 Cong.Rec.S
17,994 (daily ed. Dec. 6 1979) (remarks of Senator Cranston).
Nonetheless, the compromise version as passed by both Houses substituted
the VA for HHS.
The explanatory statement accompanying the compromise agreement makes
it clear that the VAS was regarded as the most appropriate Federal
agency to conduct the study. This statement also shows, however, that
Congress did not intend to limit the VA from contracting-out any portion
of the study. The pertinent portion of the explanatory statement
provides as follows:
In addition, the Committees note their views that the VA, by virtue
of its traditional mandate to provide services and benefits for veterans
and their survivors is the Federal agency most likely to carry out the
needed study with the requisite sympathy and understanding for the
individuals concerned. The Committees also note that the VA has the
authority, pursuant to section 213 of title 28, to enter into contracts
with the private or public agencies or persons for any necessary
services for or in connection with any portion of the mandated study.
125 Cong.Rec.S 17,997 (daily ed. Dec. 6, 1979).
In this respect, the VA has stated that no final decision has yet
been made concerning what parts of the study will be performed by whom,
nor will such a decision be made until the protocol has been approved.
While we view this statement as inconsistent with the RFP provision on
which the NVLC has predicated its allegation, it does reflect a
willingness on the part of the VA to reconsider its position if a
different approach is required.
The NVLC's last allegation is that the study contemplated by the RFP
is not scientifically valid epidemiological study ordered by the
statute, but rather a clinical screening study.
In this respect we note that the solicitation continuously refers to
the study as epidemiological and that no mention is made of a clinical
screening study. Moreover, our examination of the proposals actually
submitted in response to the RFP reveals that these offerors apparently
understood the RFP to contemplate an epidemiological study rather than a
clinical screening study. We find no merit to this assertion.
It is our understanding that there are a number of factors which can
influence the validity of the study, some of which are beyond anyone's
control. For example, the ability of any scientist or scientific group
to arrive at a valid means of determining how to actually measure
exposure to Agent Orange will have a decisive effect on the validity of
the study.
As the NVLC itself recognizes, this may be an impossible task.
The protest is denied.
B-198574, February 2, 1981, 60 Comp.Gen. 219
Appropriations - Obligation - Validity - Agreements - Small Business
Administration - Management Services
Annual appropriations may not be obligated for any management
services under section 7(j) of the Small Business Act, 15 U.S.C. 636(j)
which are required to be performed as requested during specified period
extending beyond fiscal year in which contract was made. Appropriations
- Obligation - Contracts - Future Needs
Where prior year agreement purporting to bind Government to pay for
services required to be performed in subsequent fiscal year is
enforceable only when definite order for services is made, cost of
services performed pursuant to such order may be charged against
appropriation current when services are ordered.
Matter of: Obligations and Charges Under Small Business
Administration Service Contracts, February 2, 1981:
An authorized certifying officer of the Small Business Administration
(SBA) requests our decision on whether annual appropriations, obligated
in one fiscal year for contracts for services under section 7(j) of the
Small Business Act (15 U.S.C. 636(j)(1976)) are available for payment in
a subsequent fiscal year during which the services are performed.
Heretofore, SBA's practice has been to charge the full estimated cost of
the services against appropriations current at the time of the award of
the contract on the theory that, since payment may not exceed an
estimated maximum cost and may be made only for completed tasks ordered
by the Government, the service agreements are analogous to definite
quantity supply contracts executed in one fiscal year for deliveries in
a subsequent fiscal year. Under those contracts the Government makes
payment only for supplies actually shipped.
For the reasons which follow we do not agree that the SBA contracts
are for definite quantities or that payments for services rendered in
the fiscal year following that in which a contract therefor was executed
represent valid obligations of the previous fiscal year. In our view,
an obligation under the SBA contracts arose only when specific services
were ordered from the contractor by the Government.
Under section 7(j), SBA arranges with private organizations to
provide technical and management assistance to individuals or businesses
eligible for assistance under the Act. The period covered by the usual
contract is one calendar year after its execution, which, the certifying
officer states, in most instances covers more than one fiscal year. The
contractor agrees to perform certain specified tasks, as requested by
the agency, at any time during the life of the contract. Although the
contract terms provide a total estimated price for the services to be
rendered, payments are actually made only in proportion to the amount of
work requested and performed.
Moreover, the agency is not bound to order any minimum amount of
services nor is it required to deal only with the contractor.
The certifying officer asks two specific questions: (1) Whether the
contracts executed in a current fiscal year represent valid obligations
for payment of services to be performed in a subsequent fiscal year, and
(2) if not, whether the certifying officer may, nevertheless, certify
vouchers for services performed during a current fiscal year when the
contracts for such services were awarded during a prior fiscal year.
For the reasons we will explain more fully in our answer to Question
2, the specific agreements described by SBA do not give rise to any
contract obligations on the part of the United States at all unless and
until the agency requests the contractor to perform certain specific
services. Thus an order placed in a subsequent fiscal year to render
services in that year is a valid obligation of the year in which the
order was placed. There is no funding-across-fiscal-year-lines problem
in the instant case.
However, because the question itself and the references cited
indicate some confusion with the principles involved, we will take this
opportunity to explain the "bona fide needs" rule more precisely.
Assuming for the moment that the SBA agreement did represent a
contract obligation in the year in which it was executed the answer to
the first question would be no, since it is hard to see how services,
which by the very terms of the agreement, can only be rendered in a
subsequent fiscal year, can be said to be a "bona fide need" of the
agency for the fiscal year in which the contract was made. The "bona
fide need" rule was developed by the General Accounting Office to
implement one of the oldest funding statutes on the book. First enacted
in 1789 (1 Stat. 95), the principle known as "the one year rule," now
classified to 31 U.S.C. 712(a), is that annual appropriations may only
be applied "to the payment of expenses properly incurred during that
year or to the fulfillment of contracts properly made within that year."
This makes appropriations available only to fulfill a genuine or "bona
fide" need which exists at the time the contract is executed.
The fact that delivery of goods or performance of services takes
place in a fiscal year subsequent to the year in which the contract was
made does not automatically preclude the charging of the earlier fiscal
year appropriations with the full cost of the goods or services. The
test is whether the goods or services will meet an immediate need of the
agency, regardless of when the work under the contract is completed.
Generally, there is little problem determining that contracts for
supplies or equipment or for construction of a building represent
genuine needs of the year in which the contract was made.
This may also be true of some services. On the other hand, continuing
and recurring services, to the extent that the need for a specific
portion of them arises in a subsequent fiscal year, do not meet the
test. The portion of the services needed in the subsequent fiscal year
would be regarded as "severable," and not chargeable against
appropriations available at the time the contract was made.
The legal opinion upon which SBA relied in this case for the
conclusion that funds of the fiscal year of contract formation were
validly obligated was an August 18, 1977, memorandum from SBA's Office
of General Counsel. It views the agreements here in question as
"entire," based in part upon two of our decisions concerning a contract
awarded by the Department of State. B-125444, February 16, 1956, and
May 2, 1956. On the other hand, the Certifying Officer recognizes that
in a more recent case, B-192518, August 9, 1979, we stated:
In the absence of any specific legislative authority, a contract for
management services, funded with annual appropriations, may be made only
for services to be rendered during the current fiscal year and may not
cross fiscal year lines. * * *
The State Department contract involved in the 1956 decision provided
for gardening services for a certain number of days each month during a
12 month period extending across fiscal year lines. The total contract
price consisted of the gardener's wages for 207 days, the cost of
equipment rental and maintenance, and the cost of refuse removal, mold,
and grass seed. Although some of the gardening services were not
rendered until the fiscal year following that in which the contract was
executed, we found that since it also included equipment and supply
costs, the contract was not purely a services contract and was not
severable. Therefore, we held that the entire amount due under the
contract was chargeable against the fiscal year appropriations current
at the time the contract was executed.
Whether B-125444 was correctly decided on the facts of that case is
open to question since the type of gardening service involved (as
opposed to the supplies and equipment) by its very nature had to be
performed on a periodic basis throughout the life of the contract. At
any rate, it is clear that SBA agreements under section 7(j) of the
Small Business Act do not require delivery of equipment and supplies but
are purely for services to be performed upon request of the contracting
officer at any time during the life of the contract, and that life spans
two fiscal years. The SBA agreement calls for services which fulfill a
need of a subsequent fiscal year, as well as the current fiscal year and
thus is severable. Because one cannot logically say that service
rendered in the subsequent fiscal year fulfills needs of the current
fiscal year, appropriations current at the time of contracting are not
available to pay for services rendered in the following year.
In his second question, the certifying officer asks whether he may
certify vouchers for services rendered in the fiscal year following that
in which the contract was awarded, presumably by charging the subsequent
fiscal year's appropriations. This question and question one are merely
opposite sides of the same coin. In addition to the arguments advanced
before, involving 31 U.S.C. 712(a) and the "bona fide needs" rule, the
prohibitions in 31 U.S.C. 665(a), the so-called Anti-deficiency Act,
must also be considered. The Antideficiency Act (among other things)
forbids the incurring of obligations in advance of or in the absence of
available appropriations to cover the obligation. Since section 712(a)
makes appropriations unavailable for goods or services which do not
represent a bona fide need of the fiscal year sought to be charged, if a
valid contract obligation for services arose in the prior fiscal year,
funds of the subsequent fiscal year could not be used to pay for them
without violating the prohibition in 31 U.S.C. 665(a). See e.g., 28
Comp.Gen. 553(1949); 29 id. 451(1950); 37 id. 60 and 155 (1957); 42
id. 272(1962); 56 id. 142(1976); and B-192518, August 9, 1979.
In the instant case, however, as we stated in answer to question one,
the sample agreement submitted to us does not, by itself, give rise to a
contractual obligations on the part of the United States. Under the
so-called "contract" terms, all orders for services must be placed on
behalf of the Government by a designated project manager who must issue
a task order which references the basic contract and describes the
specific task to be performed. As we have already noted, the "contract"
terms provide an estimated price for the entire project. The "contract"
states in addition, however, that--
(T)he contractor shall be paid only for completed and accepted tasks.
No task shall be deemed to be completed until a report thereon has been
accepted. Payments are authorized for tasks (and reports thereon)
completed and accepted with invoices to be submitted on a MONTHLY BASIS.
HOWEVER, PAYMENT FOR THE FINAL GOVERNMENT * * *. There are no minimum
payments required under the terms of this contract. Contractor shall be
paid only for work completed and approved by SBA Project Manager.
Another provision of the contract provides as follows:
It is further understood and agreed that this is not a contract for
all of SBA's requirements for technical and management assistance to be
rendered to eligible individuals or enterprises within this region and
SBA may award contracts to other concerns or otherwise provide for
furnishing such assistance within this region as may be necessary.
Thus, no obligation arises until specified services are ordered, and
there is nothing in the contract to require SBA to place any orders or
to create any liability in the event no orders are placed at all.
Furthermore, such orders as are placed need not be placed with any given
contractor. Finally, payment for services performed under the contract
may be made only for completed tasks, and no minimum payment is
required, it is well settled that contracts of this nature are
unenforceable for want of mutuality if the "will, wish or want" of the
buyer, in this case the Government, determines absolutely the quantity
to be delivered. Further, if there is no consideration other than the
promises of the parties, an agreement for such quantity as the buyer, at
his option, may order or request from the seller is unenforceable for
the reason that no absolute obligation to purchase is imposed upon the
buyer. Willard Sutherland & Co. v. United States, 262 U.S. 489,
493(1923); B-161841, July 26, 1967; B-160063, February 10, 1967;
B-101099, March 7, 1961.
Inasmuch as SBA has no legal obligation to order or pay for any
services under the agreements in question, such agreements lack
mutuality of obligation and are not contracts. Similar agreements
lacking mutuality have been held enforceable only to the extent
performed. Willard Sutherland & Co. v. United States, supra: Atwater &
Co. v. United States, 262 U.S. 495(1923); 16 Comp.Gen. 779(1937).
Therefore, since the Government incurs a contract obligation only when
orders are placed and services are rendered, there would be no violation
of 31 U.S.C. 665(a) if vouchers for services ordered and performed
during a current fiscal year are certified for payment from current
fiscal year funds once the services are performed and accepted. In other
words, we regard the contract obligation as arising only when a definite
order for services is placed, notwithstanding the agreement executed in
the prior fiscal year.
B-199418, January 30, 1981, 60 Comp.Gen. 212
Indian Affairs - Sioux Benefits - Proposed Regulation Revision - Head of
Family Determination - Sex-Neutral Standard Adopted
Sioux benefits are farm equipment and stock (or cash equivalent)
granted by law to Sioux Indians who are heads of families. Interior
Department proposes sex-neutral standard for determining head of family
status. General Accounting Office (GAO) agrees that change is
constitutionally required. Therefore, following decisions, insofar as
they hold that Sioux woman married to non-Sioux man is conclusively
presumed to be head of family, and that Sioux woman married to Sioux man
cannot be head of family, are overruled: A-19504, February 1, 1929;
A-98691, October 28, 1938; 11 Comp.Gen. 469(1932). This decision also
overrules in part 9 Comp.Gen. 371 and A-61511, July 15, 1935. Indian
Affairs - Sioux Benefits - Proposed Regulation Revision - Double
Benefits Prohibition - Sex-Neutral Standard Adopted
Eligible recipient of Sioux Benefits-- farm equipment and stock (or
cash equivalent) granted by law to Sioux Indians-- is entitled to only
ONE ALLOWANCE OF BENEFITS. INTERIOR PROPOSES SEX-NEUTRAL STANDARD OF
eligibility. GAO agrees with Interior, that rule in A-19504, February
1, 1929-- that a formerly married Sioux woman's entitlement to benefits
in her own right was exhausted when her then-husband received benefits
as head of family-- is impermissibly discriminatory on basis of sex and
overrules that portion of A-19504. Indian Affairs - Sioux Benefits -
Proposed Regulation Revision - Vesting of Rights - Same Standard Under
All Four Benefits Statutes
Four statutes-- 1889, 1896, 1928, and 1934-- govern award of Sioux
benefits, farm equipment and stock (or cash equivalent) granted by law
to eligible Sioux Indians. Under 1928 and 1934 statutes, applications
must be approved during applicant's lifetime, or right lapses. Two GAO
decisions (9 Comp.Gen. 371(1930) and A-61511, July 15, 1935) held that
limitation did not apply to benefits under 1889 law. Interior interprets
1928 and 1934 laws as making limitation applicable to all Sioux
benefits. Language is ambiguous so GAO defers to administering agency's
preferred interpretation and overrules cited decisions. Indian Affairs
- Sioux Benefits - Proposed Regulation Revision - Eligibility
Determination - Date of Original Application v. Date of Application's
Approval
Where application for Sioux benefits-- farm equipment and stock (or
cash equivalent) granted to Sioux Indians-- was disapproved on grounds
now recognized as improper (for example, sex discrimination), and Indian
now reapplies, Interior Department proposes to determine eligibility
based on applicant's status at time of original application. Department
suggests that two GAO decisions (A-19504, February 1, 1929, and 11
Comp.Gen. 469(1932)) prevent implementation of proposal. Decisions,
which require that eligibility be determined not as of date of
application but as of date of approval, are overruled to extent they
conflict with proposed exception.
Matter of: Department of the Interior - Sioux Benefits, January 30,
1981:
The Department of the Interior (Department) wishes to revise the
policies and regulations of its Bureau of Indian Affairs which govern
the payment of certain benefits to Sioux Indians.
The impetus for this proposed revision was a suit against the Department
challenging the constitutionality of the present regulations. Because
these regulations are based on a number of Comptroller General
decisions, the Department asks us to modify or withdraw those decisions
which are inconsistent with the proposed regulations.
Inconsistencies arise in four areas: head of family status; double
benefits prohibition; vesting of rights; and timing of eligibility
determinations.
"Sioux benefits" are articles of farming equipment and stock or, more
commonly today, the commuted cash value of such articles, payable to
certain Sioux Indians under the provisions of four Federal statutes:
the 1889 Sioux Allotment Act (Act of March 2, 1889, ch. 405, Sec. 17, 25
Stat. 888); and 1896 amendment to that act (Act of June 10, 1896, ch.
398, 29 Stat. 321, 334); a 1928 statute which continued those benefits
(Act of May 21, 1928, ch. 662, 45 Stat. 684); and section 14 of the
Indian Reorganization Act (Act of June 18, 1934, ch. 576, Sec. 14, 48
Stat. 987, 25 U.S.C. 474). Under each of these statutes, only Sioux
Indians who are single persons over the age of 18 or heads of a family
are eligible. In addition, the applicant must have received an
allotment of land to be eligible for benefits under the 1889 or 1928
statutes. The 1934 law continued eligibility for certain benefits for
"unallotted" Indians-- that is, those who had not received land
allotments although other eligible-- on the Pine Ridge, Rosebud, and
Cheyenne River Reservations, with provision for a gradual phase-out of
such benefits.
Neither the 1889 Act nor any of the subsequent acts relating to Sioux
benefits defines the term "head of a family." Under the current
regulations, an adult Sioux woman married to a man who is not a Sioux
Indian is conclusively considered to be head of a family, but a Sioux
woman married to a Sioux man is held not to be the head of a family and
is therefore ineligible for Sioux benefits.
The Department has concluded that these regulations are
unconstitutional in that they discriminate against women on the basis of
sex. It proposes to revise the regulations to provide a sex-neutral
standard for determining who is the head of a family.
The proposed regulations provide, as a general rule, that a married
person shall be deemed a head of a family if so designated by both
parties to the marriage. Where the applicant and his or her spouse
cannot agree or are not living together as a family, and in cases where
the applicant's spouse has previously received Sioux benefits as the
head of a family, an economic contribution test is used to determine
head of family status.
Under the standard, either the husband or the wife could qualify as a
head of the family.
We concur in the Department's determination that these proposed
changes in the regulations are necessary to meet constitutional
requirements. Therefore, the following decisions on which the current
regulations are based are overruled insofar as they hold that a Sioux
woman married to a non-Sioux is conclusively considered to be the head
of a family and that a Sioux woman married to a Sioux man cannot be the
head of a family: A-19504, February 1, 1929; 11 Comp.Gen. 469(1932);
A-98691, October 28, 1938. (Other decisions cited by Interior as
forming the basis for current regulations (2 Comp.Gen. 13(1922) and
A-96643, August 9, 1938) are in our view not inconsistent with the
proposed regulations and need not be overruled.)
The 1928 act which continued the allowance of Sioux benefits
contained the following prohibition:
No person shall receive more than one allowance of the benefits, and
application must be made and approved during the lifetime of the
allottee or the right shall lapse. Act of May 21, 1928, ch. 662, 45
Stat. 684.
In a 1929 decision, we held that this prohibition precluded payment
of Sioux benefits to a Sioux woman if her husband had previously
received an allowance as head of the family, even if the woman (though
once married) was unmarried, single, divorced or widowed at the time of
her application. Under this reasoning, the right of a Sioux woman was
deemed merged with that of her husband by virtue of her marital status
and her entitlement to Sioux benefits was deemed exhausted by the
allowance of benefits to her husband. A-19504, February 1, 1929. The
Department of the Interior believes that this rule impermissibly
discriminates against women on the basis of sex and is not required by
the governing statutes, which speak in terms of an allowance of benefits
to each individual who qualifies either as a head of a family or single
adult, and not in terms of an allowance per family.
We concur in the Department's determination that the above rule is
impermissibly discriminatory. Therefore, our decision A-19504, February
1, 1929, is overruled insofar as it holds that a formerly married Sioux
woman's entitlement to Sioux benefits in her own right was exhausted
when her then-husband received Sioux benefits as head of the family.
Both the 1928 Act continuing the allowance of Sioux benefits and the
Indian Reorganization Act of 1934 provided that "application (for Sioux
benefits) must be made and approved during the lifetime of the allottee
or the right shall lapse." Act of May 21, 1928, ch. 662, 45 Stat. 684;
Act of June 18, 1934, Sec. 14, 48 Stat. 987; 25 U.S.C. 474. The 1889
Sioux Allotment Act did not contain such a provision, and the
Comptroller of the Treasury in 1915 held that eligible allottees under
the 1889 act had a vested right to Sioux benefits which would descend to
their heirs if the decedent remained eligible for such benefits at
his/her death and had not received the allowance. 21 Comp.Dec. 806.
The Department's proposed regulations would require that all
applications for benefits be made and approved during the lifetime of
the applicant, regardless of the statute under which benefits are
sought. This proposed regulation conflicts with several Comptroller
General decisions (9 Comp.Gen. 371(1930) and A-61511, July 15, 1935)
interpreting the 1928 and 1934 statutes relating to Sioux benefits, and
therefore the Department requests that we withdraw or modify those
decisions. The decisions held that the restriction in the 1928 and 1934
acts against paying benefits to an allottee's heirs if the allottee's
application had not been approved during his lifetime did not apply to
benefits under the 1889 act.
The 1928 act directs the Secretary "to continue the allowance of the
articles enumerated in" the 1889 Act to all Sioux Indians who have taken
or may take allotments under the 1908 act (and who are heads of families
or single persons over 18). It goes on to say, as quoted above in part,
that "No person shall receive more than one allowance of the benefits,
and application must be made and approved during the lifetime of the
allottee or the right shall lapse." Similar language appears in the 1934
act. We concluded that this limitation was intended to apply "only to
the benefits and persons dealt with" in the 1928 and 1934 acts (9
Comp.Gen.at 373; A-61511).
While the cited decisions are not inconsistent with the statutory
language, we recognize that the references in the 1928 and 1934 acts to
"allowance of the benefits" are ambiguous and could be read, as Interior
has consistently maintained, as referring to "all beneficiaries
irrespective of the act under which they were allotted" (9 Comp.Gen.
271).
Under the circumstances, we will defer to the administering agency's
preferred interpretation. Accordingly, we overrule our decisions
interpreting the 1928 and 1934 acts concerning vesting of Sioux
benefits, 9 Comp.Gen. 371 and A-61511, July 15, 1935. (The same
decisions, as the Department points out, stood for the proposition that
the prohibition in the 1928 and 1934 acts against double benefits does
not apply to the 1889 act.)
The Bureau's present policy, which is continued in the proposed
regulations, is that eligibility for Sioux benefits is determined as of
the date of application, so that if an applicant was "eligible" for
benefits at some prior time, but not at the time of application, he or
she is not entitled to the benefits. However, the draft regulations
make an exception to this rule for living persons who previously applied
for Sioux benefits and whose applications were disapproved under prior
regulations. Where a prior application was disapproved on grounds which
would no longer warrant disapproval under the revised regulations, the
applicant could reapply and have his eligibility determined on the basis
of his status at the time of the original application, rather than on
the basis of his status at the time of reapplication. This exception
would not extend so far as to allow benefits to be retroactively paid on
behalf of deceased Indians whose applications were improperly denied.
The Department states that its general rule of determining
eligibility as of the application date is based on our decisions
A-19504, February 1, 1929, and 11 Comp.Gen. 469(1932). Because it is
concerned that the exception made by the proposed regulation may
conflict with these decisions, the Department asks that we withdraw or
modify them as necessary.
We agree that the cited decisions enunciate the principle that an
alloted married woman is not entitled to benefits merely because she
would have been eligible for benefits as a single person if she had
applied before her marriage. The proposed regulation exception would
not change this principle. However, we do not agree that our decisions
require eligibility to be determined as of the date of application for
benefits. Rather, as the following quotation demonstrates, our 1929
decision held that an applicant may not receive benefits unless she
possesses the required status at the time her application is approved:
The fact that a single Sioux woman over 18 years of age has an
approved allotment and may have applied for the benefits does not
operate to give her a vested right to receive such benefits.
The allowance of benefits is contingent upon the existence of certain
conditions which may vary or change from time to time. Taking into
consideration the nature of such benefits, which are substantially
gratuities, no vested right is acquired until the application for
benefits has been approved for payment, such approval under the act of
1928 being tantamount to a payment of same. 21 Comp.Dec. 806. Thus
while a Sioux Indian woman may have been entitled to the benefits
provided by law as a single person over 18 years of age, her status as
such is changed by her marriage prior to the approval of her application
and her right to such benefits lapses, unless she may be recognized
under the law as a head of a family. A-19504, February 1, 1929.
Since an applicant's status as a single person or the head of a
family may change between the filing of the application and the actual
grant of benefits, administrative convenience dictates that that an
applicant's status at some point in time be final for the purpose of
determining eligibility. The statutory scheme governing Sioux benefits
does not prescribe this time. Therefore, we believe it is appropriate
to leave the matter to the discretion of the agency charged with
administering the provison of benefits. The Department's proposed rule
is designed to prevent an inequity, the denial of benefits based on
regulations then in effect but now recognized to have been improper, and
is within the scope of its discretion. Accordingly, our decisions
A-19504, February 1, 1929, and 11 Comp.Gen. 469(1932), are hereby
overruled to the extent that they conflict with the Bureau's proposed
rule governing the redetermination of eligibility for Sioux benefits for
those whose applications were denied in the past under regulations now
determined to have been improper.
Finally, the Department asks our assistance in locating and analyzing
three decisions which are referred to in the manual of the Bureau of
Indian Affairs: C.D., May 29, 1908; Comptroller General Decision
A-19504, August 13, 1927; Comptroller General Decision A-61511, July
15, 1935.
We enclose copies of the two Comptroller General decisions referred
to. Our decision A-19504, August 13, 1927, questioned the authority for
the payment of Sioux benefits prior to enactment of the 1928 act
continuing these benefits. This decision does not appear to be
inconsistent with the Department's proposed new regulations. Our
decision A-61511, July 15, 1935, is discussed above under "Vesting of
Rights." We have been unable to locate a May 29, 1908, decision dealing
with Sioux benefits. In any case, any decisions of this Office are
hereby overruled to the extent they are inconsistent with this decision.
B-197439, January 30, 1981, 60 Comp.Gen. 210
Small Business Administration - Investment Companies - Authority to
Invest in - Minority Enterprise Small Business Investment Companies
(MESBICS) - Leveraging Propriety - Non-Private Fund Matching
Section 105(a)(15) of the Housing and Community Development Act of
1974, as amended, 42 U.S.C. 5305(a)(15), authorizes Small Business
Administration to leverage (match) Community Development Discretionary
(Block) Grant funds invested in minority enterprise small business
investment companies.
Matter of: Authority of SBA to leverage Block Grant funds invested
in minority enterprise small business investment companies, January 30,
1981:
Recently, the Small Business Administration (SBA) turned down an
application from Square Deal Venture Capital Corporation, a minority
enterprise small business investment company (MESBIC) for leveraging
(matching) funds under the Small Business Investment Act, citing our
decision 59 Comp.Gen. 635(1980), as the reason.
SBA explained that the July 29, decision prohibited it from leveraging
Federal funds invested in small business investment companies. Since
Square Deal's application was based on Federal investments (from
Community Development Discretionary (Block) Grant funds under Title I of
the Housing and Community Development Act of 1974, as amended), SBA said
it had no alternative but to return the application. Square Deal has
asked us whether our earlier decision applies to its situation. In
addition, we have had informal discussions with officials of SBA and the
Office of Management and Budget concerning the applicability of our July
29 decision to various MESBICs that have different sources of Federal
funding. Therefore, we are issuing this decision to assist SBA in
interpreting our earlier decision.
Our decision of July 29, 1980, held that SBA did not have authority
to leverage funds invested in MESBICs by the Minority Business Resource
Center of the Department of Transportation because section
303(c)(2)(iii) of the Small Business Investment Act, 15
U.S.C.683(C)(2)(III), authorizes SBA to leverage only "private" money.
Since the Minority Business Resource Center uses Federal money, we held
that its investments in MESBICs could not be leveraged. We also said,
however, that where a statute such as section 742(a)(1) of the Community
Services Act, 42 U.S.C. 2985a(a)(1), authorizes it, Federal money may be
leveraged. We think section 105(a)(15) of the Housing and Community
Development Act of 1974, as amended, 42 U.S.C. 5305(a)(15), the
pertinent statute in the present case, is such a statute-- i.e., it
authorizes leveraging of Block Grant funds (Federal money) invested in
MESBICs. Therefore, our decision does not provide a basis for denying
Square Deal's application.
Section 105(a)(15) of the Housing and Community Development Act of
1974, as amended, provides that Community Development Programs assisted
under Title I (Community Development) of that Act may consist only of
certain enumerated activities, including:
(15) grants to neighborhood-based nonprofit organizations, local
development corporations, or entitles organized under section 301(d) of
the Small Business Investment Act of 1958 (MESBICs) to carry out a
neighborhood revitalization or community economic development project in
furtherance of the objectives of section 101(c).
While this provision appears on its face to do no more than authorize
the investment of Community Development money in MESBICs, the
legislative history indicates that it was intended that these funds be
eligible for leveraging. The words "or entities organized under section
301(d) of the Small Business Investment Act of 1958" were added by
amendment to both the House and Senate bills after they were reported
out of their respective committees. In offering the amendment, both
Congressman Mitchell, in the House, and Senator Brooke, in the Senate,
explained that the amendment would qualify the funds for SBA leveraging.
Congressman Mitchell, after pointing out the difficulties in securing
bank loans, said:
A partial solution to this problem is to allow localities to use some
of their Community Development funds to capitalize viable MESBIC,
therefore, allowing their qualification for 3 to 1 leverage * * * from
the Small Business Administration. 123 Cong.Rec. 14117(1977).
In the same vein, Senator Brooke said:
A partial solution to this problem is achieved by this amendment.
This minor classification (i.e., specific authorization for investment
of Community Development money in MESBICs) would allow MESBICs to
benefit from the more favorable 3 to 1 leverage * * * from the Small
Business Administration. 123 Cong.Rec. 17851(1977).
It seems clear that the specific reference to MESBICs in section
105(a)(15) was intended, by those who introduced that language, to
permit leveraging by SBA. And it is reasonable to assume that the
Congress, in adopting that language, shared the views of Congressman
Mitchell and Senator Brooke. See Sutherland on Statutory Construction,
sections 48.10 and 48.12. Unlike the circumstances involved in our
earlier decision, concerning the Department of Transportation funds, the
statute involved here specifically refers to financial assistance to
MESBICs and its legislative history clearly shows that the legislators
had leveraging in mind when they enacted it. Therefore, we conclude
that section 105(a)(15) of the Housing and Community Development Act of
1974, as amended, 42 U.S.C. 5305(a)(15), authorizes SBA to leverage
Block Grant funds invested in MESBICs.
B-201546, January 29, 1981, 60 Comp.Gen. 208
Payments - Advance - Authority - Grant Funds - Urban Mass Transportation
Administration
Urban Mass Transportation Administration (UMTA) grant authority under
49 U.S.C. 1602(h) is sufficient to avoid the restrictions of 31 U.S.C.
529 on advance payments. 41 Comp.Gen. 394(1961). Accordingly, UMTA can
make advance payments to grantee under this authority before
disbursement of required non-Federal matching share of grant costs.
Matter of: Urban Mass Transportation Administration - Advances of
Grant Funds before Disbursement of Local Matching Share, January 29,
1981:
The Chief Counsel of the Urban Mass Transportation Administration
(UMTA) has asked if the Administration is authorized to advance grant
funds under circumstances where the required non-Federal matching share
is contractually committed but not yet disbursed by the grantee. For
the reasons given below we conclude that it has such authority.
The Chief Counsel has provided us with the following summary of the
proposed transaction:
Briefly stated, the project application submitted to UMTA by the New
Jersey Transit Corporation (NJTC), to be funded under two combined
projects (NJ-03-0034 and NJ-05-0004), is for approximately $40 million.
Of this amount, $32 million is to acquire the tangible assets of a
private bus company, Transport of New Jersey (TNJ) and $8 million is the
value of new buses to be acquired. Under Project No. NJ-03-0034, the
federal share is $19,666,212 and the purchase of up to 36 buses valued
at $4,916,553 using funds provided by the Port Authority of New York and
New Jersey (PA) is the local share. For Project No. NJ-05-004,
$12,444,788 constitutes the federal share with the purchase of 22 buses
valued at $3,111,197 using PA funds as the local share.
The entire local share will be provided to the NJTC by the PA which
has been authorized by State legislation to expend $120 million for
buses and related improvements in New Jersey, as this is the only type
of expenditure permissible under its bond covenant. Pursuant to Section
3(h) of the Urban Mass Transportation Act of 1964, as amended, UMTA is
authorized to approve projects which utilize funds available under
sections 3 and 5 of the Act for any purpose so long as the combined
project includes bus related elements the cost of which is at least
equal to the total amount which could have been provided for bus
purposes under Section 5(a)(4). The basic Congressional intent of
Section 3(h) * * * was that UMTA should be flexible "in assisting
jurisdictions to mold balanced capital improvements programs around
local share funds whose use is restricted to bus purposes." (H.Rep. No.
95-1485, 95th Cong., 2d Sess., p. 56).
NJTC purchased the assets of TNJ with a loan from the State without
prejudice to future federal reimbursement not to exceed the eligible
project cost of $32,111,000 which NJTC is applying for under this
project application. The commitment to provide the local share for the
project is represented by a signed contract for $8,027,750 with the
Gruman Flexible Corporation for the manufacture of buses, and NJTC's
assignment to the PA in return for the PA's promise to pay for the buses
upon delivery.
The grant, as noted in the summary, is to be made under section 3(h)
of the Urban Mass Transportation Act of 1964 as added by Pub. L. No.
95-599, 92 Stat. 2735, 49 U.S.C. 1602(h), and is subject to the matching
non-Federal share requirements of that act. 49 U.S.C. 1603(1976).
Specifically, the Federal share of a section 3 grant is 80 percent of
the net project cost with the remainder to be provided "from sources
other than Federal funds."
The single question presented by the Chief Counsel is whether UMTA
has authority to make an advance of grant funds prior to disbursement of
a proportionate amount of the required local or non-Federal share of the
project. In this case, the grantee would receive the entire Federal
share at a time when the non-Federal share has not been disbursed,
because the buses to be purchased with the non-Federal share have not
yet been delivered. The local share is committed however, in the sense
that a binding contract requires payment for the buses upon delivery.
Although an advance payment as proposed will be an exception to internal
UMTA guidance, the Chief Counsel of UMTA is of the opinion that such a
transaction is within UMTA's authority. We agree.
Section 529 of Title 31, United States Code, provides generally that
"No advance of public money shall be made in any case unless authorized
by the appropriation concerned or other law." However, the system of
funding programs, such as those supported by UMTA, through Federal
grants to State and local governments and other organizations has always
to our knowledge included the authority to made advances of grant funds.
See 41 Comp.Gen. 394(1961). The policy of payment upon receipt of goods
or services is simply inconsistent with assistance relationships where
the Government does not receive anything in the usual sense. Advance
payments are a fundamental part of the present Federal assistance
system. (See Treasury Department Circular No. 1075 which is based on the
assumption of authority to make advances to grantees.)
Accordingly, unless the program legislation or the appropriation from
which the advance is made restricts this authority, UMTA has authority
to make advances by virtue of its grant authority. This authority alone
is enough to satisfy 31 U.S.C. 529(1976). 41 Comp.Gen. 394(1961).
We are unaware of any basis for limiting UMTA's otherwise
unrestricted authority to advance grant funds where a non-Federal share
is required of the grantee. A grant agreement usually includes an
agreed-upon effort on the part of the grantee over a period of time.
The non-Federal share is shown in the agreement as part of the total
project cost and can consist of a number of cost items that may not be
spread evenly over the life of the grant and may not correspond to the
times at which the Federal funds are needed.
See OMB Circular A-102, Attachment F. Non-Federal share requirements are
met where there are sufficient allowable grant costs from non-Federal
sources to meet the percentage required at the end of the grant.
Exhibit 3 to Attachment H of OMB Circular A-102, cited by the Chief
Counsel as possibly tending to support the contrary conclusion, is a
standard form for grantees to use to request advances. While it
includes a place for reporting the non-Federal share of costs for which
an advance is requested, we fail to see how this may be construed as
placing a restriction on the cost sharing policy expressed in Attachment
F.
UMTA's guidelines (UMTA Circular 500.1A) require grantees to
demonstrate that they have a proportionate non-Federal share available
at the time of each advance of Federal funds. According to the Chief
Counsel, this is a long standing administrative practice of UMTA,
reflecting a judgment that the management of the large sums of money
involved in the program requires tangible commitments from grantees.
Since this is an internal administrative guideline, we see no reason why
the Administrator may not make exceptions to it in his discretion where
he is able to determine, as would appear to be the case here, that the
contractual commitment of local funds to pay for the buses on delivery
adequately protects the Government's interest in assuring that the local
share will be forthcoming.
As previously noted, there is no indication in UMTA's program and
appropriation legislation that its grants must be subject to
restrictions on the advance of funds not commonly applied to other grant
programs. Moreover, as memoranda from the chief counsel's office
indicate, UMTA legislation expressly authorizes grant advance (49 U.S.C.
1603(b)). Accordingly, we agree that the administrator of UMTA has
authority to make an advance payment of the Federal share of project
cost before the disbursement of the non-Federal matching share.
B-199550.2, B-199550.3, B-199550.4, January 29, 1981, 60 Comp.Gen. 202
Contracts - Protests - Certificate of Competency Denial
Protest of award to low bidder is moot where Small Business
Administration declines to issue Certificate of Competency after agency
finds bidder nonresponsible. General Accounting Office - Jurisdiction -
Contracts - Small Business Matters - Responsibility Determination by SBA
- Conclusiveness
General Accounting Office will not question issuance of Certificate
of Competency unless fraud is shown or Small Business Administration
fails to consider vital information bearing on small business bidder's
compliance with definitive responsibility criteria. Bids - Options -
Level Option Pricing Provision - Deviation - Option Price Higher Than
Basic Bid - After Lump-Sum Price Reduction for Basic Quantity
Although protester literally complied with invitation for bid's level
option pricing provision (LOPP) that line item unit prices for option
quantities not exceed unit prices for basic quantities, lump sum price
reduction for basic quantity effectively circumvented LOPP and bid may
not be considered for award since manner of bidding prejudiced other
bidders.
Matter of: Sentinel Electronics, Inc.; E-Systems, Inc.; Cincinnati
Electronics Corp., January 29, 1981:
Sentinel Electronics, Inc. (Sentinel), Cincinnati Electronics
Corporation (Cincinnati) and E-Systems, Inc. protest the proposed award
of a contract to any bidder other than themselves under invitation for
bids (IFB) DAAB07-80-B-0116, issued by the Department of the Army.
The IFB solicited bids for a range of quantities of radio set AN/PRC-77,
contract line items (CLINS) 0001 and 0002, and a 0004. CLINS 0002 and
0004 are for the Army's Foreign Military Sales requirements. The
Sentinel and E-Systems protest against award to Cincinnati is sustained;
the Cincinnati protest against award to any other bidder is denied;
the E-Systems protest against award to Sentinel is dismissed.
The IFB provided that award would be based on, among other factors,
the total price quoted for all items. The IFB required a bidder to
enter a unit price for each item and provided spaces in the schedule so
a bidder could enter a unit price for each item's three range
quantities. At bid opening, the Army announced the award quantities for
each item and multiplied the award quantities within each range by the
item's unit price for that quantity range.
The ranking of the bidders from the low bidder to the high bidder was
as follows:
Hallicrafters . . . . . $10,175,056
Cincinnati . . . . . 11,836,514
Sentinel . . . . . 12,312,332
E-Systems . . . . . 12,554,856
Tardisan Limited . . . . . 14,098,524
Cincinnati's aggregate price, i.e., including option quantities was
higher than Sentinel's aggregate.
The IFB also contained a level option pricing provision (LOPP). This
provision allowed the Government to increase the quantity of CLINS
0001-0004 up to but not exceeding 100 percent "at the unit prices no
higher than the lowest unit price bid for these CLINS," and cautioned
bidders "that an offer containing an option price higher than the lowest
basic price for the same item may be accepted only if such acceptance
does not prejudice any other offeror." The IFB further advised that bids
would be evaluated on the basis of the award quantity, exclusive of
option quantity. The Army proposes to reject Cincinnati's bid as
nonresponsive for violation of the LOPP provision to the prejudice of
other bidders.
We agree.
Sentinel's protest with respect to the low bidder, Hallicrafters
Company, is moot because the Army determined that the firm was
nonresponsible and the Small Business Administration (SBA) declined to
issue the firm a Certificate of Competency (COC). E-Systems has
withdrawn its protest regarding Hallicrafters. There is, therefore, no
issue with respect to this portion of the protest which requires
consideration by this Office.
E-Systems' protest against award to Sentinel is not for consideration
because it is based on E-Systems' contention that Sentinel (the third
low bidder) cannot meet the IFB's definitive responsibility criteria.
The Army agreed but referred the matter to SBA for the possible issuance
of a COC. In this connection, we have been informally advised by SBA
that it informed the Army that a COC would be recommended for Sentinel.
Since by law, SBA conclusively determines the matter of a firm's
responsibility by issuing or refusing to issue a COC, 15 U.S.C.
637(b)(7)(A) (Supp. I 1977); Old Hickory Services, B-192906.2, February
9, 1979, 79-1 CPD 92, we will not question SBA's issuance of a COC
unless the protester shows either fraud on the part of Government
officials or that SBA did not consider certain vital information bearing
on the small business bidder's compliance with the definitive criteria.
J. Baranello and Sons, 58 Comp.Gen. 509(1979), 79-1 CPD 322. In this
regard, no such fraud has been shown, and SBA has advised us that it
carefully considered Sentinel's compliance with the definitive
responsibility criteria. Under the circumstances, we have no basis to
now question SBA's proposed action should such a COC be issued. See
Baxter & Sons Elevator Co., Inc., B-197595, December 3, 1980, 60
Comp.Gen. 97, 80-2 CPD 414. We dismiss E-Systems's protest in this
respect.
Sentinel and E-Systems maintain that the second low bidder,
Cincinnati, which is in line for award because SBA did not issue a COC
to Hallicrafters, submitted a nonresponsive bid because the bid violated
the LOPP. Inasmuch as the Army agrees with the protesters in this
regard, we need only decide whether the Army properly rejected
Cincinnati's bid as nonresponsive.
In accordance with the LOPP, Cincinnati bid the same unit price for
both the basic and option quantities, but attached to its bid a cover
letter which provided:
* * * If the award is made in a timely manner, i.e., within the 90
day validity period of this bid or at such time that continuity of
production remains unbroken, whichever is later, reductions in costs of
up to $1,029,600, depending on quantity can be realized as a result of
manufacturing continuity * * * . However, because of the nature of the
procurement, the quantity to be awarded during the life of the contract
cannot be ascertained. Therefore, in order not to prejudice other
offerors, we have chosen to offer the total savings as a one time,
non-recurring lump sump reduction in amounts based on the total quantity
of AN/PRC-77 and RT-841 units of CLIN Items 0001, 0002, 0003 and 0004.
In view of the above, therefore, Cincinnati Electronics offers, as
part of this bid, a total contract price reduction, as follows:
1. $694,800 in the event that the sum of the higher quantities of
the ranges announced at bid opening date for CLIN's 0001, 0002, 0003 and
0004 is 11,003 or less;
2. $859,980 in the event that the sum of the higher quantities of
the ranges announced at bid opening date for CLIN's 0001, 0002, 0003 and
0004 is no greater than 13,003 and no less than 11,004; and
3. $1,029,600 IN THE EVENT THAT THE SUM OF THE HIGHER QUANTITIES of
the ranges announced at bid opening date for CLIN's 0001, 0002, 0003 and
0004 is no less than 13.004.
The ranges alluded to above are: (TABLE OMITTED)
The Army decided to award 7,460 of item 0001; 2172 of item 0002;
2456 of item 0003 and 164 of item 0004. Since the sum of the "higher"
quantities of the ranges was 13,000 (range C for item 0001 (7500);
range C for item 0002 (2500); range A for item 3 (2500); and range A
for item 4 (500)), the Army reduced Cincinnati's total price for the
basic quantity by $859,980.
As a result, Cincinnati became the second low bidder and in line for
award. However, the Army rejected Cincinnati's bid as nonresponsive
because it concluded that the firm's price reduction in effect violated
the LOPP to the prejudice of other bidders.
Citing numberous GAO decisions, Cincinnati takes the position that a
lump sum price reduction is an acceptable method of bidding which does
not render a bid nonresponsive. See 42 Comp.Gen. 746(1963); Shamrock
Five Construction Company, B-191749, August 16, 1978, 78-2 CPD 123; LML
Corporation, B-184046, June 25, 1975, 75-1 CPD 387. Since Cincinnati
bid the same unit price for each item for both the basic and option
quantities, and only reduced its total contract price for the basic
quantity, the protester believes it did not contravene the COPP and its
bid therefore is responsive. For this reason, the protester maintains
that the Army cannot proportionately reduce its unit prices for the base
quantity to reflect the percentage reduction in its total contract price
and thereby determine that Cincinnati deviated from the LOPP.
In this respect, the Army recognizes that the protester's use of a
lump sum price reduction, by itself, does not render a bid
nonresponsive. The offer of a lump sum "bottom line" price reduction
per se is not the issue, however. Rather, the question to be resolved
is whether Cincinnati's bidding method in effect violated or otherwise
circumvented the LOPP to the prejudice of other bidders in this
circumstance, see ABL General Systems Corporation, 54 Comp.Gen.
476(1974), 74-2 CPD 318, even though option prices were not part of the
evaluation for award. We think that it did.
ABL, supra, involved a bidder whose bid was low on the base quantity
and whose price was higher than the next low bidder on the option
quantity still remained low for the aggregate (basic plus option
quantities) of all items. We held that "where a bidder is low on the
base quantity, but higher than the next low bidder on the option
quantity, notwithstanding the fact that the bid remains low in the
aggregate, such bid is not properly for acceptance under the terms and
conditions of the IFB." The reason for this rule is that the manner of
bidding conceivably could have worked to the prejudice of other bidders
because other bidders could have underbid the low bidder on the basic
quantity if they too had disregarded the ceiling imposed on the option
price. ABL, supra, at 479.
Although we recognize Cincinnati's manner of bidding literally
complied with the LOPP, the practical effect of Cincinnati's lump sum or
bottom line price reduction was the same as a direct reduction of its
individual unit prices for the basic quantity.
Thus, insofar as the Government is concerned, Cincinnati's lump sum
price reduction effectively reduced its per unit cost for the basic
quantity substantially below that for the option quantity, thereby
circumventing the LOPP requirement, i.e., that the Government pay the
same price for the basic and option quantities. We are not suggesting
that this was Cincinnati's intent, but it nonetheless was the result.
In the cases decided before ABL, supra, we held that a clear
violation of an LOPP or similar provision could be waived if the
offending bidder was low in the aggregate for the basic and option
quantities because no other bidder could be prejudiced by acceptance of
the low bid. 44 Comp.Gen. 581(1965); B-176356, November 8, 1972. It
was always our view, however, that a bid could not be accepted if, as
here, the bid prices for the basic quantity plus higher option prices
exceeded the sum quoted by the next low bidder. 51 Comp.Gen. 439(1972).
Therefore, while in ABL, supra, and its predecessor cases, the
offending bidders expressly violated the terms of the LOPP or similar
provisions, i.e., they submitted unit prices for the option quantity
higher than their unit prices for the basic quantity, we think that
where the result, as here, is the same as would obtain by an actual
lower unit price bid for the basic quantity, the bid should not be
accepted, notwithstanding a bidder's method of bidding.
Finally, contrary to the protester's contention, its lump sum price
reduction is not the same as a prompt payment discount. For purposes of
bid evaluation, a prompt payment discount must be deducted from the
total bid price because it is assumed that the discount will be taken.
Defense Acquisition Regulation 2-407.3(b)(1976 ed). Thus, we previously
have recognized that where the option year will be evaluated, discounts
would be deducted from the gross price. See Linolex Systems, Inc., and
American Terminals & Communications, Inc., 53 Comp.Gen. 895(1974), 74-1
CPD 296. In this case, even though the option year was not evaluated
for purposes of award, presumably if the Government ordered the option
quantities it would take any discount offered. Therefore, a prompt
payment discount would not necessarily violate the LOPP. This is unlike
the situation here where the protester offered the price reduction only
for the basic quantity. Moreover, we could not ignore the relationship
between Cincinnati's price reduction and the price for the option
quantities because ABL, supra, requires an examination of the price for
the option quantity to determine possible prejudice to other bidders
even though the option prices are not evaluated for purposes of award.
The protests are denied in part, sustained in part and dismissed in
part.
B-198934, January 29, 1981, 60 Comp.Gen. 200
Statutes of Limitation - Claims - Ten Year Period for Filing - Reduced
to Six
Member performed active duty from June 30, 1970, to September 30,
1970, and filed claim with Navy for basic allowance for quarters for
this period on September 14, 1979. The claim was forwarded to General
Accounting Office (GAO) on September 24, 1979, as a possible time barred
claim. Under provisions of 31 U.S.C. 71a as amended in 1975, member had
6 years, not 10 years, from date claim accrued to file in G. A. O.
Accordingly, claim is barred. Statutes of Limitation - Claims - General
Accounting Office - Vietnam Conflict
Member whose claim arose during active duty from June 30, 1970, to
September 30, 1970, filed claim with Navy on September 14, 1979. Claim
was forwarded to GAO on September 24, 1979. Member contends that claim
is not barred as it arose during time of war (Vietnam conflict) and
under the proviso in 31 U.S.C. 71a he has 5 years after peace is
established to file claim. Even under that proviso a decision of when
peace is established is dependent on political acts and, for Vietnam
conflict, a political act which established peace took place on January
27, 1973. Therefore, proviso would not operate to alter untimeliness of
this claim.
Matter of: Captain Herbert E. Tuttle, Jr., USNR (Retired), January
29, 1981:
Captain Herbert E. Tuttle, Jr., USNR (Retired) appeals the denial of
his claim for basic allowance for quarters by the Claims Group of this
Office. We concur with the Claims Group that Captain Tuttle's claim is
barred under 31 U.S.C. 71a because it was filed in the General
Accounting Office within the time period specified in that provision.
Captain Tuttle was on active duty from June 30, 1970, to September
30, 1970. For this period, he indicates that he received basic pay and
basic allowance for subsistence. He further indicates that he received
no basic allowance for quarters. It was not until September 14, 1979,
that the member, who retired on April 6, 1971, forwarded his claim to
the U.S. Navy Finance Center. The Finance Center forwarded the claim to
our Claims Group where it was received on September 24, 1979.
The Claims Group informed Captain Tuttle that the claim was barred
under the provisions of the act of October 9, 1940, c. 788 Secs. 1, 2.
54 Stat. 1061, as amended by Public Law 93-604, title VIII, 801, 88
Stat. 1965(1975), codified at 31 U.S.C. 71a, which requires that a claim
cognizable by the General Accounting Office must be filed in that Office
within 6 years after it first accrues or be forever barred.
That act provides in pertinent part as follows:
(1) Every claim or demand * * * against the United States cognizable
by the General Accounting Office under sections 71 and 236 of this title
shall be forever barred unless such claim, bearing the signature and
address of the claimant or of an authorized agent or attorney, shall be
received in said office within 6 years after the date such claim first
accrued.
Provided, That when a claim of any person serving in the military or
naval forces of the United States accrues in time of war, or when war
intervenes within five years after its accrual, such claim may be
presented within five years after peace is established.
In his letter requesting reconsideration, Captain Tuttle, in effect,
sets forth three bases upon which he questions whether the barring act
is for application in his situation. The first basis is that the
amendment of January 2, 1975, Public Law 93-604, 88 Stat. 1965, which
shortened the period for filing claims from 10 years to 6 years, is the
date from which he had 6 years to file his claim and his filing with the
Navy on September 14, 1979, satisfied this. Next, he questions how
individuals were given notice of the amendment. Finally, he questions
whether the provision in the act, which gives an individual serving in
the military or naval forces whose claim accrued in time of war, 5 years
after peace is established to file a claim in the General Accounting
Office, is applicable to his claim. He raises this question as the
Vietnam conflict was ongoing when his claim arose.
We note first that the effective date for tolling the running of the
limitation period in the act is the date the claim is received in the
General Accounting Office and not the date the member submits his claim
to his agency. B-170443, November 25, 1974. Therefore, Captain Tuttle's
date of filing his claim is September 24, 1979, the date it was received
in this Office. Prior to the amendment of the barring act, a claimant
had 10 years from the date his claim first accrued to file it in the
General Accounting Office. The amendment merely shortened the period to
file from 10 years to 6 years after the claim accrued. Thus, the
accrual date of Captain Tuttle's claim was not changed but rather the
period in which he had to file his claim was changed. His claim accrued
on September 30, 1970, so he originally had until September 29, 1980, to
file his claim. However, the amendment shorted this time for him to
file to September 29, 1976. See 58 Comp.Gen. 738(1979); and B-185748,
July 12, 1976.
As to Captain Tuttle's question regarding how individuals were given
notice of the amendment, we point out that the act is part of the laws
of the United States and it is presumed in law that each individual who
might be affected by such a statute has knowledge of its provisions.
The fact that one may not be aware of a law or an amendment does not
defeat its effect. See: B-165383, November 29, 1968, and October 25,
1968.
Mr. Tuttle's final basis for reconsideration relies on the proviso to
the barring act which extends the period for filing a claim for an
individual serving in the military or naval forces in time of war to 5
years after peace is established.
While we have not previously considered whether the Vietnam conflict
was a war for purposes of the proviso, we did consider the proviso to be
operative for claims arising during the Korean conflict.
See B-173514, August 9, 1971. Also, several Federal courts have held
that the Vietnam conflict was a war for purposes of applying the wartime
provisions of certain Federal statutes to military members. See
Broussard v. Patton, 466 F.2d 816(9th Cir. 1972); and Rotko v. Abrams,
338 F.Supp. 46 (D. Conn. 1971).
Assuming, then, that the proviso is for application here, the
relevant question becomes when was peace established. To determine
this, we must look to a political act of the Congress or the President
which may be, among other things, a treaty, legislation, or presidential
proclamation. Ludecke v. Watkins, 335 U.S. 160(1948); Cf. Lee v.
Madigan, 358 U.S. 228(1959).
For the Vietnam conflict, the political act which ended the conflict
was the signing of the cease fire agreements and implementing protocols
on January 27, 1973, in Paris, France. This ended the United States'
active participation in the conflict and by April 1, 1973, all American
combat troops were withdrawn from South Vietnam and all American
prisoners of war were released. See Drinan v. Nixon, 364 F.Supp. 854,
"Appendix" at 866 (D. Mass. 1973); and Proclamation No. 4373, 40 F.R.
20257 (May 7, 1975).
Thus even under the proviso Mr. Tuttle's claim was to be filed within
5 years from January 27, 1973. Since he did not file his claim until
September 24, 1979, the proviso would not operate to alter the
untimeliness of his filing and his claim is barred.
B-200058, January 28, 1981, 60 Comp.Gen. 198
Compensation - Aggregate Limitation - Maximum Scheduled v. Maximum
Payable Rate
Section 5547, title 5, U.S. Code, limits aggregate biweekly basic pay
plus premium pay covered by that section to biweekly rate for maximum
rate for GS-15, PATCO's contention that maximum rate for GS-15 is
maximum scheduled rate ($57,912), rather than maximum payable rate
($50,112.50), must be rejected. Recent appropriation acts require that,
in administering a provision of law such as section 5547 which imposes a
limitation on the basis of a rate of basic pay, the rate of basic pay
must be construed to be the rate payable.
Matter of: Donald Bodine - Effect of Pay Ceiling on Title 5 Premium
Pay, January 28, 1981:
This action is in response to a request for a decision filed by
Robert H. P. Finnegan, Special Assistant to Regional Vice President
George W. Kerr, Professional Air Traffic Controllers Organization
(PATCO), on behalf of Donald Bodine, an air traffic controller employed
by the Federal Aviation Administration (FAA). Pursuant to 4 C.F.R.Part
21, as amended, 45 F.R. 55689-92 (August 21, 1980), FAA was served with
a copy of PATCO's submission but has filed no written comments or
response. 4 C.F.R. 21.4.
The issue here is what is the limit imposed by 5 U.S.C. 5547 on
aggregate biweekly pay. As used here aggregate pay means basic pay plus
premium pay, and premium pay means overtime, night, standby, Sunday, and
holiday pay authorized for General Schedule employees by subchapter V,
chapter 55, title 5, United States Code. 5 U.S.C. 5547 provides:
An employee may be paid premium pay under section 5542 (overtime
rates), 5545(a)-(c), (night, standby, and irregular overtime
differentials), and Sec. 5546(a), (b) (Sunday and holiday pay), of this
title only to the extent that the payment does not cause his aggregate
rate of pay for any one pay period to exceed the maximum rate for GS-15.
PATCO argues that "maximum rate for GS-15" in this provision of law
means the maximum scheduled rate, step 10-- currently $57,912.
Executive Order 12248, October 16, 1980, 45 F.R. 69199, 69201, October
20, 1980. It is their contention that 5 U.S.C. 5308 and recent
appropriations acts which limit the maximum rate payable for GS-15 to
the rate payable for level V of the Executive Schedule-- currently
$50,112.50-- apply to basic pay only and do not limit premium or
aggregate pay.
The maximum rate payable for GS-15 is limited by 5 U.S.C. 5308, which
reads:
Pay may not be paid, by reason of any provision of this subchapter,
at a rate in excess of the rate of basic pay for level V of the
Executive Schedule.
Finally, level V of the Executive Schedule is presently limited to
$50,112.50, section 101(c) of Public Law 96-536, December 16, 1980, 94
Stat. 3166(H.j. Res. 644)-- the current continuing resolution
authorizing expenditures-- which provides:
* * * the provisions of section 306(a), (b), and (d) of H.R. 7593
(providing salary pay cap limitations for executive, legislative, and
judicial employees and officials) shall apply to any appropriation,
fund, or authority made available for the period October 1, 1980,
through June 5, 1981, by this or any other Act.
H.R. 7593 is the Legislative Branch Appropriation Act, 1981, as
passed by the House of Representatives on July 21, 1980. Section 306
provides:
(a) No part of the funds appropriated for the fiscal year ending
September 30, 1981, by this Act or any other Act may be used to pay the
salary or pay of any individual in any office or position in the
legislative, executive, or judicial branch, or in the government of the
District of Columbia, at a rate which exceeds the rate (or maximum rate,
if higher) of salary or basic pay payable for such office or position
for September 30, 1980, if the rate of salary or basic pay for that
office or position is--
(1) fixed at a rate which is equal to or greater than the rate of
basic pay for level V of the Executive Schedule under section 5316 of
title 5, United States Code, or
(2) limited to a maximum rate which is equal to or greater than the
rate of basic pay for such level V (or to a percentage of such a maximum
rate) by reason of section 5308 of title V, United States Code, or any
such other provision of law or congressional resolution.
(d) For purposes of administering any provision of law, rule, or
regulation * * * which imposes any requirement or limitation, on the
basis of a rate of salary or basic pay, the rate of salary or basic pay
payable after application of this section shall be treated as the rate
of salary or basic pay.
While section 5308 and recent appropriations acts, including Public
Law 96-536, above, do apply directly to basic pay, section 5547 is a
limitation on aggregate pay (basic pay plus premium pay) prescribed in
terms of basic pay (maximum rate of GS-15) which is derived through
t4ese provisions.
Clearly section 306(a), through 5 U.S.C. 5308, limits the maximum
rate payable for GS-15 to the rate payable for level V of the Executive
Schedule-- currently $50,112.50. It is equally clear in our view that
section 306(d) requires that in administering a 5 U.S.C. 5547-- a
provision of law which imposes a limitation on the basis of a rate of
basic pay-- the maximum rate for GS-15 be construed to be the maximum
rate payable under section 306.
Accordingly, the maximum aggregate biweekly basic and premium pay
allowable under 5 U.S.C. 5547 is the maximum biweekly rate payable for
GS-15 (currently $1,927.20) and claims for amounts in excess thereof may
not be allowed.
B-200668, January 27, 1981, 60 Comp.Gen. 192
Contracts - Specifications - Restrictive - Geographical Location - "Home
Port Policy"
Navy's general use of geographic restriction to preclude firms in one
district from competing for overhaul of ships home-ported in other
districts in order to preserve overhaul capacity of those firms is
unduly restrictive, although in given case it may be shown that
restriction is necessary.
Matter of: Norfolk Shipbuilding and Drydock Corporation, January 27,
1981:
Norfolk Shipbuilding and Drydock Corporation (NORSHIPCO) protests the
restriction in request for proposals (RFP) N62665-80R-0061 issued by the
Naval Sea Systems Command for the overhaul of the USS MULLINNIX to firms
on the "East and Gulf Coasts, Exclusive of States of North Carolina,
Virginia, Delaware, Maryland and Pennsylvania." These states comprise
the Fifth Naval District (ND), which is the home port of 55 percent of
all Navy vessels home-ported on the East and Gulf Coasts. The USS
MULLINNIX is home-ported in Charleston, South Carolina, part of the
Sixth ND. NORSHIPCO, located in Norfolk, Virginia, contends that the
geographic restriction unduly limited competition for the contract
award.
The protest is sustained. However, for the reason noted below we do
not recommend any corrective action with respect to this particular
procurement.
The RFP's geographical restriction is related to the Navy's "Home
Port Policy," established by the Chief of Naval Operations in 1971.
The Policy calls for the maximum possible amount of ship maintenance to
be performed in a vessel's home port in order to minimize disruption to
Navy families in an effort to eliminate problems regarding personnel
retention. The Policy is implemented by section 7-3.4 of the Naval Sea
System Command's Master Ship Repair Manual, which provides that except
in certain limited circumstances "the performance of work shall be
restricted to the home port to which such ships and craft have been
assigned, and bids or proposals shall be solicited only from qualified
firms within the home port area." The section and accompanying
instructions also provide that where adequate competition or reasonable
prices cannot be obtained the geographical area is to be expanded, with
the areas closest to the home port examined first until those criteria
are met. The intention behind first considering the areas closest to
the vessel's home port is to make it feasible for crew members to
commute home on weekends. If the competition must include areas outside
of weekend commuting distance, and a contractor in one of these areas
wins the competition, the Navy offers to move the crew's families to the
overhaul area for the duration of the work. In this connection, a major
overhaul such as the USS MULLINNIX will undergo can take over six
months.
We considered the propriety of Home Port Policy geographical
restrictions in our decision in 53 Comp.Gen. 102(1973). We set out the
following Navy statement in support of the Policy:
The intent of this policy is not to favor the award of overhaul
contracts to any particular area but, instead, to minimize disruption to
Navy families. While family separation has always been, and will always
be, an expected part of Navy life, unnecessary separations must be
avoided if the Navy is to retain the trained manpower necessary for the
future. * * *
* * * Family separation is a hardship and is one of the more
compelling reasons cited for not adopting a Navy career. With the
advent of an all volunteer Navy, and with strenuous competition for
manpower from the other Armed Forces and from the civilian sector, it is
imperative that the quality of Navy life be maintained at an acceptable
level. One important way we can improve the average Navy man's life is
to allow him time with his family; one way chosen to do this is to
accomplish the maximum possible amount of ship maintenance in the home
port.
We concluded:
* * * (W)hile it is clear that this policy may sometimes result in
increased costs to the Government and may prevent some bidders who are
otherwise qualified from competing for an award, we cannot agree that
the Home Port Policy is unduly restrictive of competition so as to
contravene the statutory requirement for competitive procurements. We
think the record in this case adequately shows that the Navy's
restrictive requirement "serves a useful or necessary purpose" in
meeting its needs, * * * since personnel morale and retention will be
better served by minimizing the occasions on which its ship crew
personnel must be separated from their families. Furthermore, as the
Navy points out, home port restrictions are not to be applied if they
would "prevent the obtaining of adequate competition" or would result in
unreasonably high costs. * * * Accordingly, we do not believe that
application of Home Port Policy to Federal procurements is illegal.
Because the Navy did not anticipate adequate competition for the
contract to overhaul the USS MULLINNIX within the Sixth ND, it broadened
the area of competition pursuant to section 7-3.4 of the Repair Manual,
ultimately including all East and Gulf Coast Districts except the Fifth.
The Navy reports that as a matter of Naval Sea Systems Command
unwritten policy it generally will not solicit firms in the Fifth ND to
work on ships home-ported elsewhere. The Navy's rationale is that it is
necessary that the Fifth ND not be "saturated" with work on ships from
other Districts in order to insure that there will be contractors
available in the District to overhaul any of the great number of ships
home-ported there consistent with the Home Port Policy, should any such
overhauls be needed. In this respect, as stated above, the Fifth ND is
the home port of 55 percent of the Navy vessels home-ported on the East
and Gulf Coasts; the Navy states that the percentage includes 36,000
people on 39 percent of all combatant ships, 67 percent of all auxiliary
ships, and all amphibious ships.
NORSHIPCO's position essentially is that while it supports the Home
Port Policy as described in our 1973 decision, the "Fifth ND
exclusionary rule" simply is not consistent with the Policy. NORSHIPCO
points out that the exclusion of Fifth ND firms from competing for
contracts to overhaul vessels home-ported elsewhere may well result in
more of a disruption of the crews and their families than if the firms
were allowed to compete. For example, the USS MULLINNIX may end up
being overhauled in New York (Third Naval District) or Boston (First
Naval District) instead of in Norfolk, which is much closer to the
vessel's home port.
Further, NORSHIPCO asserts that there simply is no possibility that
the Fifth ND will be "saturated" in 1981 with work on ships home-ported
there so that the overhaul of the USS MULLINNIX in Norfolk would
necessitate the overhaul of a Fifth ND vessel in another location.
The Policy that we considered in our 1973 decision did not include
the Fifth ND "exclusionary rule"; the rule was not instituted until
approximately three years ago. In condoning the Home Port Policy we
stated:
The basic principle underlying Federal procurement is that full and
free competition is to be maximized to the fullest extent possible,
thereby providing qualified sources an equal opportunity to compete for
Government contracts. See 10 U.S.Code 2305; Armed Services Procurement
Regulation (ASPR) (now Defense Acquisition Regulation) 1-300.1.
However, it is well established that legitimate restrictions on
competition may be imposed when the needs of procuring agencies so
require. 42 Comp.Gen. 102(1962). Many of these restrictions are
specifically provided for in the ASPR (see, for example, ASPR 1-1101. et
seq., regarding qualified products lists). Others, which are not
specifically mentioned in ASPR are imposed in accordance with the
particular need of the Government, and may involve such things as
product experience, 48 Comp.Gen. 291(1968); ability to demonstrate a
complex system having specified performance features, 49 Comp.Gen.
857(1970); and geographic requirements, B-157053, August 2, 1965, and
B-157219, August 30, 1965.
Our Office has taken the position that these various solicitation
provisions, while obviously restrictive of competition in the broadest
sense, need not be regarded as unduly restrictive when they represent
the actual needs of the procuring agency. 52 Comp.Gen. 640(1973);
B-157053, supra. Further the fact that one or more bidders or potential
bidders cannot comply with the requirements of particular solicitation
provisions does not automatically make those provisions unduly
restrictive. 52 Comp.Gen. 640, supra.
That quotation, as well as the others from our 1973 decision set out
above, reflects the importance to Government procurement of maximizing
competition to the greatest extent practicable; generally, the benefit
to both the public and the Government, in terms of price and other
factors, is directly proportional to the extent of the competition. It
is for that reason that a contracting agency may impose on the
competition a geographical or other restriction only if, after careful
consideration of all relevant factors, the restriction is deemed
necessary to meet the agency's actual minimum needs. Plattsburgh
Laundry and Dry Cleaning Corp.; Nu Art Cleaners Laundry, 54 Comp.Gen.
29(1974, 74-2 CPD 27.
We have no reason to alter our view that the Home Port Policy as
originally conceived certainly has applicability whenever a ship is to
be overhauled-- with few exceptions (such as the need for special
facilities) the concern with the disruption of Navy families is one
legitimate enough to warrant the Policy's geographical restriction in
almost all situations.
However, we do not view the Fifth ND "exclusionary rule" as similarly
for general application. The record shows that it is the Navy's
experience that notwithstanding that it affords families of crew members
of vessels being overhauled in other than their home ports the
opportunity to move to the overhaul location, the families as a general
matter in reality simply choose to remain in the home port area during
the overhaul. Thus, the Fifth ND "exclusionary rule" as a practical
matter must be viewed as causing the crew members of a vessel
home-ported in a District often near the Fifth ND to locate a
considerable distance away from their families for the duration of a
particular overhaul in the expectation that the crews of Fifth ND
vessels that may be overhauled in the future will be able to locate in
the home port.
Because of the large number of ships home-ported in the Fifth ND
relative to other Districts, this may be appropriate in terms of
furthering the Home Port Policy in some circumstances. The reason is
that there may be fewer non-Fifth ND crew members that would be
relocated than there are Fifth ND crew members that would be able to
stay in their home port.
However, in circumstances where overhaul scheduling is such that
there may be no real danger that award to a Fifth ND firm for the
overhaul of a vessel from another District would result in no Fifth ND
contractors to overhaul Fifth ND ships, the Navy's policy to exclude
Fifth ND shipyards from these procurements simply would cause a greater
disruption of Navy families than would otherwise be the case. This is
so because ships home-ported in districts adjacent to the Fifth ND will
be overhauled much further from the home port area than would be
necessary. As such, it would run directly afoul of the Navy's stated
purpose behind the Home Port Policy-- to minimize the disruption of Navy
families-- which caused us to condone the Policy in 1973.
Accordingly, and in view of the statutory mandate to maximize
competition, we believe that the propriety of the Fifth ND "exclusionary
rule's" implementation must, in contrast to the general applicability of
the Home Port Policy restrictions per se, depend on the reasonableness
in each particular situation of the Navy's actual plans as to future
overhauls of Fifth ND vessels that might be adversely affected by
including Fifth ND firms in a competition for vessels outside the Fifth
ND. Thus, a general application of this restriction may under the
circumstances of a particular procurement be viewed as unduly
restrictive of competition.
The Navy states that it is the agency's "projected forecast that
ships home-ported in the Fifth ND requiring overhauls during fiscal year
1981 will fill the capacity of the Fifth ND."
We first note that the overhaul of the USS MULLINNIX is scheduled to
begin on February 20, 1981, and to be completed in September of the same
year. The record indicates that there presently is only one Navy ship
being overhauled in the Fifth ND, and that overhaul is to be completed
shortly. There apparently are four firms in the Fifth ND, including
NORSHIPCO, with major overhaul capability, some with multiple capacity--
the protester asserts that it has facilities to overhaul four ships at a
time-- and NORSHIPCO alleges that none of the four firms has a major
overhaul scheduled for fiscal year 1981. Accordingly, it would appear
that there is considerable capacity in the District for 1981 overhauls
of Fifth ND vessels. In this respect, we are concerned only with work
that we anticipate would be bid on by the firms with major overhaul
capacity, as opposed to "minor" overhauling for which that capacity
could not logically be viewed as being adversely affected if the USS
MULLINNIX were overhauled in the Fifth ND.
In any case, the record does not clearly support the Navy's
"projected forecast" in that there is no indication in the agency's
submissions of any specific major overhauls of Fifth ND vessels firmly
scheduled. On the other hand, the record does show that because of an
increased Navy presence in the Indian Ocean fewer ships will be
overhauled (major and minor) in the Fifth ND in 1981 than in other
years. In addition, even if a major overhaul were to be scheduled for
the Fifth ND immediately, the overhaul of the USS MULLINNIX might be
substantially completed by the time an award could be made and work
begun. With regard to this last point, we note that the contract to
overhaul the USS MULLINNIX was awarded to a non-Fifth ND firm,
notwithstanding NORSHIPCO's protest, over three months after the
issuance of the solicitation for the work, and that in accordance with
Navy policy the overhaul is not to begin for another three months after
that date. Using a similar time frame, no work on an as yet unscheduled
major overhaul would begin until the second half of 1981.
Nonetheless, the record shows that in addition to filing this bid
protest, NORSHIPCO filed suit in the matter in the United States
District Court for the Eastern District of Virginia, Norfolk Division
(Civil Action No. 80-1083-N), requesting a preliminary injunction
against the award of a contract under the RFP. The court denied
NORSHIPCO's request, stating that the General Accounting Office was the
proper forum to consider the issue. However, the court also ordered
NORSHIPCO to submit to the Navy a timely proposal for the work. While
the Navy apparently never opened NORSHIPCO's proposal, the firm has
informally advised our Office that the offer exceeded the contract
price.
Assuming that the Navy confirms that NORSHIPCO's price exceeded the
contract price, and since work on the USS MULLINNIX is to begin shortly,
we do not believe that termination of the awarded contract would be
appropriate even if we were to conclude that the record in support of
the Navy's forecast for 1981 was insufficient. However, by separate
letter, we are advising the Secretary of the Navy of our views.
The protest is sustained to the extent that it concerns the general
application of the Fifth ND "exclusionary rule."
B-195341, January 19, 1981, 60 Comp.Gen. 189
Bids - Mistakes - Judgmental Errors - Correction or Withdrawal of Bid
Precluded - Supplier Costs - Estimated
Judgment error, i.e., where bidder makes knowing judgment and assumes
known risk at time it submits bid such as computing bid on basis of
estimate of supplier's costs instead of obtaining actual quotation, is
not a mistake for which relief may be granted. 58 Comp.Gen. 793,
B-162379, October 20, 1967, and other decisions allowing relief where
the bid was so low so as to raise presumption of error regardless of
whether bidder established existence of mistake as opposed to judgment
error, will no longer be followed.
Matter of: Handy Tool and Manufacturing Co., Inc., January 19, 1981:
Handy Tool and Manufacturing Co., Inc. (Handy) requests rescission of
contract No. DAAK01-77-C-5362 alleging it erroneously estimated
subcontractor costs when computing its bid for item 1, and that it
mistakenly assumed the availability of certain supplies upon which it
based its bid for item 2.
On December 13, 1976, the Army Troop Support and Aviation Materiel
Readiness Command (Army), St. Louis, Missouri, issued invitation for
bids (IFB) No. DAAK01-77-B-5131 for 20 mechanical drive housings (item
1) and 21 vertical housings (item 2). The bids received were as
follows: (TABLE OMITTED)
Handy was the low bidder for items 1 and 2 after the Army permitted
Dunrite to withdraw its bid due to a mistake in bid. Because the
processing of Dunrite's mistake claim delayed award, the Army requested
Handy to extend its bid acceptance period from March 15, 1977, to April
14, 1977. On March 7 Handy refused, stating it did not want the
contract award. Handy alleges, and the Army denies, that Handy notified
the contracting activity of an alleged "mistake" in its bid.
In any event, the contracting officer accepted Handy's bid and awarded
the contract to Handy on March 10, 1977.
On March 14, 1977, Handy sent the Army a telegram formally alleging a
"mistake" in its bid, and on April 4, 1977, Handy submitted written
details describing two errors. The first error involved item 1 and
consisted of Handy's having formulated its bid on the estimated cost of
obtaining certain castings from a foundry instead of requesting actual
quotations from potential subcontractors prior to submitting a bid.
After bid opening, Handy requested such a quotation and discovered it to
be significantly higher than Handy had estimated. The second mistake
involved item 2 and consisted of Handy's having assumed the availability
of 7 3/4 inch alloy steel tubing. Handy alleged that after award it was
unable to obtain the tubing from any source and would have had to use 8
inch tubing, resulting in greater costs.
Handy refused to perform the contract and the Army terminated the
contract for default.
Regardless of whether Handy claimed a mistake in bid prior to award,
no remedial action is available unless a mistake has been made. The
Navy reports that 7 3/4 inch alloy steel tubing is generally available
and has identified at least one source for the tubing. Handy has not
contested the existence of that source. Thus, we do not find any basis
for Handy's claimed second mistake. With respect to the first mistake,
we agree with the Army that Handy's error is not the type of mistake for
which relief may be granted.
The bidder must bear responsibility for the preparation and
submission of a bid, including ascertaining the exact cost of any
supplies to be obtained from its supplier. If the bidder does not
obtain a firm price from its suppliers on which to compute its bid, any
post-bid opening increase in the price relied upon by the bidder does
not afford a basis for relief. 31 Comp.Gen. 323(1952).
Prior to 1970, and on some occasions since, we allowed relief in
cases where the bidder was ignorant of the suppliers' costs, and the bid
was so low as to raise a presumption of error in the mind of the
contracting officer. See, e.g., B-162379, October 20, 1967. The basis
for relief was the basic principle that if a material mistake is made by
one party to a contract and the mistake is known by the other party, or
because of accompanying circumstances the other party had reason to know
of the mistake, the party making the mistake has the right to
rescission. 44 Comp.Gen. 383, 386(1965). Under such circumstances, we
did not allow the contracting officer to overreach the bidder by
snapping up an offer that was too good to be true. See Wender Presses,
Inc. v. United States, 343 F.2d 961, 963 (Ct. Cl. 1965). A valid
contract resulted only where the Government notified the bidder of the
nature and extent of a suspected mistake and obtained the bidder's
verification of the bid. 44 Comp.Gen.,supra,at 386.
However, in 1970 the Court of Claims made clear that:
* * * The mistake, to invoke such principles, must be * * * a clear
cut clerical or arithmetical error, or misreading of specifications, and
* * * (does) not extend to mistakes of judgment.
Ruggiero v. United States, 420 F.2d 709, 713 (Ct. Cl. 1970); see
also National Line Co., Inc. v. United States, 607 F.2d 978 (Ct. Cl.
1979). We take this to mean that the Government does not overreach a
bidder who makes knowing judgments and assumes known risks at the time
it submits a bid, since the bidder bid exactly what it intended to bid.
See generally Tony Downs Food Co. v. United States, 530 F.2d 367, 373
(Ct. Cl. 1976). Therefore, to the extent B-162379, supra, and other
decisions allowed relief without requiring the bidder to establish the
existence of a mistake as opposed to a judgment error, they will no
longer be followed.
Recently we had occasion to consider a pre-award mistake-in-bid claim
submitted by a bidder that had been unable to obtain price quotations
from a supplier, and therefore computed its bid on estimated costs.
Relying in part upon B-162379, supra, we allowed the bidder to withdraw
its bid because the contracting officer suspected the possibility of
mistake since the bid was significantly lower than the other bids
received. Department of the Navy-- Advance Decision, 58 Comp.Gen.
793(1979), 79-2 CPD 215. We believe that decision does not accord with
our decision here and it also will no longer be followed.
The correct rule is that the bidder generally must bear
responsibility for the submission of a bid, including ascertaining the
exact cost of any supplies to be obtained from a supplier. Where the
bidder knows it lacks a firm price from its suppliers but elects to
submit a bid based upon the bidder's own estimate, the bidder (in this
case, Handy), must bear the risk that the actual supplier's costs will
be higher than the bidder's estimate. See 31 Comp.Gen., supra, and Bill
Bouska Construction, Inc., B-196786, December 2, 1980, 80-2 CPD 411,
where we viewed a bidder's reliance on a supplier's price quote that by
its own terms was not firm as a judgmental error rather than a mistake
for which relief was available under the mistaken bid rules.
Consequently, we consider Handy to have made a judgment error here
rather than a "mistake" for which mistake-in-bid relief can be obtained.
In recent years our Office has also permitted relief, where otherwise
proper, in cases where the bidder's claim for relief was based upon a
firm, but erroneous quotation from a subcontractor. MKB Manufacturing
Corporation, 59 Comp.Gen. 195, 197-8(1980), 80-1 CPD 34; B-169901, June
19, 1970. Since the subcontractor's error precluded the bidder from
making a knowing judgment, we believe these cases still represent good
law.
Of course, if any any circumstances the actual prices are such that
an award to the bidder would mean that the Government was obviously
getting something for nothing, then relief should be allowed on the
basis that it would be unconscionable for the Government to accept the
bid. See Porta-Kamp Manufacturing Company, Inc., 54 Comp.Gen. 547,
552(1974), 74-2 CPD 393. We recently held that, in itself, the fact
that a second low bid was 130 percent more than the awardee's bid is
insufficient to find a contract unconscionable. Andy Electric Company,
59 Comp.Gen. 363(1980), 80-1 CPD 242. Handy's bid was not so low that
the Government knew or should have known it was geting something for
nothing. In fact, Handy's prices for the two items were higher than the
prices paid in the prior year's procurement as increased to reflect
inflation.
The claim is denied.
B-195133, January 19, 1981, 60 Comp.Gen. 181
Travel Expenses - Temporary Duty - Lodgings and/or Meals - Procured by
Contracting Officer - Appropriations Limitation
A Government contracting officer may contract for rooms or meals for
employees traveling on temporary duty. Appropriated funds are not
available, however, to pay per diem or actual subsistence expenses in
excess of that allowed by statute or regulations, whether by direct
reimbursement to the employee or indirectly by furnishing the employee
rooms or meals procured by contract. Because of the absence of clear
precedent, the appropriations limitation will be applied only to travel
performed after the date of this decision. Travel Expenses - Temporary
Duty - Lodgings and/or Meals - Procured by Contracting Officer -
Furnished Without Charge - Per Diem Rate Establishment
When a contracting officer procures lodgings or meals for an employee
on temporary duty and furnishes either to the employee at no charge, the
lodgings plus system is normally inappropriate and a flat per diem at a
reduced rate should be established in advance. Subsistence - Per Diem -
Rates - Lodging Costs - Average Cost - More Than One Trip on Voucher
When an employee submits a travel voucher which includes three
different trips, the average cost of lodging is determined by dividing
the total amount paid for lodging by the traveler during the three trips
by the number of nights lodging that was or would have been required.
Matter of: Bureau of Indian Affairs - Procurement of Lodgings and
Meals for Employees on Temporary Duty, January 19, 1981:
This action is in response to a request from Donald M. Gray, an
authorized certifying officer of the Department of the Interior, Bureau
of Indian Affairs (BIA), Albuquerque, New Mexico, for an advance
decision concerning various questions raised by six vouchers.
These questions arise because contracting officers of the BIA have
directly procured rooms or meals from hotels for travelers during the
performance of the travelers' temporary or authorized training duty. We
shall discuss the three main general issues and then answer the specific
questions raised by each voucher.
1. May a Government contracting officer contract for rooms and meals
for employees on temporary duty?
Normally, an individual employee on temporary duty is responsible for
obtaining and paying for his own lodging and meals. The employee then
submits a voucher which details his expenses and he is reimbursed on the
basis of the voucher. This is the usual method of incurring and paying
for travel expenses.
We have found no express prohibition that would prevent an agency
from contracting for lodgings and meals, other than the restriction in
40 U.S.C. 34(1976) on the rental of space in the District of Columbia.
Thus, a Government contracting officer may enter into a contract with a
commercial concern for rooms or meals, or both, for employees on
temporary duty. However, since it is well established that officers of
the Government may not do indirectly that which a statute or regulation
forbids doing directly, we conclude that the statutory and regulatory
limitations on per diem rates or actual expense rates are equally
applicable to contracts or purchase orders entered into by agencies for
lodgings and meals. Thus, appropriated funds are not available to pay
for subsistence expenses in excess of the amounts authorized by statute
or the implementing regulations, regardless of whether the employee is
reimbursed for such expenses or the agency has procured lodgings or
meals by contract.
Because of the lack of precedent in this area, the above-stated
limitation on the use of appropriated funds for travel expenses will
only be applied to travel performed after the date of this decision.
2. Should the amount paid by the Government by contract with a
vendor for lodging or meals for an employee on temporary duty be applied
to the $35 per diem limitation contained in 5 U.S.C. 5702?
At the time in question, the statute which establishes a per diem
rate, 5 U.S.C. 5702, provided in pertinent part:
(a) Under regulations prescribed under section 5705 of this title, an
employee while traveling on official business away from his designated
post of duty, or in the case of an individual described under section
5703 of this title, his home or regular place of business, is entitled
to (1) a per diem allowance for travel inside the continental United
States at a rate not to exceed $35, * * * .
The applicable regulations promulgated pursuant to this statute
provided:
Reimbursement for official travel within the limits of the
conterminous United States shall be a daily rate not in excess of $35
except when actual subsistence expenses travel is authorized or approved
due to the unusual circumstances of the travel assignment or for travel
to a designated high rate geographical area as provided in 1-8.1.
Federal Travel Regulations (FTR) 1-7.2a, FPMR 101-7, Temp. Reg. A-11,
Supp. 4, April 1977.
Both the statute and regulation quoted above imposed a $35 limitation
on the amount of money to which an employee is entitled or may be
reimbursed while in a per diem status on temporary duty.
The regulations also provided that, in order to establish a per diem
rate, the average amount which the traveler pays for lodging should be
used. See FTR para. 1-7.3c(1)(a). The regulations do not specifically
address the issue as to how to treat the amount paid under a contract
with a commercial concern for lodging and/or meals in determining the
proper per diem or actual expense entitlement. If a Government
contracting officer procures food and/or lodgings for an employee on
temporary duty either no per diem should be allowed or a reduction
should be made from the amount otherwise allowable to the employee as
appropriate. FTR para. 1-7.6f.
In instances where it is known in advance that rooms will be
furnished to the employee under a contract for the entire trip the
lodgings plus system is normally inappropriate in such cases. Rather, a
specific per diem rate appropriately reduced should be established in
advance under FTR para. 1-7.3c(3), FPMR 101-7, Temp. Reg. A-11, Supp. 4,
May 1, 1977. In that regard, it is pertinent to note that the training
act, 5 U.S.C. 4101 et seq. specifically provides for direct arrangements
with a school or other institution sponsoring training courses for
lodgings, meals and other necessary costs of training.
If the training cost charges include lodging and meal costs as an
integral part of the charges they would be considered a "necessary cost
of training" payable by the Government. A reduced per diem rate, if
appropriate, still would be allowed to the employee. If charges
submitted by sponsor for the training course do not include lodging or
subsistence costs the per diem rate or subsistence charges should be
treated as indicated above for temporary duty travel.
3. Should lodging procured by a Government contracting officer be
considered Government furnished quarters?
If such a reduced per diem rate is not established in advance, the
Federal Travel Regulations provide that when meals or lodging are
furnished without charge or at a nominal cost by a Federal Government
agency at a temporary duty station, an appropriate deduction shall be
made from the authorized per diem rate. FTR Para. 1-7.6f, FPMR 101-7,
May 1973. Hence we conclude that when the Government rents rooms,
and/or meals by purchase order for employees on temporary duty, these
rooms or meals should be treated as Government furnished quarters or
meals. Thus, a reduction in per diem otherwise due is required in such
cases. In the case of actual expense travel no reimbursement would be
made for meals or lodgings furnished by the Government.
We will now answer the specific questions raised by the certifying
officer which pertain to the six vouchers submitted.
A. Emil Kowalczyk, an employee of the BIA, traveled on temporary duty
between Juneau, Alaska, Seattle, Washington, and Denver, Colorado, from
February 19, 1979, to February 28, 1979. For 6 of the 9 nights he
traveled, the Government procured lodgings for him by purchase order at
a total cost of $147.52. For the days he procured his own lodgings he
did not provide receipts nor did he claim to have spent any specific
amount. In his travel voucher, Mr. Kowalczyk claimed $35 per diem for
the portions of the trip which involved his securing his own lodging and
$16 per diem for the portions of the trip in which the lodgings were
paid by the BIA. The certifying officer determined that this method of
computing reimbursement was inappropriate because it could result in
charges to the BIA in excess of the $35 limitation in 5 U.S.C.
5702(1976). The BIA computed reimbursement by combining all costs of
lodging, including the amounts paid by purchase order by the BIA, and
divided that total by the number of nights which lodgings were required.
To complete the lodging plus computation the certifying officer added
$16 a day to the lodging cost, and a $33 per diem rate was established
and applied according to the appropriate regulation.
After the computation of the per diem allowance, the certifying officer
deducted the exact amount paid by the BIA for Mr. Kowalczyk's lodgings.
We find no objection to the certifying officer's method for computing
per diem in these particular circumstances as there are apparently no
excess costs chargeable against Mr. Kowalczyk.
B. The second travel voucher was submitted by Mr. Peter Soto who
traveled to Denver, Colorado, on temporary duty from April 16-19, and
secured lodgings by a Government purchase order for $28 per night. Mr.
Soto claims per diem expenses of $16 a day for 4 3/4 days. Since the
combination of the costs of lodging and other expenses would exceed the
limits set by 5 U.S.C. 5702 the certifying officer refused to certify
this amount and asks us who should bear the excess cost. Any excess
costs resulting from hotel accommodation charges normally in the future
will be regarded as being in violation of the above stated rule limiting
the availability of appropriations. However, as stated above, since
there has been some confusion in this area and no decision of this
Office has stated a clear rule, the limitation on the availability of
appropriations for such excess costs will only be applied to travel
performed after the date of this decision. Accordingly, the amounts
claimed are allowable, if otherwise proper.
The certifying officer also asks what documentation should support
the traveler's vouchers regarding the cost of lodging supplied by the
purchase order. Regulations state that lodging receipts may be required
at the discretion of each agency. FTR Para. 1-7.3c(1)(a) supra.
Therefore it is up to BIA to decide if employees should supply receipts.
C. The third voucher covers three separate trips made by Mr. Daniel
Sadongei, whose official duty station was Anadarko, Oklahoma. On the
first trip, from Anadarko to Oklahoma City, from February 28 to March 2,
1979, Mr. Sadongei claimed only a mileage allowance and turnpike tolls
since lodging and meals were paid by Government purchase order. Mr.
Sadongei's second trip was from Anadarko to Horton, Kansas, from March 4
to 9, and his final trip included on the voucher was to Pawnee,
Oklahoma, from March 13 to 14. In computing his per diem, he figured
out the average cost of lodging to be $13.42 for the two trips together.
The issue is when an employee includes three trips on one voucher
should per diem for each trip be computed separately or should per diem
for the three trips be computed together.
The Federal Travel Regulations clearly state that in order to compute
the average cost of lodging, the total amount paid for lodging during
the period covered by the voucher should be computed. FTR Para.
1-7.3c(1)(a).
The General Services Administration has informally advised us that the
purpose of this regulation is to allow an employee some latitude if he
is faced with a situation in which the cost of lodging in one area is
more expensive than another. In this way the employee can average in
less expensive trips with others that cost more. However, when an
employee exercises his option and includes more than one trip on a
travel voucher, all the trips must be counted together in order to
compute per diem expenses. This rule would normally apply to Mr.
Sadongei's case. However, in view of the confusion in this area,
referred to above, we will not object to payment for subsistence as
claimed by the employee, notwithstanding any excess cost that may have
resulted from the use of the purchase order.
The next three vouchers which the certifying officer has sent to us
concern billing from commercial vendors directly to the Government for
services rendered employees of the Government. None of the vouchers
cover a situation in which the lodging costs or meal cost is part of a
training course package under which such costs are a part of necessary
costs of training. Accordingly, these vouchers will be treated as if
they were for travel on regular temporary duty.
D. Three employees of the BIA traveled to Tempe, Arizona, from March
18 to March 30, 1979, to attend a training conference at Arizona State
University. On March 6, 1979, Duane Marion, contracting officer for the
BIA, issued an order for supplies or service (Standard Form 147) to the
Holiday Inn in Tempe, Arizona, for lodging and meal costs for these
employees. BIA was billed $493.65 for each employee which included $312
for room and $181.65 for food. The certifying officer has not paid this
bill since he states that the average cost per day per employee is
$41.11 and this is in excess of the limitation contained in 5 U.S.C.
5702.
The certifying officer asks whether the voucher should be paid in
full and if the voucher is paid, who should bear the cost of payment.
If the employee must pay back some money, the certifying officer also
asks whether the employee should submit a travel voucher, even though
there might not be an additional claim. The certifying officer asks if
the voucher could be treated on an actual subsistence basis in a per
diem area. Finally, the certifying officer inquires into the
itemization necessary by the vendor to determine the correctness of the
claim.
Earlier in this decision we held that a Government contracting
officer may procure rooms or meals from a commercial concern for
employees on temporary duty, provided the cost is not in excess of that
authorized to statute to be paid for per diem or actual subsistence
expenses.
The second issue which must be decided before the Government may pay
Holiday Inn is whether the Government entered into a contract with the
Holiday Inn for hotel accommodations or whether the agency personnel
just reserved a room on behalf of an employee. We have examined this
issue in cases where a room reserved by an agency was not used and the
employees and the agency failed to cancel the reservation. We have held
that if a contract existed between the Government and hotel, then the
Government is liable to pay for the rooms, 50 Comp.Gen. 453(1972) and 41
id. 780)1962), but if there is no contract then the Government is not
obligated to pay. Richard E. Cunningham, B-192804, December 18, 1978;
B-181266, December 5, 1974.
In this situation Standard Form 147 establishes the fact that a
contract existed between the Government and the hotel. Since Holiday
Inn supplied the services as requested, the Government is liable to pay
for the rooms and meals on the basis of the contract. In the future,
agencies are not authorized to expend appropriated funds for any such
excess costs.
The next question that the certifying officer asks is whether or not
the travelers should submit a travel voucher even though there may be no
additional claim. Federal Travel Regulations provided that agencies are
authorized to prescribe the manner of submitting vouchers for travel.
FTR para. 1-11.4. We believe BIA must decide for itself whether the
proper administration of its official travel requires that vouchers be
submitted where no reimbursement is claimed.
The certifying officer inquires into what type of itemization is
required when the vendor submits a bill. Since the vendor is paid on
the basis of the contract established by the purchase order, the vendor
must show that the services rendered are covered by the contract.
In this regard we have held that coffee, soft drinks and similar
refreshments are in the nature of entertainment and are not payable from
appropriations for necessary expenses in absence of specific statutory
authority. 47 Comp.Gen. 657(1968); B-188078, May 5, 1977. We have
also held that where an employee is authorized actual subsistence
incident to official travel, expenditures made by him for coffee during
coffee breaks may not be reimbursed since such expenditures are not
necessary expenses of subsistence under the Federal Travel Regulations.
Samuel S. Rey, B-197830, April 22, 1980. It is incumbent upon the hotel
to itemize its bill so that the agency uses appropriated funds only for
necessary items of subsistence. Therefore, this voucher should be paid
if the goods and services provided were reimbursable under the Federal
Travel Regulations.
E. An acting procurement officer for the BIA issued Standard Form
147 to a Holiday Inn in Oklahoma City for meals and lodging for BIA
employees to attend a Social Services Staff Meeting and Motivation
Seminar from March 22 to 23, 1979.
The only restriction on Standard Form 147 was that the cost was not to
exceed $2,500. There also was a statement on Standard Form 147 that the
Holiday Inn was the only hotel having conference space and sleeping
rooms available on the dates of the meeting. The total bill submitted
to the certifying officer for payment was $1,077.36, for a total of 25
people. This bill comes out to a total of approximately $21.50 per
person for each day.
The certifying officer asks if this type of Blanket Authorization is
legal because of the potential that some employees would exceed the $35
per diem limitation established in 5 U.S.C. 5702.
As we have previously stated, a contracting officer can contract for
rooms and meals for employees on official travel only within the
limitations of the per diem and actual subsistence expenses authorized
by statute or regulations. Here the total cost divided by the number of
employees came out to about $21.50 per day. Since this is less than the
per diem maximum, the certifying officer need not examine individual
costs to make sure that each employee was under the per diem or
subsistence maximum.
F. The last voucher concerns a commercial bill submitted by employees
and students and teachers on a field trip. The certifying officer asks
if this is the proper method for covering the expenses of teachers and
students on a field trip. The certifying officer also asks if students
are subject to the per diem limitation established in 5 U.S.C. 5702
under the circumstances.
We believe that a contracting officer may procure rooms for employees
and students on a field trip as long as it is necessary to conduct
official business. The determination as to whether the trip is
necessary to conduct official business should be made by an appropriate
agency official. Under these circumstances, we would not object to this
type of procurement. The per diem limitation set forth in 5 U.S.C. 5702
is applicable in this situation and the amount due shall be computed
consistent with the discussion in the other situations covered in this
decision.
The certifying officer asks if a traveler on temporary duty may be
required to eat and lodge at a specific place. The general rule is that
agencies may not require its employees to use Government quarters while
on temporary duty without making the finding that use of such quarters
was necessary to accomplish the employee's mission. Federal Aviation
Administration, B-195859, March 18, 1980. The "necessity" determination
cannot be made on a blanket basis but must be tailored to each
particular situation.
We are not aware of any similar requirement in law for such a
determination in the case of meals. However, agencies should only
require meals at a specific place when it is clearly required by the
circumstances and only after consideration of both the Government's and
employee's interest. Generally, we would not object to the use of the
same test, namely, whether it is "necessary to accomplish the employee's
mission." This would place quarters and meals on the same basis. An
example of a situation requiring furnished meals and quarters is certain
training courses.
B-200008, January 16, 1981, 60 Comp.Gen. 172
Contracts - Negotiation - Requests for Proposals - Cancellation -
Administrative Discretion - Reasonable Exercise Standard
Decision to cancel and resolicit procurement lacks sound basis where
based on conjecture without reference to available evidence and clearly
available alternative which would have preserved procurement was
rejected. Since low prices have been disclosed, solicitation should be
reinstated to preclude auction. Contracts - Protests - Court Solicited
Aid - Revival of Related (Mooted) Protests
Related prior protests, mooted by cancellation of solicitation but
which form large part of purported bases for cancellation, will be
considered in connection with protest by low offeror against
cancellation. Parties to prior protests have participated actively in
present matter and have had fair opportunity to present arguments.
Contracts - Protests - Procedures - Bid Protest Procedures - Time For
Filing - "Court Interest" Exception
Because of interest by court, protests against solicitation and
conduct of procurement will be considered even though untimely under
General Accounting Office Bid Protest Procedures, 4 C.F.R.Part 20(1980).
Contracts - Negotiation - Offers or Proposals - Time Limitation for
Submission - Effect on Competition
Contention of inadequate time to prepare initial proposal is
unpersuasive in view of lack of objection by other offerors and adequacy
of competition. Allegation that solicitation provision is "confusing,"
raised after receipt of initial proposals, is not a basis for finding of
prejudice, particularly where protester took no action to obtain
clarification. Contention of unequal negotiations, based on request for
clarification of protester's proposal to which protester did not respond
in substance, leading to elimination from competitive range, is without
merit. Contracts - Negotiation - Offers or Proposals - Best and Final -
Time Limit - Sufficiency
Allegation by incumbent of prejudice attributable to unequal and
inadequate time to prepare best and final offer is denied where record
indicates other offerors used about equal or less time without
objection. Allegation that contracting officer failed to verify low
offer and took no action to preclude "buy-ins" is without merit where
low offeror's costs were questioned during negotiations and use of
multi-year fixed-price contract is specific measure against possible
"buy-ins" contemplated under regulations.
Matter of: Apex International Management Services, Inc., January 16,
1981:
On September 8, 1980, Apex International Management Services, Inc.
(Apex), filed a protest with us and an action in the United States
District Court for the District of Columbia, Apex International
Management Services, Inc. v. Clifford L. Alexander, et al., Civil Action
No. 80-2274.
Essentially, Apex contests a decision by the United States Army to
cancel a request for proposals for fixed-price multi-year contractor
operation of Government-owned laundry facilities in the Federal Republic
of Germany. On September 12, 1980, the court issued a preliminary
injunction prohibiting the resolicitation of this requirement until 10
days after our resolution of Apex's protest.
We find Apex's protest to have merit.
Apex's challenge to the cancellation followed two related prior
controversies involving this same procurement. In the first of these,
on August 18, 1980, Dyneteria filed a protest (B-200008) with us in
which Dyneteria charged that it had not been afforded adequate time to
respond to the solicitation and that the application of German labor
laws to the procurement was "confusing." Subsequently, on August 20,
1980, Jets Services, Inc. (Jets), the incumbent contractor for the
preceeding 4 years, also filed a protest (B-200008.2) in which Jets
argued that it was denied adequate time to prepare its best and final
offer; Jets also contested the propriety of the contracting officer's
decision to award the contract to another offeror whose offer was
"25-27" percent lower than the Army's fair cost estimate. On August 22
and 27 Jets supplemented its protest with additional charges.
On August 29 Dyneteria, after examination of the Jets protest, expanded
its own protest to challenge the Army's conduct of negotiations.
On August 29 these protests culminated in a lawsuit in the United
States District Court for the District of Columbia entitled Jets
Services, Inc. v. United States Department of the Army, et al., Civil
Action No. 80-2226. Dyneteria participated in this action. On that day
the court granted a temporary restraining order prohibiting award of the
contract until September 5, 1980, the date set for hearing on Jets'
motion for a preliminary injunction. Jets' lawsuit was withdrawn by
stipulation on September 2, 1980, after the Army canceled the
solicitation on August 30. On September 5 the Army and Jets signed a
6-month extension to Jets' current contract.
The solicitation for these services was issued on June 2, 1980, with
performance to begin on October 1, 1980, with a minimum 30-day
mobilization period for the awardee to prepare for performance. A
preproposal conference was held on July 9, 1980, during which the
contracting officer advised offerors that the awardee would have a
39-day transition period, based on an anticipated award date of August
22. Site visits to each of the laundry facilities covered by the
solicitation were conducted during the week of July 14-18. Dyneteria
neither attended the preproposal conference nor participated in the site
visits. Six offers were submitted by the closing date of July 23.
During the evaluation of proposals the Army sent a telegraphic
message to Dyneteria requesting clarification of both its cost and
technical proposals and advising Dyneteria that if the requested
information were not submitted by August 7, 1980, Dyneteria's proposal
would be declared "non-responsive." The Army's message asked for
Dyneteria to submit its materials by special delivery mail and also
requested telephonic advice of Dyneteria's position. Dyneteria
RESPONDED TO THIS REQUEST WITH A MESSAGE STATING: "DUE TO SHORT TIME
given for response to your message, it will be necessary to be declared
non-responsive. Thank you."
Negotiations with the five firms remaining in the competitive range
were conducted during the week of August 11. The contracting officer
negotiated with Jets on the afternoon of August 14. Best and final
offers were due at 9 a.m. on August 15. All five offerors in the
competitive range submitted best and final offers prior to the deadline.
On the Army's advice that it was the low offeror, Apex initiated
mobilization, including such steps as forming a German company and
getting firm commitments from suppliers. Jets, the third low offeror,
attempted after the deadline to submit a further price revision which
was rejected by the contracting officer.
The contracting officer, by telex message dated August 21, sought
authority to award the contract to the low offeror despite the pending
protests of Dyneteria and Jets to which we referred above. This message
generally indicated that the procurement was entirely proper and that
all offerors had been made aware of and accepted the short time
available for the procurement. The request for authority to award the
contract was granted in messages from the Office of the Principal
Assistant for Contracting (OPAC) and the Assistant Secretary of the Army
for Research Development and Acquisition (SARDA), subject to the
condition that Apex document its responsibility.
Despite continuing contact between the contracting officer and Apex's
representatives, Apex had not furnished sufficient evidence of its
responsibility as of August 29, on which date the contracting officer
was advised that a preaward survey at Apex's home office had resulted in
a negative finding of financial capability. On that date, the United
States District Court for the District of Columbia issued the temporary
restraining order in Jets Service, Inc. v. Department of the Army, et
al., supra.
On the morning of August 30, the contracting officer again met with
Apex's local representative to discuss the subject of Apex's
responsibility. At that meeting, Apex's representative agreed to travel
to Apex's home office in Florida and return on September 2, 1980, with
performance bonds in response to the contracting officer's suggestion
that he would accept these bonds as evidence of Apex's financial
capacity. The contracting officer did not advise Apex of the
restraining order.
Later in the day of August 30, the contracting officer canceled the
solicitation. The determination and findings cites the following seven
factors as supporting a finding that there was a compelling reason to
cancel the solicitation:
(a) The solicitation closing date, the evaluation, the negotiations,
and the best and final were compressed.
(b) The time was further curtailed by the oral assurances of award by
22 or 24 August 80.
(c) The urgency of the 39-day mobilization may not have been
necessary.
(d) The low offeror has a negative preaward.
(e) The nature of the JETS protest leads me to believe that sensitive
procurement information has leaked perhaps giving one or more offerors
an unfair advantage.
(f) The nature of the protest leads me to believe that certain parts
of the RFP are subject to being interpreted as ambiguous.
(g) The injunction precludes the Government from awarding and
allowing a 30-day mobilization period for contractor commencement of
work effective 1 October 1980.
Apex argues that none of these factors is a reason to cancel the
solicitation and also contends that the Army was obligated to find it
responsible and award it the contract because Apex had responded to all
of the Army's requests for information. The Army argues that the
cumulative effect of the various bases for cancellation cited in the
determination and findings cast such uncertainty over the award of the
contract that the contracting officer had no viable alternative course
of action which would ensure the uninterrupted continuation of these
vital services.
We find no sound basis for the cancellation of this solicitation in
the circumstances existing on the date of cancellation. We think that
no matter what action the contracting officer determined to take with
respect to the solicitation, whether to cancel, reopen negotiations, or
merely extend, he had no viable option on August 30 but to extend Jets'
contract if the 30-day mobilization period guaranteed by the
solicitation were to be preserved. We do not agree with the Army,
however, that cancellation and resolicitation of the procurement was
necessary. On the contrary, we are convinced that the contracting
officer, by arranging an extension of Jets' contract on August 30, could
have preserved this procurement and that the cancellation of the
solicitation was unnecessary on that date.
The Army had a clear opportunity to extend Jets' contract without
cancellation of the solicitations. Jets specifically offered to extend
its contract in a letter to the Army dated August 22; during the oral
hearing on August 29 on Jets' application for a temporary restraining
ORDER, JETS REPRESENTED TO THE COURT THAT "* * * WE HAVE OFFERED TO
extend the contract, to do whatever can be done to smooth any transition
and also to make sure that the services the Army needs CONTINUE TO BE
PERFORMED" AND "* * * WE HAVE MADE THE OFFER TO EXTEND our performance,
to continue our performance, for whatever period is necessary."
The first two justifications for the cancellation both relate to the
compression of the time available to conduct this procurement. We
perceive no basis for a finding that the competition was unduly
prejudiced by the time constraints here. On the contrary, the extent of
the competition without timely objection to the schedule by any offeror
or potential offeror suggests that the time available did not unduly
influence the competition, Serv-Air, Inc., B-194717, September 4, 1979,
79-2 CPD 176; Dyneteria, Inc., B-181589, October 29, 1974, 74-2 CPD
230, and there is no evidence that the constraints may have been
unjustified.
The reference in the determination and findings to the "39-day
mobilization" is an outgrowth of the oral assurances to offerors at the
preproposal conference that the awardee would have 39 days to mobilize
prior to the October 1, 1980, beginning of performance, based on the
expected award date of August 22.
The solicitation, as we pointed out above, provides for a minimum 30-day
transition period and also provides that it cannot be modified except in
writing. The contracting officer indicates that he was concerned that
he could not tell whether the proposals were predicated on a 30- or
39-day mobilization period and that reopening negotiations to clarify
this question might be improper because of Jets' apparent knowledge of
its competitors' prices. The Army has suggested no way in which an
offeror's anticipation of an extra 9 days to prepare for performance
might have prejudiced the competition and we can identify none from the
record before us. And, to the extent that any offeror may actually have
required 39 days to mobilize, we see no reason why this period could not
have been included in the extension of Jets' contract.
Neither Apex's negative preaward survey nor Jets learning of its
competitors' prices provides a reasonable basis for the cancellation of
this procurement. Apex was still actively trying to demonstrate its
financial capability and Jets' knowledge of the other offers does not
appear to have prejudiced the competition. Jets was the third low
offeror and even if Apex were unable to establish its capability, the
second low offeror was still available.
The contracting officer's concern with the possibility of ambiguities
in the solicitation originated in the Jets and Dyneteria protests and
certain remarks in the OPAC and SARDA messages granting authority to
award the contract while these two protests were pending. These
problems primarily relate to the offerors' understanding of the wage
scales required under German law. Dyneteria's allegations of
"confusing" information in the solicitation were not raised until long
after the date set for receipt of initial proposals and only after
Dyneteria was threatened with elimination from the competitive range.
Jets' various suggestions of ambiguities or shortcomings in the
solicitation were not made until after Jets fully participated in the
procurement without complaint and only after Jets obtained the
information that there were two lower offers; Jets made these comments
largely in the context of attempting to explain how the two lower
offerors might have been misled into miscalculating their prices. We
are particularly concerned that the contracting officer relied on the
unsupported allegations in these protests without turning to the
offerors' cost proposals to ascertain whether there was actually a
problem. We note in this connection that Apex's proposal was in fact
examined in response to Jets' allegations and was found to contain
satisfactory wage scales.
The OPAC message granting authority to award the contract while the
Jets and Dyneteria protests were pending also referred to an error in
Apex's proposal in responding to the economic price adjustment clause
contained in the solicitation.
Apex did not follow the specified format and was not totally clear in
indicating what costs Apex might seek to adjust under the clause. The
contracting officer apparently relied on OPAC's statements for his
suspicion that this clause may have been ambiguous. The other remark
which concerned the contracting officer was advice that specific
sections of German law should not be cited in solicitations.
We have two principal objections to the contracting officer's
suspicions here: (1) OPAC's concern was the Apex's response, not the
solicitation which appears clear to us on its face; and (2) the
contracting officer did not refer to the offeror's proposals to
ascertain whether anyone may in fact have been materially misled by the
clause. Apex's deviations were relatively insignificant and we find no
evidence here of any prejudice to the competition.
We have long recognized that contracting officials have broad
discretion to determine whether a solicitation should be canceled and
the requirement reprocured. See, e.g., 36 Comp.Gen. 364(1956); 49
Comp.Gen. 244(1969); Colonial Ford Truck Sales, Inc., B-179926,
February 19, 1974, 74-1 CPD 80. Our view of discretionary
determinations is limited to the question of the reasonableness of the
exercise of discretion. See, e.g., Sperry-Univac, B-195028, January 3,
1980, 80-1 CPD 10; Tracor, Inc., B-195736, January 24, 1980, 80-1 CPD
69; BEI Electronics, Inc., 58 Comp.Gen. 340(1979), 79-1 CPD 202. To be
sustainable, a contracting officer's discretionary decision must reflect
the reasoned judgment of the contracting officer based on the
investigation and evaluation of the evidence reasonably available at the
time decision is made. Fairfield Scientific Corporation v. United
States, 611 F.2d 854 (Ct. Cl. 1979); General Electric Company v. United
States, 412 F.2d 1215 (Ct. Cl. 1969); Schlesinger v. United States, 132
Ct.Cl. 645, 132 F.Supp. 698(1955). We think the determination to cancel
this solicitation falls short of this standard.
The Army's decision appears to have been reached on the basis of
conjecture as to potential prejudice without reference to available
evidence which might have dispelled these concerns and without recourse,
for which no reasonable justification has been offered, to a clearly
available alternative which would have preserved the competition. In
our opinion, the decision to cancel this procurement lacked a sound
basis.
The Apex protest is sustained.
Jets has argued that if we were to sustain Apex's protest, as we do
here, we would also have to consider independently the Jets and
Dyneteria protests mentioned above which would require obtaining reports
from the Army in response to these protests and affording the parties
time to comment. Apex filed a statement in opposition to Jets' argument
in which Apex contends that our consideration of the related protests
would go beyond the scope of the court's request.
The Army's justifications for the cancellation of this solicitation
in large degree rest on and are identical to the bases of protest
presented by Jets and Dyneteria. Consequently, we find that these
matters are so inextricably intertwined that, as a practical matter,
there is no alternative but to consider the three protests together.
Furthermore, since both Jets and Dyneteria were aware that their
protests were at issue in this case, and both firms participated
actively in the present proceeding, we believe both Jets and Dyneteria
have had a fair and reasonable opportunity to present their case. In
conclusion here, we believe the court should have the benefit of our
views.
After its elimination from the competitive range, Dyneteria protested
that it had not had sufficient time to prepare its initial proposal and
that certain provisions of the solicitation were "confusing." All of the
bases underlying these protests were apparent in the solicitation, as
amended. Dyneteria's protest of these factors was therefore untimely
under section 20.2(b)(1) of our Bid Protest Procedures, 4 C.F.R.part
20(1980), because Dyneteria did not raise these objections prior to the
date set for receipt of initial proposals. Nonetheless, we will
consider these questions on the merits because of the court's interest.
See, e.q., Informatics, Inc., B-194734, August 22, 1979, 79-2 CPD 144.
We find Dyneteria's objections to the time for preparation of
proposals to be without merit for the reasons set forth above in our
discussion of the contracting officer's reasons for cancellation. As
for Dyneteria's objections to the solicitation, while we agree that the
specific provision to which Dyneteria refers requires close reading, we
do not think this affords any basis for a conclusion of prejudice,
particularly when Dyneteria failed to seek timely clarification.
Dyneteria's other objections, couched in terms of an unequal
opportunity to negotiate, rest on an erroneous factual basis because the
Army did not negotiate with Dyneteria, but only requested clarification
of Dyneteria's initial proposal. Dyneteria responded to this request
with a timely message seemingly accepting its impending elimination from
the competitive range.
The Army had no obligation to negotiate with Dyneteria after it was
eliminated from the competitive range. Western Design Corporation,
B-194561, August 17, 1979, 79-2 CPD 180.
Dyneteria's protest is denied.
Some aspects of Jets' protest are clearly untimely filed under our
Bid Protest Procedures. However, consistent with our consideration of
similarly untimely aspects of Dyneteria's protest, we will discuss the
merits of these contentions.
Jets' protest was based in part on the assertion that it did not have
sufficient time to prepare its best and final offer. Jets argued that
the short time available was both inadequate and prejudicial because
other offerors had more time. We note, however, that Apex's best and
final offer is dated August 14, the day after its negotiations, and that
a third offeror was able to conduct its negotiations on the morning of
August 14 and submit its best and final offer by 4:00 p.m. that same
afternoon, in considerably less time than that afforded Jets. Jets in
fact submitted its best and final offer at 7:30 a.m. on the 15th. And,
despite Jets' assertions that it objected to the lack of time within
which to submit its best and final offer, we find no evidence of any
written complaint and the August 21 telex requesting authority to award
the contract while the protests were pending indicates that all best and
final offers, including presumably Jets', were submitted without
qualification. We find no merit in Jets' contentions.
Jets also contended that the contracting officer failed to verify
Apex's "apparently mistaken bid" as required by DAR Sec. 406.3 and did
not take steps to preclude buying-in as required by DAR Sec. 1-311.
Neither of these arguments has any merit. With respect to the first
contention, we note first that Jets' assertion of a mistake in Apex's
offer is speculative, and second, that the Army did question Apex's low
costs during negotiations, to which Apex responded satisfactorily.
Concerning the second contention, we note only that the use of
multi-year, fixed-price solicitations, as here, is a step specifically
recommended under DAR Sec. 1-311 to preclude buy-ins.
Jets also protested that in evaluating proposals the Army ignored a
wage increase which Jets promised to its employees and which a follow-on
contractor would be obligated to pay under German law. There are two
elements to this assertion: the first is an implied objection to other
offerors' wage scales and the second to the likelihood of compliance by
other offerors with German law. We note, however, that in response to
Jets' complaints about Apex's wage scales, Apex's proposal was examined
and found to have wage scales higher than those of the other offerors.
And, the solicitation bound the awardee to comply with German law.
Jets also argued belatedly that (1) the solicitation was defective
because the workload estimates and equipment descriptions were faulty
and (2) the Army, during the preproposal conference, stated that an
estimated 495 workers were required, whereas Jets states the number is
actually 515-520. However (1) the site visits and inspections and the
solicitation provided for adjustments in price for variations in
workload from the estimates, and (2) no offeror was bound by the Army's
workforce estimate. In this latter connection, we find no evidence that
any variations in proposed workforce were the product of anything other
than the permissible exercise of business judgment by the competitors.
We find these contentions also to be without merit.
Jets' protest is denied.
IN VIEW OF THE FOREGOING, WE SEE NO IMPEDIMENT TO AWARD UNDER A
REINSTATED SOLICITATION ACCOMPANIED BY ANY NECESSARY TERMINATION OF
JETS' CONTRACT. THEREFORE, SINCE THE LOW PRICES HAVE BEEN DISCLOSED AND
TO AVOID GIVING RISE TO AN AUCTION, WE ARE OF THE VIEW THAT THE
SOLICITATION SHOULD BE REINSTATED AND THAT AWARD BE MADE AS SOON AS
PRACTICABLE AFTER COMPLETION OF NEW RESPONSIBILITY EVALUATIONS IN
ACCORDANCE WITH DAR ! 1-905.2.
THE PARTIES HAVE ALSO ARGUED WHETHER THE SMALL BUSINESS
ADMINISTRATION'S CERTIFICATE OF COMPETENCY PROCEDURES APPLIED TO THIS
PROCUREMENT. WE DID NOT ADDRESS THIS QUESTION IN OUR DECISION BECAUSE
APEX, A SMALL BUSINESS, WAS NOT FOUND TO BE NONRESPONSIBLE BY THE ARMY
AND THE QUESTION WAS PREMATURE.
B-198661, January 8, 1981, 60 Comp.Gen. 170
Quarters Allowance - Basic Allowance for Quarters (BAQ) - Dependents -
Children - Adopted - Adoption Not Finalized
Where children are placed with a member of the uniformed services for
adoption in the State of California by an agency of the State, the
effective date for determining entitlement to dependency benefits is the
date an order of adoption has been entered by a court of competent
jurisdiction.
Matter of: Lieutenant Charles Tyahur, Jr., USN, and Lieutenant
Commander Per L. Okey, USNR, January 8, 1981:
This case involves the question of the effective date for entitlement
to quarters allowance at the with-dependent rate for members of the
uniformed services on account of children who have been placed with them
for adoption in the State of California but where a final order of
adoption has not been entered. Under California law the parents'
assumption on full financial responsibility and care of the child after
entering into the adoption placement agreement without court sanction is
not sufficient to meet the dependency definition of 37 U.S.C.
401(2)(1976).
The Director, Navy Family Allowance Activity, Cleveland, Ohio,
requested a decision concerning the effective date for entitlement to
increased quarters allowance on account of children placed for adoption
in the State of California in the cases of Lieutenant Charles Tyahur,
Jr., USN, and Lieutenant Commander Per L. Okey, USNR. The matter was
referred here through the Department of Defense Military Pay and
Allowance Committee and was assigned submission number DO-N-1344.
The factual situation in each case is very similar. In the case of
Lieutenant Tyahur, a child born September 15, 1979, was placed for
adoption in the member's home on November 1, 1979, by the Adoption
Services of San Diego County, California.
An adoption placement agreement was entered into by Lieutenant Tayhur
and his wife on November 1, 1979, in which they agreed to assume full
financial responsiblity and care of the child.
An adoption placement agreement was entered into by Commander Okey
and his wife on July 15, 1976, for a child "Jonathan" born May 29, 1976.
On the same date, the member and his wife signed an "Addendum to
Adoptive Placement Agreement" which contains a statement that "possible
potential rights of the father have not been legally terminated and a
court action may be necessary. Final decision in this regard has not
been made and a certain risk exists."
A final adoption decree has not been submitted. On September 6, 1979,
Commander Okey entered into another adoption placement agreement for
another child "Benjamin Shane" born on May 11, 1977. To date, a copy of
the final adoption decree for Benjamin has not been submitted.
In both Lieutenant Tyahur's and Commander Okey's case it appears that
the children were placed in their custody for adoption purposes by the
San Diego County Department of Public Welfare and that during the
placement period the adoptive parents share joint custody with the San
Diego County Department of Public Welfare. While that agency may
terminate the agreement at any time prior to the final adoption decree,
the adoptive parents provide full financial support and care, the agency
being there for family counseling and guidance.
It appears that under California law the prospective adoptive parents
obtain certain rights to the continued custody of the child after
entering into an adoption placement agreement. However, no
interlocutory order of adoption is issued in California and the child
may be removed at anytime prior to the entry of a final order of
adoption. See Deerings California Codes, C.C.A. Sections 221-230.5.
Section 401, Title 37, United States Code, provides that "dependent"
with respect to a member of a uniformed service, includes his unmarried
legitimate child, including a stepchild, or an adopted child, who is in
fact dependent on the member.
In 30 Comp.Gen. 210(1950), we held that in order for an officer to be
entitled to increased allowances authorized to be paid to him on account
of "adopted children" there must be shown to be a legal adoption, that
is, one accomplished according to statute.
In 44 Comp.Gen. 417(1965), we held that basic allowance for quarters
as a member with dependents was authorized on account of an adopted
child effective upon the issuance of an interlocutory order of adoption.
The pertinent statute provided that subject to a probationary period
and the provisions of the final order of adoption, the adopted child
would be for all intents and purposes the child of the adopting parent
from the date of entry of the interlocutory order.
The rule was further extended in 52 Comp.Gen. 675(1973) where we held
that children provisionally adopted by a Navy member while stationed in
Great Britain are considered dependents of a member under 37 U.S.C. 401,
so as to entitle him to a dependent's allowance and all other benefits
incident to the dependency status while the member resides in Britain.
This is based on the fact that although the provisional adoption order
only authorizes custody and removal of the children from Great Britain
for adoption elsewhere, the law also provided that the rights, duties,
obligations, and liabilities prescribed in other sections of the Act for
an adopter shall equal those of natural parents or those created by an
adoption order.
In each of the cases cited above the children were placed in a home
by an order of a court of competent jurisdiction pursuant to the state
laws involved.
Section 224n, Deerings California Codes, C.C.A. provides for the
placement of potentially adoptable children in homes without court
action. This action may lead to a legal adoption but it does not have
the sanction of a court.
In the present cases, the placement of the children in the members'
homes by an agency of the State of California government and assumption
by them of the full financial support and care during a temporary period
before adoption gave the prospective adoptive parents certain parental
rights. However, this is done without any court approval. It is our
view that without court approval or sanction such placement does not
constitute an adoption for the purposes of 37 U.S.C. 401(2) nor is such
action tantamount to an interlocutory adoption decree entered by a
court.
Accordingly, Lieutenant Charles Tyahur, Jr. and Commander Per L. Okey
are not entitled to basic allowance for quarters at the with-dependent
rate until an order of adoption has been issued by a court of competent
jurisdiction.
B-200579, January 7, 1981, 60 Comp.Gen. 158
Property - Public - Surplus - Federal Property and Administrative
Services Act - Donations for Historical Preservation - Developer's
Payments in Lieu of Taxes
We are unaware of any basis for legally objecting to approval of
Archives Preservation Corporation's (a wholly owned subsidiary of the
New York State Urban Development Corporation) application for conveyance
of the Federal Archives Building in New York City for historic monument
purposes and revenue producing activities pursuant to 40 U.S.C.
484(k)(3). Even though the application requires the developer who will
be restoring and maintaining the property to make payments in lieu of
real estate and sales taxes, these are customary costs for the UDC
sponsored projects and they are not being assessed merely to circumvent
the requirement that "all incomes in excess of costs" be used for
historic preservation purposes. Property - Public - Surplus - Federal
Property and Administrative Services Act - Donations for Historical
Preservation - State, etc. Urban Development Corporations - Cost
Reimbursement
New York Urban Development Corporation may be reimbursed fee
representing costs it has incurred in participating in the development
and implementation of plan for restoration and maintenance of Federal
Archives Building in New York City pursuant to 40 U.S.C. 484(k)(3) if
the Secretary of the Interior deems the fees to be reasonable (and we
have no information that they are not) since it is UDC's custom to
recover these costs from developers under projects it sponsors and these
are valid costs of the project. Property - Public - Surplus - Federal
Property and Administrative Services Act - Donations for Historical
Preservation - Participating Nonprofit Corporations - Cost Reimbursement
New York Landmarks Conservancy, a nonprofit corporation which
participated at the request of the General Services Administration and
New York City in preparation of plan and selection of developer to
implement plan for repair and maintenance of Federal Archives Building
in New York City following donation to States pursuant to 40 U.S.C.
484(k)(3), may be paid a fee to reimburse the Conservancy its costs if
the Secretary of the Interior finds it reasonable. Reimbursement may
properly be considered project cost and not "incomes in excess of
costs." Property - Public - Surplus - Federal Property and
Administrative Services Act - Donations for Historical Preservation - No
Ceiling on Excess Income Generated
Nothing in 40 U.S.C. 484(k)(3) serves to limit amount of "incomes in
excess of costs" which could be generated by revenue-producing
activities. Legislative history indicates that Secretary of the
Interior is to use as an important criteria, in approving financing
plans under the statute, whether the plan will generate significant
amount of income. It also indicates that strict limitations should not
be placed on the amount of income which could be generated by a plan.
Thus, the bill was amended to indicate that excess income in whatever
amount generated be used primarily for public historic preservation
purposes. This furthers the purpose of the law by permitting projects
susceptible to generating income to assist in restoring and maintaining
projects that are not.
Matter of: Donation of Federal Archives Building, New York, under 40
U.S.C. 484(k)(3), January 7, 1981:
This decision to the Administrator of General Services
(Administrator) is in response to questions raised concerning an
application from the Archives Preservation Corporation (APC) requesting
the conveyance of the Federal Archives Building (Building) in New York
City for historic monument purposes, pursuant to Sec. 203(k)(3) of the
Federal Property and Administrative Services Act of 1949 (1949 Act), as
amended (40 U.S.C. 484(k)(3)).
He questions whether the various provisions in the application relating
to the disposition of payments to be made by the Teitlebaum-Starrett
Group, the project's developer (Developer), to the State are in
conformity with the requirements of the law.
Under 40 U.S.C. 484(k)(3), the Administrator is authorized to convey
all of the right, title and interest of the United States in and to any
surplus real and related personal property which the Secretary of
Interior (Secretary) has determined is suitable and desirable for use as
a historic monument for the benefit of the public. Conveyance may be to
any State or municipal government. The APC is a wholly owned subsidiary
of the New York Urban Development Corporation (UDC), a corporate
governmental agency of the State of New York.
The Administrator may authorize the use of the property conveyed for
revenue-producing activities if the Secretary first determines that the
revenue-producing activities are compatible with the use of the property
for historic monument purposes and approves the grantee's plan for
conducting and financing the repair, rehabilitation, restoration and
maintenance of the property.
However, the Secretary may not approve a financial plan unless it
provides that:
* * * incomes in excess of costs of repair, rehabilitation,
restoration, and maintenance shall be used by the grantee only for
public historic preservation, park, or recreational purposes. 40 U.S.C.
484(k)(3)(A).
Also, the deed of conveyance disposing of the property must provide
that the property shall be used and maintained for historic monument
purposes in perpetuity, and that, should it cease to be used for these
purposes, all or any portion of the property shall, at the option of the
Government, revert to the United States.
Although the Secretary has found that the proposed use of the
Building is consistent with the requirements for a listing in the
National Register of Historic Places, and has approved the APC's
application, the Administrator has asked this Office to review the
application. He notes that under the application, the Developer is
required to make the following payments.
Ground Rent. The Developer would pay the APC an amount equal to
$10,000, multiplied by the total number of residential units
constructed. Payment would be made:
-- 15 percent upon delivery of the lease;
-- 15 percent upon the earlier of the funding of the permanent
mortgage or six months after the issuance of a temporary certificate of
occupancy for 90 percent of the Building; and,
-- 70 percent over 10 years at 11 percent interest.
-- If the Developer markets the Building as a cooperative, all
payments with respect to each residential unit would fall due when the
unit is sold.
Gross Rent. The Developer would pay APC an amount equal to 8 percent
of all income, rent, fees, payments and other charges paid under all
commercial subleases, licenses and occupancy agreements.
Payments in Lieu of Real Estate Taxes. The Developer would make
payments to APC in amounts equal to the New York City real estate taxes
that would otherwise have been payable if the property were not exempt
from taxation by virtue of UDC's ownership. The APC would then deposit
these payments in the general revenues of the City.
No payments in lieu of real estate taxes would be required on the
building's semi-public space. Semi-public space will be rented by the
developer to nonprofit groups, educational institutions and community
services at subsidized rates calculated at the break-even point to the
Developer-- $4 per square foot per year, compared with the $6 to $8
commercial value of the space.
Payments in Lieu of Sales Taxes. The Developer would pay APC an
amount equal to the New York State and New York City sales taxes (each
equalling 4 percent) otherwise payable if UDC was not the fee owner, but
not less than $600,000. The amount paid would be held in trust in an
interest bearing account to be applied towards public space projects
within the Manhattan Community District Number 2 (the project's
location), as approved by Manhattan Community Board Number 2.
Fee Payments. The Developer would also be required to pay a fee of 1
percent of the overall development costs (estimated at approximately
$30,000,000) to UDC to cover its direct overhead costs. The Developer
would also be required to pay a fee of 1/3 of 1 percent of the overall
development costs to the New York City Landmarks Conservancy
(Conservancy) to cover its costs.
The Administrator notes that because of GSA's oversight
responsibility, it is vitally concerned with the proposed action. He
then states:
* * * The absence of criteria for determining "cost" and "incomes in
excess of costs" with regard to: (1) the in lieu of real estate taxes;
(2) the in lieu of sales taxes; and (3) the development fees, has
prompted our request for your review and advice. However, the proposal
raises larger questions involving the legal propriety of using the
income from revenue producing activities for non-historic public
purposes and the programming of such income to exceed the amount
necessary to maintain the historic character of the property so that the
excess can be used to finance public historic recreational programs of a
particular city generally.
For the reasons set forth below, we find the payments set forth in
the proposed agreement to be unobjectional from a legal standpoint.
The term "cost" is not a technical one having at all times the same
meaning, but a general or descriptive term which may have varying
meanings according to the circumstances in which used. Boston Molasses
Co. v. Molasses Distributors Corporation, 175 N.E. 150, 152(Mass. 1931).
Since the terms "costs" and "incomes" as used in 40 U.S.C. 484(k)(3)(A)
were left undefined, we must look elsewhere for their meaning.
Prior to 1972, while excess Federal property could be donated for
historic monument purposes, administrative interpretations equated
historic monuments with museums. Income producing use of these
properties was considered out of character with the museum concept, and
therefore prohibited. Since the cost of rehabilitation and maintenance
of the property as a historic monument could be quite high, preservation
of the site as a historic monument was in some cases feasible only if
productive use could be made of the property or some portion of it.
Consequently, S. 1152, 92d Congress and a companion bill, H.R. 6769,
were introduced in the Congress for the principal purpose of allowing
recipients of historic monuments to use them for compatible
revenue-producing activities. See H.R. Rep. No. 92-1189, accompanying
S. 1152, p. 2 (1972). S. 1152 was adopted by the Congress to amend
section 203(k)(3) of the 1949 Act to read as it does now.
While the nature of the revenue producing activities permitted is not
spelled out in the language of S. 1152 as adopted, reference to the
legislative history indicates that shops or other commercial activities
were mentioned as possibilities. The only reservation expressed
concerning revenue producing activities was that whatever use was made
of the property, it must be tasteful and compatible with the use of the
property as a historic monument. See H.R. Rep. No. 92-1189, p. 3(1972);
Hearing before a Subcommittee of the House Committee on Government
Operations, 92d Congress, 2nd Sess., on S. 1152, pp. 32, 35, 47, 49-50,
57, and 61 (1972); S. Rep. No. 92-377, accompanying S. 1152, p. 2
(1971); Hearings before the Subcommittee on Parks and Recreation of the
Senate Committee on Interior Insular Affairs, 92d Congress, 1st Sess.,
on S. 1152, p. 73 (1971); and statements of Rep. Buchanan and Senator
Percy (sponsor of S. 1152) during debate on adoption of S. 1152, 118
Cong.Rec. 24018(1972) and 117 Cong.Rec. 33580(1971), respectively.
It is clear that since the term "revenue-producing activities"
included shops or other commercial activities conducted on a profit
making basis, the income and cost to the proprietors of these activities
were not to be considered among the income or costs of the grantee.
Furthermore, it is clear that some kind of agreement between the grantee
and the proprietors was contemplated whereby use of the property by the
proprietor of the commercial activity would be authorized in return for
some form of fee or monetary remuneration to the grantee. It was this
remuneration, less any costs incurred by the grantee for repair,
rehabilitation, restoration and maintenance, which would constitute
"income" for purposes of the law.
Under the arrangement proposed in APC's application, the Developer
would, in return for the Ground Rent, Gross Rent, and other fees paid to
the State, assume the actual responsibility for repairing, restoring,
renovating, and maintaining the Building as a historic monument for a
period of from 75 to 99 years. In return, the Developer would receive
the right to develop the interior of the property in accordance with the
approved architectural and use plan, and sublease the property to users.
While he would incur the development costs, he also would receive any
profits to be made from use of the restored property, and will have, of
course, assumed the risk of loss as well.
We find nothing in the law that prohibits this kind of arrangement.
The UDC has indicated that it chose to use the Developer to restore and
maintain the Building since it does not normally handle this aspect of a
project it sponsors. Under these circumstances, the use of the
Developer seems practical and reasonable. Unless it can be shown that
the payments in lieu of taxes and fees being assessed on the developer
somehow circumvent the requirements of 40 U.S.C. 484(k)(3)(A), we are
unaware of any basis for legally objecting to the Secretary's approval
of the application requiring their payment.
Payment in Lieu of Real Estate Taxes
UDC has indicated that although it is exempt by law from the payment
of real estate taxes, it is its well-established policy to make payments
in lieu of real estate taxes on all of its projects so local
municipalities will not be deprived of needed tax funds which would
otherwise have been payable. This policy was initiated as part of UDC's
effort to fulfill its statutory mandate to cooperate with local
municipalities in the planning and development of projects. Also UDC
does not wish to alienate municipalities by exacerbating their financial
problems.
In keeping with its policy, UDC has entered into a Memorandum of
Understanding with the City of New York, dated July 13, 1977. Under the
memorandum, UDC has agreed to pay to the City an amount approximately
equal to the taxes which would have been payable under the established
New York incentive programs for similar properties, had they been
privately owned. Furthermore, the payments are also required to be paid
to the City under the established New York incentive programs for
similar properties, had they been privately owned. Furthermore, the
payments are also required to be paid to the City under the New York
City Board of Estimates Amended Resolution (Cal. No. 81, dated December
6, 1979) as a condition of the Board's approval. We have been
informally advised by representatives of UDC that this is a customary
requirement of the Board.
Further, we have been provided copies of other agreements containing
provisions similar to that set forth in the proposed agreement in which
payments in lieu of real estate taxes were required of project
developers (for example, the Hanover Square Project and the St. George
Project), which make it clear that such payments are customarily
required of developers as a condition for UDC sponsorship of a project.
Thus, there is nothing to indicate that the requirement that the
Developer make payment in lieu of real estate taxes was imposed solely
to circumvent the requirements of 40 U.S.C. 484(k)(3)(A). We therefore
find that payments in lieu of real estate taxes are a legitimate UDC
project cost and the moneys from the Developer paid to defray that cost
do not constitute "excess income" for purposes of the law.
Payments in Lieu of Sales Taxes
UDC has explained its requirement that the Developer make these
payments as follows:
As a state agency, UDC is exempt from the payment of sales taxes,
including those payable on materials incorporated into any project owned
by UDC. It is UDC's policy, however, that when a private developer is
involved in the development of the UDC Project he nevertheless pays to
UDC an amount equivalent to the taxes that otherwise would have been
payable.
UDC does not retain such amounts; rather, they are used to fund a
public benefit project pursuant to the UDC Public Spaces Program.
Other existing projects where these payments have also been required
include:
-- St. George Hotel Arcade Project-- payments in lieu of sales tax
used to renovate 7th Avenue IRT subway arcade;
-- Hotel Commodore Project-- payments in lieu of sales tax used to
renovate Grand Central Terminal;
-- Hanover Square Project-- payments in lieu of sales taxes used to
improve parks;
-- Albee Square Industrial Project-- payments in lieu of sales taxes
used to improve subway lighting, painting, benches, and trash
receptacles.
Although payments by UDC in lieu of sales taxes are not required by
statute, they have for some time consistently been made as a matter of
policy. Therefore, the payments may be properly considered costs to UDC
which may be passed on to the Developer. We find nothing to warrant a
conclusion that these payments are being required merely to circumvent
the requirements of the law.
UDC Development Fee
UDC has explained its requirement that the developer pay a one
percent fee to it as follows:
UDC, as a public benefit corporation, relies on the State Legislature
to fund general and administrative expenses. To minimize the use of
state funds, UDC requires all entities requesting UDC assistance to pay
a Development Fee. This Development Fee is considered a capital cost of
the project, conceptually equivalent to the fees for other professional
services such as legal, architectural and engineering.
At the time that the basic business terms were negotiated with the
Developer and presented to the UDC Directors (June 1, 1979), it was
UDC's policy to require of developers the payment of both a fee of 1% of
the total cost of the project to cover the related general and
administrative expenses of UDC, plus reimbursement for all out-of-pocket
expenses such as operational permits, plan review and inspection during
construction when UDC acts as the building department and reimbursement
for all outside legal and consulting expenses. These fees and
reimbursables are payable only if the project is eventually implemented
and thus, UDC bears a large up-front risk for which it is not
compensated unless the project proceeds. The fee that the Developer has
agreed to pay to UDC reflects this policy, and is estimated to be
$300,000. However, it should be noted that it is presently UDC's policy
to obtain a much larger fee, depending on the nature of the project,
with a minimum of 1 1/2% to 2%, often structured to capture the upside
potential of a project in compensation for UDC's risk. This is true
especially in cases where profits accrue to the entrepreneur as a result
of UDC participation.
A great deal of general and administrative expenses are incurred by
UDC in executing a project such as the Federal Archives Building, and
most expenses must be borne whether or not a project is eventually
implemented and UDC receives its Development Fee. For the Federal
Archives Building, members of the Economic Development Department have
already spent a considerable amount of time in project analysis and in
the financial structuring of the project, including negotiation of the
business terms with the developer and the retaining of outside
consultants to determine the fair market value of the building.
UDC's Corporate Finance Department has performed an analysis assessing
the credit of the developer. Our Engineering and Construction
Department has worked extensively with the developer in creating the
plans and specifications for the renovation, including reviewing the
proposals for building code compliance and preparing independent cost
estimates of the project. In addition to work on the preparation and
revision of the Application for transfer of the property from the
General Services Administration, UDC's Legal Department has worked on an
agreement-in-principle with the developer spelling out the terms of the
proposed transaction.
As the transaction progresses, the Economic Development and Legal
Department will invest much time preparing and negotiating the terms of
the lease and many related documents (e.g., the Project Agreement, the
Deed, the Three Party Agreement, the Fund Agreement, Construction and
Permanent Financing Documents, etc.). The Construction Department will
conduct a final review of the construction plans including drawings and
specifications, revise the cost estimate for the project, and examine
the construction contracts and other documents to determine if UDC
procedures and all other governmental and contractual requirement(s)
have been satisfied. UDC's Affirmative Action Office will work with the
Developer to create an acceptable affirmative action plan which promotes
the participation of minority business enterprises in the performance of
all contracts entered into in connection with the construction and
continued maintenance and operations of the project. UDC will work with
the community and implement the Public Spaces Program of UDC whereby the
sales tax savings realized by the Developer during the construc(tion) of
the project will be used by UDC, together with any available grants, for
a project benefiting the community. During construction, the Project
manager, Construction Representative and Affirmative Action Officer will
monitor the construction activity for conformance to the project
agreement and the affirmative action plan; and finally, the Director of
Project Administration will establish and implement adequate systems and
controls to assure compliance with the terms of all agreements with all
parties during the entire term of the lease (75 years), including
collecting rents and inspecting the building to ensure that it is being
maintained. In addition to these tasks UDC's staff would undertake any
actions necessary in connection with any default of the Developer under
its lease or other agreements. (Letter from Linda Sidhoum, Assistant
Vice President for Economic Development, UDC, to Leonard Wasserman,
Esq., Office of the Regional Council, GSA, dated August 6, 1980.)
Additionally, we have been provided a list of 16 projects under which
developers have been assessed a fee by UDC as described above.
In view of the foregoing, we see no basis for objecting to the
payment of the fee in question since it appears to be a legitimate cost
to the UDC which it has passed on to the Developer. While, as a matter
of policy and good accounting practice it might be better if
reimbursements were based on actual costs rather than a fixed percentage
rate, this does not warrant a recommendation that the application be
rejected.
We informally requested that UDC provide us its actual costs related
to this project. Although UDC was unable to provide this information,
we have nothing to indicate that the fee was unreasonable. In this
regard, developers on other projects have paid the fee and in fact UDC's
cost experience has resulted in an increase to 1 1/2% or 2 percent on
more recent projects. In any event, if the Secretary is satisfied that
the fee is reasonable, we see no basis for objecting to the approval of
the application because of the inclusion of the Development fee.
Conservancy Fee
The APC application requires a payment of 1/3 of 1 percent of total
project costs to the New York Landmarks Conservancy to compensate the
conservancy for its expenses in assisting in the planning of the project
and the selection of a Developer. The New York Landmarks Conservancy is
a private nonprofit corporation organized in 1973 to further the
preservation and continuing use of architecturally, historically, and
culturally significant buildings in New York City. The Conservancy has
indicated that it was invited by GSA in 1974 to initiate a plan for the
preservation and reuse of the Building. We note that the "Blue Book"
compiled by the New York City's Office of Economic Development for
submission to the Board of Estimates indicates the following in its
analysis of the Building project:
In 1976, the Conservancy presented its plan to the City of New York
and received the City's support and aid in effecting the transfer. In
order to retain a project manager and other consultants to carry out the
project, the Conservancy raised funds from sources such as the Exxon
Corporation, the Fund for the City of New York, and the National
Endowment for the Arts. In March, 1977, in keeping with agreements
reached with the City and the local community board, the Conservancy
prepared and distributed a Request for Proposal which was sent to firms
EXPERIENCED IN THE REHABILITATION OF OLDER BUILDINGS. THE REQUEST
called for a proposal generally in keeping with the principles of the
Columbia (University) study which had recommended that the building be
converted to a mixture of commercial/residential and semi-public uses in
a way that would preserve the architecture of the building and reflect
the character of the community.
The City and the Conservancy set several parameters for re-use plans
which entailed substantial extra project costs such as enlarging the
building's courtyard to increase light and air and providing central air
conditioning.
Nine development proposals were received and evaluated by the
Conservancy, with special consideration given to the plan's commercial
feasibility, architectural treatment, area impact and mixture of uses.
Other criteria considered were the development team's ability to
implement the plan and the amount of sublease rentals and other
considerations proposed.
Three finalists were chosen and, from them, the Rockrose Development
Corporation was selected.
In late 1978, the Rockrose Development Corporation withdrew from the
project because of difficulty in working with the local community board
and in negotiating the final lease arrangements with the Conservancy and
the City. The Conservancy and the City then invited the two finalists
in the earlier section process, the Teitlebaum Group and Corland
Corporation, to submit new proposals for the redevelopment of the
Archive Building.
The Teitlebaum Group was finally selected based on a plan closer to
the desires of the Community Board and greater flexibility regarding the
business terms.
Thus it is clear that the Conservancy has incurred expenses directly
related to the development of the plan and selection of the Developer to
implement the plan for the repair, rehabilitation, restoration, and
maintenance of the Building. These appear to be legitimate costs to the
developer, even though its participation in the project was initiated
first by GSA and then by New York City.
None of the payments made to the Conservancy ever flow to State
coffers and therefore, normally the payments would not be considered
income to the grantee. However, the Administrator assumes that were not
the Conservancy reimbursed, there would be higher payments in the form
of Ground and Gross Rents payable to UDC and, in turn, there would have
been more funds available for public historic preservation purposes. In
our view, whether or not more funds would have been realized for these
purposes is merely speculative, in view of the relatively small amount
involved. Moreover, the negotiated rentals were based on comparability
studies.
In any event, if the Secretary is satisfied that the 1/3 of 1 percent
fee for payment to the Conservancy is reasonable and a legitimate cost
to the developer, we have no reason to conclude that the payments are
artificially inflated for costs incurred only to indirectly reduce the
amount of income to the State.
Generation of Income
Finally, we see no reason to object to APC's application simply
because it contemplates generation of income far in excess of the
amounts needed for restoration of the Building. There is nothing in the
legislation imposing a limit on the amount of income in excess of costs
which is authorized. Nor does 40 U.S.C. 484(k)(3) preclude the
establishment of revenue-producing activities operated on or in property
conveyed under the statute. We note that the legislative history of S.
1152 indicates that congressional concern was expressed on this issue.
Thus, in addressing this point the report of the House Committee on
Government Operations states:
The Secretary of the Interior is required to approve the grantee's
accounting and financial procedures, and has the authority to make
periodic audits of the records of the grantee that directly relate to
the property conveyed. The committee anticipates that the Secretary
will regularly and thoroughly exercise this authority to audit, and will
regularly oversee management of the property.
In this connection, the committee was troubled by the provision in S.
1152 relating to income which a particular property might produce that
is in excess of the cost of repair, rehabilitation, restoration and
maintenance. Representatives from the Department of the Interior
testified at the subcommittee's hearing that a proper plan of repair,
rehabilitation, etc., should not generate a significant amount of excess
income. The committee agrees and urges the Secretary of the Interior to
use this as an important criterion in approving the grantee's plan of
financing. H.R. Rep. No. 92-1189, 3(1972).
However, we also note that the report indicates that the committee
took specific action directed at addressing this problem as follows:
In this respect, the committee has amended the excess income
provision of S. 1152. Originally, S. 1152 provided that any income in
excess of that necessary for repair, rehabilitation, restoration and
maintenance shall be used by the grantee for public park or recreational
purposes. The committee amended this provision to provide that any
excess income should be used for public historic preservation, park or
recreational purposes. By inserting historic preservation, the
committee intends that any excess revenues from these properties should
be directed primarily toward the type of activity that generated it--
namely, public historic preservation. H. R. Rep. No. 92-1189, 3(1972).
From the foregoing, it is clear that the Secretary was expected to
use as an important criterion in his approval of financing plans the
amount of excess income expected to be generated (with the hope that
this amount would not be significant). However, it is also clear that
rather than impose a strict limitation on the Secretary on the amount of
income that could be generated, the committee chose to indicate its
intent that any income be used primarily for public historic
preservation projects, after deducting costs to the grantee.
This is in keeping with the purpose of the legislation which
recognized the financial burden imposed on State and municipal
governments which maintain property for historic monument purposes.
Also while some properties might well be susceptible to use for
revenue-producing activities, the potential of other properties to
generate revenue could be limited. Consequently, the committee sought
to have any excess income from successful projects shifted to help
restore other properties. In fact, this is what the APC proposal
contemplates as is indicated by the following:
The Archive Building income will be used to preserve other historic
structures in New York City by making loans and awarding grants in
situations where private mechanisms and existing public programs and
controls are not sufficient by themselves to ensure the long-term
preservation of the historic structure. The fund will be spent for
activities such as rescuing landmarks from impending destruction,
providing analysis necessary to show that adaptive re-use is feasible
and making subsidies for re-use of projects unable to attract adequate
private financing. The intent is that the fund should intervene to
allow significant buildings to survive and be re-used and then should
recover at least a portion of its investment. To some extent, the
Archive Building income will function as a revolving fund to be re-used
in similar ways. Blue Book, page 7.
Furthermore, whether incomes are considered significant in relation
to any specific proposal must be weighed against other factors which of
necessity affect the scope of the proposed project. Thus the size of
the building to be restored, the compatible uses which can be made of
the property which can generate the amounts necessary to undertake the
restoration and maintenance, and the need to assure that persons using
the property for profit making activities do not receive a windfall at
the expense of the public generally (which would occur if such persons
were not required to pay their full share for benefits bestowed upon
them for the use of the property) must be considered when reviewing the
propriety of any financing plan proposed.
In the present case, a ten story warehouse which is historically
significant primarily because of its exterior architectural appearance
is being converted to a number of uses, all of which have been
determined to be compatible with its use as a historic monument.
However, because of the magnitude of the project, there is the potential
for the Developer to earn a significant return on his investment.
Thus the payments required of the Developer should be commensurate with
the benefits bestowed. In turn the Developer, by passing on his costs
plus an allowance for profits to various users under subleases, assures
that these users do not receive an unintended windfall. In explaining
how the UDC established the amounts it would charge the Developer, we
were informed that:
* * * These rental payments, together with fees to be paid to UDC and
the Conservancy, represent what UDC staff, working in conjunction with
Eastdil Realty and C. A. Frank and Company, determined to be the fair
market value of the building. A purchase price equivalency representing
the market value of the building under the peculiar programmatic and
preservation constraints on development was felt to most accurately
reflect what the development market perceives as the associated
potential risks and rewards, adjusting itself to produce a "fair" return
to the developer. The rental payment schedule corresponds to the
anticipated need for funds, recognizing the limited investment potential
of any unused funds by the Trust.
The purchase price equivalency, and thus the fair market value of the
property, was determined based on analysis of comparable sales, of the
anticipated income and expenses to be generated from the specific areas
and uses involved, and of the potential risks to the developer. A
comprehensive survey of the Federal Archives Building Comparables was
prepared to determine the purchase price commanded by buildings of
comparable size and scope convertible to Class A Multiple Dwelling Units
and eligible to receive benefits under Section J51-25 of the New York
City Administrative Code. The marketability of the Federal Archives
Building's location was assessed, the adaptability of its physical
structure was analyzed, and the financial effect of the mandated and
other constraints which effect the economics of the project, and thus
the purchase price was determined. Included in this analysis was:
-- the potential effect on the ability to finance the project and on
the cost of financing that the property being subject to a reverter
might have.
-- the negative impact on the cost of development and on the annual
operating costs of landmark and other mandates such as creation of the
required atrium and the provision of central air-conditioning over what
would otherwise have been required in the absence of such requirements.
-- the relative impact of the Developer's position as a lessee versus
the value of a fee position, and
-- the special tax preference created by the accelerated depreciation
allowable for designated landmarks such as the Federal Archives
Building. (Letter from Barbara Moore, Vice President, Economic
Development Department, UDC to Richard Rosen, Office of Development
dated November 27, 1979.)
Thus, it would appear that UDC has undertaken to assure that the
payments of the Ground Rent and Gross Rent are proper under the
circumstances. We are not in a position to judge the reasonableness of
the amounts being charged the Developer, and therefore defer to the
judgment of the agencies which have negotiated this agreement. In any
event, the use of income over costs for the purposes specified is
squarely within the contemplation of 40 U.S.C. 484(k)(3), even if
substantial income is generated.
Since all the competing interests seem to have been adequately
considered and protected, we cannot say it is an abuse of the
Secretary's discretion to approve the financing plan proposed in the
APC's application. Even though significant amounts of income will be
generated, it will be expended for public historic preservation projects
as called for under the law.
B-199233, January 7, 1981, 60 Comp.Gen. 154
Quarters Allowance - Basic Allowance for Quarters (BAQ) - Eligibility -
Different From That for Family Separation Allowance
The statutory purpose of the basic Allowance for Quarter authorized
by 37 U.S.C. 403 is to reimburse a service member for personal expenses
incurred in acquiring non-Government housing when rent-free Government
quarters "adequate for himself, and his dependents," are not furnished.
The Family Separation Allowance, Type H-R, authorized by 37 U.S.C.
427(b)(1) has a separate and distinct purpose, i.e., to provide
reimbursement for miscellaneous expenses involved in running a split
household when a member is separated from his dependents due to military
orders, and it is payable irrespective of the member's eligibility for a
quarters allowance. Military Personnel - Allowances - Husband and Wife
Both Members - Dependent Children - Different Allowances Claimed by Each
Parent - Dual Payment Prohibition - Inapplicability
When two service members marry, neither may claim the other as a
"dependent" for military allowance purposes, but if they have a child,
that child becomes their joint "dependent" for purposes of establishing
entitlement to allowance payments. Although both parents may not claim
their child as a dependent for the same allowance payment where dual
payments would result, it is permissible for one parent to claim the
child as a dependent for the purpose of one allowance and for the other
parent to claim the child for other allowances. 37 U.S.C. 401, 420.
Family Allowances - Separation - Type 2 - Wife Also Member of Uniformed
Services - Mother's Entitlement - Other Parent Receiving BAQ "With
Dependent" Rate
Marine Corps member separated from her child and husband while
serving an unaccompanied tour of duty overseas may properly be regarded
as a "member with dependents" under 37 U.S.C. 427(b)(1) and is entitled
to a Family Separation Allowance. Type II-R notwithstanding that her
husband is also a Marine and is drawing a Basic Allowance for Quarters
at the "with dependent" rate on behalf of the child, since their child
is their joint dependent and since payment of the two allowances-- each
for a separate purpose-- would not improperly result in dual payments of
the same allowance for the same dependent.
Matter of: Gunnery Sergeant Victoire E. McDonald, USMC, January 7,
1981:
This action is in response to a request for an advance decision from
the Disbursing Officer, Marine Corps Base, Camp Pendleton, California,
concerning the propriety of crediting Gunnery Sergeant Victore E.
McDonald, USMC, 000-00-1692, with a Family Separation Allowance, Type
II-R (FSA-R), while she is serving an overseas tour of duty away from
her child and her husband, who is also a Marine and who is receiving a
quarters allowance on behalf of their dependent child.
The question has been assigned Control Number DC-MC-1346, by the
Department of Defense Military Pay and Allowance Committee. We have
concluded that Sergeant McDonald is entitled to FSA-R in these
circumstances.
It is indicated that Sergeant McDonald has been required by military
orders to serve a tour of duty overseas unaccompanied by her husband and
child. Her husband is stationed in the United States and is residing in
offpost non-Government housing with their child. He is receiving a
Basic Allowance for Quarters at the "with dependent" rate on account of
their child.
The Disbursing Officer questions whether Sergeant McDonald may be
credited with FSA-R in these circumstances. Essentially, he notes that
the law authorizes FSA-R to be paid only to a "member with dependents."
He notes that Sergeant McDonald may not claim her husband as her
"dependent" for military allowance purposes since her husband is also an
active duty member of the uniformed services. The Disbursing Officer
points out that Sergeant McDonald is therefore eligible for FSA-R only
if her child may properly be regarded as her "dependent." He indicates
that doubt has arisen in the matter because the child is already the
"dependent" of her husband for quarters allowance purposes, and he
therefore questions whether Sergeant McDonald may also claim the child
as her "dependent" for other military allowance purposes, including
entitlement to FSA-R.
Provisions of law governing the payment of allowances to members of
the uniformed services are contained in chapter 7 of title 37, United
States Code. Generally, a member's eligibility for a particular
allowance, and the rate at which an allowance is payable, may vary
depending upon whether or not the member has any dependents. Concerning
the definition of a "dependent," 37 U.S.C. 401 provides in pertinent
part that:
In this chapter, "dependent," with respect to a member of a uniformed
service, means--
(1) his spouse;
(2) his unmarried child * * * .
However, 37 U.S.C. 420 provides that:
A member of a uniformed service may not be paid an increased
allowance under this chapter, on account of a dependent, for any period
during which that dependent is entitled to basic pay under section 204
of this title.
The Basic Allowance for Quarters authorized by 37 U.S.C. 403 is
designed to reimburse a service member for personal expenses incurred in
acquiring non-Government housing when rent-free Government living
quarters "adequate for himself and his dependents," are not furnished.
The quarters allowance is paid at "without dependent" and higher "with
dependent" rates. When two service members marry, neither may claim the
other as a dependent for quarters allowance purposes due to the
operation of 37 U.S.C. 420. See 53 Comp.Gen. 148, 152(1973); 41 id.
334(1961). If those married service members have a child, either one of
the members-- but not both of them-- may claim the child as a dependent
for quarters allowance purposes. 54 Comp.Gen. 665(1975); B-180328,
October 21, 1974.
The Family Separation Allowance, Type II-R (FSA-R), here in question,
is authorized by 37 U.S.C. 427(b)(1), which provides in pertinent part
that:
(b) Except in time of war or of national emergency hereafter declared
by Congress, and in addition to any allowance or per diem to which he
otherwise may be entitled under this title * * * a member of a uniformed
service with dependents * * * is entitled to a monthly allowance equal
to $30 if--
(1) The movement of his dependents to his permanent station or a
place near that station is not authorized at the expense of the United
States * * * and his dependents do not reside at or near that station.
We have previously expressed the view that FSA-R under 37 U.S.C.
427(b)(1) is, in effect, an additional quarters allowance authorized
under specified conditions and, in similar circumstances, the rules
applicable to payment of the Basic Allowance for Quarters are for use in
determining entitlement to FSA-R. See 51 Comp.Gen. 116, 118(1971);
B-185813, July 13, 1976. We have therefore previously concluded that
when two service members marry, neither can claim the other as a
dependent for FSA-R purposes-- just as neither can claim the other as a
dependent for quarters allowance purposes-- due to the operation of 37
U.S.C. 420. See 51 Comp.Gen. 116, supra.
However, although we may have previously referred to FSA-R on
occasion as an "additional quarters allowance," we have also recognized
that FSA-R authorized by 37 U.S.C. 427(b)(1) and the Basic Allowance for
Quarters authorized by 37 U.S.C. 403 are separate and distinct. As
mentioned, the Basic Allowance for Quarters is intended to reimburse a
member for the costs of private living quarters when he is not furnished
with Government quarters adequate for himself and his dependents. On
the other hand, FSA-R is intended to reimburse service families to some
extent for miscellaneous extra out-of-pocket expenses incurred for
running a split household when a member is separated from his dependents
due to military orders.
Such miscellaneous expenses include duplicatory expenses for magazines
and newspapers; extra postage, local transportation, and laundry
expenses; baby-sitting fees; etc. See Senate Report No. 91-1347,
dated November 19, 1970, concerning the purpose of Public Law 91-533,
approved December 7, 1970, 84 Stat. 1392. This act amended 37 U.S.C.
427(b) to remove the requirement that a member be entitled to a Basic
Allowance for Quarters in order to be eligible for FSA-R. Hence, FSA-R
is payable to a member separated from his dependents by military orders
under the circumstances set forth in 37 U.S.C. 427(b)(1), regardless of
the residence of the primary dependents and independent of the member's
eligibility for a Basic Allowance for Quarters on their behalf. 51
Comp.Gen. 97, 100(1971).
Furthermore, we have previously recognized that if two service
members marry and have a child, then it may be entirely proper for one
member-parent to claim the child as a dependent for the purpose of one
allowance, and for the other parent to claim the same child as a
dependent for purposes of establishing entitlement to other military
allowances. See, e.g., B-183176, November 18, 1975, involving one
member receiving Basic Allowance for Quarters at the with dependent rate
and the other receiving a dislocation allowance at the with dependent
rate. Also in 54 Comp.Gen. 665, supra, at page 667, we held that a
child of two service members properly claimed by one member-parent as a
dependent for quarters allowance purposes may be claimed by the other
parent as a dependent for travel allowance purposes. It is only
objectionable for both parents to claim their child as a dependent for
the same allowance payment since that would improperly result in dual
payments of the same allowance being made on behalf of the same
dependent. See, e.g., B-180328, supra.
In the present case, Sergeant McDonald and her husband may not claim
one another as "dependents" for military allowance purposes due to the
operation of 37 U.S.C. 420, since both of them are active duty members
of the uniformed services. They do, however, have a child who qualifies
as their joint dependent for military allowance purposes under 37 U.S.C.
401. Sergeant McDonald's husband has claimed their child as his
dependent for quarters allowance purposes, and Sergeant McDonald is
therefore precluded from also drawing a quarter's allowance on behalf of
the child since, as mentioned, dual payments of the same allowance for
the same dependent may not be permitted. Nevertheless, in our view it
would be consistent with the statutory purpose of the military allowance
system and permissible under 37 U.S.C. 401 for Sergeant McDonald to
claim their child as her dependent for the purpose of establishing her
eligibility for and entitlement to other military allowances, including
FSA-R.
In that connection, we note that the quarters allowance paid to her
husband on account of the child is for the purpose of providing shelter
for the child; FSA-R paid to her because of her separation from the
child would serve the separate and distinct purpose of defraying in some
measure the extra miscellaneous split-household expenses resulting from
her involuntary separation from her family. We therefore conclude that
Sergeant McDonald is entitled to FSA-R as a "member with dependents" on
the basis of her involuntary separation from her dependent child due to
military orders.
Payment may issue accordingly.
B-198876.3, January 2, 1981, 60 Comp.Gen. 151
Contracts - Specifications - Tests - Benchmark - Deficiencies - Notice
of Failure to Pass
When otherwise-qualified offeror-- who asserts failure to demonstrate
technical capability in one area of benchmark was due to human error
(other than deficiency in software)-- is not advised of failure until
month after benchmark, agency has not met duty to obtain maximum
competition. Evaluators supervising benchmark either knew or should
have known of failure at time it occurred, and question of capability
could have been resolved immediately by re-running exercise in question.
Contracts - Specifications - Tests - Benchmark - Second Opportunity -
All or Part Re-Run Basis
When offeror has demonstrated ability to meet all but one mandatory
requirement for teleprocessing system, General Accounting Office
recommendation that offeror be allowed second attempt to successfully
complete benchmark requires re-running only exercise in question, not
entire benchmark. Contracts - Specifications - Tests - Benchmark -
Pass/Fail Basis - Propriety
Benchmark tests should not be run on "pass/fail" basis. In rare
instances where agency can justify such a test, evaluators supervising
benchmark have duty to point out failures at time they occur. If these
can be corrected during benchmark, offeror should be afforded
opportunity to do so.
Matter of: The Computer Company - Reconsideration, January 2, 1981:
The Department of Energy requests reconsideration of our decision in
The Computer Company, B-198876, October 3, 1980, 80-2 CPD 240. For the
reasons indicated below, we affirm that decision.
The protest involves procurement of a computer-based message service
by DOE through the General Services Administration's Teleprocessing
Services Program (TSP). Under this program, approved user agencies may
place orders for teleprocessing services against GSA Multiple Award
Schedule contracts. See ADP Network Services, Inc., B-196286, May 12,
1980, 59 Comp.Gen. 444, 80-1 CPD 339.
Seven offerors who responded to a Commerce Business Daily
announcement were invited to participate in a benchmark, designed to
demonstrate capability of their systems to meet more than 30 mandatory
requirements. Those found technically qualified were then to
participate in a second phase of the benchmark, designed for cost
evaluation purposes.
DOE eliminated The Computer Company during the first phase for
failure to demonstrate a reply capability. Specifically, each vendor
was required to show that it could provide "a command to compose a reply
to a message without creating a new message address." According to DOE,
in the benchmark step which tested this capability, The Computer
Company's system had generated a new message and had failed to enter the
specified reply text, "Agenda is fine, see you at noon."
According to The Computer Company, its operator mistakenly used the
"CONFIRM" rather than the "REPLY" command in completing this exercise.
This was human error, not a technical failure, the firm asserts, and
therefore should not have resulted in a failure of a benchmark which was
to measure the technical capability of the software.
The benchmark occurred on May 8, 1980; DOE notified The Computer
Company that it had been eliminated from the competition by letter dated
June 3, 1980. The firm argues (1) that under applicable regulations,
DOE's benchmark team, on the scene, should have pointed out the error
immediately, so that the "REPLY" capability could have been demonstrated
during the benchmark, or (2) that it should be permitted to run a second
benchmark.
In our October decision, we noted that GSA's TSP Handbook (October
1979) (expected to be codified in Federal Procurement Regulations
Subpart 1-4.12) states that a vendor should not automatically be denied
a second benchmark if a non-machine-dependent change appears on the
initial benchmark, and should not be disqualified unless the benchmark
contains an unreasonable number of such changes. We also noted, as The
Computer Company had pointed out, that the handbook states that a vendor
should be notified of any failure at the completion of the benchmark.
We found that DOE had not met its duty to obtain maximum practicable
competition in excluding The Computer Company on the basis of failure to
meet one of more than 30 mandatory requirements, particularly since the
firm insisted that its system had the reply capability. We sustained
the protest and recommended that DOE permit The Computer Company to
attempt the benchmark a second time.
In its request for reconsideration, DOE states that its decision to
eliminate The Computer Company was based on a failure which had been
observed by several evaluators, and that its subsequent examination of
the firm's technical manual (which we had indicated was not sufficient
to support a determination that the firm lacked the required reply
capability) merely confirmed the fact that The Computer Company's
software was inadequate.
DOE argues that "substantial" compliance is not the same as meeting
all mandatory requirements, and that to permit The Computer Company to
run another benchmark would be allowing it a "second bite at the apple."
This action also would be contrary to the policy requiring equal
treatment of all offerors and would significantly prejudice other
offerors, DOE contends.
DOE also states that GSA's handbook requires the capability being
evaluated to be referred to in an offeror's master contract or in a
technical manual referenced by that contract, which was not the case
here.
Finally, DOE argues that since GSA's handbook is not mandatory, a
vendor has no right to a second benchmark unless the solicitation
expressly promises it. DOE further points out that The Computer
Company's failure was not one of four types listed in the handbook as
justifying a second benchmark.
We have reexamined the record, and find nothing in it which supports
DOE's conclusion that the failure to demonstrate a reply capability was
due to inadequacies in The Computer Company's software.
DOE states that the failure was observed by several members of its
technical evaluation team. Thus, evaluators either knew or should have
known that The Computer Company had generated a new message and that the
required reply, "Agenda is fine, see you at noon," was missing.
If this apparent lack of a reply capability had been pointed out to
The Computer Company during or immediately after the benchmark, and the
firm had asserted that it was due to mere operator error, rather than a
deficiency in its software, the question could easily have been resolved
by re-running the exercise in question. As we stated in our October
decision, The Computer Company had "passed" all other mandatory
requirements. DOE's duty to maximize competition required giving the
firm the opportunity to show whether it was technically qualified in
this remaining area. That duty was not met by advising The Computer
Company-- nearly a month after the benchmark-- that it had failed.
(While DOE has informally advised us, some 2 months after the request
for reconsideration was filed, that the operator was informed at the
time the "CONFIRM" command was entered that the benchmark instructions
called for a "REPLY," we are basing our decision solely on the written
record, including DOE's submissions, which contain no such indication.
Cf. Afghan Carpet Cleaners, B-175895, April 30, 1974, 74-1 CPD
220(involving a claim).)
DOE appears to believe our recommendation requires re-running the
entire benchmark. However, it should only be necessary to repeat that
section which will test The Computer Company's reply capability. See
Federal CSS, Inc.; Martin Marietta Data Systems, B-198305, October 29,
1980, 80-2 CPD 327 at 17. In our opinion this should require a minimum
investment of time and energy by DOE, and will not be tantamount to
allowing The Computer Company a "second bite" which will not be
available to other offerors.
Finally, we do not believe that a benchmark should be run on a
"pass/fail" basis.
See generally 47 Comp.Gen. 29at 53(1967), in which we stated:
* * * (T)o give effect to the statutory and regulatory requirement
for discussions and for such discussions to be meaningful, failure to
pass a benchmark test should not automatically preclude the necessity
for further discussions.
In the rare instances where an agency may be able to justify such a
test-- which DOE has not done here-- evaluators who are supervising the
benchmark should point out failures at the time they are observed. If
these can be corrected during a benchmark, an offeror should be given
the opportunity to do so.
Our prior decision is affirmed.
B-200642, April 7, 1981, 60 Comp.Gen. 357
Fraud - False Claims - Effect of Acquittal, etc. of Criminal Charges on
Civil Liability
Since acquittal on criminal charges may merely involve a finding of
lack of requisite intent or failure to meet the higher standard of proof
beyond reasonable doubt, doctrine of res judicata does not bar the
Government from claiming in later civil or administrative proceeding
that certain items on employee's voucher were fraudulent. General
Accounting Office - Decisions - Effective Date - Retroactive - False
Claims - Severability Rule
In 57 Comp.Gen. 664(1978) we held, for purposes of reimbursement
where fraud is involved, that each day of subsistence expenses is a
separate item of pay and allowances. That rule is applicable to present
claim which has not been finally decided on merits and is pending on
appeal. Due to discrepancies in record, we remand claim to Air Force
for calculation of amount of per diem allowable under that rule.
Matter of: Civilian Employee of the Department of the Air Force -
Per Diem Claim, April 7, 1981:
Does a jury verdict of not guilty on criminal fraud charges against
an employee preclude the Government from recovering funds paid to the
employee on the basis of an allegedly fraudulent travel voucher?
Secondly, does the rule of 57 Comp.Gen. 664(1978) that, for purposes of
reimbursement where fraud is involved, each day of subsistence expenses
is a separate item of pay and allowances apply to an appeal of a claim
based on a travel voucher submitted before that decision was announced?
These are the principal issues involved in this case.
This decision is in response to an appeal by a civilian employee of
the Department of the Air Force ("Employee") at McClellan Air Force
Base, California, from our Claims Division's action of November 15,
1979, Z-2815083, which denied his claim for per diem.
From our examination of the present state of the record, the
following facts emerge. Since 1969 Employee has been a sheet metal
worker. From approximately May 28, 1974, to September 30, 1974, he was
on temporary duty (TDY) at Jacksonville, Florida, and from approximately
October 1, 1974, to March 10, 1975, he was on TDY at Otis AFB,
Massachusetts. He returned to McClellan AFB, and on March 19, 1975,
submitted travel voucher No. T-23115, in which he claimed total lodging
costs of $3,465 for the entire period of temporary duty. Employees had
been advanced $7,350, and the voucher indicated a total amount of
expenses of $7,185.75 which included $597.75 for transportation and
$6,588 for per diem. The per diem expenses included $3,123 for meals
and incidental expenses and $3,465 for lodging. The then maximum per
diem rate was $25, consisting of $11.80 for meals and miscellaneous, and
$13.20 for lodging. The difference between the advancement and his
actual TDY expenses allowed amounted to $164.25 which was apparently
paid back to the United States.
At some later date, a suspicion arose that Employee's claim for
lodging was false in part. The Air Force Office of Special
Investigations (AFOSI) and the FBI concluded that he had defrauded the
Government by approximately $1,000. On April 12, 1978, he was indicted
by a Federal Grand Jury for filing a fraudulent claim for lodging for
the period May 28, 1974, to March 10, 1975, and for making a false
statement under oath about his lodging expenses while he was on
temporary duty in Florida. After a jury trial in the U.S. District
Court for the Eastern District of California in August 1978, he was
found not guilty of the charges.
In the meantime, on June 30, 1978, the Air Force Accounting and
Finance Officer (AFO) determined the travel claims to be false, and
administratively initiated a recoupment action for $6,588, the entire
per diem portion of the voucher. Since that date $25 per pay period has
been and is being deducted from Employee's check. He has appealed that
determination to the GAO.
Our Claims Division, on November 15, 1979, decided to deny Employee's
claim for per diem on the ground that it was of doubtful validity and
could not be paid. He filed an appeal of the denial on September 19,
1980.
In its present state, the record in this case presents several legal
and factual disputes. Focusing our attention first on the legal issues,
we are presented with the argument that Employee's acquittal is res
judicata as to any disputed factual matters, and, therefore, that the
Government is now estopped from contending in any civil or
administrative proceeding that he submitted a false claim for lodging.
It is clear that, as to matters in issue or points controverted upon
which a finding or verdict was rendered, the findings in a prior
criminal proceeding may estop a party, even the United States, in a
subsequent civil action. Kennedy v. Mendoza-- Martinez, 372 U.S. 144,
157(1963). An acquittal on a criminal charge, however, may merely
involve a finding that an act was not done with the requisite criminal
intent. One Lot Emerald Cut Stones and One Ring v. United States, 409
U.S. 232, 234-235(1972). Furthermore, the acquittal on criminal charges
may have only represented "an adjudication that the proof was not
sufficient to overcome all reasonable doubt of the guilt of the
accused." Id. at 235, quoting Helvering v. Mitchell, 303 U.S. 391,
397(1938). Thus, as to the issues raised, an acquittal on a criminal
indictment does not constitute an adjudication on the lesser standard of
evidence applicable in civil proceedings. For the applicable civil
standard adopted by the Comptroller General, see 57 Comp.Gen. 664,
668(1978) which states that fraud must be proved by evidence sufficient
to overcome the presumption in favor of honesty and fair dealing.
Since an acquittal may merely involve a finding of lack of requisite
intent or a failure to meet the higher standard of proof beyond a
reasonable doubt, it follows that the doctrine of res judicata is not
applicable in Employee's case, and the Government is not estopped from
finding that certain lodging items on his voucher were fraudulent.
The second issue involves what effect, if any, our decision at 57
Comp.Gen. 664(1978) has on the instant case. We held there that, where
an employee submits a voucher for subsistence expenses, each day's
subsistence expenses constitute a separate item for this purpose and
that fraud for any subsistence item taints the entire per diem or actual
expense claim for that day. However, claims for subsistence expenses on
other days which are not based on fraud may be paid. In so ruling, we
modified B-172915, September 27, 1971, where we had held that a claim
for per diem on a voucher was an indivisible item of pay and allowances.
In 59 Comp.Gen. 99, B-189072, November 27, 1979, we held the
severability rule applicable also to military members and non-Government
employees traveling pursuant to invitational travel orders.
The Air Force contends that, while 57 Comp.Gen. 664, decided August
11, 1978, is the current law, it should be given prospective application
only. Thus, it would not affect the instant case where the agency seeks
to recoup the entire per diem of $6,588 for the full period covered by
Employee's travel voucher submitted on March 19, 1975.
While several previous decisions have held that a change in
construction of the law need not be given retroactive application, 54
Comp.Gen. 890(1975) and 56 Comp.Gen. 561(1977), the question of
retroactivity must be analyzed in light of the particular circumstances
of each case and the potential impact on Federal agencies and employees.
Here, the basic rule involved was established in 1961 in 41 Comp.Gen.
285(1961), namely that each separate item of pay and allowances is to be
viewed as a separate claim even though several such Here, the basic rule
involved was established in 1961 in
items are included in a single voucher. The 1978 decision merely
modified our 1971 ruling as to what constitutes a separate item of
subsistence expenses for this purpose. As such we do not believe it
requires "prospective only" treatment. Instead we shall apply the rule
followed by the courts where a case has not been finally decided on the
merits, and is still on appeal, namely that "a court is to apply the law
in effect at the time it renders its decisions, unless doing so would
result in manifest injustice or there is statutory direction or
legislative history to the contrary." Cort v. Ash, 422 U.S. 66,
76-77(1975), quoting Bradley v. Richmond School Board, 416 U.S. 696,
711(1974). The Supreme Court thus reaffirmed the principle first
announced by Chief Justice Marshall in United States v. Schooner Peggy,
5 U.S.(1 Cranch) 103, 110(1801).
Moreover, the courts have long recognized that procedural rules apply
to pending actions, absent any showing of hardships or injustice in
particular cases. United Wall Paper Factories, Inc. v. Hodges, 70 F.2d
243, 244 (2d Cir. 1934). The severability rule announced in 57 Comp.Gen.
664 is in the nature of a procedural rule since it concerns the method
of disposing of vouchers involving fraudulent claims.
Hence, the severability principles announced in 57 Comp.Gen.
664(1978), and now in effect, are applicable to the present case. See
Ben L. Zane, B-194159, October 30, 1979, where we applied the rule of 57
Comp.Gen. 664 to a case involving an employee of the Department of
Health, Education and Welfare whose travel voucher had been submitted on
August 18, 1976.
At this juncture, having ascertained the applicable principles of
law, we would usually apply them to the facts of the instant case. We
are hindered in this effort by the fact that the record submitted by the
Air Force contains three different estimates of the amount of fraud
varying between $823 and $1,000, and merely states conclusions as to the
various items allowed or disallowed without sufficiently explaining the
reasons therefor. We also note further unexplained discrepancies, e.g.,
it is not clear whether the Air Force considered certain rent receipts
from June 1974 through August 1974 in the amounts of $346.40 as
fraudulent or valid, or whether it considered utilities expenses during
Employee's TDY at Jacksonville. We note there is no indication in the
record of any fraud in connection with his TDY in Massachusetts from
October 1974 to March 1975.
In light of the above state of the record, Employee's per diem claim
is remanded to the Air Force for a recalculation of the amount of the
suspected fraud and a determination of the number of days for which
fraudulent information was submitted. In performing this task it should
be borne in mind that the regulations at the time these events occurred
did not require lodging receipts. Then, in accordance with this opinion
he should be allowed per diem for the days for which no fraud is
involved.
B-200377, December 31, 1980, 60 Comp.Gen. 148
Transportation - Household Effects - Commutation - Documentation To
Support Reimbursement Claim
Employee had his household goods transported by private independent
trucker with 40-foot freight hauling trailer for which employee paid
$1,610 in cash. Employee submitted notarized statement of trucker
attesting to shipment and also trucker's receipt for cash payment. In
accordance with applicable provisions of the Federal Travel Regulations
evidence submitted is not sufficient to establish constructive weight of
goods for reimbursement on commuted rate basis, nor does it establish
estimated weight approximating actual weight for reimbursement of actual
expenses incurred.
Matter of: Kalman Pater, Jr. - Shipment of household goods, December
31, 1980:
W. K. Dulin, an authorized certifying officer at the Morgantown
Energy Technology Center (METC), Department of Energy, has requested an
opinion on the claim of Mr. Kalman Pater, Jr., for expenses incurred in
shipping his household goods. On the basis of the record before us, and
pursuant to the following analysis, we are denying Mr. Pater's claim.
Briefly, Mr. Pater moved his family and household belongings from
Wayne, Pennsylvania, to Morgantown, West Virginia, on Memorial Day,
1977, reporting for duty at METC on June 6, 1977. Mr. Pater was moved
by a private independent trucker with a 40-foot freight hauling trailer
who presented Mr. Pater with a written receipt for $1,610, after
receiving a cash payment from him.
Mr. Pater's claim for reimbursement for transfer expenses was
submitted to the Certifying Officer at the Oak Ridge Operations Office
and partial payment was made for the employee and his family's move.
However, payment for shipment of the household goods was denied pending
the outcome of our decision in Challis Broughton, B-193133, April 24,
1979, which appeared to be similar in nature to Mr. Pater's move. Based
on our final decision in the above mentioned case, Oak Ridge felt that
it could not justifiably reimburse Mr. Pater for the shipment of his
household goods. Therefore, the claim was returned to METC unpaid.
In our initial decision in the Broughton case, dated April 24, 1979,
we determined that insufficient documentation had been presented
concerning weights of the household goods transported by Mr. Broughton
to support payment under the commuted-rate system. Further, no
information had been presented which could be used to justify payment of
the commuted rate based upon the constructive weight. In lieu of the
commuted rate we authorized the payment of actual expenses to the extent
that actual expenses had been shown by the claimant. In our
reconsideration of the Broughton case, B-193133, August 13, 1979, we
concluded in part that, pursuant to paragraph 2-8.2b(4) and 2-8.3(a) of
the Federal Travel Regulations (FPMR 101-7) (FTR), where evidence to
support a claim for shipping household effects does not establish the
cubic feet of properly loaded van space, the employee is not entitled to
reimbursement at the commuted rate but may be reimbursed actual expenses
incurred if evidence submitted reasonably supports the shipment of the
claimed weight of household goods. Thus, in affirming our initial
decision, we held that although the evidence submitted was sufficient to
permit reimbursement to Mr. Broughton of the actual expenses he incurred
in moving his household goods himself, it did not support payment at the
commuted rate.
The transportation of household goods is governed by the Federal
Travel Regulations (FPMR 101-7) (FTR). Paragraph 2-8.3a(3), which sets
out the requirements for the determination relating to shipments of
household goods, provides that:
(3) Documentation. Claims for reimbursement under the commuted rate
system shall be supported by a receipted copy of the bill of lading (a
reproduced copy may be accepted) including any attached weight
certificate copies if such a bill was issued. If no bill of lading was
involved, other evidence showing points of origin and destination and
the weight of the goods must be submitted. Employees who transport
their own household goods are cautioned to establish weight (weight of
vehicle and goods) and tare weight (weight of vehicle alone) because
compliance with the requirements for payment at commuted rates on the
basis of constructive weight (2-8.2b(4)) usually is not possible.
The constructive weight system described in paragraph 2-8.2b(4)
provides that:
(4) Constructive weight. If no adequate scale is available at point
of origin, at any point en route, or at destination, a constructive
weight, based on 7 pounds per cubic foot of properly loaded van space,
may be used.
Such constructive weight also may be used for a part-load when its
weight could not be obtained at origin, en route, or at destination,
without first unloading it or other part loads being carried in the same
vehicle, or when the household goods are not weighed because the
carrier's charges for a local or metropolitan area move are properly
computed on a basis other than the weight or volume of the shipment (as
when payment is based on an hourly rate and the distance involved).
However, in such instances the employee should obtain a statement from
the carrier showing the amount of properly loaded van space required for
the shipment. (See also 2-8.3a(3) with respect to proof of entitlement
to a commuted rate payment when net weight cannot be shown.)
In accordance with this authority, and as we indicated in the
Broughton case, where an employee has failed to obtain the actual weight
of his household goods at the time of transportation, he may be paid at
the commuted rate only if he is able to show the amount of space
occupied by his goods and that the goods were properly loaded in the
space available. In establishing the amount of space which would have
been occupied by his effects if properly loaded, the employee may summit
a list of items transported together with the volume occupied by each
based on actual measurement or a uniform table, preferably prepared by a
commercial carrier. 48 Comp.Gen. 115(1968).
Further, if the employee is unable to establish his entitlement to a
commuted payment by complying with the requirements listed above, he may
be reimbursed the actual expenses incurred in the transportation of his
household goods upon complying with the rule set forth in 38 Comp.Gen.
554, 555(1959) as follows:
When, however, as here, the evidence available affords a basis for
concluding that the actual weight of the goods shipped reasonably
approximates the estimated weight, the employee may be reimbursed for
his actual expenses to the extent they do not exceed the amount which
would have been payable for such estimated weight at the applicable
commuted rates.
However, the evidence available must afford a basis for concluding
that the actual weight of the goods shipped reasonably approximates the
estimated weight. See James G. Bristol, B-185626, July 1, 1976, and
decisions cited therein. The clear distinction between the Broughton
case and Mr. Pater's claim is that in the present case there is no
sufficient evidence of estimated weight to apply to the legal
formulation set out above. As a result, since reimbursement on a
commuted rate basis may not be allowed absent proper evidence of the
weight or volume of the goods transported such as will satisfy the law
and regulations, the voucher may not be paid on a commuted rate basis.
And, because the evidence which Mr. Pater has presented does not
establish the estimated weight of his shipment, let alone substantiate
the accuracy of such estimated weight, the voucher may not be paid on an
actual expense basis.
Accordingly, based on the record before us the voucher may not be
paid.
B-198440, December 31, 1980, 60 Comp.Gen. 145
Transportation - Household Effects - Military Personnel - "Do It
Yourself" Movement - Benefits Entitlement - Non-Change-of-Station Moves
Properly directed moves without a change in duty station by military
members under 37 U.S.C. 406(e) are not precluded from the do-it-yourself
household goods movement program authorized by section 747, Department
of Defense Authorization Act, 1976. Section 747 refers only to 37
U.S.C. 406(b) (change of station moves); however, transportation of
household goods under section 406(e) is that authorized under section
406(b) and neither the legislative history nor implementing regulations
show an intent to preclude section 406(e) moves from the program.
Transportation - Household Effects - Military Personnel - "Do It
Yourself" Movement - Weight Evidence
The military services' requirement, that in order to qualify for an
incentive payment under the do-it-yourself household goods moving
program a member must have certified scale weight certificates
establishing the weight of the goods, is in accordance with the law and
implementing regulations. Therefore, although the move may have been
only a short distance, was accomplished without a motor vehicle, and the
use of a commercial scale was impractical and a Government scale was not
available at the time of the move, the incentive payment may not be made
without the weight certificates. In the absence of a change in
regulations, the weight certificate requirement will be applied since
this is a matter for administrative determination.
Matter of: Do-it-yourself household goods move incentive payment,
December 31, 1980:
This case involves an Air Force member's entitlement to an incentive
payment under the "do-it-yourself" household goods movement program
where the member moved a short distance between quarters at the same
base and did not procure weight certificates showing the weight of his
goods. Two specific issues are involved: (1) whether the
do-it-yourself household goods program may include moves made without a
permanent or temporary change of station in emergency or unusual
circumstances under 37 U.S.C. 406(e); and (2) whether a constructive
weight may be used in lieu of the certified weight certificates where it
is shown that due to unusual circumstances it is impractical or
impossible to produce certified weight certificates. On the first issue
the answer is yes, and on the second the answer is no.
The case was submitted by the Accounting and Finance Officer,
Headquarters 314 Technical Airlift Wing (MAC), Little Rock Air Force
Base (AFB), Arkansas, requesting an advance decision on a claim by
Sergeant James A. Horton, USAF, for incentive payment under the
do-it-yourself program. The matter was forwarded here through the Per
Diem, Travel and Transportation Allowance Committee (PDTATAC Control No.
80-15).
Sergeant Horton, stationed at Little Rock AFB, was reassigned from
one set of Government quarters into other Government quarters located at
Little Rock AFB. The change in quarters was not incident to a change in
permanent duty station.
Sergeant Horton elected to move his household goods himself under the
do-it-yourself program. The quarters were located only 100 yards
distance from each other and only a few items required movement by motor
vehicle since most items could easily be moved by hand or using a hand
dolly. Using a small vehicle required approximately nine trips and the
base scales were not accessible during the period of time he moved. To
weigh the goods would have required that a portion of the weight tickets
be obtained at a commercial scale located 16 miles distant, or 32 miles
round trip. Also, had the shipment been tendered to a commercial
carrier a much higher cost would have been incurred. The base traffic
manager, considering the circumstances involved, instructed Sergeant
Horton that cubic measurements in lieu of certified weight tickets could
be used to determine the weight of his goods for the computation of the
incentive payment.
The matter has been submitted to our Office for decision since
applicable regulations require that the incentive payment be computed
based on weight obtained from scale weight certificates. In addition,
the Deputy Director, Plans and Systems, Headquarters Air Force, has
raised the question as to whether the do-it-yourself program applies to
moves such as this where no change in duty station is involved.
Concerning whether the do-it-yourself program may be used for moves
where there is no duty station change, 37 U.S.C. 406(b) provides the
general authority for transportation, within certain limitations, of a
member's household goods in connection with "a change of temporary or
permanent station." The statute authorizing the do-it-yourself program
is section 747 of the Department of Defense Appropriation Act, 1976,
Public Law 94-212, 90 Stat. 153, 176(37 U.S.C. 406 note) which provides:
Appropriations available to the Department of Defense for providing
transportation of household effects of member of the armed forces
pursuant to section 406(b) of title 37, United States Code, shall be
available hereafter to pay a monetary allowance in place of such
transportation, to a member who, under regulations prescribed by the
Secretary of the military department concerned, participates in a
program designed by the Secretaries in which his baggage and household
effects are moved by privately owned or rental vehicle. Such allowance
shall not be limited to reimbursement for actual expenses and may be
paid in advance of the transportation of said baggage and household
effects. However, the monetary allowance shall be in an amount which
will provide savings to the government when the total cost of such
movement is compared with the cost which otherwise would have been
incurred under section 406(b).
Movement of household goods between quarters without a change in
station is authorized under 37 U.S.C. 406(e) in unusual or emergency
circumstances when change-of-station orders have not been issued. 45
Comp.Gen. 569, 571(1966). Section 406(e) specifically provides, however,
that such transportation of household goods is that authorized under
section 406(b).
Therefore, it is our view that although section 747 of the Defense
Authorization Act only refers to transportation under section 406(b), it
does not clearly preclude applying the do-it-yourself program to moves
authorized by the exception provided in section 406(e) to the change of
station required by section 406(b). We have also reviewed the
legislative history of section 747 of the Authorization Act and have
found nothing there which indicates an intent to preclude move without a
change of duty station from the program. In addition, we note that the
governing regulations in Volume 1, Joint Travel Regulations (1 JTR),
Part H, and Air Force Regulations 75-33, do not preclude such moves from
the program. Therefore, it is our view that non-change-of-station moves
are not currently precluded from the do-it-yourself program.
We question, however, whether the move in question could qualify as a
move made in emergency or unusual circumstances in the first instance.
The submission asserts that Sergeant Horton was given orders for a local
move which involved moving from one set of Government quarters to
another set of Government quarters 100 yards distance. However, no
orders were submitted but rather a copy of a certificate dated June 27,
1979, which certifies that James A. Horton "will be assigned
(relocated)" Government quarters. There is nothing to indicate that the
certified relocation was the result of emergency or unusual
circumstances.
Section 747 of Public Law 94-212 authorizes expenditure of
appropriated funds available for expenditure pursuant to section 406(b)
for reimbursement to members who move household goods by privately owned
vehicle or rental vehicle and, as is indicated above, pursuant to
section 406(e). However, if Sergeant Horton's move was not under an
authority which would authorize movement of household effects under 37
U.S.C. 406(b) or 406(e), then he could not, in any event, qualify for
the incentive payment of the do-it-yourself program.
Because of the method and time period which Sergeant Horton used to
move his household goods, apparently it was impractical for him to
obtain weight certificates to show the weight of his goods. However,
under the detailed regulations (promulgated pursuant to statute)
implementing the do-it-yourself program, to receive the incentive
payment the weight of the goods must be established by use of weight
certificates from a public weightmaster or Government scales. 1 JTR,
paragraph M8401, and AFR75-33, paragraph 3-2.
In decision B-191016, April 20, 1979, we specifically overruled a
prior decision in which we had authorized payment on a do-it-yourself
move based upon constructive weights in consideration of the unusual
circumstances involved there. In seeking reconsideration of the prior
decision, the Air Force made a strong presentation in which it was
asserted that the use of weight certificates is essential to the success
of the program because there is no other means to accurately compute the
cost of a move upon which the incentive payment is made.
In the April 20, 1979 decision we stated that it is our view that the
regulations of the Air Force and the other services, issued pursuant to
authority delegated by paragraph M8400, 1 JTR, legally may require that
weight certificates from certified scales showing both the empty and
loaded weight of the vehicle must be furnished, as a condition to a
member's qualifying for an incentive payment. We found nothing in the
law limiting the authority of the services in this regard and,
accordingly, we stated we would apply that requirement in the future.
Therefore, until such time as the services determine that the use of
weight certificates will no longer be considered as the only evidence
acceptable in establishing weights under the do-it-yourself movement
program, we will continue to apply the weight certificate as an
exclusive requirement of the program. Accordingly, the voucher
submitted may not be certified for payment and will be retained here.
B-197794, December 31, 1980, 60 Comp.Gen. 142
Travel Expenses - Military Personnel - Release From Active Duty - "Place
From Which Ordered to Active Duty" Determination - Service Academies,
etc. Status
For the purpose of travel and transportation allowances under 37
U.S.C. 404, and implementing regulations, on separation the place from
which ordered to active duty, in the case of a midshipman or cadet at a
service academy or civilian college or university, is the place where he
attains a military status or where he enters the service, and generally
this would be at the academic institution and not his home of record,
since up to the time he is appointed a cadet or midshipman he is a
civilian.
Matter of: Place from which ordered to active duty - Cadets or
midshipmen, December 31, 1980.
The question presented is whether a service academy or a civilian
college or university where a cadet or midshipman accepts his commission
should be considered the place from which ordered to active duty for the
purposes of determining travel entitlements at the time of separation or
retirement from the service under 37 U.S.C. 404 and implementing
regulations.
The answer is yes.
This request for advance decision was made by the Acting Assistant
Secretary of the Air Force (Manpower, Reserve Affairs and Installations)
and was assigned Control Number 80-6 by the Per Diem, Travel and
Transportation Allowance Committee.
The Acting Assistant Secretary points out that under 37 U.S.C.
404(a)(3), a member of the uniformed services is entitled to travel and
transportation allowances on his separation from the service from his
last duty station to his home of record or the place from which ordered
to active duty. Under the definition of "Place from which ordered to
active duty" contained in Appendix J of Volume 1 of the Joint Travel
Regulations (1 JTR), implementing the statute, it would appear that the
physical location where a member accepts his commission would be the
place from which he was ordered to active duty. Notwithstanding this
view, it has been a longstanding administrative practice of the Navy
that a midshipman on commissioning should reflect his home of record as
the place from which he was ordered to active duty. It is noted that
this practice is based on the fact that a permit to attend the academy
is mailed to his home. This practice is followed even though the
individual remains a civilian until he accepts the appointment as a
midshipman.
In view of the above, a decision is requested concerning the
appropriateness of designating a service academy or a civilian college
or university as the place from which ordered to active duty for a
civilian entering into the armed forces by appointment as a midshipman
or cadet and is subsequently commissioned as an officer.
Travel and transportation allowances for members of the uniformed
services are governed in part by 37 U.S.C. 404, which provides in
pertinent part as follows:
(a) Under regulations prescribed by the Secretaries concerned, a
member of a uniformed service is entitled to travel and transportation
allowances for travel performed or to be performed under orders, without
regard to the comparative costs of the various modes of transportation--
(3) upon separation from the service, placement on the temporary
disability retired list, release from active duty, or retirement, from
his last duty station to his home or the place from which he was called
or ordered to active duty, whether or not he is or will be a member of a
uniformed service at the time he travel is or will be performed; * * *
Paragraph M4157, 1 JTR provides that a member is entitled to travel
and transportation allowances upon separation from his last duty station
to his home or the place from which he was called or ordered to duty, as
the member may elect. Appendix J, JTR defines "place from which ordered
to active duty" as:
The place of acceptance in current enlistment, commission, or
appointment of members of the regular services, or of members of the
reserve components when enlisted, commissioned, or appointed for
immediate active duty; * * * .
It has been the position of this Office that the purpose of the
statutory provisions for the payment of travel allowances upon
separation from the service or release from active duty is to return the
member to his home or to the place from which he entered the service
from civilian life. B-120297, September 8, 1954.
In this regard, it is apparently the position of the Navy that when
an individual's status changes from that of midshipman at the Naval
Academy on his receiving his commission that it has no significance in
determining the place from which he was ordered to active duty. See
B-120297, September 8, 1954, and 45 Comp.Gen. 661(1966). The view is
also expressed that service as a midshipman at the Naval Academy is at
least tantamount to active duty, if not clearly such, and thus the place
from which he is ordered to active duty would be the place to which his
permit to travel to the academy was sent, his home.
Notwithstanding these views, it is our position that the place from
which ordered to active duty as used in the statute and the regulations
contemplates an individual having some military status and then being
ordered to active duty. It has been customary to interchange in usage
"the place from which ordered to active duty" and "the place where he
enters the service." In this regard, a candidate for admission to the
Naval Academy is a civilian until he arrives at the academy and accepts
his appointment. We have been advised that prior to traveling to the
academy all the individual normally receives is a permit for the travel.
In these circumstances, it cannot be said a candidate for admission to
the Naval Academy accepts appointment by actions prior to taking the
required oath as in 21 Comp.Gen. 819(1942).
On the basis of this reasoning, it is our view that the place from
which a cadet or midshipman at the Naval Academy or a civilian college
or university is ordered to active duty is the place where he attains a
military status or the place where he enters the service, assuming of
course that he has no prior military status.
Accordingly, it is our view that unless a candidate to be a cadet or
midshipman has some military status prior to being appointed, his home
of record should not be considered the place from which he is order to
active duty, but rather the place from which ordered to military duty
should be the place at which he attains a military status, e.g., the
Naval Academy.
B-197781, December 30, 1980, 60 Comp.Gen. 141
Officers and Employees - Transfers - Relocation Expenses - Real Estate
Expenses - Title in Name of Trust
Employee of Interior Department who transferred from Reno, Nevada, to
Anchorage, alaska, seeks reimbursement of real estate expenses incurred
in sale and purchase of residences at old and new duty stations. Title
to both residences was held in name of a trust established by last will
and testament of deceased mother of employee's spouse. Since title to
residences was held in name of trust which paid all expenses of real
estate transactions, title requirements of 5 U.S.C. 5724a(a)(4)(1976)
and para. 2-6.1c of Federal Travel Regulations were not met. Therefore,
no entitlement to reimbursement exists.
Matter of: Carl A. Gidlund - Real Estate Expenses - Title
Requirements December 30, 1980:
This decision is in response to a request from Ms. Mary M. Rydquist,
Authorized Certifying Officer, Bureau of Land Management, United States
Department of the Interior, as to the propriety of reimbursing Mr. Carl
A. Gidlund for real estate expenses incident to his change of official
station from Reno, Nevada, to Anchorage, Alaska, in 1978.
The pertinent facts and circumstances involved in this claim are as
follows: Mr. Gidlund is an employee of the Department of the Interior.
His wife is employed by the United States Forest Service, Department of
Agriculture. Both were selected to fill positions in Alaska and the two
agencies agreed that the Interior Department would pay the transfer
costs to their new duty station. The claimed expenses incurred in the
sale of the residence in Reno totaled $8,307.50 and $202.75 was incurred
incident to the purchase of a residence in Anchorage.
By her last will and testament, Ms. Hillis J. Schmidt, deceased
mother of Ms. Joan Elna Boduroff, now the wife of Mr. Gidlund,
established a trust which in Article IV thereof, directed her executor
and trustee to provide her daughter and family with a residence,
including the selling of one residence and replacing it by purchasing
another residence. When the Gidlund family transferred to Anchorage,
the trust paid all of the real estate expenses incurred in the sale and
purchase of the two residences.
This is the first time the trust has sold a residence and purchased
another in a transfer involving the Federal Government. The title to
both residences in Reno and Anchorage was and is in the name of the
Schmidt Trust. Mr. Gidlund states that he will reimburse the trust if
he is paid the claimed real estate expenses by the Department of the
Interior.
The statutory authority for reimbursing a Federal employee for
expenses incurred in the sale and purchase of residences at his old and
new duty stations is contained in 5 U.S.C. 5724a(a)(4)(1976). The
implementing regulations spell out the title requirements for such
transactions. Paragraph 2-6.1c of the Federal Travel Regulations (FTR)
(FPMR 101-7, May 1973) provides that, in order to reimburse real estate
expenses, title to the residences at the old and new official stations
"must be in the name of the employee alone, or in the joint names of the
employee and one or more members of his immediate family, or solely in
the name of one or more members of his immediate family." Paragraph
2-1.4d of the FTR (FPMR Temporary Regulation A-11, Supplement 4, April
29, 1977) defines "immediate family" only in terms of a spouse,
children, dependent parents, and dependent parents, and dependent
brothers and sisters.
In the instant case, title to the residences involved was held by the
trust and not by Mr. Gidlund, his wife, or any member of his immediate
family, as required by the Federal Travel Regulations. We view the
purpose of the statute and regulation as being to reimburse the
transferred employee for real estate expenses incurred by him or a
member of his immediate family, but not to reimburse a third party, such
as a trust, that has borne such expenses. Reverend Richard A. Houlahan,
B-192583, March 14, 1979. See also B-172244, June 3, 1971.
Accordingly, since the conditions precedent relating to the title to
the property in question have not been met, Mr. Gidlund is not entitled
to reimbursement of the claimed real estate expenses. The voucher
submitted may not be certified for payment.
B-186373, December 30, 1980, 60 Comp.Gen. 139
Indian Affairs - Grazing Rights - Indian and Former Indian Lands
Acquired for Garrison Dam - Public Law 87-695 Requirements
Public Law 87-695, 76 Stat. 595(1962), permits the Three Affiliated
Tribes of the Fort Berthold Reservation to graze livestock without
charge on the former Indian lands acquired by the United States in
connection with the Garrison Dam project. This privilege is limited to
lands which were actually acquired from Indians and does not extend to
lands that were acquired from non-Indians.
Matter of: Indian Grazing Privileges on the Garrison Dam Project,
December 30, 1980:
The Chief Counsel of the Army's Office of the Chief of Engineers has
requested our opinion on whether Indian grazing rights at the Garrison
Dam project extends to lands which were acquired from non-Indians as
well as to lands acquired from Indians.
The Flood Control Act of December 22, 1944, 58 Stat. 887, established
a comprehensive plan for the improvement of the Missouri River Basin and
authorized the Secretary of the Army to acquire all lands necessary for
the project. Most of the needed land lay within Indian reservations,
and these lands were acquired from a number of Indian tribes, under
varying terms worked out in several different statutes. Generally, the
tribes were granted permission to continue to graze stock on the land.
However, grazing privileges were not granted to the Three Affiliated
Tribes of the Fort Berthold Reservation when their land was acquired for
the Garrison Dam project in 1949, Pub. L. No. 81-437, 63 Stat. 1026.
This omission was corrected by Public Law 87-695 (September 25, 1962),
76 Stat. 594, which extended grazing privileges to the Three Affiliated
Tribes.
Not all of the project land which lay within reservations was owned
by Indians. Some of the land was owned by non-Indians, who had acquired
it from Indians through direct purchase, tax sales, etc. A question has
arisen in connection with Indian grazing privileges as to whether the
privilege is limited to land actually acquired from Indians or whether
it extends to project lands within a reservation that were acquired from
non-Indians. We first considered this question in B-142250, May 2,
1961, where we held that the grazing provisions in Public Law 85-916, 72
Stat. 1766(1958), and Public Law 85-923, 72 Stat. 1773(1958), applied
only to lands that had been acquired from Indians. In 1977, we reviewed
the grazing provision in Public Law 83-776, Sec. X, 68 Stat. 1191,
1193(1954), and held that it applied to land that had been acquired from
non-Indians as well as to land that had been acquired from Indians. 56
Comp.Gen. 655(1977). We also overruled our earlier decision. B-142250,
May 2, 1961.
The Army Corps of Engineers now asks us for an interpretation of the
grazing provision in Public Law 87-695. In administering its projects
in the Missouri River Basin, the Corps wants to be able to treat all
Indian tribes in the same fashion.
Thus, it would like us to interpret the grazing provisions in Public Law
87-695 as applicable to lands that were acquired from both Indians and
non-Indians. However, because the law is explicit on this point, we
cannot make such an interpretation.
As the Corps itself acknowledges, grazing privileges granted to the
Three Affiliated Tribes "are somewhat different from those of other
tribes." As first introduced, the bill which became Public Law 87-695
contained language similar to that which we interpreted in 56 Comp.Gen.
655:
That the Three Affiliated Tribes of the Fort Berthold Reservation are
hereby granted the exclusive right, without cost, to use all lands owned
by the United States on the Fort Berthold Reservation lying between the
shoreline of the Garrison Dam Reservoir and the exterior boundaries of
the Garrison Dam project for grazing purposes for the benefit of the
tribe and its members subject to the rights under existing grazing
leases and permits. The tribe shall have the right to lease such land
for grazing purposes to members or nonmembers of the tribe for such
rental and on such terms and conditions as the Secretary of the Interior
may prescribe. S. 1161, 87th Cong., 2d Sess., introduced March 2, 1961.
However, the bill was amended by the Senate Committee on Interior and
Insular Affairs, and the enacted version read as follows:
Subject to the right of the United States to occupy, use and control
the lands acquired by the United States within the Fort Berthold
Reservation for the construction, operation, and maintenance of the
Garrison Dam and Reservoir project pursuant to the Flood Control Act of
1944, approved December 22, 1944, and amendatory laws, as determined
necessary by the Secretary of the Army adequately to serve said
purposes, the Three Affiliated Tribes of the Fort Berthold Reservation
shall be permitted to graze stock without charge on such former Indian
land as the Secretary of the Army determines is not devoted to other
beneficial uses, and to lease such land for grazing purposes to members
or nonmembers of the tribes on such terms and conditions as the
Secretary of the Interior may prescribe. The foregoing grant of grazing
privileges shall be subject to rights under existing grazing leases and
permits. Pub. L. No. 87-695, 76 Stat. 594(1962).
The plain meaning of the words "former Indian land," plus the fact
that this phrase was substituted for "all lands owned by the United
States on the Fort Berthold Reservation lying between the shoreline of
the Garrison Dam Reservoir and the exterior boundaries of the Garrison
Dam project" make it clear that the grazing privilege is limited to land
which was acquired from Indians. This interpretation is reinforced by
the Department of Interior's comments on the final version of the bill:
The one recommendation of the Department that is not included in the
bill is language that makes the grazing privilege apply to all project
lands within the reservation boundaries, regardless of who was the
former owner. The bill limits the grazing privilege to project lands
within the reservation boundaries that were formerly owned by Indians.
Convincing arguments can be advanced in favor of both of these
approaches. While we prefer to extend the privilege to all project
lands within the reservation boundaries, regardless of the former
owners, we do not object to the language of the bill if that is the
considered judgment of the committee. H. R. Rep. No. 2348, 87th Cong.,
2d Sess. 2(1962).
To adopt the Army's suggested interpretation would be to revert to the
language of the bill as introduced, language which was specifically
changed in the legislative process.
In summary, we find that the grazing privilege granted by Public Law
87-695 is limited to lands which were acquired by the United States from
Indians and does not extend to lands that were acquired from
non-Indians. While we appreciated the Army's desire for consistency in
the application of the Missouri River Basin statutes, the differences in
statutory language make this consistency impossible. Should this impose
an undue administrative burden upon the Army, its only recourse is to
seek an amendment to Public Law 87-695.
B-199805, December 29, 1980, 60 Comp.Gen. 135
Transportation - Rates - Section 22 Quotations - Construction - "LTL
Rate or Class" - Quotation Expressly Subject to NMFC
Definition of less than truckload, "LTL," as published in National
Motor Freight Classification, controls interpretation of "LTL rate or
class" in quotation, since quotation is expressly governed by
Classification. Transportation - Rates - Less Than Truckload (LTL) -
Application to Various LTL Quantities
Abbreviation "LTL," under "scale" column or tariff's rate table,
means quantity of freight of less than 500 pounds; "LTL," as well as
other weight groups, expressly made subject to LTL classes.
Transportation - Rates - Section 22 Quotations - Less Than Truckload
(LTL) Quantities - Applicability of LTL Class Rate to Various LTL
Quantities
Applicability of quotation, referring to "currently applicable class
55 LTL rates" in tariff, is not limited to class 55, LTL rates on "LTL"
weight line of rate table but extends to class 55 LTL rates,
corresponding to any weight scale of less than truckload quantity.
Transportation - Rates - Less Than Truckload (LTL) - What Constitutes -
Governing Classification's Definition
General Services Administration properly based deduction action on
quotation which offers rates on all less than truckload quantities, as
term is defined in governing Classification.
Matter of: Yellow Freight System, Inc., December 29, 1980:
Yellow Freight System, Inc. (Yellow Freight), initially requested
review of settlement action taken by the General Services Administration
(GSA) on 36 less than truckload (LTL) shipments of Government property
which were transported between points listed in item 3860 of U.S.
Government Quotation ICC RMB Q15-D (Quotation RMB 15). See 49 U.S.C.
6(b)(1976) and 4 CFR 53(1979). By letter of November 3, 1980, the
carrier amended its request by adding 88 bills.
In its audit of Yellow Freight's transportation bills the GSA
determined that the carrier collected overcharges in the total amount of
$3,296.42 on the 36 LTL shipments.
GSA's report, which recommends that its action be sustained, represents
that the circumstances and issue involved in Government bill of lading
K-4495333 are the same in all material respects as those in the other
shipments.
The record shows that Yellow Freight collected $360.35 in August 1978
for the transportation of a shipment of books, NOI, from Seal Beach,
California, to Indianapolis, Indiana. The shipment, which was received
by the carrier on July 25, 1978, weighed 3,312 pounds. The GSA
determined that the applicable charges were $341.80, and issued a Notice
of Overcharge for $18.55. When the carrier declined to pay the
overcharge, the GSA caused the deduction to be made. (The carrier
states that $11,570.63 in overcharges were deducted on the 88 additional
bills.)
The source of GSA's audit determination is item 3860 of quotation RMB
15. Item 3860 provides for specific commodity rates on books, NOI, the
article shipped (plus other printed matter, and paper articles, paper
and boxes). The item does not contain the rates. Instead, for rates, it
refers to Note 1 thereof which in turn refers to the currently
applicable class 55 LTL rates published in specified Rocky Mountain
Motor Tariff Bureau, Inc., tariffs, including Tariff ICC RMB 521-Series
(Tariff 521). For shipments transported between Western and Eastern
points, section 8 of Tariff 521 (item 3860) contains published rates, in
cents per 100 pounds, arranged by columns, under the various commodity
classes, and by lines, extending from various weight scales.
Organization of the rate table, showing, to the extent necessary, the
intersecting columns and lines, follows, as it appears on the 9th
revised page 472 of the tariff: (TABLE OMITTED)
The GSA applied the $9.60 rate (adjusted to $10.32 per 100 pounds to
reflect a general increase in rates), which appears in the class 55
column and on the fourth line which extends from the 2,000-pound weight
scale.
That scale was selected because the shipment weighed 3,312 pounds.
There is apparent agreement that the rate would be selected from the
class 55 column; the controversy is over the proper line. The parties
urge different interpretations of the abbreviation, "LTL8" as it appears
in the pertinent clause of Note 1:
the currently applicable class 55 LTL rate . . .
Yellow Freight contends that "LTL" refers only to the first line
under the "Scale" column inasmuch as it contains the same abbreviation,
"LTL;" that line covers shipments weighing less than 500 pounds. That
position would result in application of the $13.70 rate (before
adjustment for the rate increase). The GSA contends that "LTL" means
less than truckload, as generally understood, and that the class 55
rates on any line, except those marked "TL" (truckload) are available,
depending on the weight of particular shipments.
In support of its position that only the higher rates on the "LTL"
(first) line apply, Yellow Freight refers to the title page of section 8
of Tariff 521. On 2nd revised page 469 (the title page), the following
appears:
APPLICATION OF SCALE LTL, 5C, 1M, 2M, 5M, 10M OR TL RATES SHOWN IN
THIS SECTION Scale LTL-- Less than truckload, subject to LTL classes;
or AQ classes.
The carrier argues that since the provision specifically ties "less than
truckload" to the "Scale LTL " line, it follows that no other scale can
be considered as "LTL" within the meaning of Note 1 of Item 3860.
Yellow Freight states that the LTL scale was intended to provide an
exception (lower than tariff) rate for small shipments, generally, 500
or 1,000 pounds, and some shipments weighing 2,000 pounds, but none
greater.
We believe that well-established principles of tariff construction
control disposition of this case. See 56 Comp.Gen. 529(1977). Whatever
may have been the intentions when tariff items are framed, tariffs must
be construed according to their language, and the framer's intentions
are not controlling. See B-174445, April 25, 1972. In the
interpretation of a tariff, its terms must be taken in the sense in
which they are generally used and accepted; and it must be construed in
accordance with the meaning of the words used. See Penn Central Co. v.
General Mills, Inc., 439 F.2d 1338, 1340(8th Cir. 1971).
We agree with Yellow Freight that "LTL" means less truckload;
however, the sense in which the term is generally used extends beyond
the scope of 499-pound shipments. In its usual sense, "LTL" is
considered as a quantity that is below the carrying capacity of a
vehicle.
In other words, it covers all weights less than the truckload minimum.
This is the meaning adopted by the National Motor Freight
Classification, ICC NMFC 100. Section 6(c) thereof defines less than
truckload (LTL) rates or classes as those applicable to a quantity of
freight less than the volume or truckload minimum specified in the
Classification for the same article. See Merchandise, Southwest Freight
Lines, Inc., 51 M.C.C. 112, 115(1949).
The Classification governs Quotation RMB 15 through item 100-1
thereof which refers to U.S. Government Quotation ICC RMB 20 and the
publications set forth in item 100 of that quotation. Item 100
specifically refers to the Classification as a governing publication.
See B-197183, June 26, 1980.
Items 161560 and 161580 in the Classification, which provide class
ratings on books, NOI name minimum weights of 30,000 pounds for the
truckload rating. With reference to the "scale" column of weights it is
clear that all weight groups from the first line (LTL) to the "20M"
(20,000 pounds) line are considered LTL within the meaning of that term
in Note 1, item 3860 of Quotation RMB 15 because they represent
quantities of less than 30,000 pounds, the truck load minimum for books,
NOI, specified in the Classification.
We view the "LTL" scale simply as another weight group, as the 2,000
and 5,000 etc., groups. A notable difference, though not material here,
is that the "LTL" scale has no stated minimum, as the other weight
scales do, viz 2,000 pounds. See General Increases, Less Than
Truckload, Pacific Northwest, 310 I.C.C. 307, 313(1960).
It should be noted also that Item 3860 in Note 1 contains the
statement. "Rates in this item apply only on shipments which weigh 500
pounds or more which are rated at 500 pounds." Thus the item is
restricted to shipments covered by weight Scale 5C through weight Scale
20M. And weight Scale LTL is specifically exempted from application to
shipments weighing in excess of 500 pounds.
Yellow Freight fails to distinguish between an "LTL" rate or class
and an "LTL" quantity of freight. Note 1 speaks in terms rates, whereas
the scale column of the rate table in Tariff 521 pertains to quantities,
and the "LTL" scale is only one. The title page of section 8, relied on
by the claimant, defeats the carrier's argument. It expressly states
that it is subject to LTL classes, or any quantity, which clearly points
out the distinction between rates and quantities. Therefore, in its
audit GSA properly applied the class 55 LTL rate corresponding to the
2,000 pound weight scale.
Accordingly, GSA's settlement action is sustained.
B-194197, December 24, 1980, 60 Comp.Gen. 132
Travel Expenses - Actual Expenses - Reimbursement Basis - Ten-Hour Rule
- Applicability - High-Rate Area Travel
Although Administrator of General Services (GSA) is authorized to
promulgate Federal Travel Regulations (FTR), the General Accounting
Office (GAO) must interpret the laws and regulations in settling claims.
Guidance issued by Assistant Administrator of General Services
interpreting FTR does not bind agencies as do the FTR but GAO will
accord great deference to such guidance. Since GSA employee relied on
GSA guidance interpreting FTR as precluding application of 10-hour rule
in case of actual subsistence reimbursement, and since decision
B-184489, April 16, 1976, was similarly interpreted by a number of
agencies the 10-hour rule shall not be applied to employee or in cases
of actual subsistence reimbursement prior to issuance of 58 Comp.Gen.
810, but the rule shall apply after September 27, 1979, the date of
issuance of our decision.
Matter of: Nicholas M. Veneziano - Reconsideration, Actual
Subsistence Expense Status, December 24, 1980:
Mr. Nicholas M. Veneziano, an employee of the General Services
Administration (GSA), has requested reconsideration of our decision
Nicholas M. Veneziano, 58 Comp.Gen. 810(1979), in which we denied his
claim for actual subsistence expenses incurred incident to duty he
performed in Newark, New Jersey, on July 20, 1977.
Mr. Veneziano, whose official duty station is New York, New York, and
whose residence is in Brooklyn, New York, was ordered to perform
official business in Newark, New Jersey, where he incurred the expense
of $2.75 for lunch. Citing decision B-184489, April 16, 1976, and
paragraph 1-8.6 of the Federal Travel Regulations (FTR) (FPMR Temporary
Regulation A-11, Supp. 4, Attachment A) (1977), Mr. Veneziano claimed
reimbursement for lunch.
We denied Mr. Veneziano's claim in B-194197, September 27, 1979, (58
Comp.Gen. 810) on the basis that the prohibition against the payment of
per diem for travel of 10 hours or less, found in FTR para. 1-7.6d(1),
is applicable to employees' travel to high-rate geographical areas, and
Mr. Veneziano had performed his travel to a high-rate geographical area
in less than 10 hours. We reasoned as follows:
In decision B-184489, April 16, 1976, cited by Mr. Veneziano, we held
that since the regulations pertaining to high-rate geographical areas
did not contain special provisions for reimbursement of actual
subsistence expenses for travel of 24 hours or less when no lodging is
involved an agency could not set a per diem rate of $24 or less for such
travel to a high-rate geographical area. The regulations have since
been amended so that a per diem rate may be set in a high-rate
geographical area when circumstances warrant it. See para. 1-8.1b(1) of
the FTR, FPMR Temporary Regulation A-11, Supp. 4, Attachment A. (April
29, 1977.)
We do not think it follows, however, that the absolute prohibition
against the payment of per diem for travel of 10 hours or less found in
FTR para. 1-7.6d(1) has no application to employees' travel to high-rate
geographical areas is normally contingent under Part 8 of the FTR is
likewise limited. Decision B-184489, April 16, 1976, allowed in cases
of travel of 10 hours or less, actual expenses reimbursement under Part
8 of the FTR is likewise limited. Decision B-184489, April 16, 1976, is
distinguishable since in that case we held that the per diem method of
reimbursing an employee had no application to an employee's
reimbursement when his entitlement was under the distinct actual expense
mode. This was later corrected by an amendment to the regulations. In
the case at hand, however, there is an absolute bar on the payment of
per diem for travel of 10 hours or less and this bar is applicable to
the payment of actual subsistence expenses in like situations.
Mr. Veneziano, in his request for reconsideration, states that our
decision is in conflict with guidance provided by GSA's Assistant
Administrator for Administration. Mr. Veneziano cites a memorandum from
the Assistant Administrator dated November 5, 1975, which, by means of
an attachment, provided guidance on the preparation of travel vouchers.
The salient portion of the attachment provides as follows:
e. Travel of less than 24 hours (per diem). * * * If the travel was
10 hours or less, he would not be allowed per diem unless the travel was
at least six hours and the trip began before 6 A.M. or ended after 8
P.M. * * *
f. Travel of less than 24 hours (high rate geographical area). For
travel of less than 24 hours in a high rate geographical area with no
lodging required, the traveler will be paid actual expenses not to
exceed the maximum authorized allowance. The 10-hour limitation as in
e, above, does not apply.
Mr. Veneziano states that his voucher was approved by the approving
official under the guidance in the above instructions which he assumes
were within the Assistant Administrator's authority to issue. He says
what is involved here is the issue as to who has the authority to
prescribe regulations regarding travel allowances. He asks whether it
is the Administrator of General Services or the Comptroller General.
The Administrator of General Services is given the authority to
prescribe regulations necessary to administer the laws relating to
travel and subsistence expenses and mileage allowances. 5 U.S.C.
5707(1976). These regulations are the Federal Travel Regulations (FPMR
101-7) and they govern the payment of travel expenses of Federal
employees. The General Accounting Office (GAO), however, is required by
law to settle claims against the Government of the United States. 31
U.S.C. 71. In performing this function GAO is necessarily called upon
to construe the laws and regulations which may be pertinent to an
individual's claim against the Government.
The guidance from the Assistant Administrator concerning the 10 hour
rule which is cited by Mr. Veneziano has not been issued as a part of
the Federal Travel Regulations. Rather the guidance appears to be in
the nature of internal regulations. Since the guidance at issue is not
a part of the Federal Travel Regulations, we are not bound to follow its
instructions and we are free to construe the FTR's in a contrary manner.
However, it is a general principle of administrative law that an
agency's construction and interpretation of its own regulations will
generally be accorded great deference by a court or reviewing authority.
Udall v. Tallman, 380 U.S. 1(1964); Bowles v. Seminole Rock Co., 325
U.S. 410(1944). When we originally considered Mr. Veneziano's claim the
Assistant Administrator's guidance was not a part of the record before
us. Although the Assistant Administrator's guidance is not binding on
us, as the FTR's are, we will reconsider Mr. Veneziano's claim in the
light of this internal GSA guidance.
In this connection, we have been informed that a number of agencies
besides GSA have interpreted our decision B-184489, April 16, 1976, as
prohibiting the extension of the 10 hour rule to travel to high-rate
geographical areas. We recognize that the FTR's and our decision
B-184489, April 16, 1976, could have been construed as prohibiting the
application of the 10 hour rule in actual subsistence cases.
Accordingly, since the Assistant Administrator's interpretation of GSA's
own regulations, the FTR's, was not clearly erroneous and since decision
B-184489, April 16, 1976, may have encouraged such an interpretation by
others, we shall not apply our decision to the contrary in 58 Comp.Gen.
810 to travel performed before or on its date of issuance, namely
September 27, 1979.
It is still our view, however, for the reasons set out in 58
Comp.Gen. 810, that subsistence expenses may not be paid for travel of
10 hours or less to high-rate geographical areas. Accordingly, that
rule is applicable for travel performed after September 27, 1979, the
date of issuance of 58 Comp.Gen. 810.
Mr. Veneziano's voucher, having been duly approved by the appropriate
official, may be certified for payment for the reasons stated above.
B-199478, December 23, 1980, 60 Comp.Gen. 129
Pay - Retired - Survivor Benefit Plan - Spouse - Social Security Offset
- Mother's Benefit
A widow's Survivor Benefit Plan annuity payments were offset to the
extent of the Social Security mother's benefit to which she would have
been entitled based on the deceased service member's military Social
Security coverage. However, she was actually receiving Social Security
benefits based on her own work record and, therefore, received a reduced
mother's benefit due to the benefits payable based on her own record.
She is not entitled to reimbursement of the Survivor Benefit Plan
annuity withheld for the difference between the mother's benefit to
which she would have been entitled had the mother's benefit not been
reduced in her case and the reduced mother's benefit which she actually
received.
Matter of: Mary L. Lott, December 23, 1980:
This action is in response to a letter from the Disbursing Officer,
United States Army Finance and Accounting Center, Indianapolis, Indiana,
submitting a voucher and requesting an advance decision as to whether or
not the Survivor Benefit Plan annuity of Mrs. Mary L. Lott should be
offset by Social Security benefits in the circumstances described.
This request was assigned Control No. DO-A-1348 by the Department of
Defense Military Pay and Allowances Committee, and was forwarded to this
Office by the Office of the Comptroller of the Army on June 30, 1980.
We hold that Mrs. Lott's Survivor Benefit Plan annuity was properly
offset to reflect the full mother's benefit before that benefit was
reduced on account of benefits payable based on her own work record.
Master Sergeant Bobby W. Lott was placed on the temporary disability
retired list on February 22, 1977, under the provisions of 10 U.S.C.
1202, with 26 years, 9 months, 8 days for basic pay, 26 years, 5 months,
14 days for percentage purposes, and a disability rating of 100 percent.
He elected, under the provisions of the Survivor Benefit Plan (SBP), to
provide an annuity based on full retired pay for his wife and child.
Sergeant Lott died on April 16, 1978.
An annuity was established in favor of the deceased's widow, Mary L.
Lott, effective July 1, 1978, retroactive to April 17, 1978, in the
amount of $550.23, less a Social Security offset of $193.80. The
annuity was increased by cost-of-living adjustments to $577.19 on
September 1, 1978, and to $599.70 on March 1, 1979. The offset, which
was increased to $206.40 as of June 1, 1978, was equal to the amount of
the mother's benefit to which Mrs. Lott would ordinarily have been
entitled as a result of the deceased's active duty earnings. However,
Mrs. Lott did not receive a mother's benefit of either $193.80 or
$206.40. Since she had apparently been receiving Social Security
benefits on her own work record prior to her husband's death, her
mother's benefit was reduced by the Social Security Administration to
$25.80 as of April 1978 and $27.40 as of June 1978. The mother's
benefit and offset were discontinued on July 31, 1979, due to the fact
that Mrs. Lott's daughter attained the age of 18 on August 28, 1979.
Mrs. Lott, as the surviving spouse of a retired member who died of
service-connected causes, was entitled to Dependency and Indemnity
Compensation (DIC) payments from the Veterans Administration (VA), as
well as Social Security benefits. The Survivor Benefit Plan provides,
however, that a widow or widower who is entitled to both DIC and SBP
benefits will receive as a Survivor Benefit Plan annuity only the amount
by which the SBP benefit exceeds the DIC entitlement.
10 U.S.C. 1450(c). In such a case, the amount deducted from the
member's retired pay which corresponds to the cost of that part of the
SBP entitlement not paid because of the DIC payment will be refunded to
the spouse. 10 U.S.C. 1450(c). Since at the time Mrs. Lott's SBP
annuity was established DIC information was not available, Mrs. Lott was
paid both benefits concurrently. On May 1, 1979, the annuity was
reduced to the amount by which the SBP benefit exceeded the DIC payment,
and an overpayment of annuity was computed, retroactive to April 17,
1978, in the amount of $4,546.00. According to the submission, the VA
is currently remitting payments to liquidate the overpayment.
We are asked to determine whether the amount of overpayment was
incorrectly computed, and whether, as a consequence, when the amounts
withheld from her current benefits to liquidate the overpayment were
subtracted from the amount Mrs. Lott actually received, she was
underpaid. The voucher presented to us for certification totals
$3,214.63, a sum arrived at by adding the amounts of Social Security
offset applied to payments made for the period April 17, 1978, through
July 31, 1979.
Specifically, we are asked:
1) Should the widow's annuity be reduced by a Social Security offset?
2) If the answer to question 1 is affirmative, should the offset be
computed using the ratio formula, as when the "mother's" benefit is
reduced because of earnings?
3) If the answer to question 1 is negative, should full refund be
made?
Where a widow has one dependent child, the monthly annuity to which
she is entitled must be reduced by--
an amount equal to the mother's benefit, if any, to which the widow
would be entitled under subchapter II of chapter 7 of title 42 based
solely upon service by the person concerned as described in section
410(l)(1) of title 42 and calculated assuming that the person concerned
lived to age 65. 10 U.S.C. 1451(a).
As is noted above, the Social Security Administration determined that
Mrs. Lott's "mother's benefit," which she received based on her deceased
husband's Social Security coverage, must be reduced since she was
receiving Social Security benefits based on her own work record. Thus,
the question is whether her SBP annuity is to be reduced by what the
"mother's benefit" would have been based on her husband's Social
Security coverage, or whether her annuity should be reduced by the
lesser mother's benefit she actually received.
The Survivor Benefit Plan established by Public Law 92-425, 10 U.S.C.
1447, was designed to build on the income maintenance foundation of the
Social Security system in order to provide survivor coverage to military
widows and dependent children in a stated amount from retirement income
derived by a member from his military service.
Since the Government contributes substantial amounts to the Social
Security system on behalf of members of the uniformed services it was
determined that there should be an offset against the Survivor Benefit
Plan annuities when a survivor becomes entitled to Social Security
survivorship benefits. See page 29, Senate Report No. 92-1089,
September 6, 1972. Thus, when survivors who are receiving annuities
under this Plan receive Social Security survivor benefits or become
entitled to receive such benefits a reduction of the annuity under the
Plan is required and is calculated on the basis of the Social Security
survivorship benefit which would be attributable solely to a retired
member's years of military service. In this regard, it is to be noted
that the actual Social Security benefit to which a survivor is entitled
is not affected by this computation. See 53 Comp.Gen. 758, 759(1974).
We have held that the Social Security offset of the SBP annuity for a
widow aged 62 or more is determined by the Social Security payment
attributable to the military service of the member on whose death the
SBP annuity is payable even where the widow may receive Social Security
payments based on her own employment or the employment of some other
person. 57 Comp.Gen. 339, 343(1978). Similarly, we believe that amount
by which an SBP annuity is to be reduced for the Social Security
mother's benefit should be the amount to which the widow "would be
entitled" based upon the military service of the deceased member,
regardless of whether the widow is actually receiving that mount or some
other amount based on her own Social Security employment record.
Accordingly, question 1 is answered yes, question 2 is answered no,
and question 3 requires no answer.
B-198319, December 17, 1980, 60 Comp.Gen. 120
Contracts - Protests - Timeliness - Negotiated Contracts - Exclusion
From Competitive Range
Protest, based primarily on manner in which proposals were evaluated
and competitive range determined, need not be filed before closing date
for receipt of initial proposals, since alleged improprieties occurred
after that date. Contracts - Negotiation - Competition - Competitive
Range Formula - Determination by Comparison With Other Proposals - Quick
Reaction Work Order Contracting
In quick reaction work order procurement, competitive range may be
relative one. Proposal which is technically acceptable or capable of
being made acceptable need not be considered for negotiation if, in
light of all proposals received, it does not stand real chance for
award. Energy - Department of Energy - Contracts - Master - Quick
Reaction Work Orders - Small Business Preference
In quick reaction work order procurement, establishment of
competitive range for small businesses only is proper when (1) 25
percent set-aside was announced in solicitation and (2) small business
proposals have real chance for award when compared with each other and
preference is taken into account. Contracts - Negotiation - Evaluation
Factors - Additional Factors - Not in Request for Proposals - Quick
Reaction Work Order Contracting
When evaluation is in accord with stated criteria, all offerors are
treated alike, and evaluation reflects reasoned judgment of evaluators,
protest will be denied. Although disclosure of an agency's additional
considerations, including number of quick reaction work order contracts
to be awarded and relative competitiveness of potential contractors,
would have given offerors better understanding of selection process,
notice of these factors and opportunity to amend would not have helped
any firm to improve its proposal. Contracts - Negotiation - Evaluation
Factors - Source Evaluation Board - Authority
When Source Evaluation Board follows procedures outlined in agency
handbook-- which requires more than mere determination that proposals
are either "acceptable" or "not acceptable"-- protest that Board usurped
its authority will be denied.
Matter of: Hittman Associates, Inc., December 17, 1980:
Hittman Associates, Inc. protests its exclusion from the competitive
range by the Department of Energy under a solicitation for Quick
Reaction Work Order master contracts for planning, analytical,
technical, and other required services.
Hittman argues that all technically qualified offerors-- which it is
conceded to be-- should have been selected, rather than only those
determined by DOE to have been "best qualified."
DOE has completed negotiations, but has withheld awards pending our
decision. For the reasons outlined below, we are denying the protest.
Under the request for proposals No. DE-RP01-79-AD10163, DOE will make
multiple awards of master contracts encompassing three broad areas of
work: Support for Program Planning and Monitoring; DOE Staff Support;
and Special Tasks. DOE intends to award both a firm-fixed-price and a
cost-plus-fixed-fee contract to selected offerors in each work area. In
the solicitation, the agency stated that 25 percent of the awards in the
first two areas and 100 percent of the awards in the third area would be
reserved for small businesses.
After award, when specific, urgent needs arise in one of the stated
areas of work, DOE will solicit three or more master contracts, who will
be required to submit cost and technical proposals for the specific
task. This second competition-- generally on the basis of price-- will
result in modification of the successful contractor's master contract to
include the specific task.
Hittman was one of 90 firms submitting timely proposals; since it is
not a small business, it competed only for work areas one and two.
In its protest, the firm lists 15 reasons why it believes DOE's conduct
of this procurement arbitrarily limited competition. These reasons for
the most part involve (1) determination of the competitive range; (2)
evaluation criteria; and (3) source selection procedures.
1. Competitive Range
As noted above, Hittman believes all qualified offerors should have
been included in the competitive range, and that "preselection" of only
the best qualified for negotiation was contrary to the general rule that
the competitive range should include all responsible offerors whose
proposals are either technically acceptable or capable of being made
acceptable.
Hittman believes our opinion in B-196489, February 15, 1980, a letter
to Chairman John D. Dingell of the Energy and Power Subcommittee, House
Interstate and Foreign Commerce Committee, in which we discussed quick
reaction work order contracting, supports this view, since in it we
cited an earlier case in which we had approved a prequalification scheme
only "after it was modified to provide that all qualified firms in
particular skill areas would receive master agreements." See Department
of Agriculture's Use of Master Agreements, 56 Comp.Gen. 78(1976), 76-2
CPD 390.
DOE, however, contends that if a technically acceptable proposal is
so much lower in quality than other proposals that it stands no real
possibility of award, meaningful negotiations are not possible. Since
this was the case with Hittman, DOE indicates, the firm was not included
in the competitive range.
Hittman also objects to the fact that when DOE determined that not
enough small businesses were initially ranked highly enough to qualify
for 25 percent of the awards in work areas one and two, the Source
Evaluation Board decided to augment the competitive range by further
extending it for small businesses only. This modification of the method
of establishing the competitive range was improper, prejudicial, and
inconsistent with normal procurement rules and practices, Hittman
states.
DOE responds that the Board took this step only after considering
various alternatives which would have included a significant number of
large businesses determined to have little or no change of award.
However, DOE continues, the small businesses had a real chance for award
when their proposals were compared with other small business proposals
and when the 25 percent preference was taken into account. Thus, DOE
maintains, they could not properly have been excluded from the
competitive range; similarly-rated large businesses, which did not
enjoy the preference, had no real chance, so their exclusion was proper.
This procedure did not prejudice Hittman, DOE concludes, since it was
not included in the intially-established competitive range.
2. Evaluation Criteria
Hittman further contends that in establishing the competitive range,
DOE used evaluation criteria other than those listed in the
solicitation, without giving offerors notice or an opportunity to amend
their proposals. Specifically, Hittman alleges that Source Evaluation
Board members considered the number of master contracts which they
believed were likely to be awarded in determining the competitive range,
and made their own individual evaluations of the ability of each
contractor to vigorously participate in work order competitions. In the
request for proposals, Hittman states, there was no indication that any
specific limit would "arbitrarily" be placed on the number of selected
contractors as part of the evaluation process or that Board members
would attempt to anticipate the subsequent competitiveness of each
master contractor.
Hittman implies that if the evaluation criteria listed in the
solicitation-- experience, personnel, project management, and personnel
management and corporate resources-- had been strictly followed, there
would have been no question of the capability of the team composed of
Hittman and its subcontractor, Arthur Young Company. Instead, Hittman
argues, the listed criteria were ignored and two undisclosed criteria
were substituted.
DOE responds that it should have been apparent to Hittman from the
solicitation that awards were to be made on a "best qualified" basis,
and that no standard for determining the number of awards was set forth
in the solicitation. DOE argues that any protest as to the limited
number of awards (and presumably the limited number of firms in the
competitive range) is therefore untimely.
DOE also argues, however, that there was no need to list the number
of firms to be considered for award as an evaluation factor, since this
information would not have helped offerors to improve their proposals.
The factors which ultimately determine the number of selections, DOE
continues, included aggregate capacity of offerors to handle normal and
peak workloads, potential attrition, anticipated rates of unacceptable
work order proposals, and "other matters which bear on maintaining a
viable competitive environment for work order competitions." These were
not within the control of offerors, DOE points out.
DOE further states that while a competitive group of master
contractors was an objective of the procurement, the technical and cost
criteria stated in the solicitation were the sole means of achieving
this objective.
3. Source Selection Procedures
Hittman also contends that DOE's Source Evaluation Board usurped the
responsibilities of the Source Selection Official and the contracting
officer, as outlined in the Source Evaluation Board Handbook.
The Board's proper function, Hittman asserts, was simply to determine
which proposals were technically acceptable and to present that
information to the selecting officials.
Hittman additionally argues that Board members lacked sufficient
information from proposals as submitted to enable them to rank
prospective contractors. For example, Hittman states, the Board could
not possibly have considered the relative qualifications of its 53
specific technical personnel in identified disciplines as compared with
those listed by some other, probably larger organization. Such
evaluations necessarily had to be subjective, Hittman concludes.
DOE's position, on the other hand, is that judgments as to the
probable for ranking of proposals. The Board found a wide range of
cor-contracting, were properly made by the Source Evaluation Board as
part of its overall responsibility for establishing the competitive
range.
DOE also states that the information furnished by offerors was
suitable for ranking of proposals. The Board found a wide range of
corporate experience and facilities, proposed management approaches, and
experience in energy-related activities among offerors, DOE states.
4. Additional Bases of Protest
Hittman also objects to DOE's consideration of the need to provide
incentives to competition by limiting the number of master contractors
and thus increasing the dollar volume of work order awards which each
can anticipate. The risks and rewards of competition, Hittman states,
are those of contractors, and there was no need for DOE to inject itself
into this process.
In addition, Hittman believes that DOE may have favored larger
contractors with larger staffs, and indicates that the likelihood of
organizational conflicts of interest will be far less with smaller firms
such as itself.
Finally, Hittman takes issue with DOE's position that part or all of
its protest is untimely because it deals with matters apparent from the
solicitation but was not filed before the closing date for receipt of
initial proposals. Hittman states that it had every reason to expect
that the normal source selection procedures outlined in DOE's own
Handbook and in the solicitation would be followed. Since the protested
actions occurred after the closing date, Hittman concludes, "it is
patently obvious that the protest could not have been submitted at any
earlier time."
At the outset, we note that Hittman's protest is based primarily on
the manner in which proposals were evaluated and the competitive range
was determined. Since these were not apparent from the solicitation
itself, and in some cases became known to Hittman only when discussed in
DOE's report to our Office, we consider the protest timely.
We also note that our Office has found quick reaction work order
contracting to be reasonable and not unduly restrictive of competition
per se. B-196489, supra. It is true that as a general rule, we approve
prequalification only when all offerors meeting a certain level of
acceptability are permitted to participate; otherwise, such schemes are
inconsistent with the requirement for full and free competition.
Quick reaction work order contracting, however, differs from the
prequalification schemes discussed in our most recent decision on this
subject, Office of Federal Procurement Policy's films production
contracting system; John Bransby Productions, Ltd., 60 Comp.Gen. 104
(B-198360, December 9, 1980), 80-2 CPD 419, in which we approved a
prequalification system for film and videotape productions because all
firms might attempt to qualify (but recommended that particular
procurements be synopsized in the Commerce Business Daily).
Unlike OFPP's random lists of offerors, quick reaction work order
contracts are not intended to be used automatically or as a substitute
for the normal procurement process. Rather, they are used only in
urgent situations, with strict procedural safeguards. When a DOE
program office identifies a specific requirement, it must determine in
writing that the cost will be $250,000 or less; that the task falls
within the area of work covered by a master contract; that the work
order will result in a discrete deliverable; and most importantly, that
the services are urgently required, due to circumstances beyond the
control of the program office. In addition, the program office must
certify with a contracting officer concurring that the Government will
be adversely affected if a quick reaction work order is not issued.
B-196489, supra.
In connection with our opinion to Chairman Dingell, DOE acknowledged
that it had previously met urgent requirements by awarding sole-source
or level-of-effort contracts, authorizing pre-contract costs, entering
into letter contracts, or ratifying informal commitments by unauthorized
personnel. We therefore concluded that the quick reaction work order
system of contracting (although it needed modification in certain
aspects not relevant here) was less restrictive than other methods used
by DOE to meet urgent needs. Id.
We also reviewed the solicitation for the instant procurement and
found that in selecting contractors, DOE would emphasize experience and
require cost realism. We stated:
* * * It appears that DOE, in using these evaluation procedures, will
award master contracts to all qualified offerors, although the
competitive range in some cases may be a narrow one. Id.
In this context, "qualified" is a relative term. The solicitation
indicates this: "Evaluation is conducted to determine the offeror's * *
* comparative ranking with competing offerors."
In addition, DOE's Source Evaluation Board Handbook directs each member
to rate and rank proposals after considering them individually in light
of each evaluation criterion but before the competitive range is
established. The Handbook states that a proposal is in the competitive
range unless there is no real possibility, taking into account other
more acceptable proposals, that it can be improved to the point where it
becomes the most acceptable. According to the Handbook,
There is no purpose in considering a proposal to be in the
competitive range simply because it could be improved to the point where
it would be acceptable to the Government if better proposals were not
submitted when, in fact, such better proposals have been received. * *
* (Procurement Regulations Handbook, Source Evaluation Board,
DOE/PR-0027 Sec. 405c (June 30, 1979).)
Although it is an exception to the general rule cited by Hittman, the
concept of a relative competitive range is neither new or improper. In
52 Comp.Gen. 382,387(1972), a case involving a proposal determined to be
technically unacceptable because it fell below a predetermined point
score, we objected generally to the use of such a cutoff, but stated
that in view of the offeror's "low score in comparison to the array of
scores achieved by the other offerors," we did not find the agency's
decision to exclude it from negotiations improper.
Similarly, in Peter J. T. Nelsen, B-194728, October 29, 1979, 79-2
CPD 302, we upheld a determination that an offeror was not within the
competitive range when it received a point score of 72, compared with
other technical proposals rated 78.4 and 87.2; it was also the highest
priced. We stated that a proposal need not be considered to be within
the competitive range if, in light of the competition for that
procurement, the offeror did not have a reasonable chance of being
selected for the final award.
Even in a procurement where the competitive range consisted of one
firm, we considered that selection within the discretion of the agency
when, in its judgment, meaningful discussions could not be held with
other offerors because their proposals could not be brought up to the
level of the superior one. The protester's proposal was found to be
"acceptable" or "marginally acceptable" in each individual technical
rating category, but corporate past experience concededly cost savings
might not have been realized. Art Anderson Associates, B-193054,
January 29, 1980, 80-1 CPD 77.
In view of the foregoing, we do not agree with Hittman's contention
that all technically qualified offerors necessarily should have been
included in the competitive range. Rather, we believe, it was within
DOE's discretion to select those it found best qualified.
As for extension of the competitive range for small business
proposals, in our opinion to Chairman Dingell we discussed DOE policies
with regard to small business under quick reaction work order
contracting.
DOE had stated that it would give special recognition of the needs of
small businesses in solicitations, and that it generally would set aside
a minimum percentage of awards for such firms. DOE also stated that its
Director of Small and Disadvantaged Business Utilization would screen
work orders for the purpose of adding small businesses to the firms
solicited whenever possible. B-196489, supra.
In this case, the Source Evaluation Board report indicates that the
25 percent partial set-aside was DOE's response to a Small Business
Administration appeal that 100 percent of this procurement be set aside
for small business concerns. The determination to reserve this portion
of work areas one and two, and all of work area three, was made by DOE's
Deputy Secretary and was announced in the solicitation. However, for
the Source Evaluation Board to be able to implement this policy, a
corresponding number of small business firms obviously had to be
included in the competitive range.
Since DOE had authority to set aside 100 percent of the procurement
for small businesses, we cannot question its setting aside a lesser
amount or conclude that it was unreasonable for the Source Evaluation
Board, in effect, to establish a second competitive range for small
firms which it determined had a real chance for award. Rather, as we
noted in our opinion to Chairman Dingell, it appears that the agency is
taking steps to insure that it meets its statutory obligation to place a
fair proportion of total Federal purchases and contracts with small
business concerns. Id., citing 41 U.S.C. 225(b)(1976) and Federal
Procurement Regulations Sec. 1-1.702 (1964 ed. amend. 192).
On the issue of evaluation criteria, we have carefully examined the
Source Evaluation Board report to determine whether (1) evaluation was
in accord with the stated criteria; (2) all proposals were subject to
the same detailed technical evaluation; and (3) that the evaluation
reflected the reasoned judgment of the evaluators. See Peter J. P.
Nelsen, supra. For this procurement, 130 proposals were received on or
before the closing date (two additional proposals, received late, were
returned without being considered). These were first evaluated and
point-scored by a technical evaluation committee. Source Evaluation
Board members then individually evaluated and scored all proposals
before meeting to develop consensus scores, based on the composite
scores from the technical evaluation committee and on their own
individual evaluations.
Each proposal could receive up to 1,000 points under the four
criteria listed in the request for proposals. Maximum points for these
were: Experience, 350; Personnel, 300; Project Management, 200; and
Personnel Management and Corporate Business, 150. There were three
subfactors under each criterion; in general, the most important of
these dealt with general experience or suitability, and the less
important with specific experience or ability in DOE programs and
functions or in programs with comparable requirements.
Upon reviewing the evaluation sheets, we find that Hittman and all
other offerors were considered in light of the criteria listed in the
solicitation, and that each of the subfactors on which they were graded
could reasonably have been included under the four listed criteria. In
view of the broad general nature of the work covered by the
solicitation, there was no "technical approach" which could have been
evaluated in the sense that the Government was seeking the "best"
solution. Rather, offerors were evaluated in terms of their capability
and capacity to perform the work covered by the solicitation. Each
received a narrative summary of strengths and weaknesses, as well as a
point score.
The "undisclosed" criteria which Hittman alleges were employed--
anticipated number of awards competitiveness-- did not come in for
consideration until Board members attempted to determine how many of the
offerors should be included in the competitive range. In quick reaction
work order contracting, the exact number of awards is not determined
until the time of source selection and depends, as DOE points out, on
factors such as aggregate capacity of all offerors.
The number of awards likely to be made, we believe, was a necessary
consideration since if, for example, it was determined that the work
orders to be issued over the term of the master contracts would require
only a dozen firms in each work area, negotiation with 90 offerors would
have been an undue burden on both the agency and the lower-ranked
offerors who were not ultimately selected.
Competition for work order solicitations also was a valid concern,
since our Office had previously criticized DOE for having made sole
source awards of work orders under earlier master contracts. See
B-196489, supra.
While Hittman and other offerors might have better understood the
selection process if these considerations had been spelled out in the
request for proposals, notice and an opportunity to amend would not have
helped any firm to improve its proposal. Moreover, these "criteria"
were applied uniformly to all offerors.
Nor does it appear that the Source Evaluation Board overstepped its
authority or made subjective decisions, as alleged by Hittman. For
example, as DOE points out, the Board took the extra step of checking
with the Source Selection Official before defining the actual
competitive range. In all other respects, the Board appears to have
followed the procedures outlined in the Handbook, which states that:
* * * The Board will not recommend the selection of a contractor, but
will report its findings and conclusions and answer all questions raised
by the Source Selection Official and assist him with any special
analyses or other requirements for clarifying matters related to the
final selection. (Procurement Regulations Handbook, supra at Sec.
103a.)
This appears to require more than a mere designation of proposals as
"acceptable" or "not acceptable," as Hittman would have the Board do.
We have no reason to doubt that final selection will be made by the
Source Selection Official.
As for other bases of protest, there is no indication that DOE
favored larger contractors than Hittman; on the contrary, if any group
was favored, although justifiably, it was small business concerns. All
offerors will be required to make complete disclosure statements
regarding potential conflicts of interest as a condition precedent to
award; these statements will be updated and cross-referenced during
selection of contractors for work orders, and final determinations of
whether a conflict exists will be made when specific tasks are
identified.
In the final analysis, then, Hittman's protest is that it believes it
is as well or better qualified than other offerors, and that is proposal
should have been included in the competitive range.
Hittman initially received technical scores of 621 and 656 in work
areas one and two, respectively; these scores were increased slightly
following a determination by the Board that the relative values as
signed to subcriteria under Personnel Management and Corporate Resources
should be changed to reflect their relatively equal importance as
specified in the solicitation. Hittman's final technical scores were
625.6 and 660.6.
Among the 12 offerors initially selected for the competitive range in
each work area, technical scores ranged from 952 to 683.6 in work area
one and from 988 to 674.6 in work area two. Thus, Hittman was below the
cut-off point for large businesses in both areas of work.
It is not our function to reevaluate proposals. We have repeatedly
emphasized that decisions as to their relative merits are the primary
responsibility of the contracting agency, and will not be disturbed
unless shown to be arbitrary or in violation of procurement statutes and
regulations. Mere disagreement between a protester and evaluators does
not mean that evaluations were unreasonable. National Motors
Corporation, et al., B-189933, June 7, 1978, 78-1 CPD 416.
In this case, we find the selection of offerors for negotiation
represented the reasoned judgment of DOE evaluators, and violated
neither statute nor regulation.
The protest is denied.
B-195982, December 12, 1980, 60 Comp.Gen. 113
Contracts - Protests - Procedures - Bid Protest Procedures - Time for
Filing - Clarification v. "Initial Adverse Agency" Actions
When, at time exchanges occurred, both protester and contracting
officer regarded series of letters and meetings an opportunity to
clarify agency's requirements, exchanges do not constitute protest and
subsequent "initial adverse agency action" which would require filing of
protest to General Accounting Office within 10 days. General Accounting
Office - Jurisdiction - Contracts - Benchmark - Standard of Review
General Accounting Office standard of review for benchmark is same as
for any other technical evaluation procedure: if benchmark is
rationally based, its use as evaluation tool is within discretion of
procuring agency. Contracts - Specifications - Tests - Benchmark - Use
as Evaluation Tool - Administrative Discretion
When benchmark programs appear to represent system workload and,
combined with functional demonstration, provide reasonable basis for
identifying offeror with lowest life-cycle cost, use of benchmark as
evaluation tool is within discretion of procuring agency.
Matter of: Computer Sciences Corporation, December 12, 1980:
Computer Sciences Corporation (CSC) protests the award of a contract
for teleprocessing services to support the Army's recruiting, training,
and reenlistment programs to Boeing Computer Services Company.
CSC, the incumbent contractor, argues that the programs which
comprised the benchmark which all offerors were required to run did not
accurately or completely represent the actual work to be performed under
the contract.
On Accounting and Financial Management Division has performed a
technical review of the benchmark. Based on this review and the record
before us, we deny CSC's protest. The details are as follows:
This procurement was conducted by the General Services Administration
for the Army Military Personnel Center in connection with the Army's
"REQUEST" and "RETAIN" systems. These systems permit recruiters and
career counselors to identify and reserve training spaces for new
recruits and reenlistees, based on their individual preferences and
qualifications. In addition, all Army enlisted assignments are
processed through RETAIN.
Both REQUEST and RETAIN were installed during the 1970's on CSC's
INFONET system, with software developed by Systems Automation
Corporation (SAC). The protested procurement was a new competition for
the services which CSC has been providing since that time.
The solicitation, No. CDPA 78-5, was prepared by SAC in conjunction
with the Army over a period of approximately 2 1/2 years, beginning in
May 1976. It included a series of computer programs, designed to
represent the REQUEST and RETAIN workload, which offerors converted,
compiled, and executed on their own systems prior to submitting cost and
technical proposals. Those who found it necessary to make changes in
order to adapt the programs, based on the INFONET system, to other
manufacturers' equipment were required to submit all such changes to the
contracting officer's technical staff for approval.
Approved offerors then completed a pre-proposal benchmark which
tested their systems for certain mandatory capabilities listed in the
solicitation.
They also ran the various programs 10 times each and averaged the
results. These results were used to complete cost tables, contained in
the solicitation, which offerors were required to submit to GSA along
with detailed written descriptions of their execution of the benchmark
programs and printouts of the results.
After evaluating cost and technical proposals, GSA scheduled a
second, Government-witnessed benchmark for all offerors who were in the
competitive range. According to the solicitation, the primary purpose
of this supervised benchmark was to validate results of the pre-proposal
run. GSA also indicated that it intended to use it to monitor costs and
performance of the successful contractor by re-running the programs at
random intervals during the life of the contract. If costs were more
than five percent over those developed from the benchmark, the
contractor's monthly invoice was to be adjusted according to a specific
formula contained in the solicitation.
Award was to be made to the offeror whose system, meeting all
mandatory requirements, had the lowest evaluated life-cycle cost.
A threshold issue is whether, as GSA argues, CSC's protest is
untimely. The agency contends that a series of letters and meetings
between CSC and the contracting officer constituted protests and that
"initial adverse agency action" occurred on or before June 14, 1979,
when the contracting officer informed CSC by letter that its assumptions
regarding the benchmark were "erroneous."
CSC, on the other hand, asserts that these letters and meetings were
part of a "continuing process" by which it "attempted to gain
clarification of the RFP's requirements and GSA's interpretation" of
them.
Our Bid Protest Procedures state that if a protest is filed with the
contracting agency, any subsequent protest to our Office must be
received within 10 days after the protester knew or should have known of
"initial adverse agency action." 4 C.F.R. 201(a)(1980). The contracting
officer in this case characterized his letter of June 14 as an
"opportunity to clarify and correct CSC's misconceptions," and it does
not appear than any of the parties regarded it as a denial of a protest
at that time. We therefore do not believe this letter constituted
adverse action by GSA.
CSC's protest was filed with our Office more than 30 days before the
amended closing date for receipt of initial proposals, as required by
section 20.2(b) of our Procedures, supra, as well as before the date for
submission of benchmark data, as required by our decision in Information
International, Inc., 59 Comp.Gen. 640(1980), 80-2 CPD 100; id., SSA--
Request for Reconsideration, October 7, 1980, 80-2 CPD 246. Therefore,
except for an issue involving reentrant code capability which was not
raised until after the closing date for receipt of initial proposals, we
find the protest is timely.
CSC contests the legality of the benchmark as an evaluation tool from
both a technical and cost standpoint. (The firm has stated that a
number of other grounds of protest raised with our Office were rendered
"moot" by actions taken by GSA.)
A. Simultaneous Access
Specifically, CSC alleges that the benchmark failed to test offerors'
ability to handle a large number of simultaneous users. CSC points out
that according to the solicitation, the average number of simultaneous
users of REQUESTS and RETAIN will vary from 16 to 80, depending on time
of day, and may be as high as 139. A benchmark for a system requiring
simultaneous access capability-- but concededly not testing that
capability-- is insufficient, CSC argues.
According to CSC, the benchmark could not provide an accurate picture
of a system's "level of resource consumption." In most systems, CSC
contends, more computer resources may be consumed as more simultaneous
users come "on line." Although such is not the case with INFONET, CSC
states, the Army has no way of verifying this from the benchmark.
B. File Access Method
CSC further complains that the benchmark did not require offerors to
exercise their "random access capability," although this is a
requirement of REQUEST and RETAIN. (Random or direct access indicates
that a record can be entered into or obtained from the file in a manner
which depends only on the location of that particular record, and not on
the location of all previously entered records.) If random access for
multiple simultaneous users is not provided, CSC states, a system's
performance will degrade and costs will increase as the number of users
increases (presumably because in sequential access, more records must be
read, taking more time and using more computer resources).
C. Performance Demonstrations
CSC also criticizes the "functional" or "performance" demonstrations
which GSA used to test system capabilities not included in the
benchmark-- such as ability to support multiple simultaneous users and
method of file access-- because the demonstrations (1) did not consider
costs and (2) involved only two users. CSC contends that an offeror
could "pass" the demonstrations and the Government would still have no
idea of what actual costs of operating the system would be.
GSA responds that the benchmark, combined with the performance
demonstrations, provided an acceptable means of evaluating technical
proposals and estimating life-cycle costs.
The only alternative means of testing offerors' ability to handle
multiple simultaneous users, GSA states, would have been "load" or
"stress" testing. This type of testing requires either use of Remote
Terminal Emulation (RTE) (a new technique in which a microcomputer
simulates a large number of users) or a live test demonstration in which
as many as 139 users actually would attempt to access the system at the
same time. According to GSA, not all offerors have RTE capability, and
there is no assurance that all RTEs are functionally equivalent. A live
test of the total proposed network, GSA continues, would have given
incumbent CSC an unfair advantage, since its equipment was already in
place; in addition, such a test would have been difficult to control,
non-repeatable, time-consuming, and expensive.
GSA therefore argues that its decision to benchmark "a logical subset
of the teleprocessing capability" and use the results to project "total
system performance through extrapolation" was an appropriate one. (In
other words, GSA believes that the benchmark programs consumed the same
amounts and types of computer resources as REQUEST and RETAIN, and that
the results, including costs, of running those programs could be
accurately projected and were valid regardless of the number of
simultaneous users.)
Benchmarking generally can be defined as a test under controlled
circumstances, intended to produce descriptive data which the Government
needs to evaluate proposals. It can be used, as here, both to assess
the technical capability and to compare the expected operating costs of
a proposed system. See generally Computer Network Corporation;
Tymshare, Inc., 56 Comp.Gen. 245(1977), 77-1 CPD 31.
In deciding a protest involving benchmarking, our standard of review
is the same as for any other evaluation procedure, i.e., the
establishment of qualification and testing procedures is a matter within
the technical expertise of the cognizant procuring activity. We will
not question the use of such procedures unless they are without a
reasonable basis. Tymshare, Inc., B-190822, September 5, 1978, 78-2 CPD
167.
Thus, if a benchmark is rationally based, its use as an evaluation
tool is within the discretion of the procuring agency. Cf. Information
International, Inc., supra, (in which we found that the benchmark
methodology used provided a reasonable basis for determining the
competitive range).
A. Simultaneous Access
In developing the benchmark for REQUEST and RETAIN, the Army used the
concept of a "single composite transaction." It determined, based on
historical data and current estimates, the average mix of programs
required to enlist one person in the Army and included these programs in
the benchmark. The Army then used the number of enlistments and
reenlistments expected to occur each year for the next 5 years as the
factor to project costs of running the benchmark and to estimate
life-cycle costs.
The first question presented by CSC's protest is whether the single
composite transaction developed by the Army was valid. Our review
indicates that a relatively small number of functions represents the
majority of REQUEST and RETAIN transactions. Most of these transactions
are associated with enlistment or reenlistment and involve similar
operations, such as selection of a school or a duty station. In
addition to combining these functions to produce a "model" transaction,
SAC and the Army tested the benchmark programs against actual REQUEST
and RETAIN operations, using "machine level utilization measurements"
(central processing unit time, input-output counts, memory, and the
like) to insure representativeness.
We have carefully examined the record, including those test results.
In our opinion, the benchmark programs do consume amounts and types of
system resources equivalent to REQUEST and RETAIN, and accurately
represent work to be performed under the contract. We therefore find no
basis to object to the use of the "model" transaction.
The second question is whether, when the system may be used
simultaneously by nearly 140 users, the cost data developed from a
single composite transaction reasonably can be projected to estimate
life cycle costs. In our opinion it can, because the costed portion of
the benchmark is in fact a "linear representation" of the system load.
In other words, the average amount of computer resources consumed by a
single user in completing a transaction appears to be the same,
regardless of the number of users. For example, the resources consumed
and the costs generated will be equivalent for 140 simultaneous users
and for one user multiplied by 140.
We believe the benchmark would be invalid (1) if any element in an
offeror's billing algorithm (formula) depended upon the number of
simultaneous users, or (2) if a significant number of "collisions"
occurred when two or more users tried to access the system at the same
time, requiring computer resources to "referee" their requests.
Neither, in our opinion, is the case here.
The Army informs us that it has inspected all offerors' algorithms
and finds that none varies in proportion to the number of simultaneous
users. As for collisions, some of the REQUEST and RETAIN files are
"segmented" so that each user-- each Army activity, for example-- has
its own data base, so that collisions are impossible. For files which
are shared, the Army has structured them so that either a counter is
incremented or the record is re-read before it is updated. With the
"counter" approach, the system merely keeps track of the number of
places being reserved, such as school seats, until capacity is reached.
With the second approach, if, while one recruit is considering an
assignment which the system has indicated is available, another selects
the same assignment, when the first user subsequently attempts to
reserve it, he will be told that the place has been taken. Whether a
reservation is accepted or rejected, the user is advised, so similar
amounts of computer resources are consumed.
In our opinion, this type of collision will not have a significant
impact on cost because the user receives a message in any case. More
importantly, the REQUEST and RETAIN data base is so large-- more than a
million records-- that very few collisions occur. The reservation file
alone, for example, contains about 80,000 records on which there are
approximately 16,000 transactions a month; the greatest number of
collisions reported by the Army in a given month is 10.
Further, the great majority of users are limited to certain functions
for which REQUEST and RETAIN software has been programmed, and do not
use all possible capabilities of the system. Only personnel responsible
for maintenance and control of the system have unrestricted access,
which was not tested in the benchmark and which might increase costs.
We therefore find that the single composite transaction provided a
reasonable basis for identifying the offeror with the lowest evaluated
life cycle costs, and that the benchmark was sufficient-- from a cost
standpoint-- as an evaluation tool, even though it did not test
simultaneous access capability.
B. File Access Method
CSC alleges that the benchmark did not require offerors to
demonstrate their direct access capability. This appears to be true.
However, GSA states that this capability was tested during the
performance demonstration. CSC's real concern appears to be that,
unless direct accessing was required during the benchmark, costs which
were evaluated on the basis of the benchmark would bear no relation to
actual system costs. In operation, the Army's extremely large data base
will require use of direct access in order to meet performance
specifications, particularly response time.
Thus, CSC correctly indicates that unless offerors use the same access
method during the benchmark as they will be using during REQUEST and
RETAIN operations, any comparison of costs among offerors will be
invalid.
The Army, however, assures us that it has manually reviewed benchmark
listings, control language, and output to insure that direct access was
used during the benchmark. We therefore believe CSC's protest on this
ground is academic. Although the solicitation did not specifically
require direct access to be used in the benchmark, failure to so specify
has not prejudiced any offeror nor adversely affected cost evaluation.
C. Performance Demonstrations
We believe it was essential that GSA use the performance
demonstrations to determine whether offerors had the technical
capability to handle simultaneous users. However, in view of our
conclusion that the number of such users will not have a significant
impact on costs, we do not believe that these demonstrations had to be
costed exercises. In addition, as GSA points out, offerors have
guaranteed simultaneous access capability, and will be required to
provide any additional resources needed to meet this requirement at no
additional cost to the Government. We therefore do not believe it was
absolutely necessary to test more than two users during these
demonstrations.
In short, we find that the evaluation procedures used by GSA in this
case were within the range of discretion possessed by a procuring
agency.
The protest is denied.
B-198360, December 9, 1980, 60 Comp.Gen. 104
Contracts - Film and Video Services - Office of Federal Procurement
Policy - Uniform Contracting System - Small Business Concerns - Negative
Responsibility Determination Referral Requirement
Determination, made under Office of Federal Procurement Policy's
uniform system for contracting for film and videotape productions, that
small business concern in not qualified to participate in competition
for Government contracts is essentially negative responsibility
determination which must be referred to Small Business Administration
under certificate of competency program. Contracts - Film and Video
Services - Office of Federal Procurement Policy - Uniform Contracting
System - Notice in Commerce Business Daily Requirement
Office of Federal Procurement Policy's (OFPP) prequalification of
offerors in connection with its uniform system for contracting for film
and videotape productions is not unwarranted restriction on competition
because all firms may attempt to qualify. However, use of OFPP's
qualified list by procuring agencies in soliciting for particular
procurements is unduly restrictive of competition unless procurements
are synopsized in Commerce Business Daily and interested firms on the
prequalified lists are afforded opportunity to compete. Contracts -
Film and Video Services - Office of Federal Procurement Policy - Uniform
Contracting System - Qualified List Agreements - Contract Status
Procurements under OFPP's uniform system for contracting for film and
videotape productions are not "made by placing an order under an
existing contract" because agreement between qualified firm and OFPP's
executive agent is not "contract" within meaning of 15 U.S.C. 637(e)
(1976) and, therefore, must be synopsized in Commerce Business Daily.
Matter of: Office of Federal Procurement Policy's films production
contracting system; John Bransby Productions, Ltd., December 9, 1980:
This decision results from (1) our current survey of the uniform
Government-wide system for contracting for motion picture and videotape
productions established by the Office of Federal Procurement Policy
(OFPP), and (2) a protest filed by John Bransby Productions, Ltd.
(Bransby), against limitations on competition inherent in the uniform
system.
We have also considered the comments of the Small Business
Administration's Chief Counsel for Advocacy (SBA) that the uniform
system violates 15 U.S.C. 637(b)(7)(A) (Supp. I, 1977), which empowers
the SBA to conclusively certify the responsibility of small business
concerns.
Bransby essentially contends that the system's prequalification of
offerors, the limitation on the number of offerors that may respond to a
solicitation, and the failure to require notice of requirements in the
Commerce Business Daily violate procurement statutes and laws enacted
for the protection of small business concerns. OFPP responds that the
uniform system has resulted in more meaningful competition by providing
fair and open prequalification of sources, by establishing uniform
evaluation criteria, by standardizing contract terms and conditions, and
by establishing a central location for information concerning
procurement activity.
This decision will address only the legal issues presented by the
parties, and our views on the efficacy of the uniform system will be
reserved for consideration of our current audit investigation.
We conclude that:
(1) the uniform system's prequalification of offerors, without
referral of negative determinations to SBA, violates SBA's conclusive
authority to make responsibility determinations regarding small business
concerns;
(2) the uniform system's prequalification of offerors does not
constitute an unwarranted restriction on competition;
(3) the use of random lists of offerors in connection with the
uniform system does not restrict the number of qualified firms that may
compete in individual procurements; and
(4) procurements under the uniform system must be synopsized in the
Commerce Business Daily.
By letters of today, we are bringing our views to the attention of
the Administrators of OFPP and SBA.
In the early 1970's, studies of audiovisual activities by the
executive and legislative branches revealed waste, mismanagement,
duplication, and inadequate on the private sector for expertise.
In 1972, the Office of Telecommunications Policy, under the Office of
Management and Budget's direction, suggested that the General Services
Administration establish national requirements contracts or basic
ordering agreements for audiovisual productions. In 1976, OFPP assumed
the responsibility of directing improvement in audiovisual management.
The main problem areas were: (1) prospective contractors could not
obtain adequate information on opportunities and requirements; (2)
prospective contractors did not have adequate time to submit proposals
after publication in the Commerce Business Daily; (3) proposal
evaluation procedures and criteria differed widely and resulted in
unacceptably high administrative costs to the agencies; (4) in some
instances more than 100 proposals were received in response to one
solicitation, requiring extensive agency resources to evaluate
proposals; (5) agencies lacked audiovisual expertise which resulted in
costly delays and unsuitable final products; and (6) potential offerors
experienced difficulty in establishing credentials and qualifications
because of differing agency requirements.
OFPP Policy Letters 78-5 and 79-4, the culmination of 5 years of
effort, established the uniform procurement system for motion picture
and videotape productions with the following features:
(a) The Directorate of Audiovisual Activities (now called Directorate
for Audiovisual Management Policy), Department of Defense, is designated
as executive agent to establish and maintain the uniform system and to
serve as the central information source on motion picture and videotape
production programs.
(b) All firms interested in doing motion picture or videotape
production work for the Government are invited to qualify for contracts
containing general terms and conditions and for listing in the central
automated source list (Qualified Film Producers List (QFPL) or Qualified
Videotape Producers List (QVPL)), by submitting sample films to the
Interagency Audiovisual Review Board (IARB). Contractors are also asked
to provide a statement explaining the purpose of the film, the sponsor,
the contract price and/or production costs.
(c) The IARB, which represents about 20 agencies, is responsible for
evaluation of the sample films and videotapes in accordance with the
following standardized criteria: achievement of purposes, creativity,
continuity, and technical quality. Producers who attain a minimum score
of 70 out of 100 points and who enter into a contract with the executive
agent are placed on the QFPL or QVPL. These lists are always open for
producers to submit films and videotapes to the IARB for qualification
for a contract and placement on the QFPL or QVPL. Notice of the
opportunity to submit films for consideration by the IARB is published
at least semi-annually in the Commerce Business Daily and as often as
feasible in the trade press.
(d) The QFPL and QVPL are mandatory for use by agencies with
requirements for contracted motion picture or videotape production
except in limited circumstances, such as where procurements under
section "8(a)" of the Small Business Act are utilized or sole source is
justified by the agency; thus, producers not on the lists are
ineligible to receive Federal Government contracts for these services.
A. Violative of Small Business Laws?
SBA refers to 15 U.S.C. 637(b)(7)(A) (1976 and Supp. I, 1977) as the
statute empowering the SBA to certify to Government procurement officers
all elements of responsibility of small business concerns. SBA notes
that Government procurement officers may not preclude a small business
concern from being awarded a contract on responsibility grounds without
referring the matter to SBA for final disposition; therefore, the
prequalification procedure established by OFPP is legally defective in
that it deprives small businesses of the right to obtain a final
responsibility determination from SBA. In SBA's view, the uniform
system makes a determination on product quality, which is an element of
responsibility. SBA believes that under the uniform system firms are
disqualified due to their alleged lack of capacity without the benefit
of an SBA determination.
Finally, SBA cites our decision, B-152757, July 15, 1964, as an
example of a situation where a bidder prequalification procedure for a
particular procurement was found to be defective because it deprived SBA
of making the final determination on the capacity and credit of small
business firms. In that decision, we found that the agency's
prequalification of bidders in connection with specific proposed
construction projects was inconsistent with SBA's statutory authority to
make conclusive determinations of small business concerns' competency to
perform Government contracts. The uniform system here is far worse, in
SBA's view. Rather than merely disqualifying a small business from
participating in a particular procurement, the failure of a small firm
to qualify would disqualify it from all Federal audiovisual and
videotape procurements, thus having the same effect as a de facto
debarment, citing Myers & Myers, Inc. v. U.S. Postal Service, 527 F.2d
1252 (2d Cir. 1975).
OFPP explains that the IARB evaluates the quality of a vendor's
sample production to determine if it meets the minimum acceptable level
of quality, i.e., 70 points or more out of a possible 100, so that the
vendor can be listed on the QFPL or QVPL; this qualification system
remains open for submission, or resubmission in the event of failure to
qualify, of films and videotapes at all times. OFPP states that product
quality, as a factor affecting contractor responsibility, is a matter
which, in general, is initially a determination to be made by the
procuring agency or in this case by the executive agent.
OFPP notes that a second opportunity for evaluation of a vendor's
competency arises when the procuring agency receives proposals for
motion picture or videotape production. It is the procuring agency
here, not the executive agent, that makes responsibility determinations,
which, if negative, would automatically be referred to SBA.
OFPP essentially admits that the IARB's evaluation of the work sample
for purposes of determining the firm's technical competency is a
responsibility determination. Further, OFPP's reliance on similarities
between the uniform system and the prequalification system in the matter
of Department of Agriculture's Use of Master Agreements, 56 Comp.Gen. 78
(1976), 76-2 CPD 390, leads us to conclude here, as we did there, that
any small business firm found not to qualify for contracts for
responsibility-related reasons should be referred to SBA. Unlike
negotiated procurements, where the relative technical merits of the
proposals, and the question of referral to SBA is not involved
(Electrospace Systems, Inc., 55 Comp.Gen. 415 (1979), 79-1 CPD 264),
here, OFPP's purpose is to determine the responsibility of potential
offerors.
Thus, SBA is correct and OFPP should revise the program to refer such
negative determinations involving small business concerns to the SBA
under the certificate of competency program. We note, however, that
only one firm has protested its failure to qualify since the program
started.
B. Violates Requirement for "full and free" Competition?
Bransby contends, relying on our decision in the matter of D. Moody &
Company, Inc.; Astronautics, Corporation of America, 55 Comp.Gen. 1
(1975), 75-2 CPD 1, that the OFPP prequalification requirement for the
purpose of administrative convenience is not justified because it
results in an unwarranted restriction on full and free competition as
contemplated in applicable procurement statutes and regulations. We
note that Bransby is on the qualified list and we are addressing this
aspect of the matter in connection with our audit investigation and not
because Bransby is an interested party relative to this issue.
OFPP contends that its prequalification process actually enhances
competition and is in accord with our decisions in the matter of
Department of Agriculture's Use of Master Agreements, supra, and
Department of Health, Education, and Welfare's use of basic ordering
type agreement procedure, 54 Comp.Gen. 1096 (1975), 75-1 CPD 392.
In reply, Bransby argues that a qualified products list might be used
where a Government agency has a need for a product whose specifications
may readily be standardized; an example would be tires. Bransby states
that tire manufacturers would submit samples, which would be evaluated
by the agency, and tires which meet the agency standards would be placed
on the qualified products lists. In Bransby's view, use of the lists
assures the agency of a satisfactory end product; however, there is no
way that evaluation of a motion picture film made in the past will
assure an agency that it will receive a satisfactory film on a different
subject in the future.
In the Department of Agriculture decision, we concluded that
Agriculture's proposal to prequalify firms in connection with
procurements for consulting services was not objectionable because (1)
master agreements would be entered into with all qualified firms, and
(2) it appeared that competition would be enhanced since (a) small firms
would be better able to compete for individual project requirements
rather than large requirements-type contracts, (b) the costs of
responding to subsequent solicitations would be reduced, and (c) the
pressures for curtailing competition because of delays inherent in
soliciting and evaluating a large number of proposals for each project
would be eliminated.
In the Department of Health, Education, and Welfare decision, we
concluded that the agency's proposal to prequalify firms in connection
with procurements of expert services for studies, research, and
evaluation was not objectionable because (1) all firms found to be
within the competitive range would be eligible, and (2) the agency
proposed to limit its use of the procedure to instances where award on a
sole-source basis would otherwise be made. See also 36 Comp.Gen.
809(1957) (the use of a Qualified Products List was approved because
necessary testing was so extensive that, as a practical matter, it could
not be performed within the time constraints of a procurement);
B-135504, May 2, 1958 (approved use of Qualified Manufacturers List);
50 Comp.Gen. 542 (1971) (approved prequalifying microcircuitry
manufacturers).
Thus, while prequalification of competitors is generally inconsistent
with the requirement for full and free competition (52 Comp.Gen.
569(1973)), we have not objected where prequalification serves a
legitimate need of the procuring activity and not mere expediency, or
administrative convenience (D. Moody & Company, Inc., supra).
Here, as in the Department of Agriculture and Department of Health,
Education, and Welfare decisions, the uniform system permits all firms
meeting a certain level of acceptability to participate. More than 450
firms have qualified and only one firm protested its rejection to our
Office. Second, Bransby's contention-- that new businesses cannot
qualify because there are no work samples to submit-- presents an
academic question in view of the number of firms already qualified, the
lack of protests, and the availability of assistance to small business
concerns from the SBA.
Third, although the uniform system is designed to be used as the normal
procurement method as compared with the exceptional method envisioned in
the Department of Agriculture and Department of Health, Education, and
Welfare decisions, we do not view this as a basis to object because as a
practical matter, all qualified firms can participate. Thus, we cannot
conclude that the OFPP's current prequalification of offerors
constitutes an unwarranted restriction on competition.
A. Limits on the Number of Bidders?
Under the uniform system, a contracting agency notifies the executive
agent of its need to contract for a motion picture or videotape
production and the executive agent supplies the names of five producers
selected at random by computer from the list. At the contracting
agency's request, more names are provided in groups of five. For each
group of five names supplied, the contracting agency can add the names
of two producers of its selection from the list. For any particular
procurement, solicitations are sent only to those few firms. As a
result, Bransby has been invited to participate in only one procurement
and since agencies' procurement needs are not announced in the Commerce
Business Daily, Bransby has no means available to discover when
particular procurements are in process.
OFPP explains that the uniform system requires that proposals be
solicited from at least five producers for each requirement but agencies
determine whether more than five proposals should be solicited, except
when the estimated cost is less than $100,000; then, generally only two
increments of producers should be requested. OFPP also explains that
agencies retain the ability to solicit the number of producers
considered appropriate to assure a satisfactory end product.
OFPP contends that the uniform system does not violate 10 U.S.C.
2304(g)(1876), as Bransby argues, because proposals are solicited from
the maximum number of qualified sources consistent with the nature and
requirements of the service to be procured. In OFPP's view, this aspect
of the uniform system enhances competition because many small businesses
with limited resources that were unable to cope with multiple agency
requirements and thus were discouraged from engaging in business with
the Government now are able to compete.
Bransby disagrees with OFPP's assessment and argues that since the
average number of producers solicited is 7.2 out of 540, the maximum
number of qualified sources is not being solicited.
Further, Bransby points out that about 70 percent of the awards during
the first year of the uniform system's operation went to one of the
producers added to the random list by procuring agencies; thus, Bransby
believes that the system unduly restricts competition.
In our view, the uniform system does not restrict the number of
competitors that may compete in a particular procurement because the
procuring agency is free to request all the names on the list and notify
all listed firms of its requirements. In practice, however, procuring
agencies may have used the uniform system so as not to maximize
competition in individual procurements. For now, we will reserve
comment on these and other aspects of the uniform system's operation
until our current audit investigation is completed. Further, as
discussed below, in the future, because procuring agencies are required
to comply with statutory synopsis requirements, potential offerors will
be able to compete for these contracts, thus maximizing competition.
B. Synopsis in Commerce Business Daily?
Bransby believes that competition would be enhanced if producers
could learn of agency requirements through the Commerce Business Daily
and express their interest in the procurement. Bransby contends that 15
U.S.C. 637(e)(1978) requires synopsis of all proposed procurement
actions (in excess of specified dollar amounts) and that the uniform
system does not comply with that requirement.
OFPP states that there is an exception to the synopsis requirement:
procurement actions which are made by an order placed under an existing
contract do not have to be synopsized; each qualified firm under the
uniform system has a contract. In reply, Bransby argues that
"contracts" under the uniform system are basic ordering agreements and
not "contracts" within the meaning of the exception to the synopsis
requirement because it contains no promise for the breach of which the
law gives remedy; it contains no promise of performance which the law
recognizes as a duty; and it does not contain a promise enforceable at
law directly or indirectly.
The language of 15 U.S.C. 637(e) provides that publication of notice
of proposed procurements in excess of certain dollar amounts is required
unless the procurement involves one of a few exceptions, for example,
when the procurement is made "by an order placed under an existing
contract." Subsection (e) was added by the Small Business Act Amendments
of 1961, Public Law No. 87-305, September 26, 1961, 75 Stat. 666. The
legislative history of that act reveals that Congress intended to
"secure for small business a greater participation in Government
procurement" by requiring that all procurements in excess of low dollar
amounts be synopsized to give notice to a larger number of businessmen
of Government procurements. The amendment excepted procurements which
for security reasons are classified, procurements for perishable
substances, public utility services, and procurements in emergency
situations.
Although military and civilian agency procurement regulations were
amended, prior to passage to the act, to provide for the synopsis
requirement, Congress deemed it necessary to make the synopsis
requirement a permanent statutory provision. The twofold purpose of
subsection (e) was to obtain benefits from a nearly complete public
listing of procurement actions for large and small businesses, as well
as for the Government itself through maximized competition. Congress
believed that small businesses need this additional assistance to better
compete for Government contracts. S. Rep. No. 802, 87th Cong., 1st
Sess. 4, 5(1961); H.R. Rep. No. 8762, 87th Cong., 1st Sess.(1961)
(conference report); Cong. Rec. S1759 (daily ed. Feb. 9, 1961).
Thus, in view of the legislative intent of subsection (e), we believe
that the exception to the synopsis requirement must be narrowly
interpreted, and we conclude that the document issued to qualified firms
under the uniform system is not a "contract" within the meaning of the
exception to the synopsis requirement of subsection (e). In our view,
it is not possible to place an order under the document issued to each
of the 540 qualified firms because too many essential elements are
missing: there is no description of the item to be procured, there are
no delivery terms, and there is no price to be paid. Therefore,
procurements under the current uniform system do not qualify for that
exception to the synopsis requirement.
We recognize that OFPP has the authority, under 41 U.S.C. 402(1976),
to provide overall direction of procurement policies, regulations,
procedures, and forms for executive agencies but OFPP must do so in
accordance with applicable laws (Id.). Thus, we disagree with OFPP's
conclusion that it is within the statutory authority of OFPP to
determine for the purposes of procurement policy within the executive
branch that the agreement resulting from Policy Letter 79-4 is a
"contract" for purposes of subsection (e). In our view, OFPP's
authority does not extend to redefining the meaning of the synopsis
requirement set forth in 15 U.S.C. 637(e).
Regarding the use of rotating lists of potential offerors, we have
considered situations involving the Government Printing Office's
"rotating bid list" procedure and the General Services Administration's
"rotation of bidders mailing list" procedures and we have not found
these procedures inherently improper. Coastal Services, Inc., B-182858,
April 22, 1975, 75-1 CPD 250; American Drafting and Laminating Company,
B-186425, July 26, 1976, 76-2 CPD 82. In both cases, the synopsis
requirement was not observed and we recommended that future procurements
strictly adhere to it. Thus, the uniform system's employment of a
computer-selected list of offerors to receive a request for proposals is
not improper as long as the synopsis requirements are observed.
C. Negotiation v. Formal Advertising?
Bransby points out that all procurements under the uniform system are
negotiated but 41 U.S.C. 252(c)(1976) requires the use of formal
advertising unless certain circumstances are present. Bransby argues
that the uniform system's blanket determination-- that all firm
contracting involves situations where it is impracticable to secure
competition with formal advertising-- constitutes an interference
prohibited by 41 U.S.C. 405(f) with the determinations of executive
agencies regarding specific actions in the award of contracts.
OFPP contends that its authority under 41 U.S.C. 408 supersedes the
authority of executive agencies under any other laws to prescribe
policies for procurement and authorizes it to determine that motion
picture and videotape production procurements should be negotiated
pursuant to the authority of 41 U.S.C. 252(c)(10).
It seems apparent to us that because of the nature of film and
videotape productions, generally the negotiation authority of 41 U.S.C.
252(c)(10) would be appropriate since it is impracticable to secure
competition through formal advertising.
Our consideration of OFPP's uniform system to date reveals that the
program's prequalifications of offerors should be revised to refer
negative determinations involving small business concerns to SBA.
We also conclude that, while the use of computer-selected lists of
offerors to receive solicitations in individual procurement is not
improper, such procurements must be synopsized in the Commerce Business
Daily as required by statute. Further, procuring agencies or the
executive agent must provide a copy of the solicitation to potential
offerors, upon request, and procuring agencies must consider proposals
submitted by all offerors on the prequalified lists.
B-195550, December 5, 1980, 60 Comp.Gen. 102
Contracts - Protests - Interested Party Requirement - Direct Interest
Criterion
Labor unions protesting exercise of contract option because firms
that might compete if solicitation were issued employ persons who are or
might become affiliated with unions are not "interested" parties under
General Accounting Office Bid Protest Procedures.
Matter of: Marine Engineers Beneficial Association; Seafarers
International Union, December 5, 1980:
The Marine Engineers Beneficial Association, District 2 (MEBA), and
the Seafarers International Union (SIU), protest the decision of the
Department of the Navy, Military Sealift Command (MSC) to exercise an
option under contract No. N0033-75-C-T006 with Marine Transport Lines
(MTL) to allow for the continued operation of nine oil tankers. The
contract awarded to MTL provided for the world-wide operation of the oil
tankers for an initial contract period of five years with a series of
two-year options. The exercise of the first option is the subject of
this protest.
Our Bid Protest Procedures require that a party be "interested" in
order that its protest may be considered. 4 C.F.R. 20.1(a) (1980). The
threshold question to be resolved is whether MFBA and SIU are
"interested" parties within the meaning of our Bid Protest Procedures.
We conclude that they are not.
In determining whether a protester satisfies the interested party
criterion, we examine the degree to which the asserted interest is both
established and direct. In making this evaluation, we consider the
nature of the issues raised and the direct or indirect benefit or relief
sought by the protester. Kenneth R. Bland, Consultant, B-184852,
October 17, 1975, 75-2 CPD 242. Thus, we have recognized the rights of
nonbidders to have their protests considered on the merits where there
is a possibility that recognizable established interests will be
inadequately protected if our bid protest forum is restricted to bidders
in individual procurements. See 49 Comp.Gen. 9 (1969); Abbott Power
Corporation, B-186568, December 21, 1976, 76-2 CPD 509.
We discussed the interested party principle in American Satellite
Corporation (Reconsideration), B-189551, April 17, 1978, 78-1 CPD 289,
in which we affirmed our earlier dismissal of a protest concerning the
degree of competition for the prime contract award filed by a
subcontractor named in the proposal of an offeror for the prime
contract. We stated:
The party's relationship to the question raised by the protest must
be direct. Where there is an intermediate party of greater interest, we
generally have considered the protester to be too remote from the cause
to establish interest within the meaning of our Bid Protest Procedures *
* *
As explained in both the initial decision and its affirmation on
reconsideration, we did not consider the protester an interested party
for protest purposes because the firm, only a named subcontractor, in
our opinion was "too remote from the subject matter to establish direct
interest." In the absence of a protest by a prime offeror, we did not
consider the merits of the issues raised.
MEBA and SIU claim to be interested parties by virtue of their status
as maritime unions representing licensed officers and unlicensed seamen.
The unions state that they have collective bargaining agreements with
various tanker companies, many of whom have in the past responded to
solicitations issued by MSC and have been operators of MSC chartered
vessels. The unions claim that their interest is both direct and
substantial "since all the men filling the billets for the officers and
crew of the sealift class tankers are available for affiliation with the
protesting unions." In support of their position MEBA and SIU refer to
our previous decision in District 2, Marine Engineers Beneficial
Association-- Associated Maritime Officers, AFL-CIO, B-181265, November
27, 1974, 74-2 CPD 298, where we considered a protest filed by a labor
union.
However, in the cited case the labor union was protesting a
non-responsibility determination made against the low offeror under a
Government solicitation essentially on the basis that the
nonresponsibility determination was in fact a negative reflection upon
the union rather than the firm. Therefore, in our view the union's
interest was direct and substantial.
In contrast, MEBA's and SIU's protest against MSC's exercise of the
contract option essentially is based on the proposition that firms which
might compete if a solicitation were issued employ persons who are or
might become affiliated with the unions. We believe that there clearly
are "intermediate part(ies) of greater interest" for purposes of raising
a protest of this nature, i.e., those firms which MEBA and SIU allege
would have responded if a competition was held. It is those parties--
firms that could be awarded a contract if MTL's option were not
exercised (or if a protest against the option exercise were sustained)--
that here represent the type of direct interest contemplated in this
circumstance by section 20.1(a) of our Procedures. Since no such firm
expressed a timely indication of interest in performing the services
involved in MTL's option by, for example, filing a bid protest, we do
not believe that our consideration of the matter raised by MEBA and SIU
would be appropriate under the principles discussed above.
Accordingly, we find the interests of MEBA and SIU to be too remote
for the unions to be considered "interested" parties here as
contemplated by our Procedures. The protest is dismissed.
MEBA and SIU also request that our Office take steps to insure that
expenditures under the MTL contract and similar MSC contracts are
properly reviewed and audited, and that we review the MSC tanker "build
and charter" program in general, to which the instant procurement
relates.
(The program as instituted involved the private financing and
construction of the tankers with a commitment from the Navy that it
would lease them, with renewal provisions for 20 years.)
To the extent that MEBA and SIU are suggesting that we become
involved in the administration of MSC's contract with MTL, we point out
that contract administration is a function of the procuring agency, not
the General Accounting Office. See Nuclear Research Corporation,
B-198909, June 5, 1980, 80-1 CPD 393.
Further, we are advised by the Navy that MSC contract expenditures,
including those under the build and charter program, are reviewed by the
Navy audit group, the Inspector General, and the Defense Contract Audit
Agency.
Finally, our Office reviewed MSC's build and charter program in
general in a report to the Congress, "Build and Charter Program for Nine
Tanker Ships," B-174839, August 15, 1973.
B-200237.2, December 4, 1980, 60 Comp.Gen. 101
Contracts - Subcontracts - Administrative Approval - Review by General
Accounting Office - Active Agency Participation in Subcontractor
Selection - What Constitutes
Prior decision dismissing protest of subcontractor award is affirmed
where evidence submitted in support of request for reconsideration-- a
statement that agency, prior to approving subcontract, will examine
prime contractor's methods for selecting subcontractor-- does not
establish active agency participation in selection of subcontractor so
as to invoke GAO bid protest jurisdiction.
Matter of: Reflectone, Inc., December 4, 1980:
Reflectone, Inc. requests reconsideration of our decision B-200237,
November 6, 1980, 80-2 CPD 342, a matter involving a subcontract award
by IBM, a prime contractor to the Department of the Navy. We dismissed
Reflectone's protest because it did not fall within any of the limited
criteria under which GAO will consider subcontractor protests.
The request for reconsideration is based on additional evidence which
we did not receive until after the decision had been signed. The
additional evidence consists of an October 21, 1980 letter from the
Commander of the Naval Air Systems Command to a Congressman, in which it
is stated that the methods employed by IBM in selecting a subcontractor
would be examined prior to Government approval of the subcontract award.
We have consistently held that the Government's approval of a
subcontract award is insufficient for invoking our bid protest
jurisdiction; what is required is a showing that the Government in
effect controlled the subcontractor selection or significantly limited
subcontractor sources. Optimum Systems, Inc., 54 Comp.Gen. 767(1975),
75-1 CPD 166. We do not believe a statement that the Navy will examine
IBM's methodology for selection of a subcontractor prior to exercise of
its approval rights establishes that the Navy actively participated in
the subcontractor selection process so as to bring the case within the
Optimum Systems tests.
Reflectone has also requested a conference on the merits of its
protest. However, in view of the fact that the protest is not for
review by our Office, such a conference will serve no useful purpose and
the request therefore is denied. Cacciamani Bros., B-194434, July 20,
1979, 79-2 CPD 45.
The prior decision is affirmed.
B-197595, December 3, 1980, 60 Comp.Gen. 97
Contracts - Specifications - Restrictive - Protest - Timeliness
Opening of bids on scheduled date constitutes initial agency action
adverse to protest against specifications filed with agency. Subsequent
protest to General Accounting Office not filed within 10 days of
notification of adverse agency action is untimely. Contracts - Awards -
Small Business Concerns - Set-Asides - Withdrawal - Nonacceptance of SBA
Responsibility Determination
Where contracting officer finds small business nonresponsible, matter
of small business responsibility is to be conclusively determined by
Small Business Administration (SBA). Contracting officer is bound by
SBA decision and cannot cancel solicitation absent compelling
independent justification. General Accounting Office - Jurisdiction -
Contracts - Small Business Matters - Responsibility Determination by SBA
- Conclusiveness
General Accounting Office will not question affirmative
responsibility determination (issuance of certificate of competency) by
SBA unless fraud or failure to consider vital information is shown.
Matter of: Baxter & Sons Elevator Co., Inc., December 3, 1980:
Baxter & Sons Elevator Co., Inc. (Baxter) protests the cancellation
of invitation for bids (IFB) No. 671-1-80, issued by Veterans
Administration Audie L. Murphy Memorial Veterans Hospital, San Antonio,
Texas (VA), on July 26, 1979, for elevator maintenance. Baxter also
contests the VA's resolicitation of the contract as a sole-source
procurement from the Otis Elevator Co. (Otis).
The IFB was issued as a 100-percent set-aside for small business,
with date of bid opening scheduled for August 27, 1979. Specifications
in the IFB required that prospective contractors maintain a supply of
original manufacturer's replacement parts in the hospital machine room
and a maintenance stock inventory of new parts for repair of each
elevator located within a 24-hour delivery time from San Antonio. It
was emphasized that "genuine manufacturer's new parts" be used and that
"no substitutions shall be permitted."
On August 23, 1979, Baxter sent a letter to the contracting officer
opposing the specifications as unduly restrictive to small businesses
and seeking their amendment. Baxter claimed the listing of replacement
parts was unnecessarily extensive and the 24-hour delivery requirement
was unreasonable. It was alleged that both restrictions had been
incorporated into the specifications for the sole purpose of retaining
Otis (the original installer) as maintenance representative.
On August 27, 1979, three bids were opened and Baxter was the low
bidder.
During the months of September and October 1979 the hospital's chief
engineer and contracting officer visited Baxter's offices in San Antonio
and Dallas. At that time it was found that Baxter did not have the
repair parts on hand as required by the specifications.
Similar inquiries were made at the offices of the next lowest bidder,
with the same result.
On November 27, 1979, a certificate of competency (COC) for Baxter
was requested from a Small Business Administration (SBA) Dallas Office.
In December 1979, VA informed the SBA that Baxter was considered to be
responsive but nonresponsible because sufficient elevator parts were not
in its warehouse inventory. On January 11, 1980, the SBA informed VA
that a COC would be recommended for Baxter. On January 6, 1980, a
meeting was held between representatives of the VA and SBA, at which
time the IFB specifications and the needs of the hospital were
discussed.
The next day, January 17, 1980, VA hospital officials met and decided
to cancel the IFB. The SBA was notified of this decision by letter
dated January 24, 1980. The following day, January 25, 1980, Baxter
sent a mailgram to our Office protesting the cancellation. On January
28, 1980, the Dallas SBA issued a COC to Baxter. Subsequently, a
sole-source contract was awarded to Otis.
In its protest, Baxter raises the following three issues: (1)
reasonableness of the specifications, (2) propriety of the cancellation,
and (3) validity of the VA's resolicitation as a sole-source
procurement.
Baxter presents evidence intended to prove the unduly restrictive
nature of VA's specifications. However, we must dismiss this portion of
the protest because of the failure to meet the filing deadline
prescribed by our Bid Protest Procedures, 4 C.F.R.part 20 (1980).
Section 20.2(a) requires that if a protest has been filed initially with
the contracting agency, any subsequent protest to our Office must be
filed within 10 working days after notification of adverse agency
action. The opening of bids on the scheduled date constituted initial
adverse action to the protester's interest (i.e., to its protest of the
IFB specifications). See Hydraulic Technology, B-196450, January 7,
1980, 80-1 CPD 19, and cases cited therein. Therefore, Baxter's protest
against the specifications in the IFB is dismissed as untimely.
Since the VA found Baxter to be nonresponsible, it was required by
the Small Business Act to refer the matter to the SBA, which
conclusively determines the matter by issuing or refusing to issue a
COC. 15 U.S.C. 637(b)(7)(A) (1976). See Old Hickory Services,
B-192906.2, February 9, 1979, 79-1 CPD 92; Prestype, Inc., B-194328,
August 17, 1979, 79-2 CPD 127.
In this case, the VA properly referred the question of Baxter's
responsibility to the SBA Regional Office in Dallas, Texas. However,
after learning of the SBA's intention to issue a COC to the protester,
and after meeting with representatives of the Dallas SBA in an attempt
to resolve the matter, the VA canceled the IFB. The heart of this
protest, then, goes to an agency's authority to cancel a small business
solicitation, allegedly to change the specification, in the face of an
anticipated issuance of a COC by SBA.
Federal Procurement Regulations (FPR) Sec. 1-2.404-1(a) (1964 ed.
circ. 1) allows no solicitations to be canceled only for compelling
reasons. A compelling reason for cancellation exists where the
solicitation no longer represents the Government's needs or the agency
determines that its needs can be met by a less expensive approach than
that called for in the solicitation. See Honeywell Information Systems,
Inc., B-193177.2, December 6, 1979, 79-2 CPD 392,at p. 5, and cases
cited therein.
In its report dated June 9, 1980, the VA offers the following as
reasons for cancellation of the IFB:
a. Small Business Administration indicated in the meeting of January
16, 1980 that they would not support the Veterans Administration in
enforcement of the spare parts requirement. (This dictated a
requirement to rewrite the solicitation.)
b. The specifications as written in the IFB of July 26, 1979 do not
have any performance requirement. The specifications instead relied on
the requirement to maintain a spare parts inventory. It was reasoned
that a competent contractor, providing they have the required spare
parts on hand, should be able to provide prompt service and maintain the
elevators satisfactorily. It was also reasoned that an elevator
contractor normally maintaining this type of elevator equipment would
maintain substantial spare parts in his inventory.
The validity of the VA cancellation of this IFB is dependent upon
whether these facts constitute a compelling reason under the cited
regulation. We find that the VA has failed to present a sufficiently
compelling reason to justify cancellation of the IFB in this case.
As to the first alleged ground for cancellation, we cannot agree with
the VA's parenthetical assertion that a rewrite of the solicitation was
warranted by its dispute with the SBA over the spare parts restriction.
We are aware of no limitation binding the SBA to the conditions stated
in the IFB. We have held that contracting agencies cannot overcome the
SBA's statutory authority to make determinations regarding all aspects
of small business responsibility by specifying "special standards" or
"definitive criteria" in the solicitation. J. Baranello and Sons, 58
Comp.Gen. 509 (1979), 79-1 CPD 322; Microforms Management Corp.,
B-195350.2, February 4, 1980, 80-1 CPD 88.
Additionally, GAO is not empowered to question SBA's issuance of a
COC unless the record shows that it was fraudulent, or that certain
vital information bearing on the small business bidder's responsibility
was not considered. J. Baranello and Sons, supra. Here, there is
neither evidence of fraud nor of SBA's failure to consider the spare
parts issue. In fact, the record discloses that on January 16, 1980,
representatives of the VA hospital and the Dallas Regional Office met
and discussed the parts availability (VA memorandum dated April 15,
1980).
This clearly indicates SBA's full awareness of the issue. Microforms
Management Corp., supra. Consequently, the SBA's decision not to
enforce the spare parts restriction in the solicitation did not
"dictate" or justify a new solicitation.
As to the second factor offered as a basis for cancellation, we do
not see the significance of the specific "performance requirement" as
stated by the VA. A reading of the entire report concerning the
necessity to change the specification makes it clear that this suggested
revision of the specification is nothing more than a restatement of the
spare parts requirement. It does not reflect any change in Government
needs, nor does it clarify any ambiguity or correct a deficiency present
in the original solicitation. See FPR Sec. 1-2.404-1(b)(1).
This revision of the IFB specifications was apparently designed to
circumvent the affirmative responsibility determination by the SBA. The
VA's explanation relates to the bidders' ability to comply with the
specifications, which is by definition a matter of responsibility.
Further, the record indicates that while the SBA did not disagree with
the VA's need for prompt performance as required by the specifications,
the SBA concluded that Baxter could meet the performance requirement
without maintaining the spare parts inventory required by the
solicitation to insure timely performance. The SBA's resolution of the
issue is binding upon the contracting officer, appealable only to the
SBA Central Office in Washington, D.C., as prescribed by FPR Sec.
1-1.708-2(e). It cannot be overcome by rewording the disputed
restriction and calling it a "performance requirement." See J. Baranello
and Sons, supra.
Accordingly, we find the VA has failed to provide a cogent reason on
which to base its cancellation of the IFB. Therefore, the sole-source
award to Otis was not justified.
The protest is sustained.
The VA has informed us that the current maintenance contract with
Otis is operating on a month-to-month basis. In considering an
appropriate remedy, then, extent of performance and cost to the
Government are not relevant factors. We therefore recommend that the VA
terminate the contract with Otis and make an award to Baxter and Sons
Elevator Co., Inc.
By letter of today, we are advising the Administrator of Veterans
Affairs of our recommendation.
Since this decision contains a recommendation for corrective action
to be taken, we are furnishing copies to the Senate Committees on
Governmental Affairs and Appropriations and the House Committees on
Government Operations and Appropriations in accordance with section 326
of the Legislative Reorganization Act of 1970, 31 U.S.C. 1176 (1970),
which requires the submission of written statements by the agency to the
committees concerning the action taken with respect to our
recommendation.
B-199341, November 28, 1980, 60 Comp.Gen. 93
Federal Labor Relations Authority - Jurisdiction - Unfair Labor
Practices - Settlement - Union Dues Allotments - Wrongful Termination by
Agency
Federal Labor Relations Authority has issued complaint charging
Department of Labor with unfair labor practice in wrongfully terminating
40 dues allotments for AFGE Local 12 from March to June 1979. The
Department proposes to settle by reimbursing the union for the amount of
dues it should have received. Federal Labor-Management Relations
Statute, 5 U.S.C.chapter 71, provides for dues allotments to unions and
authorizes Authority to remedy unfair labor practices, including failure
to comply with statute. We have no objection to settlement, if approved
by the Regional Director of the Authority. Modifies B-180095, Oct. 2,
1975. Unions - Federal Service - Dues - Allotment For - Agency's
Wrongful Discontinuance - Settlement of Unfair Labor Practice Complaint
If an employee authorizes the deduction of union dues from his pay, a
Federal agency is obligated to withhold the amount from the employee and
pay it over to the union. The payment of the dues is a personal
obligation of the employee, and where the agency wrongfully fails to
withhold the dues and later reimburses the union pursuant to the
settlement of unfair labor practice charges, the agency must either
collect the dues from the employee or waive collection of the debt.
Matter of: Department of Labor - Union Dues Allotments - Unfair
Labor Practice Settlement, November 28, 1980:
This decision is in response to a request by Alfred M. Zuck,
Assistant Secretary for Administration and Management, Department of
Labor, for an advance decision concerning two different questions
involving dues allotments. We shall address the second question first.
1. Reinstatement of 71 Dues Allotments Revoked by the Department of
Labor in March 1980
During contract negotiations between American Federation of
Government Employees Local 12 and the Department, the union alleged that
71 dues allotments had been wrongfully terminated on the first full pay
period after March 1, 1980. Pursuant to an agreement with AFGE Local 12
dated April 23, 1980, the Department restored the allotments of the 71
employees effective with the pay period ending April 19, 1980. The 71
employees have filed an unfair labor practice charge against the
Department of Labor alleging that they were not given an opportunity to
revoke their dues within 1 year.
In order to settle this charge, the Department of Labor has requested
our authorization to reimburse the 71 employees for dues withholding
allotments made after March 1, 1980.
Subsequent to the Department's letter to us, the General Counsel of
the Federal Labor Relations Authority has decided not to issue a
complaint on this charge because the 71 employees did not have the right
under the statute to have their dues allotments terminated prior to
September 1, 1980. Since the charge has been dismissed, the question is
moot and no answer is required.
2. Wrongful Termination of 40 Dues Allotments
Prior to January 11, 1979, the effective date of the Federal Labor
Management Relations Statute (5 U.S.C.chapter 71, Sec. 7101 et seq.),
enacted as title VII of the Civil Service Reform Act of 1978, Public Law
95-454, October 13, 1978, 92 Stat. 1192, an employee could revoke his
dues allotment to a union semiannually under section 21 of Executive
Order 11491, as amended. On an after January 11, 1979, dues allotments
may only be revoked after a period of 1 year. 5 U.S.C. 7115(a).
On February 23, 1979, the Federal Labor Relations Authority issued a
Notice and Direction to heads of agencies and unions directing them not
to effectuate employee revocation of dues assignments received by the
agencies on or after January 11, 1979, but to continue to withhold dues
and maintain these funds in a suspense or escrow account pending further
advice from FLRA. Despite this notice the Department of Labor honored
40 dues allotment revocations received between January 11, 1979, and
March 1, 1979, and made them effective for the pay periods ending March
24, 1979, through June 16, 1979.
The Authority, on April 19, 1979, interpreted 5 U.S.C. 7115(a) and
ruled in effect that, absent an agreement to the contrary, the annual
dues revocation date would be either September 1, 1979, or the
anniversary of the date on which the employee first authorized dues
withholding, whichever is later. See Interpretation and Guidance (FLRA
No. O-PS-1). The ruling applies only to revocation requests submitted
to agencies on or after January 11, 1979.
On September 18, 1979, AFGE Local 12 filed unfair labor practice
charges concerning the Department's setting of March 1, 1979, as the
effective date for employees to revoke dues withholding allotments.
Amended charges were filed on March 14 and May 6, 1980. The union
alleged that the Department had wrongfully terminated 40 dues
withholding allotments during the period beginning March 3, 1979, and
ending June 16, 1979. On May 16, 1980, the Regional Director of the
FLRA issued a formal complaint and notice of hearing on the charge.
FLRA Case No. 3-CA-506. The Union and the Department now propose to
settle the unfair labor practice charge by having the Department
reimburse the local for the dues of the 40 employees which had been
revoked effective for the payroll periods ending March 24, 1979, through
June 16, 1979, until the first full pay period beginning after September
1, 1979.
No payments would be required from the 40 employees. The Department of
Labor is prepared to settle the unfair labor practice complaint in this
manner if we approve the payment.
In a prior decision, we held that, where union dues were not
collected by an agency due to administrative error, the agency may not
use appropriated funds to directly pay union dues without either seeking
to recover the amounts from the employees or exercising its authority to
waive collection from the employees under 5 U.S.C. 5584. B-180095,
October 2, 1975. That case arose under section 21 of Executive Order
11491, as amended, and the controlling issue here is to what extent we
should follow our 1975 decision in a case arising under the new
statutory labor-management relations program.
The Federal Labor-Management Relations Statute, 5 U.S.C.chapter 71,
DIFFERS MATERIALLY FROM THE PRIOR EXECUTIVE ORDER PROGRAM. FEDERAL
agencies are now under a statutory duty, upon receiving an employee's
written authorization, to withhold union dues from the employee's pay
and to pay the allotment to the exclusive representative for the
bargaining unit. The allotment is made without cost to the union or the
employee. 5 U.S.C. 7115(a). Dues "checkoff" is no longer dependent
upon an agreement between an agency and a labor union as it was under
section 21 of the order, and a dues allotment under section 7115(a) may
not be revoked for a 1-year period as opposed to 6 months under section
21. Moreover, Congress has creased a new agency, the Federal Labor
Relations Authority, and invested it with the duty to administer the
Federal Labor-Management Relations Statute.
The Department of Labor's termination of the 40 dues allotments to
AFGE Local 12 was clearly erroneous. In the first place, the Department
disregarded the Authority's direction of February 23, 1979, not to honor
revocation requests filed on or after January 11, 1979, pending a ruling
by the Authority. In the second place, the Department continued to
terminate dues allotments even after the Authority's ruling on April 19,
1979, that allotments were revocable only on September 1, 1979, or the
anniversary date of the employee's authorization, whichever is later.
Hence, the Department's action in terminating allotments from March 24
through June 16, 1979, was wrongful and in violation of the statute, as
it has been interpreted by the Federal Labor Relations Authority, the
agency Congress empowered to administer the statute and to establish
policies and guidance relating to matters arising under the statute. 5
U.S.C. 7105(a)(1).
Congress has also provided that wrongful actions under 5
U.S.C.chapter 71 shall be remedied through unfair labor practice
proceedings. Among other things, the statute provides that it shall be
an unfair labor practice for an agency to fail or refuse to comply with
any provision of chapter 71. 5 U.S.C. 7116(a)(8). When the Federal
Labor Relations Authority finds that an unfair labor practice has been
committed by an agency, the Authority may order such action as will
carry out the purpose of the statute. 5 U.S.C. 7118(a)(7)(D). There
need not be a formal finding of a violation by the Authority before
payment is made. The General Counsel of the Authority has the duty to
investigate charges of unfair labor practices and to issue complaints
where appropriate, and he may provide for informal methods of
settlement. 5 U.S.C. 7118(a)(1) and (5). The stated policy of the
General Counsel is to encourage voluntary settlements which effectuate
the policies of the statute in order to reduce Government expenditures
and promote amity in labor relations. In this regard, regulations have
been promulgated concerning both formal and informal settlements during
the various stages of unfair labor practice proceedings. See 5 C.F.R.
2423.11(1980).
We believe that these new statutory provisions governing union dues
allotments, together with the evident intent of Congress to provide a
remedy for violations of the statute, compel us to conclude that an
agency may use appropriated funds to reimburse a labor union for dues
allotments wrongfully terminated by the agency in violation of 5 U.S.C.
7115(a).
However, the payment of union dues is a personal obligation of the
employee. Therefore the agency, after using appropriated funds to
reimburse the labor union for the agency's error in wrongfully revoking
the dues allotments, must seek to recover the amount of the dues from
the employees or exercise its power to waive collection from the
employees under 5 U.S.C. 5584(1976). Our decision in B-180095, October
2, 1975, is modified, to allow an agency to reimburse the union from
appropriated funds under circumstances discussed above, and then to
collect or waive the debt from the employees.
Therefore, if the proposed settlement between the Department of Labor
and AFGE Local 12 is approved by the Regional Director of the Federal
Labor Relations Authority, we would have no objection to the
Department's payment to the union of the amount the union would have
received if the 40 dues allotments had not been wrongfully terminated in
1979. However, since the dues not withheld remain a personal obligation
of the 40 employees, the Department must take action either to collect
the dues from the employees or to waive collection of the debts.